Posts

Why Did Treasury Yields Surge Yesterday?

/in , /by

What’s in Today’s Report:

  • Why Did Treasury Yields Surge Yesterday?
  • Oil Update – OPEC+ Meeting Preview

Stock futures are trading at record highs as investors shrug off surging COVID cases and digest upbeat economic data.

New COVID cases topped 1 million in the U.S. Monday, nearly doubling the previous record, however, hospitalizations and deaths remain low, keeping economic lockdown odds minimal as the Omicron outbreak is increasingly expected to burn itself out in the coming weeks.

China’s Manufacturing PMI rose to 50.9 vs. (E) 50.0 in December further easing global growth concerns.

Today, there are two economic reports to watch: ISM Manufacturing Index (E: 60.5) and JOLTS (E: 11.060M). Investors will be looking for more good data, but not so good that rate hike expectations are brought forward.

There are no Fed speakers today. The January OPEC+ policy meeting will be underway soon (E: +400K b/d production hike in February) and if the group of oil producers disappoint the market, expect a potential spike in volatility that could spill over into both equity and bond markets.

Tom Essaye Quoted in Market Research Telecast on December 28, 2021

/in , /by

Wall Street opens green and the Dow Jones rises 0.16%

Optimism about omicron continues to help drive risk assets higher as markets continue to believe…said the president of the firm Seven Reports, Tom Essaye, in a note. Click here to read the full article.

What Could Go Wrong in 2022

/in , /by

What’s in Today’s Report:

  • What Could Go Wrong in 2022
  • Chart: Rate Hike Prospects Weigh on Nasdaq

Futures are modestly higher despite negative COVID headlines and a mixed outlook for China’s economy.

New COVID cases topped 1 million and set a record for a second day Tuesday as the highly contagious, but less severe Omicron variant continues to rip through hot spots around the globe. But for now, few nations have implemented new lockdowns allowing investors to look past the latest surge in cases.

According to Bloomberg Economics, China’s economy grew this month but property sector risks remain a key concern and that weighed on Asian shares overnight.

Today, there are two economic reports due out: International Trade in Goods (E: -$86.0B), and Pending Home Sales (E: 0.6%) but once again, neither should move markets as they should not shift the outlook for monetary policy.

There are no Fed speakers today but there is a 7-Year Treasury Note auction at 1:00 p.m. ET. If the auction is weak and yields rise materially, that could add pressure to higher valuation sectors of the market like tech/Nasdaq and drag the broader equity markets lower in thin holiday trading today. Otherwise, the Santa Claus rally remains in effect and the path of least resistance does still remain higher given the recent records in the S&P 500.

 

Sevens Report Q4 ’21 Quarterly Letter Coming January 3rd

The Q4 2021 Quarterly Letter will be delivered to advisor subscribers on Monday, January 3rd.

With several key macro issues coming to a head in the next few weeks, we believe the first quarter could be the most volatile of 2022.

We deliver the letter on the first business day of the new quarter because we want you to be able to send your quarterly letter before your competition (and with little to no work from you).

You can view our Q3’21 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

What Could Go Right in 2022

/in , /by

What’s in Today’s Report:

  • What Could Go Right in 2022

S&P 500 futures are trading at a fresh record high as investors shrug off rising COVID cases while global markets rallied following fresh monetary stimulus from China.

The PBOC injected 200B yuan to help meet end-of-year demand for cash, the largest injection since October which is easing liquidity and adding to risk-on money flows.

Japanese Industrial Production surged 7.2% vs. (E) 1.8% in November, bolstering hopes that the economic recovery is regaining momentum.

This morning, there are two reports on the housing market due to be released: Case-Shiller Home Price Index (E: 1.0%), FHFA House Price Index (E: 0.7%) but neither should move markets.

There are no Fed speakers today but there is a 5-Year Treasury Note auction at 1:00 p.m. ET that could impact that bond markets and potentially equities but with the calendar otherwise pretty clear, a continued “Santa Claus rally” appears to be the path of least resistance for equities this week.

Tom Essaye Interviewed on TD Ameritrade Network on November 30, 2021

/in , /by

The Market Impact Of The Omicron Variant

Tom Essaye, founder of the Sevens Report, discusses how futures are reversing Monday’s gains. He also talks about the market impact of the Omicron variant…Click here to watch to the full interview.

Is the Fed About to Make a Policy Mistake?

/in , /by

What’s in Today’s Report:

  • Is the Fed About to Make a Policy Mistake
  • Powell Testimony Takeaways
  • S&P 500 Chart: Similarities to January 2020

U.S. equity futures are rebounding with European stocks and other risk assets such as oil this morning as Omicron fears continue to ebb and flow while some of the hawkish money flows from yesterday are unwound.

Powell’s comments yesterday were hawkish regarding tapering however the market’s outlook for rate hikes remains largely unchanged which is helping stocks stabilize.

Economically, Final Manufacturing PMIs were largely in line with expectations overnight and did not materially move markets.

Looking into today’s session, there are a few key economic reports to watch starting with the first look at November jobs data via the ADP Employment Report (E: 525K), followed by the ISM Manufacturing Index (E: 61.1) and Construction Spending (E: 0.6%).

Finally, Powell will continue his CARES Act testimony at 10:00 a.m. ET today and the market will be listening closely for any further hints about taper plans, rate hike timelines, and the potential impact of the Omicron variant.

Annual Discounts on Sevens Report, Alpha and Quarterly Letter

We’ve recently been contacted by advisor subscribers who wanted to use the remainder of their 2021 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free), or add a new product (Alpha or Quarterly Letter).

If you have unused pre-tax research dollars, we offer month-free discounts on all our annual subscription plans. If you want to extend current subscriptions or save money by upgrading to an annual subscription (across any Sevens Report product), please email: info@sevensreport.com.

Omicron and Fed Tapering

/in , /by

What’s in Today’s Report:

  • Omicron and Fed Tapering
  • Omicron Update (Some Incremental Information)

Stock futures are down more than 1%, tracking global equities lower while the 10-year yield is down more than 10 basis points on renewed omicron variant concerns.

In an interview with the FT, MRNA’s CEO said the scientists he had spoken with expect a material decline in the efficacy of current vaccines against the new omicron variant of the coronavirus due to the high number of mutations and that is weighing heavily on risk assets this morning.

Today, there are a few economic reports due out: Case-Shiller Home Price Index (E: 1.1%), FHFA House Price Index (E: 1.0%), and Consumer Confidence (E: 110.7), but all of the data was gathered well before the omicron news emerged and therefore will not have a major impact on markets given the keen focus on COVID in recent days.

Fed Chair Powell will join Treasury Secretary Yellen in testifying before the Senate this morning at 10:00 a.m. ET and any indication that the Fed may change course regarding policy plans as a result of omicron could move markets. There is one other Fed speaker today: Williams (10:30 a.m. ET).

Bottom line, this is once again a COVID-driven market and any negative headlines about vaccine effectiveness or the severity of omicron infections could cause more risk off money flows as the odds of new lockdowns in parts of the world would rise as a result.

Omicron Update: The Two Key Questions We Need Answered

/in , /by

What’s in Today’s Report:

  • Omicron Update:  The Two Key Questions We Need Answered
  • Weekly Market Preview:  How Big A Risk is the New Variant?
  • Weekly Economic Cheat Sheet:  A Very Busy Economic Week:  Jobs Report Friday, Final PMIs.

Futures are solidly higher as markets bounce following Friday’s COVID related steep declines.

The new COVID variant, named Omicron, was identified in numerous countries over the weekend, and governments enacted more travel bans to try and stop the spread.  But, beyond those measures, the market didn’t learn anything “new” about the variant over the weekend.

Regarding today’s bounce in futures, Friday’s steep declines were due in part to light liquidity and attendance, so we’re seeing that portion of the declines reversed this morning now that people are back to work.

Today we get the Pending Home Sales Index (E: 0.7%) and we have one Fed speaker (Williams at 3:00 p.m. ET) but the focus will be on COVID headlines.  It’s safe to assume the variant is already in the U.S. but a headline confirming that might create a short-term headwind.  Beyond the short term, however, the major unknown is whether the variant can evade the current vaccines, and that will determine whether this COVID pullback in stocks is brief, or something more extended.

What the New COVID Variant Means for the Rally (So Far)

/in , /by

What’s in Today’s Report:

  • What the New COVID Variant Means for the Rally (So Far)

Futures are sharply lower on concerns about a new COVID variant discovered in South Africa.

A new COVID variant discovered in South Africa has multiple new mutations and the WHO has called its discovery “concerning.”

Several countries have stopped flights from countries in Africa, and the discovery of the variant is only compounding worries about more COVID lockdowns.

There are no economic reports today and the NYSE closes at 1:00 p.m. ET.

Regarding the new COVID variant, clearly this is something to watch closely but COVID variants only become real risks to the rally if they can breakthrough a vaccine or render therapeutics ineffective, and there has been no research out so far that implies that’s the case with his new South African COVID variant.  In the near term, though, it’ll exacerbate COVID lockdowns/restrictions concerns, which is the real reason stocks are lower and the lack of liquidity on the Friday after Thanksgiving is only making the market reaction more intense.

Why Last Week Was More Positive for Stocks Than It Seems

/in , /by

What’s in Today’s Report:

  • Why Last Week Was More Positive for Markets Than It Seems
  • Weekly Market Preview:  Will COVID Concerns Recede?
  • Weekly Economic Cheat Sheet:  Key Inflation Report on Wednesday

Futures are moderately higher on Powell optimism and as there were no incremental COVID restrictions in Europe.

President Biden was reportedly highly complimentary of Powell in meetings this weekend, leading markets to fully expect he will be reappointed as Fed Chair this week.

There were no new COVID restrictions announced in Europe over the weekend, providing some hope lockdowns won’t be extensive.

There were no notable economic reports overnight.

Today there are no Fed speakers and just one economic report, Existing Home Sales (E: 6.20 M), and that won’t move markets.  So, any news on Powell’s reappointment as Fed Chair and incremental COVID headlines will move markets today (if Powell is reappointed and COVID headlines don’t get worse, stocks can extend the rally).