I wouldn’t go into treasuries. I think that inflation is here to stay. We don’t know exactly how high it will be, but it’s here to stay, and that’s negative for bonds…said Tom Essaye. Click here to watch the full interview.
The problem is that unlike 2013, the economy has an inflation problem, and the Fed is under enormous political pressure to rein in inflation…Tom Essaye of the Sevens Report noted. Click here to read the full article.
What’s in Today’s Report:
Futures are trading off of the overnight lows but still down roughly 1% as yesterday’s volatile session is digested ahead of the Fed while IBM posted strong Q4 earnings yesterday and economic data largely met estimates overnight.
The FOMC meeting begins today which will increasingly capture trader focus ahead of tomorrow’s announcement and press conference.
Economically, we get two reports on the housing market this morning: the Case-Shiller Home Price Index (E: 1.0%) and the FHFA House Price Index (E: 1.0%) but Consumer Confidence (E: 111.9) will be the more important number to watch given the growing uncertainty about the state of the economic recovery. Another bad print like we saw with yesterday’s Composite PMI Flash could send stocks lower.
There is a 5-Yr Treasury Note auction at 1:00 p.m. ET and investors will be looking for strong demand (which would reflect dovish shifting Fed expectations) as we saw with yesterday’s 2-Yr auction which helped stocks bottom and reversed so sharply in intraday trade.
Finally, on the earnings front, we will hear from: JNJ ($2.12), VZ ($1.28), GE ($0.83), MMM ($2.03), and AXP ($1.78) before the open, and then MSFT ($2.29), TXN ($1.95), and COF ($5.14) after the close.
What’s in Today’s Report:
Futures are modestly higher as China made two surprise interest rate cuts overnight, helping stocks bounce from Wednesday’s late-day declines.
China’s central bank made two small surprise interest rate cuts overnight which helped Asian stocks rally (Hang Seng up 3%) and that’s pushing U.S. futures higher.
Today focus will be on economic data and earnings, and for stocks to extend the early morning rebound we need to see stable data and solid earnings (meaning no extreme cost pressures). Economically, the key report today is the Philly Fed Manufacturing Index (E: 19.1). If it suddenly plunges as Empire did on Tuesday, that will slightly increase anxiety about the economy. We’ll also be watching Jobless Claims (E: 207K) and Existing Home Sales (E: 6.40M).
On the earnings front, the key report today is NFLX ($0.82) after the close, but we’ll also be watching: AAL (-$1.54), TRV ($3.86), UNP ($2.60), CSX ($0.41) and PPG ($1.19). If margins are much weaker than expected, look for more earnings-related volatility.
What’s in Today’s Report:
U.S. stock futures are bouncing modestly after yesterday’s steep selloff as the surge in bond yields is showing signs of pausing after some mixed inflation data overnight.
German CPI met estimates of 0.5% in December, while U.K. PPI was 0.3% vs. (E) 0.6%, which is helping to ease some inflation concerns today.
Looking into today’s session, there is one economic report to watch: Housing Starts and Permits (E: 1.65M, 1.710M) while no Fed officials are scheduled to speak today.
There is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could spark another move in yields (a further rise in rates will continue to weigh on high valuation/growth tech stocks and the broader market while a pullback will open the door to a relief rally).
Finally, earnings season is continuing to pick up with BAC ($0.76), MS ($2.00), UNH ($4.30), PG ($1.65), and CFG ($1.61) all reporting ahead of the bell while UAL ($2.23), AA ($2.04), and DFS ($3.61) will release results after the close.
Bottom line, rising yields have been the biggest influence on stocks in recent sessions so it will take a stabilizing bond market and likely an additional positive catalyst or two (such as good earnings/good economic data) to see equity markets find their footing and rally today.
What’s in Today’s Report:
Futures are slightly higher as markets bounce following Thursday’s declines after a generally quiet night of news.
Economic data was better than expected overnight as UK Industrial Production (1.0% vs. (E) 0.3%) and monthly GDP (0.9% vs. (E) 0.3%) both beat estimates.
Today focus will be on earnings, some economic data and more Fed speak. Economically, the key releases today are Retail Sales (E: 0.0%), Industrial Production (E: 0.3%) and Consumer Sentiment (E: 70.4). From the Fed, we have Harker (10:00 a.m. ET) and Williams (11:00 a.m. ET). The bottom line is that to help markets stabilize, the data and Fed speak need to give the “March rate hike” mantra a rest, so that means in-line economic data and a slightly more relaxed tone from Fed officials.
Finally, today marks the start of earnings season and there are multiple key reports to watch today: JPM ($ 2.98), WFC ($1.09), BLK ($10.23) and C ($1.89). Put simply, earnings need to be solid given the recent volatility, otherwise we can expect the declines to accelerate over the coming weeks.
What’s in Today’s Report:
Futures are little changed following a generally quiet night of news.
Vice-Chair Brainard’s prepared remarks for today’s testimony were released after the close and she said fighting inflation was the Fed’s “most important task” largely echoing Powell’s commentary from Tuesday.
Senator Manchin called the 7% CPI print “very troubling,” further reducing the chances of Build Back Better passing.
Today focus will be on Brainard’s testimony, but as long as she doesn’t imply sooner than expected balance sheet reduction, the market shouldn’t take her comments too hawkishly. Other potential market events today include, in order of importance: PPI (E: 0.4%, 9.8%), Jobless Claims (E: 205K) and three Fed speakers: Harker (8:00 a.m. ET), Barkin (12:00 p.m. ET) and Evans (1:00 p.m. ET).
With stocks not too far from recent highs, they will again be sensitive to more hawkish rhetoric, so if Brainard and her Fed officials are hawkish, and we get a stronger than expected PPI report, don’t be surprised if that puts a mild headwind on stocks today.
What’s in Today’s Report:
Markets are trading with a risk-on tone this morning as U.S. equity futures track global shares higher after Powell’s testimony helped stabilize bond markets yesterday while investors look ahead to today’s CPI report.
Chinese inflation data was cooler than feared o/n with CPI dipping to 1.5% vs. (E) 1.8% and PPI falling to 10.3% vs. (E) 11.3% Y/Y which is helping ease inflation concerns today.
Looking into today’s session, the December CPI report (E: 0.4%, 7.1%) will be the main focus of markets early with the annual figures expected to hit a fresh multi-decade high. But as long as the headline and core figures are not materially “hotter” than feared, this week’s relief rally, led by tech shares, should be able to continue amid further stabilization in bond markets.
Outside of the early inflation data, there is one Fed speaker to watch: Kashkari (1:00 p.m. ET) as well as a 10-Year Treasury Note auction at 1:00 p.m. ET. And as long as Kashkari does not contradict any of Powell’s comments from yesterday regarding the balance sheet runoff coming “later in the year,” and the auction doesn’t spark a new move higher in yields, then risk-on money flows should be able to continue.
What’s in Today’s Report:
Futures are slightly lower following a generally quiet weekend as investors digest last week’s hawkish surprises ahead of Powell’s testimony tomorrow and CPI on Wednesday.
Economically, the only notable number was Eurozone Unemployment, which met expectations at 7.2%.
Chances of Build Back Better passing fell further over the weekend as according to the Washington Post, Manchin remains against the current framework for the plan.
Today there are no economic reports and just one Fed speaker, Bostic (12:00 p.m. ET), so we’d not be surprised to see markets churn ahead the three major catalysts coming later this week: Powell’s testimony on Tuesday, Wednesday’s CPI Report, and Brainard’s testimony on Thursday. Those three events will determine whether stocks rally of decline this week and any additional hawkish surprises will pressure stocks.
The Fed is already actively discussing shrinking the balance sheet showing they are serious about being hawkish, and stocks dropped…says Tom Essaye of The Sevens Report. Click here to watch the full interview.
