Posts

Technical Update (Bounce or Bottom?)

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What’s in Today’s Report:

  • Technical Market Update – Bounce or Bottom?
  • U.S./China Trade Update (What’s Next and What Sectors Benefit)

Futures are modestly lower as markets digest the recent rally following a quiet night of news.

Economically, Chinese inflation underwhelmed as CPI rose 1.9% vs. (E) 2.0% and PPI gained just 0.9% vs. (E) 2.7%.  However, those soft numbers give Chinese authorities more room to further stimulate their economy, so low inflation isn’t a negative.

On trade, there were no further comments from either side (a slight negative) as some were hoping for some optimistic official statement from the Chinese.

Today focus will remain on the Fed as we get multiple Fed speakers, highlighted by Fed Chair Powell (1:00 PM) and Vice Chair Clarida (5:30 PM).  We expect more dovish language from virtually all the speakers today, but at this point most of the benefit from dovish Fed speak is priced in, so don’t expect the comments to be a major positive catalyst unless there’s a surprise.

Economically, the calendar is quiet although we do get Jobless Claims (E: 224k) and we want to see those move back towards 200k and away from 250k.

Four Keys to a Market Bottom Updated

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What’s in Today’s Report:

  • Four Keys to a Market Bottom – More Progress But Not There Yet
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet

Futures are marginally lower following a quiet weekend as markets digest Friday’s big rally.

Economic data was mixed overnight as Japanese Composite PMI and German Manufacturers’ Orders missed estimates.  However, German Retail Sales (1.4% vs. (E) 0.4%) and EU Retail Sales (0.6% vs. (E) 0.2%) beat expectations.   So, the data reflects a still generally muddled global economic outlook.

Regarding trade, the next round of U.S./China trade talks began in Beijing but there were no notable headlines, although none were expected this early so the silence isn’t a negative at this point.

Today focus will be on economic data as we get the ISM Non-Manufacturing PMI (E: 58.4).  Despite Friday’s strong jobs report there are growing worries about the U.S. economy so a good ISM Non-Manufacturing (or service sector) PMI should help stocks keep most of Friday’s gains.  Finally, we also have one Fed speaker today, Bostic at 12:40 p.m. ET, but he shouldn’t move markets.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • Is the AAPL Decline an Opportunity for Value Stocks?

Futures are down more than 1% as AAPL sharply cut Q4 revenue guidance.

AAPL cut Q4 revenue guidance to $84 bln from the previous $89-$93 bln range, citing slowing Chinese demand as the main negative influence.

Economically UK Construction PMI and Euro Zone Money supply both slightly missed expectations.

The entire tech sector will be in focus today to see how well it can hold up in the face of the AAPL news, which wasn’t a shock as analysts and suppliers have been cutting IPhone numbers for months.  If stocks can set the lows early in the day and rally back, that would be an anecdotal sign near term selling pressure may be exhausted.

Away from AAPL, we get a lot of economic data today including (in order of importance): ISM Manufacturing Index (E: 57.9), ADP Employment Report (E: 175K), Jobless Claims (E: 217K) and Motor Vehicle Sales (E: 17.3M).  Data today could be important because if the data is firm, it should decrease the AAPL fallout.  However, if the data is weak, then it’s going to be another ugly day as the news will reinforce worries about corporate earnings and economic growth.

More Growth Fears

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What’s in Today’s Report:

  • The Aussie-Yen Points to Further Growth Fears

S&P futures are tracking international shares lower to start the year this morning as another set of soft economic data stoked fears of slowing global growth.

The Chinese Caixin Manufacturing PMI Index fell 0.5% to 49.7 in December suggesting the world’s second largest economy is slipping into contraction.

Meanwhile, the Eurozone PMI Manufacturing Index met expectations but dipped to a near two year low of 51.4.

In the U.S. today, there is one economic report to watch: PMI Manufacturing Index (E: 53.9) and there are no Fed officials scheduled to speak.

Long Term Entry Point?

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What’s in Today’s Report:

  • Why I’m Buying Some Stock in My IRA Today
  • Weekly Economic Cheat Sheet
  • Weekly Market Preview

Futures are seeing a modest oversold bounce following a generally quiet weekend.

If there is a “reason’ for this modest bounce in futures it was the administration trying to reassure investors over the weekend.  Treasury Secretary Mnuchin tried to calm markets by 1) Stating Trump knows he can’t fire Fed Chair Powell and 2)  Calling the heads of major U.S. banks to ensure there were no liquidity problems (there weren’t).

There was no notable economic data or U.S./China trade updates over the weekend.

Today there are no economic reports and no Fed speakers,  and the markets close early (1:00 p.m. ET).

Sevens Report’s Tom Essaye quoted in The Wall Street Journal on December 12, 2018

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Sevens Report’s Tom Essaye quoted in The Wall Street Journal on December 12, 2018. Read the full article here.

Sevens Report’s Tom Essaye quoted in Barron’s on December 12, 2018

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Sevens Report’s Tom Essaye quoted in Barron’s on December 12, 2018. Read the full article here.

Sevens Report’s Tom Essaye quoted in Barron’s on December 13, 2018

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Tom Essaye quoted in Barron’s on December 13, 2018. Read the full article here.

Sevens Report’s Tom Essaye appeared on Cheddar on December 12, 2018

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Sevens Report’s Tom Essaye appeared on Cheddar on December 12, 2018. He breaks down how Trump’s optimism on trade talks, and impacted the markets.

Watch the entire clip here.

Bounce Coming?

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What’s in Today’s Report:

  • Why We Could Be Close to a Bounce

Futures are modestly lower following the surprise resignation of Defense Secretary Mattis.

Mattis was seen as a stabilizing force in the administration, so his resignation is an incremental negative on general sentiment and that’s pressuring stocks this morning.

Economically, Q3 British GDP met expectations at 0.6%.

Today there is a lot of important economic data including (in order of importance):  Durable Goods (E: 1.4%), Core PCE Price Index (E: 0.2%), Final Q3 GDP (E: 3.5%) and Consumer Sentiment (E: 97.5).  The key numbers will be the Core PCE Price Index (it needs to stay around 2.00%) and Durable Goods (they need to be stable) as they can give us a stock positive “Goldilocks” outcome.

Additionally, Fed Governor Williams will by on CNBC at 10:00 a.m., and if he’s dovish that might help stocks rally.

Finally, today is quadruple witching options expiration.