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Is Tech Still An Anchor on the S&P 500?

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What’s in Today’s Report:

  • Is Tech Still An Anchor on the S&P 500?

Futures are slightly higher following a better night of earnings and more encouraging inflation data.

Earnings from NFLX and PPG were solid after yesterday’s close and that’s helping to slightly bolster sentiment.

On inflation, Japanese CPI was slightly better than estimates (4.0% y/y vs. (E) 4.1%) and that will help to reduce hawkish expectations for the BOJ.

Today there’s just one economic report, Existing Home Sales (E: 3.97 million) and that shouldn’t move markets.  So, focus will be on Fed speak and we get two speakers today: Harker (9:00 a.m. ET) and Waller (1:00 p.m. ET).  If they reiterate the desire for Fed Funds to get above 5%, despite the recent progress on inflation, that will be a mild headwind on stocks.

On earnings, two notable results to watch today are ALLY ($0.98) and STT ($2.00).

Tom Essaye Quoted in Barron’s on December 29th, 2022

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The Nasdaq Jumped Over 2% as Markets Staged a Relief Rally

“In China, Covid-19 cases continue to explode higher and there were reports of overwhelmed hospitals, but officials are proceeding with a full economic reopening.” said Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.

Why Stocks Hit New Lows

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What’s in Today’s Report:

  • Why Stocks Hit New Lows

Futures are higher on potential improvement in the UK fiscal drama and on better than feared economic data.

UK PM Truss will meet with the UK Office for Budget Responsibility today and the hope is something comes from the meeting to further stabilize markets.

Economically, the September Chinese manufacturing PMI beat estimates and rose back above 50 (50.1 vs. (E) 49.4).

The key event today will be the result of the meeting between UK PM Truss and the Office for Budget Responsibility, as that whole situation needs to stabilize if stocks are going to hold up.  Beyond the UK fiscal drama, today there is an important inflation report, the Core PCE Price Index (E: 0.5% m/m, 4.8% y/y) but unless it surprisingly drops, it shouldn’t move markets.

Finally, there are several Fed speakers today but the most important one is Brainard (9:00 a.m. ET) and if she’s slightly dovish, that could help stocks further rally.  Other speakers include Barkin (8:30 a.m., 12:30 p.m. ET), Bowman (11:00 a.m. ET) and Williams (4:15 p.m. ET).

Fundamentals Remain Bearish

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What’s in Today’s Report:

  • Bottom Line: Fundamentals Remain Bearish
  • Economic Data Takeaways: Durable Goods and Consumer Confidence
  • Chart: Nasdaq Holds June Lows So Far

Global equities continued to bleed lower overnight as yields and the dollar rose to new highs however those moves are reversing on the breaking news out of the BOE.

The Bank of England announced a bond-buying program aimed at stabilizing volatile market conditions and while it is not a long-term fix, markets have responded positively so far and the efforts may be enough to trigger a near-term relief rally today as the market remains oversold.

Today, there are two lesser followed economic reports due to be released: International Trade in Goods (E: -$88.7B) and Pending Home Sales (E: -0.8%) but neither should materially move markets.

The Fed speaker circuit remains busy with: Bostic (8:35 a.m. ET), Bullard (10:10 a.m. ET), Powell (10:15 a.m. ET), Bowman (11:00 a.m. ET), and Evans (2:00 p.m. ET) all speaking today. If there is any sign of a less-hawkish pivot, especially by Powell, that could bolster the early attempt at a relief rebound in stocks and other risk assets.

Finally, there is a 7-Yr Treasury Note auction at 1:00 p.m. ET and if the results come in solid, which would be a contrast to yesterday’s 5-Yr auction, a pullback in yields could also be well received by equity markets and trigger a bounce.

Tom Essaye Quoted in Barron’s on August 20th, 2022

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Bitcoin and Stocks Are Falling Together Again. What’s to Blame.

Bitcoin’s moves definitely follow the market. There’s no question, and that’s been especially true on days when the market has been down a lot, Tom Essaye, founder of Sevens Report Research, told Barron’s. Click here to read the full article.

 

Tom Essaye Quoted in S&P Global on June 9, 2022

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Manufacturing momentum drags as interest rates rise, supply chains snag

This is exactly what the Fed wants, The question is how quickly do we lose momentum and a slowing of growth becomes an outright contraction…said Tom Essaye, president of Sevens Report Research, of the slower momentum in manufacturing. Click here to read the full article.

Tom Essaye Quoted in Nasdaq on June 2, 2022

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Markets Slide Once More: Navigate with Managed Futures

Numbers this strong would likely reverse any hopes the Fed would consider a pause in rate hikes after the June/July increases because it would signal the labor market remains very tight…Tom Essaye of the Sevens Report told CNBC. Click here to read the full article.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • Is Good Economic Data Bad for Markets?

Futures are modestly higher following a soft EU inflation reading and on reports, OPEC members may increase oil production.

Euro Zone PPI undershot expectations (1.2% vs. (E) 2.3%) offering some hope that inflation in the EU is peaking.

Oil is down 2.5% after Saudi Arabia said it may increase oil production to make up for any Russian shortfall.

Today’s focus will be on the economic and inflation data including, in order of importance: ADP Employment Report (E: 240k), Unit Labor Costs (E: 11.6%), and Jobless Claims (E: 210k).  If the data is “Goldilocks” then this early rally can continue.  Finally, there are two Fed speakers today, Logan (12:00 p.m. ET) and Mester (1:00 p.m. ET), with the latter more important (and if she’s hawkish that will weigh on sentiment).

Tom Essaye Quoted in Forbes on April 26, 2022

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Bear Market Looms As ‘Relentless Selling’ Batters Stocks—Not Even Lower Inflation Can Help Now

While major stock market indexes plunged as much as 2% Tuesday, analyst Tom Essaye of the Sevens Report warned clients he remains “cautious” on the S&P 500 as stocks struggle to stabilize, pointing to “relentless selling” on Friday as a potential predecessor to a sharp downturn of as much as 5%. Click here to read the full article.

Why Stocks Dropped Last Week (And What It Means for Markets)

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What’s in Today’s Report:

  • Why Stocks Dropped Last Week
  • Weekly Market Preview:  A Key Earnings Week (Results Need to be Good)
  • Weekly Economic Cheat Sheet (Inflation in Focus Again this Week)

Futures are moderately lower on concerns about economic growth as COVID cases rose again in China while hopes for a diplomatic solution in Ukraine have all but faded.

China is continuing with its “zero COVID” policy and with cases rising again markets are fearing more shutdowns, perhaps in Beijing, which is a negative for global growth.

Russian President Putin essentially eliminated a diplomatic solution to the war, ensuring a further drawn-out conflict, which will also be a headwind on global growth.

Today there are no economic reports and no notable Fed speakers, but worries about global growth are the reason stocks dropped last week, so markets need some positive news on growth to stabilize in the near term.

On the earnings front, this is a very important week and while the most important reports don’t come out until later this week, two reports we’ll be watching today are KO ($0.58) and WHR ($4.90).