Tom Essaye Quoted in OPTO on September 28, 2021

Why the Evergrande crisis is causing global market jitters

There really isn’t a global contagion risk with Evergrande because in the end, and as far as we know, the loans…wrote Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Forbes on September 27, 2021

Evergrande And Chinese Regulators Pummel Crypto Markets

The losses quickly spread to broader markets as experts started warning its default…market analyst Tom Essaye wrote in a note last week. Click here to read the full article.

Why Did Stocks Drop Again?

What’s in Today’s Report:

  • Why Are Stocks Dropping Again? (Three Reasons)
  • Chart: 10-Year Treasury Yield

Stock futures are rebounding from yesterday’s sharp losses this morning as bond yields pullback with the 10-year dipping below 1.50% overnight, easing valuation concerns.

Regarding Evergrande, the company’s stock rallied 15% overnight as the developer announced the partial sale of a regional bank stake that will result in $1.5B in cash.

Looking into today’s session there is one economic report: Pending Home Sales Index (E: 0.9%) but it should not move markets.

That will leave traders focused on a busy day of Fed chatter: Harker (9:00 a.m. ET), Powell (11:45 a.m. ET), Daly (1:00 p.m. ET), Bostic (2:00 p.m. ET), and Williams (5:00 p.m. ET).

Bottom line, the bond market has been a major driver of equity flows this week and if yields continue to pullback as they did overnight, then a rebound in the major stock indexes is likely however a retest of yesterday’s highs would result in another uptick in volatility.

Tom Essaye Quoted in Forbes on September 23, 2021

Dow Soars Another 500 Points As Investors Rally Around Fed, China Stimulus Plans

It’s now clear that Chinese officials won’t allow a disorderly default, and that’s really all global markets care about…money manager Tom Essaye, president of Sevens Report Research wrote. Click here to read the full article.

Tom Essaye Quoted in OI Canadian Gaming News on September 21, 2021

$250 billion vanishes from cryptocurrency market due to Evergrande case

The losses quickly spread to broader markets as experts began to warn that…wrote market analyst Tom Essaye, author of the Sevens Report, in a note last week. Click here to read the full article.

Tom Essay Quoted in UK News Today on September 20, 2021

Crypto Markets Suddenly Lose $250 Billion In Value As Evergrande Turmoil Pummels Bitcoin, Ethereum And Other Major Cryptocurrencies

The losses quickly spread to broader markets as experts started warning its default could…market analyst Tom Essaye, author of the Sevens Report, wrote in a note last week. Click here to read the full article.

Tom Essaye Quoted in Quartz on September 21, 2021

Evergrande is a massive problem—but it’s China’s problem

But it operates like one large company. Yes, there are “private” banks in China and yes, there are “private” corporations, but in the end the Communist Party…wrote Sevens Report Research president Tom Essaye in a note last week. Click here to read the full article.

Technical Levels to Watch Today

What’s in Today’s Report:

  • Technical Update: Key Support and Upside Targets for the S&P 500

Markets are trading with a risk-on tone this morning after some positive Evergrande developments while focus continues to shift to the conclusion of today’s Fed meeting.

Evergrande announced overnight that the company would not default on a bond payment due tomorrow (but details were vague) while the PBOC injected 120B yuan of liquidity into the system helping ease financial conditions overnight.

Today there is one economic report due out early: Existing Home Sales (E: 5.90M), but the primary market focus will be the FOMC Meeting Announcement (2:00 p.m. ET) followed by the Fed Chair Press Conference (2:30 p.m. ET).

With regard to the Fed, any outcome that meets our “What’s Expected” or “Dovish If” outcomes from yesterday’s FOMC Preview will likely trigger a further relief rally while a “Hawkish If” scenario has the potential to spur another wave of elevated volatility with a high likelihood of stocks testing Monday’s lows.

FOMC Preview

What’s in Today’s Report:

  • FOMC Preview
  • What to Make of Monday’s Collapse

Stock futures are extending yesterday’s late session bounce while most overseas markets stabilized overnight amid easing concerns about China’s property sector and positioning into the Fed.

According to Bloomberg, S&P Global Ratings said Evergrande is “on the brink of default” but that a contagion effect impacting other developers is unlikely at this time and that the Chinese government would intervene if necessary which eased some concerns surrounding the issue.

Looking into today’s session, trader focus will be shifting towards the September FOMC meeting, which begins this morning, and that could influence a sense of Fed paralysis if broad market volatility continues to ease.

Economically, there is one report today: Housing Starts and Permits (E: 1.575M, 1.610M) but given all of the other market influences right now, it is not likely to move equities. Finally, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET which could impact bond yields and potentially influence price action in stocks but again, it is unlikely with the Fed looming tomorrow.

Bottom line, the pieces are falling into place for the market to stabilize today as yesterday’s volatility is digested and focus shifts to the Fed. On the charts, a break above yesterday’s open near 4,400 in the S&P could trigger some follow-through buying while a failure to do so would leave the door open to another surge in volatility in the sessions ahead.

A Critical Six Weeks for Markets

What’s in Today’s Report:

  • Why the Next Six Weeks Will be Critical for this Market
  • Weekly Market Preview:  Fed Tapering Plans Revealed
  • Weekly Economic Cheat Sheet:  What’s the State of the Global Recovery?

Futures are sharply lower on momentum from Friday’s declines, following a quiet weekend of news.

The reasons for the drop this morning are the same as last week:  China concerns (Evergrande, regulation, COVID), Fed tapering, and possible tax hikes, but nothing new occurred on any of those fronts this weekend to justify this mornings’ declines (meaning this is more about momentum than actual fundamental deterioration).

On taxes, headlines were actually slightly positive as Axios reported Senator Manchin wants to delay any increased spending/tax hikes until 2022.

Today the calendar is quiet as the only economic report is the Housing Market Index (E: 75), so pre-Fed positioning and momentum will drive trading today.  Ideally, we’d like to see stocks open deeply lower and then rally throughout the day (which would be the opposite of what we saw last week and imply a near-term bottom may be in).