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Examining the Market Impacts of Thursday’s Debate

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Examining the Market Impacts of Thursday’s Debate: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Examining the Market Impacts of Thursday’s Debate (What Happens If Biden’s Replaced?)
  • Weekly Market Preview:  Will Economic Data Keep Growth Concerns At Bay?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday, ISM PMIs Today and Wednesday.

Futures are slightly higher ahead of a busy and holiday-shortened week of data, as French election results weren’t as bad as feared while global economic data was mixed.

National Rally slightly underperformed in the first round of voting in the French election and the other major parties have agreed to form a coalition to prevent it from becoming an outright majority, reducing French political risks.

Economically, EU and UK May Manufacturing PMIs were mixed but importantly didn’t raise any growth concerns.

This is a busy and important week for economic data as the reports will either increase growth concerns or push back on them.  Today the key report is the ISM Manufacturing PMI (E: 49.1) and the stronger this number, the better for markets.

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How and Why The French Election Could Impact Markets

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How and Why The French Election Could Impact Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How and Why The French Election Could Impact Markets

Futures are modestly higher despite more weak earnings (NKE), as last night’s debate is seen as boosting Trump’s chances to win the election.

President Biden’s performance at last night’s debate raised further concerns about his mental and physical stamina and hurt his re-election chances.  The net result is markets are rallying on Trump’s improved chances to win, as markets generally prefer Republican candidates due to pro-business policies (although actual results are mixed).

Today focus shifts back to data and the key report is the Core PCE Price Index (E: 0.1% m/m, 2.6% y/y).   Markets will want to see it confirm the good CPI numbers from earlier in the month (meaning at or below estimates) and if that occurs, it should extend this early rally.

There are also two Fed speakers today, Bowman (12:00 p.m. ET) and Daly (12:40 p.m. ET), but neither should move markets.

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

Join thousands of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

Which Sectors Benefit From Trump’s Policies

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Which Sectors Benefit From Trump’s Policies: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Government Shutdown Update
  • Which Sectors Benefit From Trump’s Policies
  • “Short-Volatility Trade” Update: Chart

Futures are little changed this morning as investors digest a hotter than expected inflation print out of Japan and still cautious gauge of consumer sentiment in Europe ahead of a busy day of economic data in the U.S.

Overnight, Japanese Core CPI fell to 3.5% vs. (E) 3.3% while the German GfK Consumer Climate Index edged up by a modest 0.7 points to -29.0 vs. (E) -29.6. Neither release was particularly positive for markets but futures are stable ahead of today’s domestic data.

Looking into today’s session, there are four economic reports to watch this morning: Durable Goods Orders (E: -4.5%), Case-Shiller Home Price Index (E: 0.2%), FHFA House Price Index (E: 0.1%), Consumer Confidence (E: 115.0). Markets will want to see stability in the housing market data and easing but not collapsing growth and sentiment numbers in order for stocks to hold near the recently established record highs.

There are no Fed officials scheduled to speak today but there is a 7-Yr Treasury Note auction at 1:00 p.m. ET. Yesterday’s 2-Yr and 5-Yr Note auctions were weak, putting upward pressure on yields and if today’s 7-Yr auction is weak as well, expect the benchmark 10-Yr yield to test the critical 4.30% level which could weigh on equity markets.

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Election Preview

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What’s in Today’s Report:

  • Election Preview
  • Chart: Technicals Dominate S&P 500 Price Action – Key Levels to Watch

Stock futures are slightly higher and Treasury yields are largely steady ahead of today’s midterm elections.

Economically, the U.S. NFIB Small Business Optimism Index came in at 91.3 vs. (E) 91.8 while Eurozone Retail Sales met estimates at 0.4% but neither release is materially impacting markets this morning.

There are no additional economic reports today and no Fed officials are scheduled to speak.

In Monday’s Sevens Report we incorrectly said CPI was to be released on Wednesday but the report is due out on Thursday. We apologize for any confusion this may have caused.

Bottom line, focus will be on the midterms today which will likely result in a mostly quiet session, however, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET that could cause a move in yields and ultimately impact trading in equities.

Tom Essaye Quoted in CNBC on November 2, 2020

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“Ultimately, the markets want clarity, and the main threat to risk assets this week is the emergence of a contested election, so if races are tight enough for…” Tom Essaye, founder of The Sevens Report, wrote in a note. Click here to read the full article.

Tom Essaye Quoted in Motley Fool on November 2, 2020

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Tom Essaye of Sevens Report thinks a Biden win could bring major benefits for all cruise stocks, including Royal Caribbean, according to a report by Benzinga. Essaye sees the possibility of cruise lines cashing in on a possible $5 trillion Biden stimulus package in the short term, and that in the longer term, “re-opening travel to Cuba would be another positive…” Click here to read the full article.

A Historic Week Finally Arrives

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What’s in Today’s Report:

  • A Historic Week Finally Arrives
  • Weekly Market Preview:  This is a week full of potential catalysts including:  The election, the FOMC decision, the jobs report, a potential vaccine announcement, and more QE from the BOE.
  • Weekly Economic Cheat Sheet:  Jobs Report (Friday) is the key this week.

Futures are more than 1% higher following a generally quiet weekend as markets bounce ahead of a week full of potential catalysts.

Politically, Biden maintains a wide lead nationally but polls have tightened in some key swing states (FL/AZ/IA). But, markets do still expect the “Blue Wave” final result.

Economic data was solid was Chinese, EU and UK manufacturing PMIs all beat estimates (and remained above 50).

Today we do get one important economic report, the October ISM Manufacturing PMI (E: 55.7), but that shouldn’t move markets unless is a big negative surprise.  Instead, we’ll start to get headlines and whispers about how the election is shaping up (early voting totals, etc.) and those headlines are likely to move markets today and tomorrow.  So, don’t be surprised if markets get volatile today and tomorrow, but keep in mind almost all of it will be trading “noise.”

Tom Essaye Quoted in SwissInfo.ch on October 22, 2020

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“Earnings are heating up and they are generally coming in healthy and better than expected. But with the stimulus saga dragging on and the election…” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote in a note. Click here to read the full article.

Tom Essaye