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Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Analysis/Oil Market Update

Futures are slightly higher as oil drops sharply on reports the U.S. is considering a massive oil release from the Strategic Petroleum Reserve.

Reports hit overnight that the U.S. is considering releasing 180 million barrels of oil from the SPR over the coming six months, and oil is down 6% as a result.

Economic data was slightly underwhelming as the March Chinese manufacturing PMI dropped below 50 to 49.5.

Today focus will be on inflation, as we get the Fed’s preferred measure of inflation via the Core PCE Price Index (E: 0.4%, 5.5%).  If these numbers slightly underwhelm vs. expectations, that could lead to more hope inflation pressures are finally peaking, and we could see a rally as a result.  Today we also get Jobless Claims (E: 195K) and have one Fed speaker, Williams at 9:00 a.m. ET.

What the Fed Decision Means for Markets

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What’s in Today’s Report:

  • What the Fed Decision Means for Markets
  • EIA and Oil Market Update

Futures are sharply higher mostly on momentum from yesterday’s strong close and despite soft economic data.

EU and UK flash PMIs missed estimates thanks to drops in the service sector and that implies Omicron is a headwind on global growth in Europe.

But, for now that concern isn’t enough to stop a year-end Santa rally as the Fed was hawkish, but not too hawkish.

Looking forward, today will be a busy day.  First, we get two important central bank decisions (Bank of England at 7:00 a.m. and ECB at 7:45 a.m), and while neither are expected to change policy if they are hawkish in a tone that could partially offset the current Fed rally.

Meanwhile, we also get a lot of economic data including, in order of importance: December Composite Flash PMI (E: 58.4), Philly Fed (E: 28.8), Jobless Claims (E: 200K), Housing Starts (E: 1.563M) and Industrial Production (E: 0.7%).  Bottom line, the market will want to see stability in the data especially given the looming rate hikes in 2022, and the last thing the market will want to see is a material weakness in the data given the Fed’s new hawkishness.

Market Multiple Table Chart

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What’s in Today’s Report:

  • Market Multiple Table Chart
  • EIA Analysis and Oil Update

Futures are modestly lower on a slightly hawkish Reuters article about ECB QE and as markets digest this week’s rally.

According to Reuters, the ECB is considering tapering its QE program in March, which is sooner than markets expected and is another reminder that global central banks will be removing accommodation throughout 2022.

Economic data was sparse overnight as Chinese CPI met expectations rising 0.4%.

Today the only notable economic report is Jobless Claims (E: 223K) and they should show continued improvement in the labor market.  Additionally, markets will remain on the lookout for any official government data or more findings from MRNA/PFE on vaccine effectiveness against Omicron, and anything that implies substantial protection against infection and severe illness will be a tailwind on stocks (although at this point the market doesn’t view Omicron as a material threat so the tailwind won’t be that strong).

 

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.

Jobs Report Preview (Why It’s Still A Very Important Report)

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What’s in Today’s Report:

  • Jobs Report Preview (Why It’s Still A Very Important Report)
  • Oil Update and EIA Analysis

Futures are solidly positive as markets bounce from Wednesday’s sell-off following a quiet night of news.

There are no definitive results yet, but the chatter on Omicron is that vaccines do still provide protection from severe illness, and that is slightly easing anxiety about the variant.

Economic data was sparse but showed continued inflation pressures as Euro Zone PPI rose 5.4% vs. (E) 3.2%.

Today the key report is Jobless Claims (E: 245K) and we expect a solid bounce back from last week’s very low numbers, but clearly, trends in the labor market continue to improve.  We also get numerous Fed speakers including: Bostic (8:30 & 11:30 a.m. ET), Quarles (11:00 a.m. ET), Daly (11:30 a.m. ET), and Barkin (11:30 a.m. ET).

Bottom line, the market is dealing with three separate headwinds (ranked in order of importance):  Omicron uncertainty, Fed tapering acceleration, and Washington dysfunction (possible shutdown).  Positive headlines on any of them will help stocks bounce, while further negative headlines (like yesterday with a possible government shutdown) will cause another decline.

Why Stocks Dropped Yesterday (It Wasn’t CPI)

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What’s in Today’s Report:

  • Why Stocks Dropped Yesterday (It Wasn’t CPI)
  • EIA Analysis and Oil Market Update

Futures are enjoying a mild bounce following Wednesday’s losses as global yields are stable while U.S. bond markets are closed.

10 year Bund and GILT yields are little changed and that, combined with the bond market closure in the U.S., is allowing stocks to rebound.

Economically, British IP missed estimates (-0.4% vs. (E) 0.1%) while monthly GDP slightly beat (0.6% vs. (E) 0.5%).

Today is Veterans Day and as such, the bond markets are closed and there will be no economic reports and no Fed speakers.  So, GILT and Bund yields will partially dictate trading and as long as they don’t rise, stocks can continue this early rebound from yesterday’s losses.

What Fed Tapering Means for Markets

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What’s in Today’s Report:

  • What Fed Tapering Means for Markets (Short Term Positive, Medium Term Uncertainty)
  • EIA and Oil Market Update

Futures are slightly higher following a generally quiet night of news as markets digest Wednesday’s Fed decision.

Economic data was sparse and the only notable report was German Manufacturers’ Orders which missed estimates, falling –1.8% vs. (E ) –1.3%.

There was no progress on the Democrat’s spending bill overnight as Manchin remains a holdout, but a deal is ultimately expected in the coming days or weeks.

Today focus will be on economic data and we get two notable reports:  Jobless Claims (E: 277K) and Productivity and Costs (E: -1.5%, 5.3%) and one Fed speaker, Quarles at 1:50 p.m. ET.  But, unless there’s a major surprise from the data, focus will turn back to Congress and the fate of the Democrat spending bill, and any headlines that imply quick passage without any material tax hikes will be a short-term tailwind on stocks.

Jobs Report Preview

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What’s in Today’s Report:

  • Is a Debt Ceiling Deal a Bullish Catalyst?
  • Jobs Report Preview
  • EIA Data Takeaways and Oil Update

Stock futures are trading higher with global shares this morning as investors cheer the likely deal to extend the debt ceiling while falling energy prices, particularly in Europe, are helping ease broader inflation concerns.

Economically, German Industrial Production for August was very disappointing with a -4.0% headline drop in August (E: -0.4%) however the data is not materially moving markets this morning.

Looking into today’s session, there is just one economic report to watch: Jobless Claims (E: 348K), but a meaningful beat or miss in the headline could cause a hawkish or dovish reaction in markets ahead of tomorrow’s September jobs report.

Additionally, there are a few central bank events that could move markets: ECB Minutes (7:30 a.m. ET) and Cleveland Fed President Loretta Mester speaks (11:45 a.m. ET).

Beyond those potential catalysts, markets will remain focused on the debt ceiling negotiations in Washington and bond yields. And as long as there is not material deterioration in the former or a major resurgence higher in the latter, then stocks should be able to maintain yesterday’s upside momentum.

The Real Risk to Stocks

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What’s in Today’s Report:

  • The Real Risk to Stocks
  • EIA Analysis and Oil Market Update

Futures are higher following news a government shutdown will be avoided and despite mixed economic data.

Senate Majority Leader Schumer announced a deal to fund the government and avoid a shutdown tomorrow, although this was always expected (and this does not address the Debt Ceiling).

Economic data was mixed as the Chinese manufacturing PMI fell below 50 (49.6 vs. (E) 50.1) while UK GDP handily beat estimates at 5.5% vs. (E) 4.8%, but the data isn’t moving markets.

Today the key report will be Jobless Claims (E: 335K) and markets will want to see them drop back towards 300k.  We also get the Final Q2 GDP (E: 6.7%) but at this point, that’s a very “old” number. There are also numerous Fed speakers today including more Powell/Yellen testimony along with Williams (10:00 a.m. ET), Bostic (11:00 a.m. ET), Harker (11:30 a.m. ET), Evans (12:30 p.m. ET), Bullard (1:05 p.m. ET), and Daly (2:30 p.m. ET).

Finally, today is the last trading day of the month and quarter so some additional volatility on month/quarter-end positioning shouldn’t be a surprise.

What the Fed Decision Means for Markets

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What’s in Today’s Report:

  • What the Fed Decision Means for Markets
  • EIA Analysis and Oil Update

Futures are moderately higher as the rally continued overnight as China injected more liquidity into their economy.

Chinese officials injected another 17 billion yuan into the economy to prevent any liquidity issues, as it’s now clear that Chinese officials won’t allow a disorderly default (and that’s really all global markets care about).

Economic data disappointed as both the EZ and UK flash composite PMIs missed expectations (EZ PMIs fell to 56.1 vs. (E) 58.9 while UK PMI dropped to 54.1 vs. (E) 54.7).

Focus today will be on economic data, specifically the Flash Composite PMI (E: 55.5) and Jobless Claims (E: 309K).  Markets will want to see both numbers confirm what the Philly Fed and Empire survey implied last week, namely that the surge in COVID cases was a temporary and limited headwind on the economy.  If that’s the case the rebound in stocks should continue.

End of the (Mild) Pullback?

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What’s in Today’s Report:

  • End of the (Mild) Pullback?
  • EIA Update and Oil Market Update (Breakout)

Futures are modestly lower as markets digest Wednesday’s rally following a quiet night of news.

Economically, the only notable report was Euro Zone exports, which beat expectations (1.0% vs. (E) -0.8%).

Politics remained in focus as centrist Democrats stopped the progress of a drug price control bill, highlighting the division in the party (this is an incremental positive as markets would prefer there are no policy changes at all this year).

Today focus will be on economic data, as markets will want to see stability in two reports, Jobless Claims (E: 315K) and Philadelphia Fed Manufacturing Index (E: 19.2), and not too big of a decline in August Retail Sales (E: -0.8%).  If we get another round of better than expected macro data, then stocks can extend yesterday’s gains.