Posts

Why the Bounce Can Continue (But Volatility Isn’t Over)

/in , /by

What’s in Today’s Report:

  • Why Stocks Can Bounce Further (But Volatility Isn’t Over)
  • Technical Update:  Important Support and Resistance Levels to Watch
  • Weekly Economic Cheat Sheet:  Jobs Report Friday

Futures are slightly lower following a quiet weekend as markets digested last week’s volatility and Friday’s rally.

Atlanta Fed President Bostic was encouraged by Friday’s inflation data and expected three hikes this year, which is less hawkish than the current market expectation.

China’s manufacturing PMI slightly best estimates at 51.1 vs. (E) 51.0, further implying that economy is stabilizing.

There are no economic reports today, but there are two Fed speakers, Daly (11:30 a.m. ET) and George (12:40 p.m. ET) and if they echo Bostic’s “not as hawkish as expected” commentary from this weekend, then stocks can extend the rally.

On the earnings front, most of the big reports come later this week (FB, GOOGL, AMZN) but after the close today, we get NXPI ($2.98) and markets will be focused on chip availability, and if there’s positive commentary there that could be another tailwind on this market.

Tom Essaye Quoted by Switzer Daily on January 28, 2022

/in , /by

Why are stocks slumping and why am I not worried?

The Fed is serious about raising rates, that’s going to continue to … keep markets volatile…Tom Essaye, founder of Sevens Report, said in a note. Click here to read the full article.

Why Aren’t TIPS Rising?

/in , /by

What’s in Today’s Report:

  • Why Aren’t TIPS Rising?
  • What Could Send 10’s-2’s Closer to Inversion?

Futures are slightly lower as markets continue to digest Wednesday’s Fed decision (50 bps in March or five hikes in 2022) amidst mixed earnings results.

AAPL posted better than expected earnings and the stock was up 3% overnight, but overall results continue to be mixed and that’s contributing to market volatility.

Today’s focus will be on important inflation data and the reason is clear:  If the inflation data is materially stronger than estimates, that will only encourage the Fed to get more hawkish/unpredictable, and that will add to the headwinds on stocks.  The key inflation numbers to watch today are: Core PCE Price Index (E: 0.5%, 4.8%), Employment Cost Index: (E: 1.2%, 4.1%), and the Inflation Expectations in the 10:00 a.m. Consumer Sentiment Index.

We also get some notable earnings today, including CAT ($2.22), CVX ($3.10), SYC ($1.47), and CL ($0.79).  But, barring a major disappointment, they shouldn’t move markets.

What the Fed Decision Means for Markets

/in , /by

What’s in Today’s Report:

  • What The Fed Decision Means for Markets (50 bps in March and/or five hikes in ’22)
  • EIA Analysis and Oil Market Update

Futures are little changed and recouped modest losses earlier this morning, as global markets digest yesterday’s Fed decision and mixed earnings.

Economic data was sparse as German Gfk Consumer Climate and UK Distributive Trades both slightly beat estimates.

Today will be a busy day of data and earnings and generally speaking markets need solid data and good earnings/guidance to help this market continue to stabilize.  Some reports we’re watching include: Jobless Claims (E: 265K), Durable Goods (E: -0.5%), Initial Q4 ‘21 GDP (5.7%) and Pending Home Sales (E :0.6%).

On the earnings front, the key report today is AAPL ($1.89) after the close, but other reports we’re watching include: MA ($2.19), MCD ($2.31), JBLU (-$0.40), LUV ($0.05), VLO ($1.69), SHW ($1.35), V ($1.69).

Tom Essaye Interview by Yahoo Finance Live on January 24, 2022

/in , /by

Market rout leading to ‘a much more balanced risk-reward outlook’

I wouldn’t go into treasuries. I think that inflation is here to stay. We don’t know exactly how high it will be, but it’s here to stay, and that’s negative for bonds…said Tom Essaye. Click here to watch the full interview.

Tom Essaye Quoted in Courthouse News Service on January 24, 2022

/in , /by

Markets claw back losses after worries spurred by Fed, Ukraine

The problem is that unlike 2013, the economy has an inflation problem, and the Fed is under enormous political pressure to rein in inflation…Tom Essaye of the Sevens Report noted. Click here to read the full article.

Fed Meeting Preview

/in , /by

What’s in Today’s Report:

  • What to Make of Yesterday’s Selloff and Reversal
  • FOMC Preview
  • Chart: S&P 500 Measured Move Reached

Futures are trading off of the overnight lows but still down roughly 1% as yesterday’s volatile session is digested ahead of the Fed while IBM posted strong Q4 earnings yesterday and economic data largely met estimates overnight.

The FOMC meeting begins today which will increasingly capture trader focus ahead of tomorrow’s announcement and press conference.

Economically, we get two reports on the housing market this morning: the Case-Shiller Home Price Index (E: 1.0%) and the FHFA House Price Index (E: 1.0%) but Consumer Confidence (E: 111.9) will be the more important number to watch given the growing uncertainty about the state of the economic recovery. Another bad print like we saw with yesterday’s Composite PMI Flash could send stocks lower.

There is a 5-Yr Treasury Note auction at 1:00 p.m. ET and investors will be looking for strong demand (which would reflect dovish shifting Fed expectations) as we saw with yesterday’s 2-Yr auction which helped stocks bottom and reversed so sharply in intraday trade.

Finally, on the earnings front, we will hear from: JNJ ($2.12), VZ ($1.28), GE ($0.83), MMM ($2.03), and AXP ($1.78) before the open, and then MSFT ($2.29), TXN ($1.95), and COF ($5.14) after the close.

Tom Essaye Quoted in Barron’s on January 21, 2022

/in , /by

Netflix Tumbled, Bitcoin Slipped—and What Else Happened in the Stock Market Today

Several companies cited higher costs as impacting profitability, furthering margin concerns…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

It’s a Tightening Tantrum, Not a Taper Tantrum

/in , /by

What’s in Today’s Report:

  • It’s a Tightening Tantrum, Not a Taper Tantrum
  • Weekly Market Preview:  Will the Fed Ease Hawkish Concerns, and Will Earnings Improve?
  • Weekly Economic Cheat Sheet:  FOMC Decision Wednesday, Key Inflation Data

Futures are modestly lower as escalating Russia/NATO tensions erased early solid gains.

Tensions between Russia and NATO increased over the weekend as the US and UK reduced embassy personnel, implying a military conflict could be imminent.

Economically, the EU flash manufacturing PMI beat estimates at 59.0 vs. (E) 57.9, but the UK number slightly missed (56.9 vs. (E) 57.3).

Today’s focus will be on the U.S. Flash January Composite PMI (E: 56.7) and markets will want to see stable data to ensure the economy is solid heading into future Fed rate hikes.  On the earnings front, there are three notable reports today, HAL ($0.34), IBM ($3.39), and LOGI ($1.22), but the really important reports won’t come until later this week.

On the geopolitical front, headlines have turned more ominous regarding a conflict in Ukraine, but as long as it’s limited and there isn’t imminent risk of a larger Russia/NATO conflict, then markets should largely look past the issue as it won’t impact economic growth or Fed policy.

Pace Matters

/in , /by

What’s in Today’s Report:

  • The Fed Rate Hike Rhetoric Needs to Calm Down

Futures are slightly higher as markets bounce following Thursday’s declines after a generally quiet night of news.

Economic data was better than expected overnight as UK Industrial Production (1.0% vs. (E) 0.3%) and monthly GDP (0.9% vs. (E) 0.3%) both beat estimates.

Today focus will be on earnings, some economic data and more Fed speak.  Economically, the key releases today are Retail Sales (E: 0.0%), Industrial Production (E: 0.3%) and Consumer Sentiment (E: 70.4). From the Fed, we have Harker (10:00 a.m. ET) and Williams (11:00 a.m. ET).  The bottom line is that to help markets stabilize, the data and Fed speak need to give the “March rate hike” mantra a rest, so that means in-line economic data and a slightly more relaxed tone from Fed officials.

Finally, today marks the start of earnings season and there are multiple key reports to watch today:  JPM ($ 2.98), WFC ($1.09), BLK ($10.23) and C ($1.89).  Put simply, earnings need to be solid given the recent volatility, otherwise we can expect the declines to accelerate over the coming weeks.