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Are Stock and Bond Markets Starting to Forecast an Economic Slowdown?

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What’s in Today’s Report:

  • Are the Stock and Bond Markets Starting to Forecast An Economic Slowdown?

Futures are slightly higher mostly on momentum from Thursday’s close, following a quiet night of news.

The global trend in central banks turning more hawkish continued overnight as the Reserve Bank of India left rates unchanged (as expected) but warned that inflation was too high.

Geopolitically, a Kremlin spokesman said that Russia hoped to end its “operation” in Ukraine in the coming days or weeks, although analysts are skeptical of the promise.

Today there are no notable economic reports nor any Fed speakers, so between the sparse calendar and the Masters, I’d expect a relatively slow day.  That said, if we get any geo-political headlines from Russia that imply a sooner than expected cease-fire, then stocks can extend Thursday’s rally.

General Technical Take for Equities

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What’s in Today’s Report:

  • What the FOMC Minute Mean for Markets (Hawkish)
  • General Technical Take for Equities
  • EIA Analysis and Oil Market Update

Futures are bouncing slightly following a quiet night as markets digest the declines of the past two days.

Economic data was mixed overnight as German Industrial Production missed estimates while Euro Zone Retail Sales beat expectations, but neither number is moving markets.

Geopolitically there was no new news on Russia/Ukraine as the conflict continues with little signs of any progress towards a cease fire.

Today we get one notable economic report, Jobless Claims (E: 202K) but three Fed speakers:  Bullard (9:00 a.m. ET), Evans (2:00 p.m. ET) and Williams (4:05 p.m.).  We expect each of them to further hammer the point that rates are rising by 50 bps in May, with balance sheet reduction beginning in the same month.  But, as long as they don’t say anything “hawkishly new” then stocks should be able to look past the commentary.

Tom Essaye Quoted in Barron’s on March 28, 2022

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3 Headwinds Could Pummel Stocks. What to Know.

We must acknowledge the challenges ahead, and be ready with a plan to insulate ourselves from volatility and protect portfolios…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Market Watch on March 18, 2022

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Two-year Treasury yield has biggest two-week gain since 2008 as investors assess Fed’s rate-hike efforts

The market has, to a degree, called the Fed’s bluff on rate hike plans as rate hike expectations were dialed back in the immediate wake of the dot plot release and economic projections, but the Fed is indeed tightening policy and regardless of the pace of the trend, yields are going higher in the months and quarters ahead, said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

It’s All About Escalation (And What Can Go Wrong)

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What’s in Today’s Report:

  • It’s All About Escalation (And What Can Go Wrong)
  • ISM Manufacturing Report Takeaways

Stock futures recovered from overnight losses as investors digest President Biden’s State of the Union speech, and a slight de-escalation in the Russia-Ukraine conflict.

Geopolitically, President Biden announced that the U.S. would close its airspace to Russian planes during the open of his State of the Union address, however overnight, Russia expressed willingness to resume talks with Ukrainian leadership today and that is raising hopes for a ceasefire deal, fueling moderate risk-on money flows.

Economically, the Eurozone HICP Flash was hot with the headline jumping to 5.8% vs. (E) 5.3% which is adding to angst about stagflation.

Today, there are a few data points to watch including: Motor Vehicle Sales (E: 14.6M) and the first look at official February jobs data in the form of the ADP Employment Report (E: 320K).

Additionally, there are two Fed speakers around the time of the open: Evans (9:00 a.m. ET) and Bullard (9:30 a.m. ET) before Fed Chair Powell will begin his semi-annual Congressional testimony at 10:00 a.m. ET.

Bottom line, the Russia-Ukraine conflict will continue to dominate the headlines and markets today, and any de-escalation could trigger a further relief rally. However, investors will be watching Powell closely for any signs of a change in policy which could also impact markets.

Tom Essaye Quoted in Bloomberg on February 22, 2022

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What Ukraine-Russia Tensions Mean for Stocks and Investor Portfolios

The most important factors remain Fed tightening and economic growth…wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.

Ukraine Update and Why Future are Down

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What’s in Today’s Report:

  • Ukraine Update and Why Futures Are Down
  • Switching Focus Back to the Fed
  • Weekly Market Preview:  Powell Testimony Wed/Thurs
  • Weekly Economic Cheat Sheet:  Jobs Week

Futures are sharply lower as markets react to additional sanctions against Russia, including removing select Russian banks from the SWIFT system. The additional sanctions and historic isolation of Russia by the global community are increasing economic uncertainty.

Positively, Ukraine and Russia are having peace talks today, and hopefully, that leads to a ceasefire sooner than later.

There were no notable economic reports overnight and no material economic reports today, so Russia/Ukraine headlines will drive trading, and any reports of a cease-fire will be a positive for markets.

What the Russian Attack on Ukraine Means for Markets

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What’s in Today’s Report:

  • What the Russian Attack on Ukraine Means for Markets
  • What’s Next in This Situation
  • What We Are Doing Today

Futures are down close to 3% as Russia launched an attack on Ukraine beyond the Donbas region.

Early Thursday morning Russia launched missiles at numerous targets in Ukraine and landed troops throughout the country, dramatically escalating the conflict.

Commodity prices shot higher, including oil, which is up more than 7%

Today focus will obviously be on the Russian attack and how far it goes, along with the severity of the international sanctions against Russia.  Anything that implies a further escalation will weigh further on markets and send commodity prices even higher.

Outside of Russia/Ukraine, there are numerous economic reports and Fed speakers:  Revised Q4 GDP (E: 7.0%), Jobless Claims (E: 230K). Fed Speak: Barkin (9:00 a.m., 12:00 p.m. ET), Bostic (11:10 a.m. ET), Mester (12:00 p.m. ET), Waller (8:00 p.m. ET).

Tom Essaye Quoted in StockXpo.com on February 16, 2022

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Dow falls for a 4th day in 5 as traders assess geopolitical risks, next Fed move

Traders continue to monitor the situation in Ukraine and look ahead to the Fed minutes release…Sevens Report’s Tom Essaye said in a note Wednesday morning. Click here to read the full article.

Tom Essaye Quoted in Yahoo News on February 21, 2022

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Ukraine-Russia crisis: Stock futures tank as situation escalates

The reasons stocks are down on that news is that people fear that is the start of a full-on invasion of Ukraine. And, if that happens, then we can expect a serious test of the January lows… Sevens Report Research founder Tom Essaye told Yahoo Finance. Click here to read the full article.