“In China, Covid-19 cases continue to explode higher and there were reports of overwhelmed hospitals, but officials are proceeding with a full economic reopening.” said Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
U.S. equity futures have a tentative bid to start the new year today as tech stocks are outperforming amid a sharp pullback in Treasury yields.
Economically, China’s Manufacturing PMI fell to 49.0 in December from 49.4 in November while the U.K.’s Manufacturing PMI came in at 45.3 vs. (E) 44.7 last month. Both figures remained well below 50, in contraction territory, and that is seeing some of the recent hawkish central bank expectations unwind as we begin the new year.
Looking into today’s session, there are two economic reports to watch in the U.S., the Manufacturing PMI (E: 46.2) and Construction Spending (E: -0.4%).
Investors will be looking for data that points to a continued slowdown in growth but a more pronounced drop in price readings as that should help further ease hawkish policy expectations and allow the early but tentative risk-on money flows to continue.
There are no Fed officials scheduled to speak and no notable Treasury auctions today. That will leave investors focused on Treasuries as a continued drop in yields today should support a continued bid in tech stocks and equities more broadly as traders reposition into the new year.
Sevens Report Quarterly Letter Delivered Today
Our Q4’22 Quarterly Letter will be released today. We use our strength (writing about the markets) to help you:
You can view our Q3’22 Quarterly Letter here.
To learn more about the product (including price) please click this link. If you’re interested in subscribing, please email info@sevensreport.com.
What’s in Today’s Report:
Futures are slightly lower following a quiet night of news as markets digest Thursday’s rally.
Economically the only notable number was the UK Home Price Index, which like the U.S. readings this week saw smaller than expected declines, falling –0.1% vs. (E) -0.7%.
Geopolitically, Russia continued Thursday’s missile bombardment of Ukraine is a clear signal that fighting will rage on as the New Year begins.
Trading today will be dominated by book squaring and year-end positioning but there is one notable economic report, Chicago PMI (E: 41.0), and if it’s weak it could weigh on markets moderately.
What’s in Today’s Report:
Futures are slightly higher following a quiet night of news as markets bounce following Wednesday’s declines.
The economic calendar was mostly quiet overnight and the only notable economic report was Euro Zone Money Supply while was essentially in-line with expectations, rising 5.4% vs. (E) 5.5%.
In China, COVID cases continue to explode higher and there were reports of overwhelmed hospitals, but officials are proceeding with a full economic reopening.
Today the focus will be on Jobless Claims (E: 222K) and markets will want to see this number move higher towards 250k (and ultimately 300k). If claims remain stubbornly low, that could weigh on stocks (like it did last week).
What’s in Today’s Report:
Stock futures are modestly higher in cautious trade this morning with Treasuries largely steady and overseas markets mixed as focus remains on China’s reopening efforts.
China’s government will resume the issuance of passports and visas while Hong Kong dropped PCR testing requirements for travelers, however the rapid move away from “Zero Covid” is beginning to rekindle inflation worries which could become a renewed headwind on equities.
Looking into today’s session, there are two economic reports to watch: Pending Home Sales (E: -0.5%) and the Richmond Fed Manufacturing Index (E: -6) but neither should impact Fed policy expectations or meaningfully move markets in quiet holiday trading.
There are no Fed speakers to watch today but the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET and following yesterday’s large move higher in yields, surprisingly strong or unexpectedly weak demand could influence equity market trading.
“Specifically, despite skyrocketing cases and reports of stressed hospitals, Chinese authorities are not locking down cities and that implies continued increases in energy demand as the world’s second largest economy comes back online,” said analysts at Sevens Report Research, in a note. Click here to read the full article.
“Stocks are digesting the declines of the past two weeks and while there are some notable employment and inflation numbers looming on Thursday and Friday, the bottom line is the calendar into year-end should be mostly quiet, again barring any material surprises,” Tom Essaye, the founder of Sevens Report Research, wrote Wednesday. Click here to read the full article.
What’s in Today’s Report:
U.S. equity futures are tracking global markets higher while the dollar is lower in risk-on trading this morning following more positive reopening news out of China.
China will end its eight day quarantine for inbound travelers on January 8th and scrapped international flight limits in the latest move away from Covid-Zero which is bolstering the outlook for global growth in the months ahead and markets are responding favorably to the news.
Today, there are three economic reports due to be released: International Trade in Goods (E: -$97.0B), Case Shiller Home Price Index (E: -1.2%), and FHFA House Price Index (E: -0.5%) but none of them should meaningfully impact the outlook for Fed policy and therefore are likely to have a limited impact on stocks.
There are no Fed speakers today but the Treasury will hold a 2-Yr Note auction at 1:00 p.m. ET. If demand is weak and yields rise following the auction, that could weigh on equities as it would be a mildly hawkish signal from the fixed-income market as we approach the end of the year.
Sevens Report Q4’22 Quarterly Letter Coming January 3.
The Q4 2022 Quarterly Letter will be delivered to advisor subscribers on Tuesday, January 3.
Especially given all the volatility in 2022 and continued challenges for markets, we think the start of the year is a critically important time to communicate with clients and prospects.
We will deliver the letter on the first business day of the quarter because we want you to be able to send your quarterly letter before your competition (and with little-to-no work from you).
You can view our Q3‘22 Quarterly Letter here.
If you’d like to learn more or are interested in subscribing, please email info@sevensreport.com.
What’s in Today’s Report:
Futures are slightly higher following a quiet night of news as investors digest Thursday’s declines and look ahead to the long weekend.
Economically the only notable report was Japanese CPI and it came in slightly lower than expectations at 3.7% y/y vs. (E) 3.8% y/y. but it didn’t move markets.
Today focus will be on economic data and the key reports are, in order of importance: Core PCE Price Index (E: 0.2% m/m, 4.6% y/y), University of Michigan Consumer Sentiment (E: 59.1), Durable Goods (E: -0.8%) and New Home Sales (E: 600k). Markets will want to see further confirmation of dis-inflation in the Core PCE Price Index and the Five Year Inflation Expectations in the University of Michigan report, and if that happens it could spur a mild rally following yesterday’s declines.
What’s in Today’s Report:
Futures are slightly lower following a disappointing earnings report by Micron (MU).
Micron (MU down –3% after hours) reported underwhelming results and guidance and announced layoffs, and that’s reversing some of the earnings-driven gains we saw in stocks on Wednesday.
Economic data remained sparse but UK GDP slightly missed estimates, falling –0.3% vs. (E) -0.2%.
Today’s focus will be on Weekly Jobless Claims (E: 225k) and this number needs to move higher (towards 300k) to show the Fed that the labor market is returning to better balance (something the Fed said is needed before they can think about a pivot). We also get the Final Q3 GDP (E: 2.9%) but that data is very old now (July-September) and it shouldn’t move markets.