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Why Does It Matter When the Fed Tapers QE?

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Sevens Report Quoted in MarketWatch on February 22, 2021

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Tyler Richey Appeared on TD Ameritrade on August 6, 2019

Tyler Richey, co-editor of the Sevens Report Research, had a great interview with TD Ameritrade’s Ben Lichtenstein on August 6, discussing copper trading near 2019 lows, correlation with tenure yields, what comes next for copper, possible influencers, catalysts for copper, stocks and more…Click here to watch the full interview

TD Ameritrade_Interview Clip

Tom Essaye was Quoted in CNBC on August 5, 2019

Copper, a barometer for the global economy, drops to a 2-year low on trade war fears

“The combination of a disappointing Fed and an escalating trade war appears to be too much for this fragile global economy. The summer breakdown in copper…” said the Sevens Report’s Tom Essaye. Click here to read the full article.

Copper Pipes

Dr. Copper Update

What’s in Today’s Report:

  • Dr. Copper Update
  • CPI – The Case for a July Rate Cut Got A Bit Stronger Yesterday
  • China & Treasuries: No Signs of a Buyers Strike (Yet)
  • Oil Outlook – Supplies Keep Rising.

Futures are marginally higher following a busy night of news, but none of it shifted the current market outlook.

If there is a “reason” for the gains this morning it’s hopes for more Chinese stimulus as Chinese Vice Premier Hu called for more stimulus to help the economy, although no specifics were given and China’s already been aggressively stimulating the economy for months – so this isn’t exactly incremental news.

Geo-politically, Brent crude oil surged 3% after two tankers were attacked via a torpedo and mine strike overnight in the Gulf of Oman (near the mouth of the Strait of Hormuz).  It’s unclear who is responsible at this point but that’s obviously increasing tensions in an already unstable part of the globe.

The remaining big event for the week comes tonight via the Chinese economic data, so today will be spent watching the headlines for any trade updates, while on the economic front we get Jobless Claims (E: 216K) and Import & Export Prices (E: -0.3%, 0.1%), but neither should move markets materially.  Finally, there is a 30 Yr. T-Bond Auction at 1:00 p.m. ET and we’ll be watching to see if there are any signs of a Chinese “buyers strike” for Treasuries (so far, it’s not happening).

Tom Essaye Quoted in Markets Insider on May 15, 2019

Tom Essaye was quoted in Markets Insider on May 15, 2019. The red metal has been the “single-best leading indicator for stocks over the past 18 months,” and is flashing a warning sign for…” Click here to read the full article.

Another Update From Dr. Copper (It’s Been Right)

What’s in Today’s Report:

  • Another Update From Dr. Copper (It’s Been Right)

Futures are modestly weaker following disappointing Chinese economic data.  Nothing new happened over night with U.S./China trade.

Chinese Retail Sales (7.2% vs. (E) 8.6%), Fixed Asset Investment (6.1% vs. (E) 6.4%) and Industrial Production (5.4% vs. (E) 6.3%) all missed estimates, implying the Chinese economic recovery might not be as solid as thought.

Today focus will shift back to economic data.  The Chinese data was underwhelming and that will put more pressure on today’s U.S. data to reassure markets about growth.

The key reports today (in order of importance) are:  Retail Sales (E: 0.2%), Empire State Manufacturing Survey (E: 9.0), Industrial Production (E: 0.0%), Housing Market Index (E: 64).  Again, “bad” numbers from these reports that makes the Fed more dovish may cause a temporary bounce in stocks, but that’s not good for stocks in the medium/longer term.

Finally, there are two Fed Speakers, Quarles (9:30 a.m. ET) and Barkin (1:00 p.m. ET) but neither should move markets.

An Update from Dr. Copper

What’s in Today’s Report:

  • An Update from Dr. Copper

Futures are little changed following more U.S./China trade optimism and mixed earnings.

President Trump said he expects to host Chinese Premier Xi at the White House “soon” and a trade deal could be signed in June.

Earnings after the bell were mixed at INTC badly missed, while F and AMZN both posted solid numbers.

There was no material economic data overnight.

Today should be a generally quiet day as the volume of earnings reports subsides (reports we’re watching include XOM ($0.75), AAL ($0.50) and CVX ($1.26)) and are just two economic reports: Preliminary Q1 ‘19 GDP (E: 2.2%) and Consumer Sentiment (E: 97.1).  If GDP is a bad miss (which is unlikely) that might temporarily pressure stocks, but really markets are already looking ahead to next week, which is absolutely full of important macro events and continued earnings.

A New Prognosis from Dr. Copper?

What’s in Today’s Report:

  • Is  Dr. Copper’s Prognosis for the Markets Just Change?
  • Economic Data (Yesterday Was Not a Good Day)
  • Energy Update

Futures are recouping yesterday’s losses not because of what happened overnight (which was nothing) but instead of what might happen today.

Trump & Chinese Vice Premier He will meet at 2:30 ET and markets hope more progress on a deal is signaled.

Additionally, markets hope Fed officials (specifically Williams and Clarida) give more clarity on the end of QT at a Fed conference later this afternoon.

As mentioned, there are no economic reports or notable earnings today so focus will be on the Trump/He meeting and the various Fed speakers making comments today:  Williams (10:15 a.m. ET), Bullard (1:30 p.m. ET), Clarida (1:30 p.m. ET), Harker (1:30 p.m. ET).  For those events to power stocks meaningfully higher, we’ll need to see hints that a U.S./China deal would reduce current tariffs, and a clear indication that QT will end in 2019.

Technical Tipping Point

What’s in Today’s Report:

  • Technical Update – We’ve Reached the Tipping Point
  • Why Copper Really Rallied Yesterday

Futures are slightly lower and international markets were mixed overnight as investor focus is shifting to today’s release of the January FOMC Meeting Minutes.

Japanese Exports in January were worse than feared (-8.4% vs. E: -6.1%) while the British CBI Industrial Trends Survey was 6 vs. (E) -5 but neither release moved markets o/n.

There are no economic reports in the U.S. today however the European Commission releases Flash Consumer Confidence data for February (10:00 a.m. ET) and given the recent string of underwhelming EU data points, another bad number could weigh on EU (and to a lesser extend U.S.) stocks into the European close.

The big event today will be the release of the January FOMC Meeting Minutes at 2:00 p.m. ET. Investors will be looking for any further clues as to the Fed’s plans for the balance sheet as a dovish adjustment is one of the few potentially bullish catalysts left for this stock rally right now.

Other than the Fed, U.S.-China trade negotiations continue in Washington however a deal is largely priced in and the talks are now a risk to the market as any “bad news” regarding the trade war would likely hit stocks hard.