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Was Bullard That Hawkish? (No)

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What’s in Today’s Report:

  • Was Bullard That Hawkish?  (No).

Futures are moderately higher following more geo-political progress amidst an otherwise quiet night.

Russian officials signaled they are open to high-level talks with the U.S. on strategic stability, which is being taken as another (small) step towards an ultimate cease-fire.

Economically, the only notable number was UK Retail Sales and they were better than expected, rising 0.6% vs. (E) 0.2%.

Today the calendar is sparse with just Existing Home Sales (E: 4.360M) and one Fed speaker, Collins (8:40 a.m. ET) but if she doesn’t provide any hawkish surprises, this early rally can continue as stocks recoup yesterday’s Bullard inspired losses.

Key Inflation and Fed Events to Watch

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What’s in Today’s Report:

  • The State of Inflation and Fed Speak After CPI (Key Events to Watch)

Futures are pointing to a rebound from yesterday’s profit-taking pullback amid risk-on money flows in China overnight.

Economically, Chinese Retail Sales surprisingly fell -0.5% vs. (E) +0.8% in October but the weak data was followed by the PBOC injecting $150B into the system in new near-term stimulus measures which helped Asian markets rally overnight.

Meanwhile, Warren Buffet has reportedly accumulated a more than $4B stake in TSMC which is helping semiconductors lead equity markets higher this morning.

Looking into today’s session, traders will be watching economic data early with PPI (E: 0.5%, 8.3%) and the Empire State Manufacturing Index (E: -7.6) due out before the open. For the equity rebound to resume we will want to see another cool inflation print from the PPI release and some signs of stabilization from the Empire release to help ease rising stagflation concerns.

There are also two Fed speakers to watch: Harker (9:00 a.m. ET) and Barr (10:00 a.m. ET). If they maintain a less hawkish tone, the S&P should be able to retest yesterday’s highs near 4,010, a key near-term technical resistance level.

Tom Essaye Quoted in Barron’s on November 11th, 2022

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Stocks Gain After Their Best Day Since 2020

“Renewed hopes for peak Fed hawkishness on the back of cooler-than-expected domestic inflation data unleashed a historic rally in equities,” writes Sevens Report’s Tom Essaye. Click here to read the full article.

What the Fed Decision Means for Markets (Not a Bearish Gamechanger)

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What’s in Today’s Report:

  • What the Fed Decision Means for Markets (Not a Bearish Gamechanger)
  • EIA Analysis and Oil Update

Futures are lower on underwhelming earnings and further digestions of Powell’s hawkish press conference.

Earnings results have turned more negative this week and that included last night as ATUS and CF both posted disappointing results (among others).

Today’s focus will be on the Bank of England Rate Decision (E: 75 bps hike) and economic data, as we get Jobless Claims (E: 222K), Unit Labor Costs (E: 4.0%) and the ISM Services Index (E: 55.4).  Especially in light of Powell’s comments, markets will want to see data that shows resilient economic activity and falling inflation/deteriorating labor markets.

On the earnings front, the season largely wraps up at the end of the week but there are still some important reports to watch today including:  COP ($3.41), RCL ($0.23), MAR ($1.69), PYPL ($0.96) and SBUX ($0.73).

Fed Wildcard to Watch: Dual Risks

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What’s in Today’s Report:

  • Fed Wildcard to Watch: Dual Risks
  • Economic Data Takeaways: A Hot JOLTS Report Offsets a Favorable ISM Release
  • Chart – The Fed Could Make or Break the Gold Market Today

Futures are higher ahead of today’s Fed announcement amid continued China reopening hopes and good earnings.

AMD is up more than 4% after good earnings yesterday evening which is bolstering tech shares this morning.

Today, the focus will be on economic data early with the ADP Employment Report (E: 200K) due out ahead of the bell. The market will want to see some headline weakness to help offset yesterday’s JOLTS data in order for stocks to rebound into the Fed. Motor Vehicle Sales (E: 14.2M) will also be released over the course of the morning.

Then focus will turn to the Fed with the FOMC Announcement at 2:00 p.m. ET followed by Powell’s Press Conference at 2:30 p.m. ET. A dovish release could trigger a sharp and squeezy rally while a hawkish decision would almost certainly result in investor pain.

Earnings will be on the backburner today but there are still a few notable releases to watch: CVS ($1.99), PGR ($1.48), CHRW ($2.15), QCOM ($3.14), EBAY ($0.93).

A Critical Week for Stocks

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What’s in Today’s Report:

  • A Critical Week for Stocks
  • Weekly Market Preview:  Will the Fed confirm smaller rate hikes in the months ahead?
  • Weekly Economic Cheat Sheet:  Is the U.S. economy quickly losing momentum?

Futures are modestly lower following disappointing inflation data and as Russia suspended grain shipments from Crimea.

EU HICP (their CPI) ran hotter than expected, rising 10.7% vs. (E) 10.2% y/y while Core HICP rose 5.0% vs. (E) 4.8%, again showing that inflation pressures are not easing.

Russia suspended grain shipments in response to rocket attacks on Crimea, sending wheat prices sharply higher which will add to inflation pressures.

Today there are no economic reports but there are some notable earnings, especially from the semi-conductor companies and some companies we’re watching include:  ON ($1.31), NXPI ($3.62), CAR ($14.80).

A Tale of Two Markets?

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What’s in Today’s Report:

  • A Tale of Two Markets?

Futures are moderately lower following another disappointing night of earnings.

AMZN became the latest mega-cap tech stock to miss earnings and the stock fell more than 10% after hours.  AAPL posted “ok” results and rose 1% overnight.

Economically, the Italian CPI was hotter than expected (11.9% vs. (E) 9.7% yoy) as inflation remains sticky in the EU.

Focus today will be on inflation data, specifically the Core PCE Price Index (0.5% m/m, 5.2% y/y).  If this number comes in under expectations, that’ll be a mild positive for markets.  Also on the inflation front, the Employment Cost Index (E: 1.2% q/q, 5.0% y/y) will be closely watched by the Fed, while the University of Michigan Five Year Inflation Expectations will be released inside of the Consumer Sentiment report (E: 59.7).  If those five-year expectations can drop further below 3%, that will be a positive for markets.

Other notable releases today include Pending Home Sales Index (E: -3.8%) and a few notable earnings results:  XOM ($3.88), CVX ($5.02), CL ($0.74).

Is a Dovish Hike the Same as a Fed Pivot? No.

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What’s in Today’s Report:

  • Is a Dovish Hike the same as a Fed Pivot?  No.  Here’s Why.
  • EIA Update and Oil Analysis

Futures are little changed as rising hope of smaller than expected future rate hikes is being offset by ugly tech earnings.

Meta (FB) missed earnings and posted underwhelming guidance and the stock fell nearly 20% after hours, continuing this week’s trend of disappointing tech earnings.

Today will be a busy day of earnings and economic data.  The most important events of the day will come after the close via the AAPL ($1.26), AMZN ($0.22), INTC ($0.34) earnings, and given the disappointing tech earnings so far this week, the market will need solid numbers today.

Outside of those earnings, other key events today include the ECB Rate Decision (E: 75 bps hike), Durable Goods Orders (E: 0.6%), Jobless Claims (E: 223K) and Preliminary Q3 GDP (E: 2.3%) and the market will be looking for “just right” outcomes from each (an ECB that’s not too hawkish, and U.S. economic data that’s not too good or not too bad).

Incremental Positive Developments

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What’s in Today’s Report:

  • Bottom Line – Incremental Positive Developments, But Not Enough for a Bottom
  • Industrial Production Takeaways
  • Chart: 5-Yr Breakevens Continue to Trend Lower Amid Confidence in the Fed
  • Housing Market Index Underscores Cooling Real Estate Market

Futures are slightly higher in more cautious trade this morning as strong earnings from NFLX (+14%)  and UAL (+3%) are helping offset hot inflation data overseas.

UK CPI rose 0.2% to 10.1% vs. (E) 10.0%, revisiting a 40-year high which is bringing inflation back into focus today.

From a catalyst standpoint, there is one economic report to watch today: Housing Starts (1.475M), and two Fed speakers to watch: Kashkari (1:00 p.m. ET) and Evans (6:30 p.m. ET).

There is also a 20-Yr Treasury Bond Auction at 1:00 p.m. ET. If yields rise in the wake of the auction, that could once again weigh on equities.

Finally, earnings continue with: ALLY ($1.73), PG ($1.55), CFG ($1.21), and WGO ($2.99) reporting ahead of the bell, and TSLA ($1.01), IBM ($1.78), AA ($0.09), and PPG ($1.67) releasing their results after the bell.

Bottom line, there have been some incremental fundamental positives that have helped support the relief rally in stocks this week, and if fixed-income markets can remain orderly and earnings continue to surprise to the upside, the S&P 500 could continue towards 3,800 or beyond today.

Tom Essaye Quoted in Forbes on October 17th, 2022

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Yet Another Rollercoaster Week For Stocks On Deck: Dow Jumps 550 Points

Inflation cooling is the “key to market stabilization,” Sevens Report analyst Tom Essaye wrote in a Monday note, pointing out that the Federal Reserve and other central banks will not ease their monetary policy until there’s “conclusive” proof of inflation receding. Click here to read the full article.