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Economic Breaker Panel: January Update

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What’s in Today’s Report:

  • Economic Breaker Panel – January Update
  • January Composite PMI Data Takeaways

U.S. stock futures are lower this morning, led by mega-cap tech after MSFT earnings topped estimates but guidance disappointed which is weighing on sentiment broadly.

Economically, the Business Expectations component of the German Ifo Survey notably firmed to 86.4 vs. (E) 85.0 further supporting hopes that Europe will avoid a recession in 2023 but concerns about the global tech sector is offsetting the good economic data this morning.

There are no notable economic reports and no Fed officials are scheduled to speak today which will leave the focus on earnings.

Notable companies releasing quarterly results today include: BA ($0.30), T ($0.58), and FCX ($0.40) ahead of the bell, and TSLA ($1.15), IBM ($3.60), CSX ($0.47), and STX ($0.08) after the close.

Intraday, the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET, and as we saw with yesterday’s 2-Yr auction which sent stocks to new session highs, the outcome of the auction could move markets before focus returns to post-market earnings reports.

Economic Breaker Panel: August Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel: August Update
  • S&P 500 Reaches Key Technical Support: Chart

Stock futures are steady this morning as this week’s rise in both the dollar and bond yields has paused while economic data in Europe was better than feared

Economically, the Eurozone Manufacturing PMI was 49.7 vs. (E) 49.0 and the Services PMI came in at 50.2 vs. (E) 49.0 which is helping ease some stagflation concerns after last week’s soft growth numbers yet stubbornly high inflation across Europe.

Looking into today’s session, the focus will be on economic data early, specifically, the PMI Composite Flash (E: 49.2) as investors will want to continue to see steady moderation and evidence of slowing growth but not an all-out crash in the data either. New Home Sales (E: 575K) will also be released shortly after the open.

Outside of the data, there is one Fed speaker on the calendar: Kashkari, but not until after the close (7:00 p.m. ET) while there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could move yields.

Bottom line, news flow has not been decidedly negative over the last few sessions and the pullback in stocks has been largely driven by the rally in the dollar and rising bond yields. So if we can see those two markets stabilize, equities should be able to stabilize today as well, especially with the S&P into solid technical support, however, if the dollar and yields both grind higher, expect further volatility in the stock market ahead of Jackson Hole.

Economic Breaker Panel: March Update

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What’s in Today’s Report:

  • Economic Breaker Panel – March Update
  • Empire State Manufacturing Index and PPI Takeaways

U.S. stock futures are trading higher by more than 1% amid new stimulus optimism and progress towards a ceasefire in Ukraine ahead of today’s FOMC announcement.

The Hang Seng led Asian markets higher with a 9.1% gain o/n after the Chinese government pledged new stimulus to combat slowing economic growth trends while covid-19 cases showed signs of peaking.

In Europe, both Russian and Ukrainian negotiators have reported progress in talks as the possibility of a “neutrality model” for Ukraine has been introduced.

Looking into today’s session there are a few economic reports to watch early including: Retail Sales (E: 0.4%), Import & Export Prices (E: 1.5%, 1.3%), and the Housing Market Index (E: 81) but none should materially move markets given the geopolitical backdrop and looming rate hike from the Fed.

From there, focus will turn to the conclusion of the Federal Reserve meeting with the FOMC Announcement at 2:00 p.m. ET, and Powell’s Press Conference 2:30 p.m. ET. A 25 basis point hike is fully priced in for today’s meeting however any insight as to the pace of hikes going forward (dot plot) or plans for QT will move markets and the “less-hawkish” the better for equity markets.

December Economic Breaker Panel

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What’s in Today’s Report:

  • December Economic Breaker Panel – Are Economic Clouds Gathering on the Horizon?

Futures are little changed following a quiet night as investors digest the recent volatility and look ahead to the holiday at the end of the week.

Economic data was sparse overnight and the only notable report was UK GDP which slightly missed estimates (1.1% vs. (E ) 1.3%) although that’s not moving markets.

The Omicron outlook remained unchanged, as cases continued to surge but hospitalizations remain low, and as long as that’s the case market fallout will be limited.

Today we get three economic reports including Final Q3 GDP (E: 2.1%), Consumer Confidence (E: 110.7) and Existing Home Sales (E: 6.510M) but unless they provide a major surprise they won’t move markets. So, with the holiday quickly approaching and tomorrow’s Core PCE Price Index the only remaining “big” report of the week, and we’d expect both liquidity and activity to begin to decline into the weekend starting today.

 

Annual Discounts on Sevens Report, Alpha and Quarterly Letter

We’ve continued to be contacted by advisor subscribers who want 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 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.

Why the Fed Could Hike Rates Sooner than Expected

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What’s in Today’s Report:

  • Economic Breaker Panel – Why The Fed Could Hike Rates Sooner than Expected
  • Oil Market Update and EIA Analysis

Futures are modestly lower as markets digest the recent bounce following disappointing earnings overnight.

Earnings overnight were negative on balance as IBM missed on revenues while TSLA, LVS, and PPG also posted disappointing results and saw selling afterhours.

Today focus will be on economic data and earnings.  On the data front, the key reports will be Jobless Claims (E: 300K), Philly Fed Manufacturing Index (E: 25.0), and Existing Home Sales (E: 6.030M), and markets will want to see stability in the data (so not too hot and not too cold).  We also get two Fed speakers, Waller (9:00 a.m. ET) and Williams (9:00 p.m. ET).

On the earnings front, results have become more mixed lately so markets will continue to focus closely on earnings.  Some reports we’re watching today include: T ($0.78), AAL (-$1.04), FCX ($0.78), LUV (-$0.27), SNAP ($0.08), INTC ($1.11) and WHR ($6.16).  As has been the case, strong margins amid rising costs will be the key metric in the results.

Economic Breaker Panel: August Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – August Update
  • Consumer Confidence Data Points to Stagflation – Chart

Futures are trading near record highs this morning after mostly disappointing economic data helped reinforce dovish expectations for global central bank policy overnight.

Economically, a private Manufacturing PMI in China showed factory activity fell into contraction last month while European PMI data underwhelmed versus estimates and German Retail sales fell 5.1% vs. (E) -0.9% in July.

Looking into the U.S. session, focus will be one economic data early with the ADP Employment Report (E: 500K) due out ahead of the bell and then the ISM Manufacturing Index (E: 59.0) and Construction Spending (E: 0.3%) reports due shortly after the open.

There are no Fed speakers or Treasury auctions today so the biggest driver of markets will likely be the reaction to the economic data and what it means for Fed policy expectations. The biggest risk to the rally into the end of the week is data that is “too hot” and causes a hawkish shift to a currently very accommodative Fed policy outlook.

Economic Breaker Panel (Some Loss of Momentum)

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What’s in Today’s Report:

  • Economic Breaker Panel (Some Loss of Momentum)

Futures are moderately lower on disappointing earnings and more negative COVID commentary.

AMZN earnings disappointed investors and the stock was down –6% after hours and that’s weighing on futures.

On COVID, a CDC internal memo called the Delta variant potentially as contagious as Chickenpox, although markets remain generally optimistic given positive corporate commentary on economic activity.

Today the key number will be the Core PCE Price Index (E: 0.5%, 3.7%) which is the Fed’s preferred measure of inflation.  If that number runs well above expectations (so above 4% yoy) expect a “hawkish” reaction from markets (yields up, stocks flat to down).   Also today we get Consumer Sentiment (E: 80.8) and have one Fed speaker, Bullard at 9:00 a.m. ET, but they shouldn’t move markets.

On the earnings front, much of the discussion this morning is on AMZN but there are some other notable reports out this morning including:  PG ($1.08), CAT ($2.38), XOM ($1.02), ABBV ($3.11), CVX ($1.54).

Economic Breaker Panel: June Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel: June Update

U.S. equity futures are flat this morning after wavering between gains and losses overnight as investors continue to digest the whipsaw moves across asset classes since last week’s Fed meeting and look ahead to more commentary from Chair Powell today.

There were no market-moving economic reports overnight.

Today, there is just one economic report to watch: Existing Home Sales (E: 5.715M) but the release is not likely to materially move markets.

That will leave investors focused on the Fed with several officials speaking today including: Mester (10:30 a.m. ET), Daly (11:00 a.m. ET), and Powell (2:00 p.m. ET). Powell’s testimony before Congress this afternoon will be the main event of the session as he is likely to discuss the Fed’s plans to balance rising inflation with the still fragile economic recovery.

Finally, there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could offer some insight into the market’s expectations for Fed policy as the short end of the yield curve has moved sharply higher since last week’s FOMC meeting.

December Economic Breaker Panel (Stronger Than Expected)

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What’s in Today’s Report:

  • Economic Breaker Panel
  • Why Stocks Dropped on Wednesday
  • EIA and Oil Analysis

Futures are slightly higher following Wednesday’s tech-driven declines as markets wait for the ECB decision and more clarity on stimulus and Brexit trade negotiations.

Economic data was sparse overnight, as the only notable report was UK Industrial Production which beat estimates (1.3% vs. (E) 0.3%).

There was no notable news or progress on stimulus (still no deal) or Brexit (still no trade deal) overnight, although the “deadlines” for both events were either moved, or about to be moved, implying that negotiations on both stimulus and Brexit will continue for the coming days (this is what the market expected and already priced in).

Today could be a sneakily busy day with the ECB Announcement (E: € 500 bln Increase in QE), CPI (E: 0.1%/1.1%) and Jobless Claims (E: 724K) all coming today.

Regarding the ECB, the risk here is of a “not dovish enough” outcome as they’ve allowed expectations to get pretty high, and if that happens look for mild stock losses and higher yields global bond yields (including Treasuries).

CPI should stay tame at this point, but we’ll be watching this closely going forward.  Finally, weekly jobless claims are “noisy” right now because of the Thanksgiving holiday, but the bottom line is markets want to see claims moving lower, and a break below 700k would be a tailwind on stocks.

Sevens Report – October Economic Breaker Panel

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What’s in Today’s Report:

  • October Economic Breaker Panel:  How Long Can the Economic Plateau Last?

Futures are sharply lower as surging coronavirus cases in Europe are sparking fears of another self-imposed economic slowdown.

New lockdowns were announced across Europe, with some of the toughest measures coming in London and Paris.

Today there are several important economic reports, including Jobless Claims (E: 833K), Empire State Manufacturing (E: 14.5) and Philly Fed (E: 14.5).  Markets will want to see jobless claims get below 800k to show the labor market is improving, while Empire and Philly provide the first look at October economic data and markets will want to see stability.  With futures down sharply, any disappointment in the economic data could exacerbate the losses.

We also get multiple Fed speakers today, Bostic (9:00 a.m. ET), Kaplan (11:00 a.m. ET), Quarles (11:00 a.m. ET) plus some notable earnings, TSM ($0.92), WBA ($0.96), MS ($1.26), but I don’t think any of that will move markets unless there’s a big surprise lurking.