“Investors continue to weigh stimulus hopes against negative pandemic developments,” Tom Essaye, a former Merrill Lynch trader wrote to clients. “Markets have aggressively priced in a lot of positive resolution to these…” Click here to read the full article.
Despite Trump’s implied veto threats, not everyone was so worried. Per CNBC, Tom Essaye, founder of the Sevens Report, wrote “all the bluster neither significantly changed…” Click here to read the full article.
The market rally we’ve seen over the past few weeks has been driven by five factors, Tom Essaye, founder of Sevens Report Research, explained in a note Monday. Stimulus from the Federal Reserve…Click here to read the full article.
“All the bluster neither significantly changed to outlook for stocks, as markets still expected (and ultimately received) stimulus of a minimum…” wrote Tom Essaye, founder of The Sevens Report. Click here to read the full article.
What’s in Today’s Report:
There is a clear risk-on tone to markets this morning with U.S. equity futures tracking global shares higher while the dollar tests recent lows on hopes for more stimulus in thin holiday trading volumes.
Yesterday, the House overwhelmingly passed a bill proposing stimulus checks be increased from $600 to $2,000, which now moves to the Senate with an uncertain fate but there is growing optimism it will pass.
From a catalyst standpoint, today is lining up to be relatively slow as there is just one lesser followed economic report: Case-Shiller House Price Index (E: 0.7%) and there are no Fed speakers.
The Treasury will hold a 7-Yr Note Auction at 1:00 p.m. ET which could impact the yield curve but it is unlikely to be a large enough move to affect equity markets.
That will leave trader focus on Capitol Hill once again as the bill to increase stimulus payments moves to the Senate. While it is relatively unlikely to pass, the Presidential support for the increase is helping drive optimism that it does and such a large increase in individual payments would be a clear positive for risk assets (and dollar negative), especially given this week’s thin attendance and light volumes.
What’s in Today’s Report:
Futures are moderately higher after President Trump signed the $900 billion dollar stimulus package.
Late Sunday night Trump signed the stimulus package as-is, avoiding a government shutdown and delivering economic stimulus to U.S. citizens. Despite threats not to sign the bill, markets always expected Trump to ultimately sign the legislation, so while stocks are enjoying a bounce on the news, this was already mostly priced in (so don’t expect a big rally off the news).
Economically, there were no notable reports overnight and this will be a very quiet week for economic data.
Today, with stimulus behind us and this week traditionally devoid of any major economic reports or corporate news, markets will focus on 1) COVID-19 and economic lockdown trends (both still worsening) and 2) The pace of vaccine rollout (lagging behind expectations). Improvement in both will help fuel a rally into the new year.
What’s in Today’s Report:
Futures are marginally higher following a mostly quiet night, as the fate of the stimulus bill remains unresolved.
The stimulus bill remains up in the air as Trump has neither vetoed nor signed the bill, but while that could result in a temporary government shutdown on Monday, ultimately markets expect the bill to pass.
Regarding Brexit, the EU and UK are expected to formally announce a post Brexit trade deal later today, although as we and others have consistently said, this was always the expected outcome and as such it’s not generating much markets reaction.
There are no economic reports today and no Fed officials are scheduled to speak, so stimulus headlines will drive trading (anything that implies passage of the bill will be positive, while no news or negative news will obviously be a short term negative).
Finally, stock markets will close at 1:00 p.m. today. Please have a safe and joyous holiday weekend.
“The passage of this package only solidifies that there are massive structural tailwinds on the economy and markets as we enter 2021, which is longer-term…” Tom Essaye, founder of Sevens Report, said in a note on Tuesday. Click here to read the full article.
“The passage of this package only solidifies that there are massive structural tailwinds on the economy and markets as we enter 2021, which is longer-term…” Tom Essaye, founder of Sevens Report, said in a note on Tuesday. Click here to read the full article.
What’s in Today’s Report:
Futures declined overnight after President Trump threatened to veto the recently passed stimulus bill but markets have since stabilized as hopes for fiscal aid remain strong and investors look ahead to a slew of economic data today.
Late Tuesday, Trump said he hoped Congress would increase the amount of direct payments to individual American from $600 to $2,000 and remove unnecessary spending in the package however the bill is still likely to become law given the overwhelming Congressional support which is easing market angst this morning.
Today, there is a long list of economic data due to be released including Durable Goods Orders (E: 0.6%), Jobless Claims (E: 875K), Core PCE Price Index (E: 1.5%), New Home Sales (E: 989K), and Consumer Sentiment (E:81.0).
If the data is better than expected, that could help lift equity markets after several days of heavy trading while the impact of disappointing data will be limited given the optimism of the new aid package in the works.
Beyond the data, investors will be continuing to watch coronavirus statistics and lockdown measures as the latest surge in cases and hospitalizations remains a risk to the economic recovery and any negative developments could weigh on risk assets in thinning holiday trade.