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Market Multiple Table: March Update

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What’s in Today’s Report:

  • Market Multiple Table: March Update

U.S. futures fell sharply overnight following Russia’s threat to shut the Nord Stream 1 pipeline and the U.S. expressing a willingness to ban imports of Russian oil. But reports of successful evacuations from Ukraine through a corridor agreed upon with Russia has sparked risk on money flows in pre-market trading.

Economic data in Europe was generally good o/n with German Industrial production topping estimates while Eurozone GDP met expectations. Domestically, the NFIB Small Business Optimism Index fell to 95.7 vs. (E) 97.1.

Today, there is one economic report to watch: International Trade in Goods & Services (E: -$84.0B), however, it should not move markets, while the Treasury will hold a 3-Yr Note auction at 1:00 p.m. ET.

Bottom line, the market is attempting to stabilize this morning following yesterday’s route, but for the market to bounce further, we will need to see meaningful de-escalation between Russia and Ukraine over the course of the day.

A Narrowing Path to an Economic Soft Landing

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What’s in Today’s Report:

  • A Narrowing Path to an Economic Soft Landing
  • Weekly Market Preview:  All About Ukraine (Will there be a real cease-fire?)
  • Weekly Economic Preview:  Inflation is key this week (CPI on Thursday)

Futures are sharply lower as oil spiked more than 6% (above $120/bbl) overnight on multiple reports the West is actively considering an embargo on Russian oil and gas.

Geopolitically, there were attempts at localized cease-fires in southern Ukraine to allow citizens to flee the cities, but those efforts have been, so far, a failure.  More peace talks are scheduled for today although not much progress is expected.

Economic data was solid as German Manufacturers’ Orders and Retail Sales both beat estimates, but that’s not moving markets.

Today there are no notable economic reports and no Fed speakers, so oil and geopolitics will continue to move markets.  If oil continues to rally throughout the day, that will further pressure stocks and it’ll take meaningful progress on a cease-fire to help markets rebound (and that doesn’t seem likely, at least not today).

Tom Essaye Quoted in Kiplinger on February 9th, 2022

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Stock Market Today: Nasdaq Recovery Continues as Comms, Tech Rebound

Bottom line, inflation remains the single biggest potential influence over Fed policy, and Fed policy will determine whether stocks continue to rally, or decline…said Tom Essaye, founder of the Sevens Report. Click here to read the full article.

Tom Essaye Quoted in Market Watch on February 9, 2022

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Will hot inflation data kill the stock-market bounce? What investors want to see

Inflation has to stop going up. I know that sounds overly simplistic, but the bottom line is that for the past several months, markets and the Fed have seen ‘hints’ of a peak in inflation pressures, yet that wasn’t reality…said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

FOMC Minutes Preview

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What’s in Today’s Report:

  • FOMC Minutes Preview
  • PPI Remains Hot (Chart)
  • Empire State Manufacturing Index Takeaways

Stock futures are slightly lower while most global markets rallied overnight as traders continue to monitor the situation in Ukraine and look ahead to the Fed minutes release.

Geopolitically, there were no major developments regarding Ukraine o/n but U.S. officials continue to warn that an invasion is possible at anytime, leaving markets on edge.

Economically, Chinese inflation data came in below estimates while U.K. PPI ran hot but neither release materially moved markets overnight.

Today is lining up to be a fairly busy day from a catalyst standpoint as there are several notable economic reports due out including: Retail Sales (E: 2.0%), Import & Export Prices (E: 1.3%, 0.7%), Industrial Production (E: 0.4%), and Housing Market Index (E: 83).

From there, focus will shift to a 20-Yr Treasury Bond auction at 1:00 p.m. ET and then likely the most important catalyst of the day, the FOMC Minutes will be released at 2:00 p.m. ET.

The market has been very indecisive in recent sessions and that is likely to continue today, however, if the geopolitical backdrop remains largely calm, economic data is favorable, and the FOMC minutes are not interpreted as overly hawkish, we may finally see the market break back to test the February highs.

Are the Hot CPI and Bullard’s Hawkish Commentary Bearish Gamechanger?

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What’s in Today’s Report:

  • Are the Hot CPI and Bullard’s Hawkish Comments Bearish Gamechangers?

Futures are moderately weaker mostly on momentum from Thursday’s selloff and despite some reassuring commentary from Fed officials overnight.

Fed Presidents Daly and Barkin both pushed back on the idea of a 50 basis point rate hike in March, countering the hawkish commentary from Fed President Bullard.

Economic data was mixed as German CPI met estimates (4.9% y/y) while UK GDP and Industrial Production both slightly missed estimates.

Today there are no notable economic reports and no Fed speakers scheduled, so focus will be on Consumer Sentiment (E: 67.5) and specifically the inflation expectations indices.  If one year and five year inflation expectations can decline, that will help ease some inflation concerns and could spark a rebound later this morning.

Tom Essaye Quoted in MSN on February 10, 2022

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Will hot inflation data kill the stock-market bounce? What investors want to see

Inflation has to stop going up. I know that sounds overly simplistic, but the bottom line is that for the past several months, markets and the Fed have seen ‘hints’ of a peak in inflation pressures, yet that wasn’t…said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Is An Underwhelming CPI Report A Bullish Gamechanger?

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What’s in Today’s Report:

  • Is An Underwhelming CPI Report A Bullish Gamechanger?
  • EIA Analysis and Oil Market Update

Futures are slightly lower following Wednesday’s rally and ahead of this morning’s CPI report.

Governments and central banks pushed back a bit overnight on the global hawkish narrative as the European Commission predicted inflation would return to 1.7% yoy in 2023 while the Swedish National Bank was dovish in its commentary (no rate hikes or QT anytime soon).

Economic data was sparse overnight although Chinese money supply did beat estimates, reflecting the continued accommodation in that economy.

Today the key event is the CPI Report (E: 0.5% m/m and 7.3% y/y) and an in-line or smaller than expected increase will likely spur a further rally in stocks as markets try and price in a “not as hawkish as feared” Fed (although we’d be skeptical of that rally – more on that in the Report).  We also get Jobless Claims (E: 230K) and one Fed speaker this evening: Barkin at 7:00 p.m. ET.

February Inflation Expectations Update

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What’s in Today’s Report:

  • Inflation Expectations Update: February 2022

Stock futures are solidly higher this morning after another mostly quiet night of news as tech shares rise amid falling bond yields ahead of tomorrow’s CPI report.

There were no market-moving economic reports overnight and no data is due to be released in the U.S. today.

With no economic data on the calendar, the focus will be on Fed speakers: Bowman (10:30 a.m. ET) and Mester (12:00 p.m. ET) as well as a 10-Yr Treasury Note auction at 1:00 p.m. ET.

There are also a few notable companies due to release earnings today including: TEVA ($0.70), UBER (-$0.33), and DIS ($0.57).

Bottom line, the market remains keenly focused on inflation right now and with bond yields pulling back from recent highs, stocks are enjoying a renewed relief rally that could extend higher today as long as yields don’t reverse back towards recent highs.

Why Inflation is the Key Variable Going Forward

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What’s in Today’s Report:

  • Why Inflation Is the Key Variable Going Forward
  • Weekly Market Preview:  More Clarity on Fed Rate Hikes This Week?
  • Weekly Economic Cheat Sheet:  CPI Thursday, Inflation Expectations Friday.

Futures are slightly lower following a quiet weekend as investors digested the strong jobs report and last weeks’ hawkish surprises from the ECB and BOE.

ECB officials downplayed the idea of a summer rate hike over the weekend but didn’t rule out a hike in 2022 (largely confirming the hawkish commentary from Lagarde).

Economic data remained mixed as China’s Caixin services PMI beat estimates (51.4 vs. (E) 50.5) but German Industrial Production missed expectations (-0.3% vs. (E) 0.4%) although the data isn’t moving markets.

Today should be a generally quiet day, as from a market influence standpoint all the really important companies have released earnings, so earnings season is “over” for all intents and purposes.  Additionally, there’s only one notable economic report, Consumer Credit ($21.0 bln), but given the strength of personal balance sheets that shouldn’t move markets today.  On the geo-political front, French President Macron travels to Moscow to meet with Putin about Ukraine, and any positive headlines could produce a mild tailwind on stocks.