“A lot of people are throwing in the towel on the year, for lack of a better word, and you’re seeing people sort of remove some of those hopeful year-end bullish bets,” Tom Essaye, founder of Sevens Research, told Barron’s on Monday. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply lower as markets digest yesterday’s Fed decision and a deluge of global central bank rate hikes.
By the time stocks open today, seven separate global central banks (including the Fed, ECB, BOE and Swiss National Bank) will have hiked rates over the last 24 hours and while it was all expected, it’s still weighing on sentiment.
Today will be a very busy day of central bank decisions and economic data. First, we get the BOE Rate Decision (E: 50 bps hike) and ECB Rate Decision (E: 50 bps hike) and the keys there will be the commentary (do either central bank hint that they’re close to the end of tightening).
On the economic front, the key reports today are (in order of importance): Philly Fed Manufacturing Index (E: -9.9), Empire State Manufacturing Index (E: -0.4), Jobless Claims (E: 230K), Retail Sales (E: -0.2%) and Industrial Production (E: 0.1%). If the data can show moderation and easing price pressures (especially in Empire and Philly) that’ll be a positive for stocks.
What’s in Today’s Report:
Stock futures are extending yesterday’s gains as traders await today’s CPI report amid mixed news from overnight.
In China, a $143B stimulus package aimed at the semiconductor industry helped offset the delay of an economic/Covid policy meeting due to a surge in Covid cases.
Economic data was mixed overnight but there were no surprises material enough to derail the tentative pre-CPI rally this morning.
Today, traders will be keenly focused on the November CPI report at 8:30 a.m. ET with the headline expected to come in at 0.3% M/M and 7.3% Y/Y while the Core figure is expected to be 0.4% M/M and 6.1% Y/Y. Bottom line, a print below 7.3% on the headline and below 6.1% in the core figure will be well received by investors but an upside miss in either could trigger a sharp reversal of this most recent move higher in the broader stock market.
Once markets digest the CPI report, money flows are likely to take on a positioning tone with tomorrow’s Fed decision looming and a limited list of catalysts for the remainder of the day. There is a 30-Yr Treasury Bond auction at 1:00 p.m. ET that could move rates and have a mild impact on stocks.
What’s in Today’s Report:
Futures are marginally higher on additional China reopening headlines, although China embarking on a re-opening process is now well known and mostly priced into stocks.
The South China Morning Post reported that Hong Kong will ease isolation rules for COVID-positive residents and travelers, in what is the latest step towards reopening.
Economic data was sparse overnight and the only notable report was Japanese GDP which slightly beat estimates (-0.2% vs. (E) -0.3%).
Today’s focus will be on weekly Jobless Claims (E: 228K) as markets need to see further deterioration in the labor market to move the Fed closer to an ultimate “pivot.” Any move towards 250k in should be welcomed by markets.
What’s in Today’s Report:
Futures are moderately lower despite in-line economic data and more re-opening optimism from China, as markets further digest Friday’s jobs report.
Reuters reported that COVID may be downgraded to “Category B” in China which may result in new, less restrictive guidance from the government as early as this week.
Economic data largely met expectations as the Euro Zone Composite PMI, UK Composite PMI, and Euro Zone Retail Sales reports were all basically in line.
Today the calendar is mostly quiet but the focus will be on the ISM Services PMI (E: 53.5) and if the headline can remain firm (above 50) and prices can drop further, that’ll help support stocks.
What’s in Today’s Report:
Futures little changed following a quiet night of news as investors further digest Wednesday’s big rally in stocks and Thursday’s big rally in bonds all while awaiting today’s jobs report.
Economically, the only notable number overnight was Euro Zone PPI which fell more than expected (-2.9% vs. (E) -2.0%), adding to this week’s list of indicators showing global dis-inflation.
Focus today will be on the jobs report and expectations are as follows: Job Adds 200K, UR Rate 3.7%, Wages 0.3% m/m 4.6% y/y. Due to the big rally in stocks and bonds on Wed/Thurs, a lot of the “benefit” from a “Just Right” number is likely priced in at these levels, so the risk going into the report today is for disappointment, especially if we get a job adds number in the mid to high 200k.
Away from the jobs report, we also get two Fed speakers: Barkin (9:15 a.m. ET) and Evans (10:15 a.m., 1:00 p.m. ET).
What’s in Today’s Report:
Futures are slightly lower as markets digest yesterday’s post-Powell speech rally and focus on key economic data today (manufacturing PMI) and tomorrow (jobs report).
Global economic data underwhelmed overnight, as the Euro Zone manufacturing PMI missed estimates (47.1 vs. (E) 47.3) while the UK manufacturing PMI remained firmly in contraction territory (46.5 vs. (E) 46.2).
Looking forward to today, there are three important economic reports including (in order of importance): ISM Manufacturing Index (E: 49.9), Core PCE Price Index (E: 0.3% m/m, 5.0% y/y), and Jobless Claims (E: 235K). Markets will want to see 1) More evidence of easing price pressures in the ISM Manufacturing PMI and Core PCE Price Index and 2) Further labor market deterioration in jobless claims if the data is to help extend yesterday’s rally.
We also get three Fed speakers today, Logan (9:25 a.m. ET), Bowman (9:30 a.m. ET), and Barr (3:00 p.m. ET), but their commentary should be largely overshadowed by Powell’s less hawkish-than-feared remarks yesterday and I don’t expect them to move markets.
What’s in Today’s Report:
Stock futures are cautiously higher as traders look ahead to Powell’s speech today while international markets were mixed following some key economic data overnight.
The Eurozone HICP Flash (their CPI equivalent) fell to 10.0% in November from 10.7% in October (E: 10.6%), offering fresh evidence that inflation may have finally peaked in Europe while China’s Composite PMI was worse than expected. The soft data in China however was shrugged off thanks to continued optimism about easing Covid restrictions by the government.
Today is lining up to be a busy day with markets focusing on economic data early with the ADP Employment Report (E: 200K), GDP (E: 2.7%), International Trade in Goods (E: -$90.6B), JOLTS (E: 10.4M), and Pending Home Sales (E: -5.0%) all due out this morning.
Additionally, there are two Fed speakers through midday: Bowman (8:50 a.m. ET) and Cook (12:35 p.m. ET) before focus will turn to Powell’s speech in the early afternoon (1:30 p.m. ET) which will be the primary potential market catalyst today.
What’s in Today’s Report:
Stock futures are rebounding modestly this morning following yesterday’s sharp drop as worries surrounding China’s Covid policies and the subsequent protests ease.
The Hang Seng jumped over 5% and the offshore yuan rallied 1% after the Chinese government announced a renewed push to vaccinate elderly citizens and said excessive restrictions will be avoided, both of which are incremental steps away from “Covid Zero.”
Today, market focus will be on housing data early with the Case-Shiller Home Price Index (E: -1.3%) and FHFA House Price Index (E: -1.2) due out ahead of the bell and then the Consumer Confidence (E: 100.0) report will print shortly after the open.
There are no Fed officials scheduled to speak today so focus will likely remain on the situation in China, and if sentiment towards Covid policy expectations and the latest wide-spread protests improves then stocks will be able to stabilize as that was a major bearish influence on the market yesterday.
What’s in Today’s Report:
Stock futures are little changed in quiet holiday trading this morning as traders look ahead to the slew of economic data due out in the U.S. today as well as the release of the November Fed meeting minutes.
Economically, the Eurozone Composite PMI Flash came in at 47.8 vs. (E) 47.0 signaling economic contraction in the EU but the better-than-feared headline is helping European shares edge higher today.
This morning is lining up to be a busy one for economic data with Durable Goods Orders (E: 0.3%), Jobless Claims (E: 225K), PMI Composite Flash (E: 48.7), New Home Sales (E: 574K), and Consumer Sentiment (E: 55.0) all due to be released between 8:30 a.m. and 10:00 a.m. ET.
Additionally, the November Fed Meeting Minutes will be released at 2:00 p.m. ET.
Bottom line, with all the recent Fed speak, the Minutes are unlikely to offer any surprises today however data can move markets despite thinning attendance and light volumes. The market wants to see slowing but not collapsing growth measures and a downward acceleration in inflation (today’s inflation expectations within the Consumer Sentiment release will be the key figure to watch). If that materializes, the S&P might be able to break through key near-term technical resistance at 4,007 however high inflation and weaker-than-anticipated growth could send stocks tumbling back toward the lows of the week at 3,900.
All of us at Sevens Report Research are very thankful for your support! Everyone please travel safely, and have a Happy Thanksgiving. We will speak to you again Friday morning.
