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Tom Essaye Quoted in Channel 12 News Article on

“You’re seeing companies adapt and that’s exactly what’s going to have to happen in this economy,” financial expert Tom Essaye said. “The state could open tomorrow, but that doesn’t necessarily mean people will flock to restaurants, the mall and bars…” Click here to read the full article.

Tom Essaye

 

Tom Essaye Quoted in Barron’s on April 28, 2020

“Coronavirus headlines were mostly positive overnight as there were reports of expanded testing capabilities in the U.S., the growth rate of new cases continues to…” writes The Sevens Report’s Tom Essaye. Click here to read the full article.

New York Stock Exchange

Is Inflation The Next Big Thing? (How to be Positioned)

What’s in Today’s Report:

  • Is Inflation The Next Big Thing? (How to be Positioned)
  • OPEC Meeting Preview:  Bullish If/Bearish If

Futures are modestly lower following a generally quiet night as markets digest this weeks’ gains ahead of jobless claims and the Powell speech.

On the coronavirus front, news was again positive as Austria and Denmark became the first European countries to begin to lift coronavirus restrictions.

Economic data overnight was better than feared as German exports and British IP both beat estimates.

Today focus will be on Jobless Claims (E: 5 MM) and the Powell speech  (10:00 a.m. ET).  For claims, it’d be a positive surprise if they declined from last week’s number and that’d add to the good news from this week, while a spike towards 10MM would be a modest negative vs. expectations.

For the Powell speech, markets just want reassurance that the Fed is committed to doing whatever it takes to ensure orderly operation of markets, which is what we should get.

Valuation Update (Cheap, Fairly Valued, or Still Expensive?)

What’s in Today’s Report:

  • Market Valuation Update:  Cheap, Fairly Valued, or Still Expensive?
  • Oil Update (Weekly Inventory Data)

Futures are seeing a moderate rally/bounce as the Fed acted, again, and oil bounced on comments from Trump.

The Fed said it will exclude Treasury holdings and deposits from certain leverage ratios (that essentially allows banks to lend more money which should help the economy).

On oil, Trump said he expected a Russia/Saudi oil deal within “days” but gave no specifics as to how that might happen (although it would be a positive if it does).

Today the key report is Jobless Claims (E: 3.350M), although we also get Motor Vehicle Sales (E: 14.3M) and International Trade (E: -$39.5B).

But, in reality, the real driver of markets right now is coronavirus headlines.  They were more positive in tone last week, but have turned more negative this week and that’s why stocks dropped so hard yesterday.  Any good news on 1) A pharma solution (vaccine/antibody treatment/trials) or 2) Slowing of the spread will help make this early bounce more sustainable.

What to Make of This Rally

What’s in Today’s Report:

  • What To Make Of The Rally.
  • Coronavirus Update – Is Italy Peaking?

Futures are sharply lower (down about 2%) following a generally quiet night as markets digest the big three day rally.

The U.S. passed China in total number of coronavirus cases on Thursday, although there is some hope emerging that the spread of the virus is peaking in Italy.

Politically, there was no notable news overnight and passage of the stimulus bill will happen later today.

Today the key event is the passage of the stimulus bill in the House, but that is universally expected.  Outside of that, the key economic report will be Consumer Sentiment (E: 92.0), because that will give us some preliminary insight into how bad consumer spending might be in the coming months.  We also get the Fed’s preferred measure of inflation,  Core PCE Price Index (E: 1.8%), but at this point that number will be ignored as no one is worried about high inflation right now.

Additional Fed QE Takeaways

What’s in Today’s Report:

  • Additional Fed QE Takeaways

Futures are limit up this morning and money flows were decidedly risk-on overnight as several sources, including individual Senators, suggested that the near $2T stimulus package will be passed today.

Additionally, the spread of the coronavirus showed signs of slowing in the last 24 hours while economically, global Flash PMI data was not as bad as feared overnight with manufacturing components universally topping estimates.

Today, there are two economic reports due to be released: PMI Composite Flash (E: 44.2) and New Home Sales (E: 743K), and one Fed official scheduled to speak: Bullard (9:45 a.m. ET). There is also a 2-Yr Treasury Note Auction at 1:00 p.m. ET.

With two of the three “keys to market stabilization” either accomplished (Fed stimulus) or in progress (slowing spread of the virus), all eyes will remain on Capitol Hill today. And if the massive economic stimulus package passes a vote in the Senate, expect a relief rally to follow as investor sentiment should become decidedly less gloomy.

What Did the Fed Do? (And Why Are Stocks Down Again)

What’s in Today’s Report:

  • What Did The Fed Do And Why Are Stocks Down?
  • What to Make of This Market Now? (Buy/Sell/Hold)
  • Two Key Indicators to Watch This Week

Futures are limit down this morning despite the Fed cutting rates to 0% and restarting its QE program.

On Sunday night the Fed cut rates to 0% and announced a new 700 billion dollar QE program, along with other measures designed to boost liquidity.

Coronavirus news over the weekend wasn’t good as case counts continue to rise, especially in Italy.  That country is the new center of the coronavirus outbreak.

Today all eyes will be on the bond market.  Treasury yields need to stay down, and if the price action in LQD isn’t too bad, stocks can rally out from these early lows.  Economically, there is a notable report this morning,  Empire Manufacturing Survey (E: 4.8), as it will give us the first look at juts how bad economic activity has been in March.

What Makes It Better and What Makes It Worse

What’s in Today’s Report:

  • Why Did Stocks Drop 10% Yesterday?  (It Wasn’t Coronavirus)
  • What Makes It Better (Four Factors)
  • What Makes It Worse (This Is Important)
  • Key Support and Resistance Levels to Watch

Futures are sharply higher as stocks rebound from yesterday’s historic collapse.

Most of the morning rally is just a typical oversold bounce, although there is a lot of “chatter” that global governments are planning to unveil economic stimulus plans over the weekend.

In the U.S., expectations are rising for an economic stimulus plan to be announced as early as this morning.  This needs to happen by the open on Monday and the plan needs to be substantial, because as we explain in the issue, this crisis has morphed into a crisis of confidence in  Washington’s ability to support the economy, and that’s the real reason stocks went into free fall yesterday.

Today all eyes will be on Washington, because the market is expecting a substantial economic relief package from Congress, and if we don’t get one by Monday (or it’s small and ineffectual) then we should all brace for more volatility.

The Panic Worsens

What’s in Today’s Report:

  • What Trump’s Speech Means for Markets (Not As Bad As The Market Reaction)
  • March Economic Breaker Panel (Important Insights)
  • Is It Time To Panic?

Apologies for the slightly tardy delivery.  A lot has happened since the close.

Futures are limit down once again as markets were disappointed by President Trump’s speech and proposed economic initiatives.

President Trump announced a travel ban from Europe in an effort to curtail the spreading of the disease, as well as several economic policies aimed at stimulating growth including deferral of income tax payments, more SBA loans, and paid sick leave.  All of these initiatives will help the economy, but none are a silver bullet for coronavirus, and as such the market is reacting with short term disappointment.

Econ Today: Jobless Claims (E: 216K), PPI (E: 0.5%). There are no Fed speakers speak today however the Treasury will hold a 30-Yr Bond Auction at 1:00 p.m. ET.

Looking forward, this is a market gripped in panic so we’ll continue to watch the headlines, and we need some good news to break the negative feedback loop in the form of positive corporate commentary or optimism on the transmission of the virus, but those types of headlines have been hard to come by lately.

Tom Essaye Interviewed with TD Ameritrade on March 10, 2020

Tom Essaye interviewed with Oliver Renick from TD Ameritrade to discuss the market, oil, coronavirus, and much more. Click here to watch the full interview.

TD Ameritrade Interview