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What to Make of Yesterday’s Selloff

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What’s in Today’s Report:

  • What to Make of Yesterday’s Selloff
  • OPEC+ Policy Update and Oil Outlook

Price action is mixed across asset classes this morning as equity futures are cautiously rebounding with EU shares but bond yields made new lows amid lingering Delta variant fears.

Economically, German PPI fell to 1.3% vs. (E) 1.1% in June, down from 1.5% in May which offers some new support for the transitory inflation thesis.

Economically, there is one report on the real estate market today: Housing Starts and Permits (E: 1.590M, 1.700M) but it should not have an impact on stocks or bonds, and no Fed officials are scheduled to speak.

That will leave trader focus on earnings early with: ALLY ($1.49), PM ($1.54), TRV ($2.35), and SYF ($1.51) reporting Q2 results ahead of the bell and NFLX ($3.16), UAL (-$4.17), IBKR ($0.83) reporting after the close.

Outside of those potential catalysts, the broader market focus remains on the latest developments regarding the Delta-variant of COVID-19 and any subsequent restrictions or lockdowns that may be announced around the globe.

As has been the case in recent weeks, the stock market will likely react to moves in bonds, so if yields begin to extend this morning’s early drop amid new risk-off money flows, expect volatility to remain elevated. Conversely, if bond yields begin to recover meaningfully, then stocks would likely follow, potentially rising back towards Friday’s closing levels.

What a Blue Wave Would Mean for Markets

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What’s in Today’s Report:

  • What a Democrat-Controlled Senate Would Mean for Markets (Three Risks to Watch)
  • PMI Manufacturing Index Takeaways

Stock futures are modestly higher in cautious trade this morning as investors are largely focused on the Senate runoffs in Georgia today while mostly negative COVID-19 developments continue to weigh on sentiment.

Economically, German data was, on balance, positive o/n, as the unemployment rate held steady at 6.1% as expected while Retail Sales jumped 1.9% vs. (E) -2.0%.

Looking at today’s calendar, there are two domestic economic data points to watch this morning: ISM Manufacturing Index (E: 56.5) and Motor Vehicle Sales (E: 15.7M), and two Fed officials are scheduled to speak in the afternoon: Evans (3:45 p.m. ET) and Williams (3:45 p.m. ET).

But, the markets will remain most interested in the Georgia Senate runoffs today as the threat of a “Blue Wave” outcome would mean potentially higher taxes and more regulation which would largely offset hopes for more, massive stimulus measures.

COVID-19 has also had an impact on markets so far this week as new lockdowns in the U.K. and the discovery of the faster spreading strain of the coronavirus in upstate New York have weighed on sentiment and threaten to become increasing market headwinds in early 2021.

Tom Essaye Quoted in NBC10Philadelphia on November 10, 2020

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“Negative COVID headlines/increased economic lockdowns (especially in NYC and LA County) are starting to offset vaccine optimism, and…” wrote Tom Essaye, founder of The Sevens Report. Click here to read the full article.

New Market Catalysts

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What’s in Today’s Report:

  • New Market Catalysts (Election/Vaccine Are Priced In)

Stock futures are trading moderately lower this morning as yesterday’s rally to fresh record highs is digested while coronavirus cases continue to rise in the U.S.

There were over 160K new COVID-19 cases reported in the U.S. alone yesterday, the second highest daily increase on record which is tempering some of the vaccine optimism that drove yesterday’s gains.

The economic calendar picks up today as there are several notable economic reports due to be released: Retail Sales (E: 0.4%), Industrial Production (E: 0.9%), and Housing Market Index (E: 85). The market will want to see those data points continue to meet or beat expectations to confirm the recovery remains robust and any disappointment in the numbers could weigh further on stocks.

There is also a slew of Fed officials scheduled to speak today: Powell (1:00 p.m. ET), Bostic (1:00 p.m. ET), Daly (1:25 p.m. ET), Williams (2:00 p.m. ET), Rosengren (2:35 p.m. ET), and Barkin (3:00 p.m. ET). Markets will be most interested in Powell’s remarks but more broadly investors expect the Fed to remain very dovish for the foreseeable future so any signs of the contrary could trigger further profit taking in stocks.

 

Tom Essaye Interviewed with TD Ameritrade on August 5, 2020

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Tom Essaye intereviewed with Oliver Renick from TD Ameritrade discussing ISM non-manufacturing, COVID-19 trends, stimulus and more…Click here to watch the full interview.

Tom Essaye Quoted in Yahoo Finance on May 28, 2020

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“I think the market has priced in that April is probably the worst of the economic data,” explained Sevens Report Research founder Tom Essaye. “While it looks like the worst is behind us — which is great — we need to start to see…” Click here to read the full article.

Tom Essaye Interviewed with WPTV Channel 5 on April 28, 2020

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Tom Essaye interviewed with WPTV Channel 5 discussing entrepreneurial ventures see increase in demand amid COVID-19. Click here to watch the full interview.

Tom Essaye Interviewed with TD Ameritrade

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Tom Essaye interviewed with Ben Lichtenstein from TD Ameritrade. Click here to read the full article.