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Key Technical Levels to Watch on Fed Day

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Key Technical Levels to Watch: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Key Technical Levels to Watch on Fed Day (Shareable PDF Available)
  • Jobs Report Preview

Stock futures are in the red this morning after mega-cap tech earnings failed to meet overly optimistic estimates (but were not that bad, all things considered), Chinese Manufacturing PMI missed estimates, and French CPI was higher than expected.

On the earnings front, AMD (-11%), GOOGL (-6%), and MSFT (-1%) are all lower in the pre-market despite generally healthy quarterly reports with most earnings and revenue figures topping analysts estimates while some corporate guidance was not as strong as hoped.

Today is lining up to be a very busy day full of catalysts. Starting with the economic data, we get the first look at January labor market data with the ADP Employment Report (E: 130K) while Q4 Employment Cost Index (E: 1.0%) will offer a look at wage pressures from late 2023.

The Treasury will release the official Refunding Announcement details before the open (8:30 a.m. ET) before focus will turn to the Fed with the FOMC Decision (2:00 p.m. ET) and Powell’s press conference (2:30 p.m. ET) in the afternoon.

There are no “Mag7” earnings today, but a few notables to watch include: MA ($3.08), QCOM ($2.37), and MET ($1.95).

Bottom line, equities are on edge in pre-market trade this morning with all of today’s catalysts looming, but, if the Treasury Refunding Announcement supports the bond market (keeps a lid on yields) and the Fed doesn’t not offer a hawkish surprise, we should be able to see markets stabilize. Conversely, any disappointments or hawkish reactions will support further volatility into the back half of the week.

Computer chips

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Market Multiple Table Chart: September

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Market Multiple Table Chart: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table Chart (September Update)

Futures are slightly lower following more mixed economic data overnight.

There were no changes to the Market Multiple Table Chart for September, leaving the July/August target levels in place.

Japanese GDP (1.2% vs. (E) 1.3%) and Euro Zone GDP (0.1% vs. (E) 0.3%) both slightly missed expectations and further hinted at a loss of economic momentum.  Meanwhile, German CPI was in line with expectations (0.3% m/m, 6.1% y/y) as inflation in the EU remains sticky.

Today the calendar is mostly quiet, but focus will be on the Manheim Used Vehicle Value Index (Previous 212.0) and markets will want to see that “bell weather” for inflation continue to decline. If the MUVVI falls solidly we could see Treasury yields dip and stocks enjoy a relief rally.  Other notable events today include Consumer Credit (E: $18.0B) and a speech by Fed Governor Barr at 9:00 a.m. ET, but neither event should move markets.

September Market Multiple Table Chart

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Evidence of Some Deterioration in the Fundamentals

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Deterioration in the Fundamentals: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table:  Evidence of Some Deterioration in the Fundamentals

Futures are modestly lower on another negative AAPL article and more mixed economic data.

AAPL shares fell another 3% pre-market as Bloomberg also reported certain Chinese government agencies would be banned from using foreign made phones.

Economically, Chinese exports were no worse than feared (-8.8%). However, German Industrial Production missed estimates (-0.8% vs. (E) -0.2%) as global recession fears crept higher.

Today focus will be on economic data and Fed speak.  The two key reports to watch are Jobless Claims (E: 238K) and Unit Labor Costs (E: 1.7%).  Markets will want to see the former rise more than expected (but not too much more) and the later be less than expectations.  The opposite (low claims and high Unit Labor Costs) will push Treasuries higher and weigh further on stocks.

Turning to the Fed, New York Fed President Williams speaks at 3:30 ET. Since he’s part of Fed leadership, we’ll pay attention and markets will hope he hints that rate hikes are done.  Bostic also speaks at 3:45 ET but his message will likely be predictably dovish, and as such it won’t move markets.

multiple

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Tom Essaye Joins Yahoo Finance to Discuss Apple’s Latest Product on June 5th, 2023

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Apple stock: Why a headset could send shares even higher

Apple is rumored to reveal a mixed reality headset at their latest WWDC event. Could it be a catalyst to send Apple shares to new highs? eToro Global Markets Strategist Ben Laidler and Tom Essaye, Sevens Report Research Founder and President, discuss how mixed reality headsets could become a tech sector market driver. Click here to watch the full interview.

Special Technical Report Coming Monday

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What’s in Today’s Report:

  • Special Technical Report Coming Monday
  • Why Did the VIX Just Hit 52 Week Lows?
  • EIA Analysis and Oil Market Update
  • Two Notable Observations from a Quiet Trading Day

Futures are moderately weaker following a disappointing night of earnings.

TSLA, NOK, FFIV and TSMC all missed earnings and provided cautious commentary or guidance, and that’s increasing concerns about an economic slowdown.

Today there are numerous potential catalysts including important economic reports, lots of Fed speak and more earnings reports.

Starting with the data, the key report today is Philly Fed (E: -19.4) and markets will want to see if it confirms the rebound we saw in Empire (if it does, expect some stock weakness as Fed expectations become slightly more hawkish).  We also get Jobless Claims (E: 242K) and any move closer to 300k will be welcomed as it signals a slightly more normal labor market.

Turning to the Fed, there are multiple speakers today including Waller (12:00 p.m. ET), Mester (12:20 p.m. ET), Logan (3:00 p.m. ET) and Bostic (5:00 p.m. ET) and it will be notable to see if they all push back on the rate cut expectations in the markets.

Finally, on earnings, results lately have been underwhelming so these reports are becoming more important.  Earnings we’re watching today include: T ($0.58), TSM ($1.21), AXP ($2.63), UNP ($2.57), PPG ($1.55), CSX ($0.43), STX ($0.18).

Tom Essaye Joins BNN Bloomberg to Discus the FAANGs on February 23rd, 2023

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We could be approaching the death of the FAANGs: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to recap earnings from big tech this week. Essaye says that Meta’s earnings were the worst from a business standpoint and says that Amazon and Apple are most attractive to him out of the group. He cautions watchers not to buy these dips and talks on other sectors he finds more attractive.
Click here to watch the full interview.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview

Futures are moderately lower following a disappointing night of tech earnings and more hot inflation data.

AAPL, AMZN, and GOOGL all reported earnings overnight and the results underwhelmed.  Each stock is down between 2% and 5% pre-market.

Economically, EU PPI rose 1.1% vs. (E) -0.7% and became the third inflation number this week to hint at a rebound.

Focus today will be on the Employment Situation Report and expectations are as follows: Job Adds 185K, UE Rate 3.6%, Wages 0.3% m/m, 4.5% y/y).  Financial media focus will be on the headline job adds number but thanks to Powell’s less hawkish speech it’ll take a big number (300k or more) to be “Too Hot.”  Instead, focus on wages as they are directly related to services inflation, which remains sticky.  If wages are strong, that’ll be a negative.  The other notable economic report today is the ISM Services Index (E: 49.6) and markets will want to see stability in the data (no not worse than expectations).

A Tale of Two Markets?

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What’s in Today’s Report:

  • A Tale of Two Markets?

Futures are moderately lower following another disappointing night of earnings.

AMZN became the latest mega-cap tech stock to miss earnings and the stock fell more than 10% after hours.  AAPL posted “ok” results and rose 1% overnight.

Economically, the Italian CPI was hotter than expected (11.9% vs. (E) 9.7% yoy) as inflation remains sticky in the EU.

Focus today will be on inflation data, specifically the Core PCE Price Index (0.5% m/m, 5.2% y/y).  If this number comes in under expectations, that’ll be a mild positive for markets.  Also on the inflation front, the Employment Cost Index (E: 1.2% q/q, 5.0% y/y) will be closely watched by the Fed, while the University of Michigan Five Year Inflation Expectations will be released inside of the Consumer Sentiment report (E: 59.7).  If those five-year expectations can drop further below 3%, that will be a positive for markets.

Other notable releases today include Pending Home Sales Index (E: -3.8%) and a few notable earnings results:  XOM ($3.88), CVX ($5.02), CL ($0.74).

Time to Reduce Commodity Allocations?

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What’s in Today’s Report:

  • Is it Time to Reduce Commodity Allocations?
  • Why Q2 GDP Wasn’t as Bad As It Seemed

Futures are moderately higher following a solid night of earnings.

AAPL (up 2%) and AMZN (up 12%) both beat estimates and that’s helping to extend this week’s rally.

Eurozone inflation came in slightly hotter than expected, as EU HICP rose 8.9% yoy vs. (E ) 8.8% yoy, but stronger than expected earnings are helping the market look past the slightly hot number.

Today the focus will be on inflation as we get three notable inflation readings:  Core PCE Price Index (E: 0.5% m/m, 4.7% y/y), Employment Cost Index (E: 1.1%), and the University of Michigan Five Year Inflation Expectations (E: 2.8%).  Markets have aggressively priced in a near term peak in inflation, and the data needs to start to confirm that, starting today.  If these inflation stats run hot, don’t be surprised to see stocks decline.

On the earnings front, the season is starting to wind down but there are still a few more days of notable results.  Some reports we’re watching today include: XOM ($3.80), CVX ($5.02), PG ($1.23) and CL ($0.71).

ECB Decision Takeaways (Not as Dovish as Hoped)

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What’s in Today’s Report:

  • ECB Decision Takeaways (Not as Dovish as Hoped)

Futures are moderately lower following disappointing AAPL and AMZN earnings combined with hotter than expected headline inflation from Europe.

On earnings, AAPL and AMZN both underwhelmed investors and those stocks fell 3% and 5% after hours and the sheer weight of those names in the S&P 500 is weighing on the entire index.

On inflation, EU HICP rose to 4.1% vs. (E) 3.7%, a nearly 20-year high.

Focus today will be on inflation, as we get the Fed’s preferred inflation gauge via the Core PCE Price Index (E: 0.2%, 3.7%) and the Employment Cost Index (E: 0.9%).  Both numbers will be high, but markets will want to see hints of a plateau in inflation.  We also get Consumer Sentiment (E: 71.4) and the inflation expectations component will also be closely monitored.

On the earnings front, focus will be on the following results: XOM ($1.57), CVX ($2.21), CL ($0.79).