“In late-morning trade, selling pressure quickly picked up on the back of comments from Sen. Schumer…” wrote Tom Essaye, founder of Sevens Report Research, in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are marginally lower as markets digest Wednesday’s selloff following a quiet night of news.
Foreign markets traded lower as they reacted to Wednesday’s U.S. sell off, but that was driven by sentiment, not any actual bad news. To the contrary, earnings after the close yesterday were solid, including AAPL and FB.
Today there are important events outside of GameStop and it’s heavily shorted peers, but how those stocks trade will decide whether this pullback gets worse or takes a pause. Broadly, the market is moving inverse to GME and similar stocks, so if they rally today, expect more market declines, and if they decline, look for stocks to bounce back.
Looking at actual fundamentals, the key report today is Jobless Claims (E: 875K) and markets will want to see that number continue to decline from the recent highs. We also get Advanced Q4 GDP (4.2%), but while that will get media attention, it’s a dated number and won’t move markets. New Homes Sales (869K) will also be released later this morning, but shouldn’t move markets.
On the earnings front, the biggest reports for the week have already been released, but there are still notable reports today including: AAL (-$3.92), JBLUE (-$1.72), LUV (-$1.69), MA ($1.51), SHW ($4.85), CMCSA ($0.49), V ($1.27), X (-$0.67).
“So far in 2021, oil traders have gained increased clarity regarding global production and supply dynamics which has acted as a tailwind…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
Tyler Richey of Sevens Report Research tells Barron’s that an ongoing short squeeze may also weigh on the broader market. In order to fund the ability to buy back stocks that were previously shorted, long-short hedge funds must sell existing holdings…Click here to read the full article.
What’s in Today’s Report:
S&P futures came for sale this morning amid more margin call concerns (like we saw Monday) as some of the most shorted U.S. companies continue to squeeze higher, led by GME which rose nearly 150% in overnight trade.
Economically, Chinese Industrial Profits encouragingly jumped to 20.1% in December from 15.5% in November while the GFK Consumer Climate report badly missed estimates which underscores the negative effects of lockdowns on sentiment in Europe.
Looking into today’s session, there is one economic report to watch pre-market: Durable Goods Orders (E: 1.0%) before focus will turn to the Fed events: FOMC Meeting Announcement (2:00 p.m. ET) and the Fed Chair Press Conference (2:30 p.m. ET).
Additionally, some of the most widely followed U.S. corporations will release Q4 earnings today including: BA (-$1.78), and T ($0.73) before the open, and AAPL ($1.41), TSLA ($0.99), FB ($3.24), LVS (-$0.30), RJF ($1.71), and AMP ($4.44) after the close.
Finally, we are seeing a repeat of Monday in the pre-market this morning as massive short squeezes are continuing to play out in the most heavily shorted names in the market (multiple stocks have doubled or more during the overnight session) and that is reverberating across the broader equity markets as the fear of sizeable margin calls is weighing on stock futures.
Despite the Fed meeting and important earnings being in focus today, expect the inverse relationship between names like GME, BBBY, DDS, and AMC, vs. the S&P 500 to continue as long-short equity funds are potentially forced to liquidate long positions over the course of the session.
“The short squeeze/volatility we saw in heavily-shorted stocks such as GameStop and others yesterday only further confirms that, at least in the near term…” explained Tom Essaye, founder of The Sevens Report, in a note. Click here to read the full article.
“The short squeeze/volatility we saw in heavily-shorted stocks such as GameStop and others only further confirms that, at least in the near term, complacent/frothy investor sentiment…” Tom Essaye, founder of Sevens Report, said in a note Tuesday. Click here to read the full article.
What’s in Today’s Report:
Stock futures are modestly lower this morning as yesterday’s volatile start to the week is digested while investors look ahead to the Fed meeting and a busy earnings week.
Volatility remained elevated overnight as the PBOC unexpectedly withdrew liquidity from the Chinese financial system while the U.K. unemployment rate hit a 5 year high.
Looking into today’s session, there are two measures of the health of the real estate market due out before the market opens: Case-Shiller Home Price Index (E: 0.8%) and FHFA House Price Index (E: 0.8%), and then Consumer Confidence (E: 88.5) will print shortly after the opening bell.
On the earnings front, the Q4 reporting season picks up today with several notable companies reporting quarterly results pre-market including: JNJ ($1.81), MMM ($2.19), GE ($0.08), VZ ($1.16), and AXP ($1.26), while MSFT ($1.64), AMD ($0.47), and COF ($2.85) will report after the close.
With the FOMC meeting beginning today and more mega-cap tech earnings due later in the week, it is likely we see some sense of “Fed paralysis” in the market as traders reposition into the middle of the week.
What’s in Today’s Report:
Futures are marginally higher as markets bounce back from Friday’s declines following a quiet weekend of news.
Economically, the only notable report was the German Ifo Business Expectations Index, which slightly missed estimates at 91.1 vs. (E) 93.2.
Politically, there was no progress on stimulus (that is the main focus of markets going forward) while the COVID travel bans that were announced won’t move markets as they were largely in place for the past several months (the bans were effectively just extended by the Biden Administration, so it’s not something materially new).
Today there are no economic reports so any “color” on the stimulus progress will move markets.
On the earnings front, we get some notable reports today (KMB ($1.61), BOH ($1.11), XLNX ($0.71)) but the really important results don’t come until Tuesday (MSFT) and Wednesday (AAPL, TSLA, FB, etc.)
What’s in Today’s Report:
Futures are moderately lower on disappointing economic data and as optimism on stimulus fades slightly.
On stimulus, the political reality of Washington is starting to impact markets, and it’s becoming more unclear when Democrats’ ambitious stimulus goals will become law.
Economically, global flash PMIs were bad. Japanese, EU and British PMIs all fell further below 50 and there was significant deterioration across the board from the December readings, implying that the coronavirus lockdowns are having a negative impact on global growth (and slowing global growth isn’t priced into stocks).
Today the key number will be the Flash Composite PMI (E: 55.5). Markets will be looking for stability and for the U.S. to avoid the slowing of activity that we saw in the global data earlier this morning, because again a material slowing in growth is not priced into stocks at these levels. We also get Existing Home Sales (E: 6.540M) later this morning.
Finally, earnings season remains in full swing, and some reports we’ll be watching today include: ALLY ($ 1.05), SLB ($ 0.18) KSU ($1.91).