Posts

Technical Market Update

/in , /by

What’s in Today’s Report:

  • Technical Market Update
  • Why are Small Caps Outperforming?
  • How Bad Was Economic Data Yesterday? (Answer:  Bad)

Futures are extending Wednesday’s losses following more disappointing earnings and as worries about the economy grow.

Alcoa (AA), Allstate (ALL), and Discovery Financial (DFS) posted soft earnings or negative guidance overnight.

Today we get several important economic reports including, in order of importance: Philly Fed (E: -10.3), Jobless Claims (E: 215K), and Housing Starts (E: 1.362M).

There are also several Fed speakers and the most important one is Brainard (1:15 p.m. ET) and if she’s slightly dovish, that will help markets stabilize.  Collins (9:00 a.m. ET) and Williams (6:35 p.m. ET) also speak today.

Finally on the earnings front, we get more important results today and the market needs some good news.  Reports we’re watching include:  PG ($1.58), FAST ($0.42), NFLX ($0.45), and PPG ($1.15).

Tom Essaye Quoted in Blockworks on January 12th, 2023

/in , /by

Crypto Miners Log Double-digit Stock Price Gains After CPI Report

Tom Essaye, the founder of Sevens Report Research, said Wednesday before the CPI print that inflation metrics would need to continue falling quickly if the market hopes to sustain a broader rally. Click here to read the full article.

Tom Essaye Quoted in Blockworks on January 12th, 2023

/in , /by

‘They’re Definitely Still Hiking’: Inflation Cooling May Not Deter Fed

A drop in gasoline prices was the largest contributor to the core inflation dip, something that Tom Essaye, president of Sevens Report Research, told Blockworks is “a little bit more disappointing than the headline would imply.” Click here to read the full article.

Fed Speak and Updated Rate Expectations

/in , /by

What’s in Today’s Report:

  • Fed Speak and Updated Rate Expectations
  • CPI Takeaways

Futures are slightly lower following mixed economic data, as markets continue to digest increased hopes for an economic “soft landing.”

Chinese exports declined but fell less than expected (-9.9% vs. (E) -11.1%), offering more “not as bad as feared” news.

Today’s focus will switch to earnings (and that’s true for next week too) and key reports today include:  JPM ($ 3.11), BAC ($ 0.76), C ($ 1.18), UNH ($5.17), WFC ($0.63) and BLK ($ 8.00).  If earnings are better than feared, that should help stocks extend yesterday’s gains.

Economically the focus will stay on inflation with Import & Export Prices (E: -0.9%, -0.7%) and Consumer Sentiment (E: 60.0) while we get another Fed speaker: Harker (10:20 a.m. ET).  As has been the case, anything that implies declining inflation and/or a 25 bps rate hike in February will help stocks rally.

Market Multiple Table Chart

/in , /by

What’s in Today’s Report:

  • Market Multiple Table Chart
  • EIA Analysis and Oil Market Update

Futures are little changed as overnight economic data was in-line with expectations while investors look ahead to this morning’s CPI Report.

Economically, Chinese CPI was the only notable number and it largely met expectations at 1.8% y/y (vs. (E) 1.9%).  That reading will keep Chinese authorities actively stimulating the Chinese economy, which is a positive for the global economy.

Today focus will clearly be on the CPI report (E: 0.0, 6.6%), but remember the Core CPI report is the more important number (E: 0.3%, 5.7%).  Markets need to see continued declines in CPI to underwrite recent gains in stocks and bonds.

Away from CPI, we get the latest Jobless Claims reading (E: 215K) and this number needs to move higher to reflect a better balance in the labor market.  Finally, there are multiple Fed speakers today including Harker (7:30 a.m. ET), Bullard (11:30 a.m. ET), and Barkin (12:40 p.m. ET) and while we should expect typically hawkish rhetoric, they shouldn’t reveal anything new (and as such shouldn’t move markets).

CPI Preview

/in , /by

What’s in Today’s Report:

  • CPI Preview: Focus on the Core Figure
  • Chart – Gold Moving Higher in Well Defined Uptrend

U.S. stock futures are tracking global shares higher in moderate risk-on trading this morning as investors look past Powell’s lack of commentary of monetary policy plans yesterday and await tomorrow’s all-important CPI data.

Economically, Retail Sales reports in both Australia and Italy handily beat expectations overnight, adding to optimism for a global economic soft landing.

There are no market-moving economic reports today and no Fed officials are scheduled to speak.

That leaves just one potential market catalyst today, a 10-Yr Treasury Note auction at 1:00 p.m. ET. And while it is possible a surprise outcome in the auction moves yields and causes some modest moves in equities in the afternoon, the session is likely to be mostly quiet as traders position into the CPI report.

Tom Essaye Quoted in MarketWatch on January 9th, 2023

/in , /by

Traders made money ‘selling the rip’ in stocks last year. Why it might work again in 2023.

“A sustained break above the 200-day moving average would imply that investors are becoming fundamentally more optimistic about the market. That would require real progress toward the Fed actually stopping its rate-hike campaign. Or progress toward the economy actually achieving a soft landing. Or progress toward inflation falling somewhere that is reasonably more acceptable to the Fed,” said Tom Essaye, founder of the Sevens Report. Click here to read the full article.

Market Multiple Table: January Update

/in , /by

What’s in Today’s Report:

  • Market Multiple Table – January Update: Still More Optimistic Than Fundamentals Warrant

S&P 500 futures are trading with modest losses this morning as investors digest positive economic news out of Europe ahead of Powell’s speech today.

In Europe, French Industrial Production rose 2.0% vs. (E) 0.8% in November while GS dropped their Euro-area recession call for 2023 bolstering market hopes for a soft landing.

Domestically, the NFIB Small Business Optimism Index fell to 89.8 vs. (E) 91.3 which is weighing modestly on sentiment in pre-market trading.

There are no additional economic reports in the U.S. today which will leave investors focused on any insight Fed Chair Powell offers on either the economy or monetary policy plans when he speaks in Sweden at a Riksbank symposium beginning at 9:00 a.m. ET.

Hawkish Fed speak out of Daly and Bostic is what caused stocks to reverse early gains and close lower yesterday, so if Powell strikes a hawkish tone and pushes back against the market’s latest optimism for a lower terminal rate (below 5%), that could see stocks extend yesterday’s afternoon selloff and the market give back some or all of Friday’s post-jobs report gains.

Finally, The Treasury will hold a 3-Yr Note auction at 1:00 p.m. ET that could signal the bond markets response to Powell (if he even says anything notable). A weak outcome to the auction and rising yields could amplify any hawkish money flows and result in more broad market volatility.

Tom Essaye Interviewed on Yahoo Finance on January 5th, 2023

/in , /by

Fed, bond market playing a ‘game of chicken,’ strategist says

Sevens Report Research Tom Essaye Founder and President joins Yahoo Finance Live to discuss the Fed’s policy pathway moving ahead, inflation, the state of the economy, jobs data, a recession, what investors should be watching for, and the outlook for markets. Click here to watch the full interview.

Why Friday’s Data Wasn’t As Positive As the Market Implied

/in , /by

What’s in Today’s Report:

  • Why Friday’s Data Wasn’t As Positive As The Market Implied
  • Weekly Market Preview:  Can Inflation Fall Faster than Growth?
  • Weekly Economic Cheat Sheet:  All About Inflation (CPI the Key Report)

Futures are modestly higher mostly on momentum from Friday’s close, following a quiet weekend of news.

Stocks rallied on Friday thanks to increasing hopes for an economic soft landing, and nothing happened over the weekend to offset that hope.

Economic data met expectations as German Industrial Production and EU Unemployment were both in-line.

Today focus will be on the NY Fed Inflation Expectations (Previous:  4.0% one-year, 3.8% three-year), and if they decline from previous levels that will be positive.  We also get one Fed speaker, Bostic (12:30 p.m. ET).