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Fed Day

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What’s in Today’s Report:

  • FOMC Preview (Abbreviated Version)
  • Reserve Bank of Australia Decision
  • CME FedWatch Tool – Chart

Stock futures are little changed near record highs as a sense of Fed paralysis grips the markets ahead of the FOMC announcement today.

Economic data overnight was slightly better than expected (both the Chinese PMI Composite and Eurozone Unemployment rate beat) but the market reaction was limited with the Fed in focus.

This morning, there are several fairly important economic reports to watch as the ADP Employment Report (E: 400K) kicks off jobs week before the bell, and then we get both Factory Orders (E: 0.1%) and the ISM Services Index (E: 61.9) shortly after the open. Unless there are major surprises in any of the reports, however, the market impact should be limited with the Fed looming.

After the data is released, markets are likely to quiet down ahead of the FOMC Announcement (2:00 p.m. ET) and Fed Chair Press Conference (2:30 p.m. ET) which will be the session’s main events.

Finally, earnings will continue to roll out with CVS ($1.79), MAR ($0.97), and HUM ($4.61) releasing results before the open, and ROKU ($0.06), QCOM ($2.26), and MGM (-$0.04) reporting after the close.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • ISM Manufacturing Index – Takeaways

U.S. futures are trading slightly lower along with most overseas markets following mostly inline economic data and a less-hawkish-than-feared RBA meeting outcome.

The RBA struck a slightly dovish tone in their latest meeting announcement, especially with regard to inflation, which is pressuring bond yields this morning.

Today is lining up to be a fairly slow day with just one economic data point due out: Motor Vehicle Sales (E: 12.4M) while the focus will begin to shift to the November FOMC meeting which begins this morning.

There is a 52-Week Treasury Bill auction at 11:30 a.m. ET and while it is not typically a widely followed auction, the results could shed new light on investor expectations for rate hikes next year, and therefore could impact markets ahead of tomorrow’s Fed announcement.

Lastly, earnings season remains in full swing with several notable results due out today from: PFE ($1.08), UAA ($0.15), COP ($1.53), ZG ($0.16), TMUS ($0.54), LYFT (-$-0.04), PGR ( $1.09).

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • What to Make of Monday’s Collapse

Stock futures are extending yesterday’s late session bounce while most overseas markets stabilized overnight amid easing concerns about China’s property sector and positioning into the Fed.

According to Bloomberg, S&P Global Ratings said Evergrande is “on the brink of default” but that a contagion effect impacting other developers is unlikely at this time and that the Chinese government would intervene if necessary which eased some concerns surrounding the issue.

Looking into today’s session, trader focus will be shifting towards the September FOMC meeting, which begins this morning, and that could influence a sense of Fed paralysis if broad market volatility continues to ease.

Economically, there is one report today: Housing Starts and Permits (E: 1.575M, 1.610M) but given all of the other market influences right now, it is not likely to move equities. Finally, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET which could impact bond yields and potentially influence price action in stocks but again, it is unlikely with the Fed looming tomorrow.

Bottom line, the pieces are falling into place for the market to stabilize today as yesterday’s volatility is digested and focus shifts to the Fed. On the charts, a break above yesterday’s open near 4,400 in the S&P could trigger some follow-through buying while a failure to do so would leave the door open to another surge in volatility in the sessions ahead.

The Delta Variant and Markets

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What’s in Today’s Report:

  • Is the Delta Variant Impacting the Markets?
  • Retail Sales and Industrial Production Takeaways
  • Chart: Value Outperforming Growth In August

Stock futures are slightly lower as investors digest dovish central bank developments, mixed inflation data out of Europe and look ahead to the release of the Fed minutes.

The Reserve Bank of New Zealand unexpectedly left rates unchanged at 0.25% (E: 0.50%) citing COVID-19 uncertainties which crashed the kiwi to a fresh 9-month low overnight.

Economically, Eurozone HICP met estimates however U.K. PPI ran slightly hot versus expectations while revisions were to the upside which is keeping inflation concerns elevated for now.

Looking into today’s session, it should be a fairly slow morning as far as news flow goes with just one economic report to watch: Housing Starts (E: 1.61M) and no Fed officials scheduled to speak.

Then in the afternoon investors will be watching a 20 Year T-Note auction at 1:00 p.m. ET before the FOMC Meeting Minutes are released at 2:00 p.m. ET. Yesterday, there was a reversal higher in yields from overnight lows in the wake of the not-as-bad-as-feared Retail Sales report so the risk appears to be to the upside for yields which could weigh on big-cap growth names and drag major indexes lower if a rise in yields gains momentum.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Positive COVID News?

Futures are modestly lower again for the same reasons as Monday:  Global equity pressure following another sharp decline in Chinese shares (Hang Seng was down 4% again).

There was no new regulatory news from China overnight but fears remain and sellers remained aggressive.

There were no notable economic reports overnight.

Today there are three notable economic reports, Durable Goods (E: 2.1%), Cash-Shiller Home Price Index (E: 1.5%) and U.S. Consumer Confidence (E: 124.9) but unless there’s a major surprise from one or more, I don’t expect them to move markets and with the Fed looming tomorrow and key earnings after the close, today shouldn’t be too volatile.

On the earnings front, today is probably the biggest single day of earnings of the season, and key reports (mostly after the close) include:  AAPL ($1.00), AMD ($0.54), MSFT ($1.90), GOOGL ($19.89), UPS ($ 2.75), and MMM ($2.25).

Tom Essaye Quoted in Bloomberg on June 15, 2021

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Stocks Snap Three-Day Rally; Crude Oil Jumps: Markets Wrap

After nearly a year of anti-climactic FOMC meetings, tomorrow’s meeting has the potential to move markets because it…wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.

Fed Day

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What’s in Today’s Report:

  • PPI – Where Will Inflation Settle?
  • Empire State Manufacturing Survey Misses Estimates
  • Retail Sales – Spending Shift from Goods to Services
  • A Warning Sign from Dr. Copper

Stock futures are flat this morning as a sense of Fed paralysis grips global markets ahead of the FOMC announcement while economic data disappointed overnight.

Chinese Fixed Asset Investment, Industrial Production and Retail Sales data all missed estimates for the month of May which resulted in Asian markets underperforming overnight.

Looking into this morning’s trading session, there are two lesser followed economic reports due to be released: Housing Starts (E: 1.630M) and Import & Export Prices (E: 0.7%, 0.7%) but neither release should move markets with the Fed looming.

The Biden-Putin meeting in Geneva will also get media attention but it is very unlikely to actually impact markets. Treasury Secretary Janet Yellen’s testimony before Congress regarding Biden’s budget (10:00 a.m. ET), however, could move markets as she will likely be discussing taxes and any hint of a material hike in capital gains rates or corporate tax rates could weigh on markets even ahead of the Fed.

Today’s main event for the markets will of course be the conclusion of the June Fed meeting with the FOMC Meeting Announcement at 2:00 p.m. ET and then Fed Chair Powell’s Press Conference at 2:30 p.m. ET. If anything causes tapering expectations to be pulled forward towards September or evidence emerges of plans to raise rates in 2022, that will be viewed as hawkish and cause significant volatility across assets classes. Otherwise, an “as expected” or dovish meeting outcome will likely result in equities continuing to trade at or near all-time highs.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Gold Update: Technical Weakness Ahead of the Fed

Futures are little changed this morning as investors weigh dovish central bank developments against in-line inflation data in Europe as focus turns to U.S. data and the Fed.

The RBA minutes revealed policy makers are open to extending QE beyond the current September deadline while CPI reports in Europe all met estimates.

This morning is lining up to be a busy one from a potential catalyst standpoint with a slew of economic data due to be released including: PPI (E: 0.6%), Retail Sales (E: -0.4%), Empire State Manufacturing Index (E: 22.0), Industrial Production (E: 0.6%), and Housing Market Index (E: 83).

The June FOMC Meeting also begins today which will likely initiate a sense of market paralysis ahead of tomorrow’s announcement and Powell’s press conference however a 20-Year Treasury Bond auction at 1:00 p.m. ET could move Treasuries and ultimately impact stocks in the early afternoon.

Four Assumptions for the Next Leg of the Rally

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What’s in Today’s Report:

  • Four Assumptions for the Next Leg of the Rally
  • Weekly Market Preview:  Will the Fed Acknowledge Tapering is Being Discussed?
  • Weekly Economic Cheat Sheet:  All About the Fed (But Notable Growth Data this Week Too)

Futures are slightly higher following a quiet weekend as markets look ahead to Wednesday’s FOMC decision.

The G-7 meeting in England produced a lot of headlines including broad agreement on a minimum corporate tax.  But there were little specifics of any new policies released and the meeting won’t impact markets.

Economic data was sparse as the only notable number was Eurozone Industrial Production which rose 0.8% vs. (E) 0.4%.

Today there are no economic reports and no Fed speak (the Fed meeting starts tomorrow so officials are in their “quiet period” ahead of the meeting) so for markets to extend last week’s rally we’ll need to get corporate commentary that confirms inflation pressures are “peaking.”  Absent that, I’d expect stocks to largely tread water ahead of Wednesday’s FOMC decision.

Tom Essaye Quoted in Barron’s on May 20, 2021

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Virgin Galactic Soars, Merck Falls, and Stocks Are Down Again

“Futures are marginally lower as markets digested the slightly hawkish FOMC minutes,” writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.