Posts

Economic Breaker Panel: November Update

/in , /by

What’s in Today’s Report:

  • Economic Breaker Panel – November Update

Stock futures are little changed in quiet holiday trading this morning as traders look ahead to the slew of economic data due out in the U.S. today as well as the release of the November Fed meeting minutes.

Economically, the Eurozone Composite PMI Flash came in at 47.8 vs. (E) 47.0 signaling economic contraction in the EU but the better-than-feared headline is helping European shares edge higher today.

This morning is lining up to be a busy one for economic data with Durable Goods Orders (E: 0.3%), Jobless Claims (E: 225K), PMI Composite Flash (E: 48.7), New Home Sales (E: 574K), and Consumer Sentiment (E: 55.0) all due to be released between 8:30 a.m. and 10:00 a.m. ET.

Additionally, the November Fed Meeting Minutes will be released at 2:00 p.m. ET.

Bottom line, with all the recent Fed speak, the Minutes are unlikely to offer any surprises today however data can move markets despite thinning attendance and light volumes. The market wants to see slowing but not collapsing growth measures and a downward acceleration in inflation (today’s inflation expectations within the Consumer Sentiment release will be the key figure to watch). If that materializes, the S&P might be able to break through key near-term technical resistance at 4,007 however high inflation and weaker-than-anticipated growth could send stocks tumbling back toward the lows of the week at 3,900.

All of us at Sevens Report Research are very thankful for your support! Everyone please travel safely, and have a Happy Thanksgiving. We will speak to you again Friday morning.

When to Brace for More Volatility

/in , /by

What’s in Today’s Report:

  • Revisiting the VIX – When to Brace for More Volatility
  • Familiar Holiday Volatility Courtesy of OPEC & Russia

U.S. equity futures are slightly higher and the dollar is pulling back modestly after a mostly quiet night of news as traders eye a stabilizing oil market.

After a volatile session yesterday, WTI crude oil is trading comfortably above $80/barrel this morning, fueling a rally in energy companies which is buoying index futures in pre-market trading.

Today, there is only one lesser-followed economic report due out: Richmond Fed Manufacturing Index (E: -1.0) and two Fed officials are scheduled to speak: Mester (11:00 a.m. ET) and George (2:15 p.m. ET).

Additionally, there is a 7-Yr Treasury Note auction at 1:00 p.m. ET that could move markets but the tape has been very quiet this week as attendance is light and volumes are down given the Thanksgiving holiday schedule. So more choppy and rangebound trading between 3,900 and 4,000 in the S&P is likely.

Was Last Week’s CPI Report A Bullish Gamechanger?

/in , /by

What’s in Today’s Report:

  • Was Last Week’s CPI A Bullish Gamechanger?
  • Weekly Market Preview:  Can Yields Keep Falling?
  • Weekly Economic Cheat Sheet:  More Key Inflation Readings This Week

Futures are modestly lower following some hawkish Fed comments and as investors digest last week’s big rally.

Fed Governor Waller made comments on Sunday that the Fed still has “a ways to go” before ending rate hikes, which is sapping some of last week’s soft CPI enthusiasm.

Positively, China continued progress towards abandoning “Zero COVID” and announced a stimulus plan for supporting the residential real estate market.

Today there are no notable economic reports and only one Fed speaker, Williams at 6:30 p.m. ET, but that won’t impact today’s trading.  So, we’d expect digestion of last week’s gains.  Politically, the Republican’s are still expected to win the House, but it will be close.  If Democrats look like they may win the House, that will likely weigh on markets as investors want a split government.

Jobs Report Preview

/in , /by

What’s in Today’s Report:

  • Jobs Report Preview

Futures are moderately higher on solid economic data and rising hope China could relax its “Zero COVID” policies.

The EU Composite PMI (47.3 vs. (E) 47.1) and UK Construction PMI (53.2 vs. (E) 50.5) both beat estimates, implying economic activity in Europe isn’t collapsing.

In China, an article in the South China Morning Post stated “big and substantive” changes looming for COVID policies.

Today focus will be on the Jobs Report and estimates are as follows:  Job Adds: 210K, UE Rate: 3.6%, Wages: 0.3% m/m, 4.7% y/y.  If markets can get an underwhelming number (say the low 100’s) that will be the first material sign the labor market is starting to deteriorate, and it could spark a rally in stocks as the Fed needs better balance in the labor market before they can “pivot.”

Away from the jobs report, we also have one Fed speaker, Collins at 10:00 a.m. ET but she shouldn’t move markets.

Three Keys to a Bottom (Updated)

/in , /by

What’s in Today’s Report:

  • Three Keys to a Bottom Updated (Some Progress But Not There Yet)
  • Economic Takeaways – Goldilocks Trends Emerging
  • Weekly Economic Cheat Sheet

There is a tentative risk-on tone to trading this morning as U.S. equity futures track global shares higher thanks to new stimulus measures in China and easing natural gas prices in Europe.

The PBOC announced new measures to help stabilize the yuan and bolster the economy in the face of renewed Covid lockdowns and recent signs of slowing growth which was welcomed by markets overnight.

In Europe, German Manufacturers Orders fell -1.1% vs. (E) -0.4% but that is helping dial back some of the recently more hawkish policy expectations ahead of this week’s ECB meeting.

Looking into today’s session, there is one economic report to watch: ISM Services Index (E: 55.4), and no Fed officials are scheduled to speak.

That should leave the focus on currency and bond markets in the U.S. if both the dollar and short-duration yields can stabilize, and not move materially higher, then stocks should be able to make an attempt to stabilize after Friday’s late session reversal lower.

Additionally, if we see natural gas prices in Europe continue to pull back from Friday and yesterday’s rise, that should help the risk-on mood in markets persist as the Nord Stream 1 halt was the main catalyst for stocks rolling over on Friday.

Jobs Report Preview

/in , /by

What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Analysis and Oil Update

Futures are solidly lower as negative China/COVID headlines and lackluster economic data weighed on markets.

Chinese authorities put the city of Chengdu (population 17 million) in a COVID lockdown, reminding markets “Zero COVID” is still in effect.

Economically, global manufacturing PMIs were underwhelming as all major regions (EU, UK and China) posted numbers below 50 (signaling contraction).

Today focus will be on economic data and the most important number is the ISM Manufacturing PMI (E: 52.2).  Markets need to see an in-line reading, because if it’s a very strong number that will increase hawkish concerns about the Fed, and if it’s a very weak number (below 50) that will spike stagflation concerns.  Outside of the PMI we also get Jobless Claims (E: 248K) and Unit Labor Costs (E: 10.7%) and there’s also one Fed speaker, Bostic at 3:30 p.m. ET.

Technical Update: What Would Make This Bounce Sustainable?

/in , /by

What’s in Today’s Report:

  • Technical Update:  What Would Make This Bounce Sustainable?
  • EIA Analysis and Oil Update

Futures are slightly lower following a busy night of mixed earnings reports and ahead of today’s ECB decision.

Politically, Italian PM Draghi formally resigned and there will be elections in Italy this fall, which is adding to general macro-economic uncertainty.

Earnings overnight were mixed although TSLA posted solid results and the stock rallied 3% after hours.

Today will be a busy day for economic data and earnings and the key event is the ECB Decision.  A 25 bps hike is expected although a 50 bps hike is very possible.  From a stock standpoint, markets will be hoping for a 50 bps hike because that will boost the euro and weigh on the dollar (the dollar being this high is a problem for U.S. corporate earnings).  Outside of the ECB we also get Jobless Claims (E: 240K) and Philadelphia Fed (E: -3.3).

On the earnings front, results continue to roll in and so far this season they are decidedly mixed (not good, but not materially worse than feared, either).  Some results we’re watching today include:  T ($0.59), FCX ($0.80), UNP ($2.38), COF ($5.09).

Three Keys to a Bottom (Updated)

/in , /by

What’s in Today’s Report:

  • Three Keys to a Bottom (Updated)
  • Weekly Market Preview:  Focus Turns to Earnings
  • Weekly Economic Cheat Sheet:  Flash PMI on Friday is the Big Report to Watch

Futures are moderately higher mostly on momentum from Friday’s rally and following a generally quiet weekend.

Investors continue to hope for a near-term peak in inflation and Friday’s drop in University of Michigan inflation expectations (2.8% vs. (E) 3.0%) and multi-month lows in the Empire Manufacturing price indices fueled that hope and resulted in the rally on Friday and in futures this morning.

Today’s focus will shift to earnings, and they will dominate market action early this week as there are no Fed speakers and no market-moving economic reports till later this week.  If earnings are better than feared, they can help extend this rally in the near term while disappointing results will cause more volatility.  Some reports we’re watching today include BAC ($ 0.77), GS ($6.99), SCHW ($0.91), IBM ($ 2.29).

Market Multiple Table

/in , /by

What’s in Today’s Report:

  • July Market Multiple Table (Important Changes)
  • Weekly Market Preview:  All About Inflation (and CPI on Wednesday)
  • Weekly Economic Cheat Sheet: Important Inflation and Growth Data This Week

Futures are modestly lower following new COVID-related shutdowns in China.

Macau will close most businesses, including casinos, for one week following a COVID outbreak while Shanghai will continue with massive testing, in what is a signal that the “Zero COVID” policy is at least partially still in effect.

Geo-politically, Canada released a turbine to Gazprom (a Russian energy company) and the hope is that will result in increased natural gas flows to Europe in the coming weeks, putting more pressure on commodity prices.

Today there are no notable economic reports and just one Fed speaker, Williams at 2:00 p.m. ET.  Futures are taking the new lockdowns in China somewhat in stride but if headlines imply anything like a repeat of the Shanghai lockdowns of March-May, expect stocks to drop as a result.

Jobs Report Preview

/in , /by

What’s in Today’s Report:

  • Jobs Report Preview

Futures are slightly higher despite negative COVID news from China and after British Prime Minister Boris Johnson announced he intends to resign.

COVID cases rose in Shanghai to the highest level since late May, prompting mass testing and increasing concerns of another lockdown.

Politically, British Prime Minister Boris Johnson will announce his resignation, but this shouldn’t impact stocks.

Today’s focus will be on Jobless Claims (E: 230K) and a continued slow drift higher will imply the jobs market is softening, which is needed if the Fed is going to get to “Peak Hawkishness” sooner than later.  We also have two Fed speakers, Bullard (1:00 p.m. ET) and Waller (1:00 p.m. ET) and we should expect their commentary to be hawkish (they’re two of the louder hawks on the Fed).