Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA and Oil Market Analysis (Still Bullish)

Futures are slightly higher as markets continue to digest the week’s early rally following a quiet night of news.

Economic data underwhelmed as the UK Construction PMI and EuroZone Retail Sales both missed estimates, but neither number is moving markets this morning.

On the stimulus front, the Democrats continue to move forward with reconciliation and markets now expect a stimulus bill between $1.5-$1.9T sometime in March.

Today stimulus headlines will continue to drive markets and the real question now is whether the stimulus bill ends up more towards $1.9 trillion (more bullish for stocks, yields and inflation in the short term) or $1.5 trillion (less bullish for stocks, yields and inflation in the short term).

Away from stimulus expectations, the key number today is Jobless Claims (E: 835K) and markets will want to see a continued decline to show the labor market is not deteriorating further.  We also get two Fed speakers: Kaplan (1:00 p.m. ET) and Daly (2:00 p.m. ET), but neither should move markets.

Is the Silver Rally Sustainable?

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What’s in Today’s Report:

  • Is the Silver Rally Sustainable?
  • ISM Manufacturing PMI takeaways

Stock futures are solidly higher this morning as the rebound from last week’s declines continues amid renewed stimulus optimism and positioning into key earnings.

Moderate Senate Republicans presented President Biden with a $600B+ stimulus package yesterday raising hopes for a bipartisan deal sooner than previously expected.

Today, there is only one economic report due out this morning: Motor Vehicle Sales (16.2M), and two Fed speakers are scheduled for the early afternoon: Williams (2:00 p.m. ET), Mester (2:00 p.m. ET).

That will leave investor focus on any new stimulus developments out of Washington and another busy earnings release schedule today

Notable companies releasing their Q4 results today include: UPS ($2.10), BABA ($3.22), PFE ($0.45), and XOM ($0.01) before the open and AMZN ($7.05), GOOGL ($15.89), and CMG ($3.71) after the close.

A Potentially Bearish Technical Signal

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What’s in Today’s Report:

  • A Potentially Bearish Technical Signal
  • Updated Market Outlook (Factoring in GME)
  • Weekly Market Preview:  GME, Stimulus and Economic Data
  • Weekly Economic Cheat Sheet:  Jobs Week

Futures are sharply higher as markets bounce back from last weeks’ declines following a generally quiet weekend.

Stocks are seeing an oversold bounce and are recouping some of Friday’s losses as there was no notable news (positive or negative) on the GME situation, although the Reddit short squeeze crowd is now targeting silver – so they haven’t gone away.

Regarding stimulus, the process is continuing and at this point markets expect a stimulus bill in the coming weeks (likely somewhat smaller than $1.9 trillion but not that much smaller).

Economic data was mixed as the Jan. Chinese Manufacturing PMI missed estimates (51.3 vs. (E) 51.6) while the UK Mfg PMI beat estimates and the EU number was in-line with expectations, but none of those numbers are moving markets.

Today focus will be on the two near term market catalysts:  GME and stimulus.  Regarding GME, if there are any signs of contagion we should expect more volatility.  On stimulus, Biden is meeting with centrist Republicans today but the bottom line is the market expects a lot more stimulus in the coming weeks and anything that alters that view would be a negative.

Tom Essaye Quoted in Courthouse News Service on January 28, 2021

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“Stocks such as GameStop usually don’t move markets, but as is almost always the case, fears of contagion are starting to impact the broad market…” Tom Essaye of the Sevens Report wrote in an investor’s note early on Thursday. Click here to read the full article.

Tom Essaye Quoted in Barrons’s on January 26, 2020

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“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.

Can GameStop Cause A Correction?

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What’s in Today’s Report:

  • Can GameStop Cause a Correction?
  • Why Yesterdays FOMC Meeting Was More Important Than It Seemed
  • Oil Analysis and EIA Update

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).

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on January 26, 2021

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“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 Co-editor of the Sevens Report Quoted in Barron’s on January 27, 2021

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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.

Did the Pandemic Finally Peak?

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What’s in Today’s Report:

  • What Quietly Positive COVID News Means for Markets
  • Favorable Oil Fundamentals

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.

Tom Essaye Quoted in Unseen Opportunity on January 26, 2021

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“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.