I think in a market that’s stretched, that doesn’t have a lot of backing at these fundamental levels, if you get some sort of serious scare, it could take 5% to 10% out of the S&P 500 pretty quick…Essaye said. Click here to read the full article.
What’s in Today’s Report:
Stock futures are trading modestly lower while most overseas markets declined overnight amid lingering concerns about the Delta variant’s impact on growth as well as the threat of a hawkish shift in tone from the ECB this week.
Economically, Japanese Q2 GDP was revised up to 1.9% vs. (E) 1.6% y/y which helped the Nikkei buck the trend and rally nearly 1% overnight.
Today, there are a few potential market-moving catalysts beginning with the July JOLTS report (E 10.0M). Then there are two Fed speakers to watch: Williams (1:10 p.m. ET) and Kaplan (6:00 p.m. ET). Finally, there is also a 10-Year Treasury Note Auction at 1:00 p.m. ET.
Bottom line, markets have become more “on edge” this week as the balance between economic growth trends and subsequent Fed policy outlook has become less certain.
So any combination of economic data deteriorating, the outlook for Fed policy getting more hawkish, or interest rates accelerating too quickly will continue to weigh on equities and other risk assets this week.
What’s in Today’s Report:
Stock futures are trading at all-time highs this morning as dovish, risk-on money flows continue into the end of the month following mixed economic data overseas.
Economically, China’s Manufacturing PMI fell to 50.1 vs. (E) 50.2 in August while inflation data in Europe was slightly firmer than estimates but the outlook for global central bank policy remains notably accommodative and that is a positive for equities and other risk assets.
Today, there are two reports on the housing market in the US: Case-Shiller Home Price Index (E: 1.7%) and FHFA House Price Index (E: 1.8%) before the more important Consumer Confidence (E: 123.0) report is released shortly after the open.
Beyond those economic data points, there are no other material catalysts as no Fed officials are scheduled to speak and there are no Treasury auctions this afternoon.
Bottom line, momentum remains positive for stocks into the end of the month however a soft Consumer Confidence number or negative COVID headline could serve as an excuse for profit taking and cause a reversal of the early morning gains today.
The key for markets is how quickly the Fed removes the accommodation, because that…said Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.
The odds that the market makes a material move one way or another are…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
The key for markets is how quickly the Fed removes the accommodation, because that dictates…said Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.
If there’s a reason for the rally, it’s the growing sense that the Fed won’t…market analyst Tom Essaye, author of the Sevens Report, wrote in a Tuesday email. Click here to read the full article.
How the Fed tapers is the next major variable for this market…wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.
What’s in Today’s Report:
U.S. stock futures are tracking most global equity markets higher this morning as Chinese tech shares recovered from recent declines and trader focus is shifting ahead to the Fed’s Economic Policy Symposium later in the week.
Economically, German GDP rose 1.6% vs. (E) 1.5% in the second quarter, easing some concerns that the global economic recovery is losing momentum.
Today, there is one economic report due out: New Home Sales (E: 700K) but it shouldn’t materially move markets and no Fed officials are scheduled to speak.
There is a 2-Yr Treasury Note auction at 1:00 p.m. ET, and given the increased sensitivity towards taper plans and interest rates right now, the outcome could move markets in the afternoon.
What’s in Today’s Report:
U.S. futures are lower this morning amid new regulatory threats for Chinese tech companies, while Delta variant concerns linger and traders look ahead to fresh U.S. data.
Chinese regulators proposed a new set of rules for internet and technology companies overnight which once again triggered a wave of selling in Chinese markets, specifically in big cap tech names.
Economically, the Eurozone GDP flash met estimates while U.K. wage growth hit a new record in July the latest evidence that stagflation may be an emerging economic trend (more on that in today’s edition of the Report).
Looking into today’s session, there are two notable economic reports due out in the U.S. this morning: Retail Sales (E: -0.2%), and Industrial Production (E: 0.5%).
As has been the case recently, investors will be looking for data that is good enough to suggest we are not falling deeper towards a stagflationary environment but not so strong that it pulls forward expectations for tapering QE (the key to reading the data will be to monitor the reaction in the yield curve; we want to see steepening).
Finally, Fed Chair Powell will speak as part of a virtual town hall event at 1:30 p.m. ET this afternoon and the markets will be looking for any new clues as to the Committee’s taper plans/views of the economic recovery. For now, a continued, slightly dovish stance remains the best case scenario for stocks as another hawkish “tilt” would likely spark a run higher in yields, potentially weighing on broader equity markets.
