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Tom Essaye Interviewed on TD Ameritrade Network on November 30, 2021

The Market Impact Of The Omicron Variant

Tom Essaye, founder of the Sevens Report, discusses how futures are reversing Monday’s gains. He also talks about the market impact of the Omicron variant…Click here to watch to the full interview.

Inflation Expectations Update

What’s in Today’s Report:

  • Inflation Expectations Update
  • Empire State Manufacturing Index Takeaways

Stock futures are slightly lower this morning following a mostly quiet night of news as investors look ahead to several important economic releases in the U.S. today.

Economic data was in-line to slightly better than expected overnight while the Xi-Biden talks, while largely uneventful, did help to modestly improve general market sentiment.

Today, focus will be on economic data early with Retail Sales (E: 1.0%), Import & Export Prices (E: 0.9%, 0.7%), and Industrial Production (E: 0.9%) all due out ahead of the opening bell while the Housing Market Index (E: 80) will be released at the top of the 10:00 a.m. hour (ET).

Additionally, there are several Fed speakers today: Bostic (12:00 p.m. ET), Harker (2:55 p.m. ET), and Daly (3:30 p.m. ET) and the market will continue to look for patient remarks that suggest the pace of the taper will not be accelerated and rate hikes will not be pulled forward from late 2022.

Sector Winners from the Infrastructure Bill

What’s in Today’s Report:

  • Sector Winners from the Infrastructure Bill

Futures are slightly higher following a generally quiet night of news as global yields are again little changed.

10 year Treasury yields are up two basis points to 1.59% and that small move is helping futures to slightly rally.

Economic data was sparse as the only notable report was Euro Zone Industrial Production which fell –0.2% vs. (E) -0.6% but that number isn’t moving markets.

Focus today will be on economic data, and specifically the inflation expectations component of the Consumer Sentiment report.  If inflation expectations rise above 5% for next year and above 3% for the next five years, that will get the Fed’s attention and likely push yields higher.  The other economic report this morning is JOLTS (E: 10.1M) and we have one Fed speaker, Williams at 12:10 p.m. ET.

FOMC Preview

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).

Valuation Update

What’s in Today’s Report:

  • Valuation Update
  • Gold Market Update: Breakout or Breakdown?

Futures are indicating an open at fresh record highs and international markets traded higher overnight as earnings continue to top expectations and economic concerns fade.

There were no notable economic reports or market-moving headlines overnight outside of more mostly upbeat earnings.

Looking into today’s session, there are several reports on the housing market due out early: Case-Shiller Home Price Index (E: 1.3%), FHFA House Price Index (E: 1.3%), and New Home Sales (E: 760K), but the most important economic release to watch today is Consumer Confidence (E: 109.0) as a disappointing print could weigh on consumer spending expectations into year-end.

There are no Fed officials scheduled to speak today however the Treasury will hold a 2-Yr Note Auction at 1:00 p.m. ET. The risk to equities is a soft outcome as that could rekindle the hawkish policy concerns that weighed on risk assets this past Friday.

Finally, earnings remain the main focus of the market right now and several big companies are due to report today including: UPS ($2.52), GE ($0.41), and SHW ($2.07) before the open, and AMD ($0.67), MSFT ($2.06), GOOGL ($23.13), V ($1.53) after the close.

Jobs Day

What’s in Today’s Report:

  • Jobs Report Preview (Abbreviated Version)

Futures are little changed as the debt ceiling extension was made official during an otherwise quiet night.

Economic data was mixed as the Chinese Service Sector PMI beat estimates (53.4 vs. (E) 49.1) while Japanese House Hold Spending missed expectations (-3.0% vs. (E) -1.9%), but those numbers aren’t moving markets.

The debt ceiling extension was signed late last night and the proverbial “can” has been kicked to late December.

Today focus will be on the Employment Situation report are expectations are as follows:  E: Job Adds: 475K, UE Rate:  5.1%, Wages:  0.4% m/m 4.6% y/y.  Treasury yields remain buoyant (the 10-year yield was above 1.60% overnight) so risk remains that a “Too Hot” number spikes yields and hits stocks.

 

Sevens Report Quarterly Letter

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Market Multiple Table: October Update

What’s in Today’s Report:

  • Market Multiple Table: October Update
  • ISM Services Index – Takeaways

Stock futures are down more than 1% and bond yields continue to climb higher amid renewed stagflation fears while traders look ahead to this week’s U.S. jobs data.

Economically, data was disappointing overnight as German Manufacturers Orders fell by -7.7% vs. (E) -2.1% in August and EU Retail Sales for the same month rose just 0.3% vs. (E) 0.8%.

Meanwhile, U.K. 10-year Gilt breakevens jumped 10 basis points to the highest since 2008 (above 4%) as surging energy costs add to inflation concerns.

Looking into today’s session, focus will be on the September ADP Employment Report (E: 428K) ahead of the bell while there is one Fed official speaking this morning: Bostic (9:00 & 11:30 a.m. ET). The bond market is continuing to have a significant impact on stocks right now so if there is a spike higher in yields in the wake of the private payrolls print, expect stocks to remain under pressure today.

Tom Essaye Quoted in Shouzy on September 27, 2021

Stock futures opened little changed after cyclical-led session

Really what you’re seeing is, across asset classes, the market is adopting a…Tom Essaye, The Sevens Report Research Founder, told Shouzy Finance Live on Monday. Click here to read the full article.

Inflation Expectations

What’s in Today’s Report:

  • Inflation Expectations

Stock futures are trading cautiously higher this morning while international markets were mixed overnight ahead of key U.S. inflation data.

Economically, the NFIB Small Business Optimism Index for August rose to 100.1 vs. (E) 99.0 which is helping U.S. equity markets edge higher in pre-market trade.

Today, there are no Treasury auctions or Fed officials scheduled to speak which will leave markets focused on the one major economic report today: CPI (E: 0.4%, 5.3%).

If the CPI report supports the transitory inflation narrative and suggests that price pressures have already peaked, stocks are likely going to be able to further stabilize after yesterday’s bounce. However, a “hot” print could easily trigger a wave of hawkish money flows and pressure the major indexes back down to fresh multi-week lows today.

Tom Essaye Quoted in Barron’s on August 30, 2021

Affirm Holdings Soars, Moderna Falls — And What Else Is Happening in the Stock Market Monday

Futures are slightly higher mostly on momentum from Friday’s ‘dovish Powell’ rally, following…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.