Posts

Technical Market Update

/in , /by

What’s in Today’s Report:

  • Technical Market Update
  • Why are Small Caps Outperforming?
  • How Bad Was Economic Data Yesterday? (Answer:  Bad)

Futures are extending Wednesday’s losses following more disappointing earnings and as worries about the economy grow.

Alcoa (AA), Allstate (ALL), and Discovery Financial (DFS) posted soft earnings or negative guidance overnight.

Today we get several important economic reports including, in order of importance: Philly Fed (E: -10.3), Jobless Claims (E: 215K), and Housing Starts (E: 1.362M).

There are also several Fed speakers and the most important one is Brainard (1:15 p.m. ET) and if she’s slightly dovish, that will help markets stabilize.  Collins (9:00 a.m. ET) and Williams (6:35 p.m. ET) also speak today.

Finally on the earnings front, we get more important results today and the market needs some good news.  Reports we’re watching include:  PG ($1.58), FAST ($0.42), NFLX ($0.45), and PPG ($1.15).

Has the Outlook for China Finally Turned Positive?

/in , /by

What’s in Today’s Report:

  • Has the Outlook for China Finally Turned Positive?
  • Chart – FXI (China) vs. S&P 500 Divergence
  • Empire State Manufacturing Survey Takeaways

Stock futures were volatile o/n as the BOJ doubled down on their bond-buying program, sending the yen lower by nearly 3% but markets have stabilized as focus turns to a busy morning of economic data and more earnings in the U.S.

Economically, Eurozone HICP met estimates at 9.2% y/y and the Narrow Core also met estimates at 5.2% y/y.

Looking into today’s session, focus will be on earnings in the pre-market with SCHW ($1.10) and PNC ($3.95) due to release earnings ahead of the bell while DFS ($3.58) will report after the close.

There is also a slew of economic data due out this morning including: Retail Sales (E: -0.8%), PPI (E: -0.1%, 6.8%), Industrial Production (E: -0.1%), and the Housing Market Index (E: 31). The market wants to see data continue to point to slowing, but not collapsing growth (as we saw with the Empire report yesterday) and a continued deceleration in inflation metrics to maintain bets for a soft landing.

As far as other catalysts go, there are two Fed speakers to watch this morning: Bostic (9:00 a.m. ET) and Bullard (9:30 a.m. ET) and then a 20-Yr Treasury Bond auction at 1:00 p.m. ET.

Bottom line, much of the recent rally has been based on hopes for a soft landing and less hawkish pivot by the Fed and anything that contradicts those two possibilities would likely trigger a wave of volatility today.

Is a Soft Landing More Likely Now?

/in , /by

What’s in Today’s Report:

  • Is a Soft Landing Really More Likely Than Before?
  • Weekly Economic Cheat Sheet – Stagflation or Soft Landing?

Stock futures are lower and bond yields are climbing on the back of strong economic data and hawkish ECB chatter.

Chinese economic data was strong overnight while the German ZEW Survey surprised to the upside and U.K. wage growth rose to a record 6.4% vs. (E) 6.1%.

Meanwhile, the ECB’s Chief Economist, Philip Lane, made hawkish comments about rates rising into restrictive territory overnight which is weighing on recently dovish-leaning investor sentiment.

Today, focus will be on earnings early with: GS ($5.25), MS ($1.25), CFG ($1.30) all reporting ahead of the bell while UAL ($2.07) will release results after the close.

Economically, there is one important report this morning: Empire State Manufacturing Index (E: -7.5) and there is one Fed speaker to watch this afternoon: Williams (3:00 p.m. ET).

Tom Essaye Quoted in Barron’s on December 21st, 2022

/in , /by

Dow Soars 500 Points as Consumer Data Adds Some Cheer

“Stocks are digesting the declines of the past two weeks and while there are some notable employment and inflation numbers looming on Thursday and Friday, the bottom line is the calendar into year-end should be mostly quiet, again barring any material surprises,” Tom Essaye, the founder of Sevens Report Research, wrote Wednesday. Click here to read the full article.

Is the Yield Curve Already Forecasting a Fed Rate Cut?

/in , /by

What’s in Today’s Report:

  • Is the Yield Curve Already Forecasting a Fed Rate Cut?

Futures are slightly higher following a quiet night of news as investors digest Thursday’s declines and look ahead to the long weekend.

Economically the only notable report was Japanese CPI and it came in slightly lower than expectations at 3.7% y/y vs. (E) 3.8% y/y. but it didn’t move markets.

Today focus will be on economic data and the key reports are, in order of importance: Core PCE Price Index (E: 0.2% m/m, 4.6% y/y), University of Michigan Consumer Sentiment (E: 59.1), Durable Goods (E: -0.8%) and New Home Sales (E: 600k).   Markets will want to see further confirmation of dis-inflation in the Core PCE Price Index and the Five Year Inflation Expectations in the University of Michigan report, and if that happens it could spur a mild rally following yesterday’s declines.

Economic Breaker Panel

/in , /by

What’s in Today’s Report:

  • December Economic Breaker Panel

Futures are slightly lower following a disappointing earnings report by Micron (MU).

Micron (MU down –3% after hours) reported underwhelming results and guidance and announced layoffs, and that’s reversing some of the earnings-driven gains we saw in stocks on Wednesday.

Economic data remained sparse but UK GDP slightly missed estimates, falling –0.3% vs. (E) -0.2%.

Today’s focus will be on Weekly Jobless Claims (E: 225k) and this number needs to move higher (towards 300k) to show the Fed that the labor market is returning to better balance (something the Fed said is needed before they can think about a pivot).  We also get the Final Q3 GDP (E: 2.9%) but that data is very old now (July-September) and it shouldn’t move markets.

 

What the BOJ “Rate Hike” Means for Markets

/in , /by

What’s in Today’s Report:

  • What the BOJ “Rate Hike” Means for Markets (Possible a Positive)

Futures are moderately higher following better-than-expected earnings overnight.

Both Nike (NKE up 12% after hours) and FedEx (FDX up 4% after hours) posted better-than-expected earnings overnight and those results are helping to ease rising anxiety about 2023 earnings.

The only notable economic report was German Gfk Consumer Climate and it was in line (–37.8 vs. (E) -37.5).

Today the calendar stays quiet (it picks up tomorrow) but the focus will be on Consumer Confidence (E: 101.0) and Existing Home Sales (E: 4.2M) and the key for data will remain moderation (but not a collapse that implies looming stagflation).

A Make of Break Week for Stocks and Bonds

/in , /by

What’s in Today’s Report:

  • A Make or Break Week for Stocks and Bonds
  • CPI Preview:  Good, Bad & Ugly
  • Weekly Market Preview:  Year-End Rally?
  • Weekly Economic Cheat Sheet:  Fed Decision Wednesday and CPI Tomorrow are the key events.

Futures are slightly higher as China continues to remove COVID restrictions.  The rest of the weekend was quiet from a macroeconomic perspective.

China announced it will deactivate its COVID tracking app in the latest signal that it is gradually abandoning the “Zero COVID” policy.

Economically, reports were sparse but UK Industrial Production (0.7% vs. (E) 0.0%) and Monthly GDP (0.5% vs. (E) 0.4%) both beat expectations.

Today the economic calendar is quiet and trading should be also, as markets look ahead to the week’s key events tomorrow (CPI) and Wednesday (FOMC Decision).

 

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 2022 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 products. 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.

Are Corporate Earnings Rolling Over?

/in , /by

What’s in Today’s Report:

  • Are Corporate Earnings Rolling Over?
  • Another (Small) Sign of Dis-Inflation
  • EIA Update and Oil Market Analysis

Futures are modestly lower as investors digest Wednesday’s earnings disappointments.

CSCO and NVDA reported after the close and both results were better than feared, but that’s not enough to offset growing concerns about future corporate earnings.

On inflation, October EU HICP slightly missed estimates  (10.6% vs. (E) 10.7%) although the monthly reading was in-line at 1.5%, signaling that inflation pressures in the EU aren’t declining.

Today’s focus will again be on inflation so the price indices in the Philly Fed Manufacturing Index (E: -7.0) will be the key reports and any declines in those price indices should prompt at least a small rally.  Outside of Philly Fed, we also get Housing Starts (E: 1.41M) and Jobless Claims (E: 222k), but neither should move markets.

There are also multiple Fed speakers today including Bostic (7:30 a.m. ET), Bowman (9:15 a.m. ET), Mester (9:40 a.m. ET), and Kashkari (10:40 a.m. ET & 1:45 p.m. ET), and we should expect their message to be consistent with recent Fed speak:  The size of rate hikes will shrink, but the Fed still has a long way to go to reach the “Terminal Rate.”

Tom Essayed Interviewed on BNN Bloomberg on November 14th, 2022

/in , /by

We Could Be Approaching The Death Of The FAANG’s: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to recap earnings from big tech this week. Click here to watch the full interview.