The looming jobs report is a reminder that expectations for Fed policy are the key influence on this market right now…Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter, told Bloomberg. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply lower following a big earnings miss by Facebook (FB was down 20% after hours).
FB posted disappointing margins and guidance and the steep decline in the stock is pulling futures lower.
EU and UK Composite PMIs were mixed as the EU reading slightly missed while the UK PMI beat estimates, although neither number is moving markets.
Today will be a busy day. First, we get two central bank announcements (BOE at 7:00 a.m. and ECB at 7:45 a.m.). The BOE is expected to hike rates 25 basis points and while there’s no change expected to ECB policy if Lagarde is hawkish at her press conference that will add to the earnings-inspired declines.
We also get some notable economic data, including the ISM Services PMI (E: 59.9), Jobless Claims (E: 250K), and Productivity and Costs (E: 2.4%, 1.7%) and as has been the case, markets will crave stability to ward off stagflation fears.
Finally, on the earnings front, AMZN ($3.88) after the close is the big report today. Of the super cap tech stocks, we’re had some good reports (AAPL/MSFT/GOOGL) and some bad reports (NFLX/FB), and markets need AMZN to land in the former. Beyond AMZN, some other reports we’ll be watching include: MRK ($1.52), LLY ($2.51), COP ($2.20), HON ($2.08), SNAP ($0.10), and F ($0.43).
What’s in Today’s Report:
Futures are slightly lower following a quiet weekend as markets digested last week’s volatility and Friday’s rally.
Atlanta Fed President Bostic was encouraged by Friday’s inflation data and expected three hikes this year, which is less hawkish than the current market expectation.
China’s manufacturing PMI slightly best estimates at 51.1 vs. (E) 51.0, further implying that economy is stabilizing.
There are no economic reports today, but there are two Fed speakers, Daly (11:30 a.m. ET) and George (12:40 p.m. ET) and if they echo Bostic’s “not as hawkish as expected” commentary from this weekend, then stocks can extend the rally.
On the earnings front, most of the big reports come later this week (FB, GOOGL, AMZN) but after the close today, we get NXPI ($2.98) and markets will be focused on chip availability, and if there’s positive commentary there that could be another tailwind on this market.
What’s in Today’s Report:
Futures are little changed following Wednesday’s sell-off, as solid economic data is helping sentiment.
The Chinese December Composite PMI beat estimates at 53.0 vs. (E) 51.2, the second straight better than expected data point from China. UK Composite PMI also beat estimates, imply a resilient economy in response to Omicron.
President Biden and Senator Manchin are set to resume negotiations on “Build Back Better” signaling the legislation isn’t dead (again passage of this in Q1 shouldn’t shock markets but it will not likely be a major market influence, either).
Today’s focus will be on economic data, specifically Jobless Claims (E: 205K) and the ISM Services PMI (E: 67.0). If the data is very strong, will that increase concerns the Fed will get even more hawkish, and that will pressure stocks again.
What’s in Today’s Report:
Futures are starting the new year with moderate gains driven mostly by momentum/start of year positioning, following a quiet weekend of news. Many major markets today (London, Japan, Australia, U.S. Bonds) are closed.
Tesla (TSLA) reported better than expected deliveries for the fourth quarter and the stock is up 7% pre-market, and that’s helping markets rally.
There was no new news on Omicron over the weekend as cases skyrocket but hospitalizations remain relatively low.
With so many major markets closed, today will be a mostly quiet day, and barring any surprises tomorrow will be the first “real” trading day of the year. We do get one notable economic report today, the Markit December Manufacturing PMI (E: 57.8), and markets will want to see a “Goldilocks” number that shows Omicron isn’t a major economic headwind, but at the same time the data isn’t so strong it makes the Fed more aggressive.
Sevens Report Quarterly Letter Delivered Today
Our Q4 ’21 Quarterly Letter will be released today.
We use our strength (writing about the markets) to help you:
You can view our Q3 ’21 Quarterly Letter here
To learn more about the product (including price) please click this link.
If you’re interested in subscribing, please email info@sevensreport.com.
What’s in Today’s Report:
Futures are modestly lower on a slightly hawkish Reuters article about ECB QE and as markets digest this week’s rally.
According to Reuters, the ECB is considering tapering its QE program in March, which is sooner than markets expected and is another reminder that global central banks will be removing accommodation throughout 2022.
Economic data was sparse overnight as Chinese CPI met expectations rising 0.4%.
Today the only notable economic report is Jobless Claims (E: 223K) and they should show continued improvement in the labor market. Additionally, markets will remain on the lookout for any official government data or more findings from MRNA/PFE on vaccine effectiveness against Omicron, and anything that implies substantial protection against infection and severe illness will be a tailwind on stocks (although at this point the market doesn’t view Omicron as a material threat so the tailwind won’t be that strong).
Annual Discounts on Sevens Report, Alpha and Quarterly Letter
We’ve continued to be contacted by advisor subscribers who want to use the remainder of their 2021 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free) or add a new product (Alpha or Quarterly Letter).
If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you want to extend current subscriptions or save money by upgrading to an annual subscription (across any Sevens Report product), please email: info@sevensreport.com.
Initially, the stock market took the jobs report as good news. Any result above 200,000 but not wildly above expectations..wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as markets digest Thursday’s rally ahead of the jobs report.
In Washington, the Senate passed a bill to avoid a government shutdown, removing a potential risk from markets.
The Omicron variant has been detected in five states now but symptoms so far appear mild.
Economically, EU and UK Composite PMIs generally met expectations.
Today focus will be on the Job Report and expectations are as follows: Job Adds 543K, UE Rate 4.5%, and Wages 5.0% y/y. As long as the jobs report is around expectations (so not above 700k but still showing solid job additions with wages not spiking) then markets will expect a mild acceleration of tapering and the rally can continue. We also get the ISM Services PMI (E: 65.0) and markets will be looking for a similarly “Just Right” number to show solid growth but nothing so strong it would encourage the Fed to substantially accelerate tapering of QE.
What’s in Today’s Report:
Futures are solidly higher as markets bounce following Friday’s COVID related steep declines.
The new COVID variant, named Omicron, was identified in numerous countries over the weekend, and governments enacted more travel bans to try and stop the spread. But, beyond those measures, the market didn’t learn anything “new” about the variant over the weekend.
Regarding today’s bounce in futures, Friday’s steep declines were due in part to light liquidity and attendance, so we’re seeing that portion of the declines reversed this morning now that people are back to work.
Today we get the Pending Home Sales Index (E: 0.7%) and we have one Fed speaker (Williams at 3:00 p.m. ET) but the focus will be on COVID headlines. It’s safe to assume the variant is already in the U.S. but a headline confirming that might create a short-term headwind. Beyond the short term, however, the major unknown is whether the variant can evade the current vaccines, and that will determine whether this COVID pullback in stocks is brief, or something more extended.
What’s in Today’s Report:
Futures are modestly higher ahead of the jobs report and despite underwhelming European economic data.
German Industrial Production (-1.1% vs. (E) 0.9%) and EU Retail Sales (-0.3% vs. (E) 0.8%) both missed estimates but those reports aren’t moving markets.
House Democrats are expected to pass the bipartisan infrastructure bill later today, while the larger $1.75 trillion stimulus bill remains in negotiations.
Today focus will be on the Jobs Report and expectations are as follows: Job Adds: 400K, UE Rate: 4.7%, Wages: 0.4%/4.8%. Given the Fed didn’t commit to a $15 billion tapering beyond December, a “Too Hot” number (in either jobs adds or wages) could cause market volatility, but outside of that occurring the jobs report shouldn’t move markets too much. We also get one Fed Speaker, George at 9:30 a.m. ET.
