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Market Multiple Table: September Update

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What’s in Today’s Report:

  • Market Multiple Table: September Update

Stock futures are modestly lower today as investors digest yesterday’s strong equity rally and assess the COVID-19 outbreak among politicians after President Trump’s return to the White House from Walter Reed Medical Center.

Economically, German Manufacturers’ Orders grew 4.5% vs. (E) 2.3% in August but positive economic data remains a near-term negative for risk assets as it reduces pressure for lawmakers to unleash more stimulus.

Looking into today’s session, there are two economic reports to watch: Goods & Services Trade (E: -$66.5) before the bell and JOLTS (E: 6.250M) shortly after the open but neither is expected to materially move markets.

There are also multiple Fed speakers today including: Harker (12:00 p.m. ET), Bostic (2:00 p.m. ET), and Kaplan (6:00 p.m. ET) but Powell (10:40 a.m. ET) will be the most closely watched as the market looks for further clues into future policy.

Beyond economic data and Fed speakers, markets will continue to focus on Capitol Hill and the ongoing negotiations for the next stimulus deal. Specifically, Speaker Pelosi and Treasury Secretary Mnuchin are expected to have a follow up call today so investors will be anxiously waiting for any updates from their conversation.

Tom Essaye Quoted in Fintech Zoom on September 24, 2020

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“By giving the market a lot lodging … the Fed has primarily created a spoiled youngster the place nothing’s sufficient…” Tom Essaye, founder and president of Sevens Analysis, tells Axios. Click here to read the full article.

All Clear for Tech?

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What’s in Today’s Report:

  • Does This Bounce Mean an “All-Clear” in Tech?

Futures are rallying with international shares this morning as investors digest soft economic data and look ahead to another day of Powell’s testimony before Congress.

The EU PMI Composite Flash missed estimates this month (50.1 vs. E: 51.7) due to an unexpected drop in the services index but the weakness is bolstering stimulus hopes.

Turning to the U.S. session, there are two economic reports to watch this morning: FHFA House Price Index (E: 0.6%) and the PMI Composite Flash (E: 54.5). The latter will be the important one to watch as investors will be looking to see if the service index “whiffed” as it did in Europe which would up the pressure on lawmakers to pass a new stimulus bill.

Beyond the data, there is a slew of Fed speak today including: Mester (9:00 a.m. ET), Evans (11:00 a.m. ET), Rosengren (12:00 p.m. ET), Bostic (1:00 p.m. ET), Kashkari (1:00 p.m. ET), and Daly (3:00 p.m. ET), however Chair Powell’s second day of testimony before Congress (beginning at 10:00 a.m. ET) will be the most closely watched as the market continues to look for affirmation that more accommodation and stimulus are on the way.

Why Can’t the Fed Generate Inflation?

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What’s in Today’s Report:

  • Why Can’t the Fed Generate Inflation

U.S. stock futures have a mild bid this morning while international shares were split between gains and losses overnight amid mixed economic data.

Global manufacturing PMI data largely met expectations overnight and did not materially move markets.

The August Eurozone HICP Flash (our equivalent of CPI) missed with a headline of -0.2% vs. (E) +0.2% but a resulting rise in stimulus hopes is helping EU equities outperform today.

Looking into today’s session, there are two economic reports: ISM Manufacturing Index (E: 54.5) and Construction Spending (E: 1.1%) however the former will be the more important release to watch regarding the health of the economic rebound.

Additionally, there is one Fed speaker today: Brainard (1:00 p.m. ET), and markets will simply be looking for further confirmation that the FOMC plans to be very accommodative for quarters to come.

A Bullish Gamechanger?

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What’s in Today’s Report:

  • What Would Be a Bullish Gamechanger?

Futures are modestly lower this morning as yesterday’s sizeable stock market gains are digested amid simmering tensions between the U.S. and China after President Trump threatened to cut funding to the WHO late yesterday.

Economically, the German ZEW Survey’s Current Conditions Index fell to -93.5 vs. (E) -87.8 while Business Expectations firmed to 51.0 vs. (E) 33.5, underscoring both the economic fallout from the COVID-19 pandemic as well as the broad hopes for a swift recovery.

Today, there is one economic report due out: Housing Starts (E: 968K) but investor focus will be on Capitol Hill where Fed Chair Powell and Secretary Mnuchin are set to testify at 10:00 a.m. ET regarding the stimulus efforts to support the economy in the aftermath of the coronavirus pandemic.

Later in the afternoon, there is one other Fed speaker to watch: Rosengren (2:00 p.m. ET) but things should be relatively quiet following the Powell and Mnuchin’s testimony this morning.

Why The Fed Needs To Do More

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What’s in Today’s Report:

  • Why The Fed Needs to Do More
  • Is It Time to Go To Cash?

Futures are down just under 2% which is an improvement as they were nearly down limit at the lows overnight, so there’s been a good rebound.

On the stimulus front, governments continue to act.  Stimulus bill 2 was passed last night and the ECB dramatically increased its QE program by 750 bln euros. and will buy government bonds, corporates and commercial paper. Australia also launched its first ever QE program.  All these measures are helping markets and sentiment.

All eyes today will be on Washington for signs of progress on stimulus bill three, and the sooner it passes, the better.  From an economic standpoint, Jobless Claims (E: 220K) are the key report and we’re expecting a big increase, while Philadelphia Fed (E: 14.0) will also be important as we want to see more March data.

What Did the Fed Do? (And Why Are Stocks Down Again)

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What’s in Today’s Report:

  • What Did The Fed Do And Why Are Stocks Down?
  • What to Make of This Market Now? (Buy/Sell/Hold)
  • Two Key Indicators to Watch This Week

Futures are limit down this morning despite the Fed cutting rates to 0% and restarting its QE program.

On Sunday night the Fed cut rates to 0% and announced a new 700 billion dollar QE program, along with other measures designed to boost liquidity.

Coronavirus news over the weekend wasn’t good as case counts continue to rise, especially in Italy.  That country is the new center of the coronavirus outbreak.

Today all eyes will be on the bond market.  Treasury yields need to stay down, and if the price action in LQD isn’t too bad, stocks can rally out from these early lows.  Economically, there is a notable report this morning,  Empire Manufacturing Survey (E: 4.8), as it will give us the first look at juts how bad economic activity has been in March.

Tom Essaye Quoted in U.S. News on January 3, 2020

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With the Federal Reserve’s decision to leave interest rates unchanged and rates seemingly to remain low for now, fixed-income market watchers are reviewing their outlooks on the best places to invest now. Tom Essaye, the founder of Sevens Report Research, says in a research note that the Fed’s decision to consider “global developments and muted inflation pressures,” along with the U.S. economic…Click here to read the full article.

Dollar bills

Why The Fed Was More Bullish Than It Seems

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What’s in Today’s Report:

  • Why The Fed Meeting Was More Bullish Than It Seems
  • Why the UK Election Matters to You (Good/Bad/Ugly Preview)
  • EIA Update – Where Will Oil Go?

Futures are slightly higher following a generally quiet night as markets digest yesterday’s Fed meeting and wait on important trade news and the results of the UK election.

Today is a big day in the U.S./China trade as Trump is meeting with senior advisors to decide the fate of the 12/15 tariff increases.  It’s widely expected they will be delayed and if they are not, that will be a negative shock for markets.

Economic data was again mixed as Euro Zone IP missed (-0.5% vs. (E) -0.3%) while German CPI met expectations.

Today will be a busy day.  First, regarding the trade meeting, it’s unclear if a formal announcement will be made on the decision, but it could come at any time so markets will be watching the tape closely.  Additionally, there is also an ECB Meeting this morning and it’s new ECB President Lagarde’s first press conference.  Finally, we should know the results of the UK election by this evening, and the key number for the Torys is 335 seats.  Stocks will like any result above that number.

On the economic front, the only notable report is Jobless Claims (E: 213K).

Did the Fed Just Restart QE?

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What’s in Today’s Report:

  • Did the Fed Just Restart QE?

Stock futures declined overnight after China said it would take countermeasures to the passage of a pro-Hong Kong bill by the U.S. House, further complicating the U.S.-China trade relationship while hopes for a Brexit deal faded.

There were no market-moving economic reports overnight.

Today, there is one key economic report to watch: Retail Sales (E: 0.3%) and two second tiered reports due to be released: Business Inventories (0.3%) and the Housing Market Index (E: 68). There are also two Fed officials scheduled to speak: Evans (9:00 a.m. ET) and Brainard (3:00 p.m. ET) that could potentially move markets.

Investors will also be looking for any further developments on the latest escalation in tensions between the U.S. and China as the trade war remains a major influence on stocks and broader risk assets.

Shifting from macro to micro, the start of earnings season will continue today with BAC ($0.68), PNC ($2.80), ALLY ($0.98), USB ($1.11), and BK ($0.99) all reporting ahead of the bell while NFLX ($1.05), IBM ($2.64) and CSX ($1.01) will release results after the close.