“In short, Credit Suisse is starting to act like a bank that’s about to go under,” analyst Tom Essaye of the Sevens Report said in a recent note. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as markets digest yesterday’s post-Powell speech rally and focus on key economic data today (manufacturing PMI) and tomorrow (jobs report).
Global economic data underwhelmed overnight, as the Euro Zone manufacturing PMI missed estimates (47.1 vs. (E) 47.3) while the UK manufacturing PMI remained firmly in contraction territory (46.5 vs. (E) 46.2).
Looking forward to today, there are three important economic reports including (in order of importance): ISM Manufacturing Index (E: 49.9), Core PCE Price Index (E: 0.3% m/m, 5.0% y/y), and Jobless Claims (E: 235K). Markets will want to see 1) More evidence of easing price pressures in the ISM Manufacturing PMI and Core PCE Price Index and 2) Further labor market deterioration in jobless claims if the data is to help extend yesterday’s rally.
We also get three Fed speakers today, Logan (9:25 a.m. ET), Bowman (9:30 a.m. ET), and Barr (3:00 p.m. ET), but their commentary should be largely overshadowed by Powell’s less hawkish-than-feared remarks yesterday and I don’t expect them to move markets.
What’s in Today’s Report:
Stock futures are cautiously higher as traders look ahead to Powell’s speech today while international markets were mixed following some key economic data overnight.
The Eurozone HICP Flash (their CPI equivalent) fell to 10.0% in November from 10.7% in October (E: 10.6%), offering fresh evidence that inflation may have finally peaked in Europe while China’s Composite PMI was worse than expected. The soft data in China however was shrugged off thanks to continued optimism about easing Covid restrictions by the government.
Today is lining up to be a busy day with markets focusing on economic data early with the ADP Employment Report (E: 200K), GDP (E: 2.7%), International Trade in Goods (E: -$90.6B), JOLTS (E: 10.4M), and Pending Home Sales (E: -5.0%) all due out this morning.
Additionally, there are two Fed speakers through midday: Bowman (8:50 a.m. ET) and Cook (12:35 p.m. ET) before focus will turn to Powell’s speech in the early afternoon (1:30 p.m. ET) which will be the primary potential market catalyst today.
What’s in Today’s Report:
Stock futures are rebounding modestly this morning following yesterday’s sharp drop as worries surrounding China’s Covid policies and the subsequent protests ease.
The Hang Seng jumped over 5% and the offshore yuan rallied 1% after the Chinese government announced a renewed push to vaccinate elderly citizens and said excessive restrictions will be avoided, both of which are incremental steps away from “Covid Zero.”
Today, market focus will be on housing data early with the Case-Shiller Home Price Index (E: -1.3%) and FHFA House Price Index (E: -1.2) due out ahead of the bell and then the Consumer Confidence (E: 100.0) report will print shortly after the open.
There are no Fed officials scheduled to speak today so focus will likely remain on the situation in China, and if sentiment towards Covid policy expectations and the latest wide-spread protests improves then stocks will be able to stabilize as that was a major bearish influence on the market yesterday.
Tuesday’s “geopolitical fear bid, related to the initially unidentified missiles hitting Poland, is unwinding as details emerge that suggest the projectiles did not actually originate in Russia after all,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.
“Stagflationary economic data, rising COVID cases in China, and hawkish [Federal Reserve] chatter have all been added headwinds on the oil market today,” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
“There’s frankly little doubt that consumers are already 1) Reining in spending and 2) Becoming more value conscious,” Sevens Report analyst Tom Essaye wrote in a Thursday note. Click here to read the full article.
“Looking at the curve, the 10s-2s yield curve spread remained near a multidecade low of nearly minus-80 basis points. That deep of an inversion suggests that the Fed’s current policy and expected path of future policy are far too restrictive for the state of the economy and growth expectations, which will almost certainly end in a recession — and potentially a severe one given the scope of the current inversions across the Treasury yield curve,” said Tom Essaye, editor of Sevens Report Research, in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply lower on unrest in China as protests erupted across the country following more COVID restrictions.
Over the weekend Chinese citizens protested in numerous cities following new COVID restrictions, as the Chinese government sticks to it’s “Zero COVID” policy.
Economically the only notable number was EU M3 (money suppled) and that rose 5.8% vs. (E) 6.1%.
Today there are no notable economic reports but there are two Fed speakers, Bullard (12:00 p.m. ET) and Williams (12:00 p.m. ET). Bullard especially has produced some “tape bombs” with his commentary on rates and if he’s again hawkish (talking about 7% Fed Funds) expect that to add to the early losses.
What’s in Today’s Report:
Stock futures are little changed in quiet holiday trading this morning as traders look ahead to the slew of economic data due out in the U.S. today as well as the release of the November Fed meeting minutes.
Economically, the Eurozone Composite PMI Flash came in at 47.8 vs. (E) 47.0 signaling economic contraction in the EU but the better-than-feared headline is helping European shares edge higher today.
This morning is lining up to be a busy one for economic data with Durable Goods Orders (E: 0.3%), Jobless Claims (E: 225K), PMI Composite Flash (E: 48.7), New Home Sales (E: 574K), and Consumer Sentiment (E: 55.0) all due to be released between 8:30 a.m. and 10:00 a.m. ET.
Additionally, the November Fed Meeting Minutes will be released at 2:00 p.m. ET.
Bottom line, with all the recent Fed speak, the Minutes are unlikely to offer any surprises today however data can move markets despite thinning attendance and light volumes. The market wants to see slowing but not collapsing growth measures and a downward acceleration in inflation (today’s inflation expectations within the Consumer Sentiment release will be the key figure to watch). If that materializes, the S&P might be able to break through key near-term technical resistance at 4,007 however high inflation and weaker-than-anticipated growth could send stocks tumbling back toward the lows of the week at 3,900.
All of us at Sevens Report Research are very thankful for your support! Everyone please travel safely, and have a Happy Thanksgiving. We will speak to you again Friday morning.