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Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart (Printable/Shareable PDF Available)
  • NY Fed Inflation Expectations Data Takeaways
  • Key Levels to Watch Today in the Dollar and Treasuries

Stock futures are modestly higher thanks to good economic data overnight as traders await today’s U.S. CPI report and more Fed speak.

Economically, the U.K.’s Unemployment Rate held steady below 4% but wage growth favorably slowed to 5.9% in January from 6.5% in December.

Meanwhile the NFIB Small Business Optimistic Index in the U.S. met estimates at 90.3 which saw S&P 500 futures hit new pre-market highs at the top of the 6:00 a.m. hour ET.

Today, focus will be on economic data early with CPI (E: 0.5% m/m, 6.2% y/y) and Core CPI (E: 0.3% m/m, 5.5% y/y) due out before the opening bell. Cooling inflation pressures have largely been priced in recently so a low print could see stocks add to YTD gains, but the risk is for a hot print to spark a significant wave of selling amid further hawkish shifting money flows across asset classes.

Moving through the day, there are three Fed speakers to watch: Logan (11:00 a.m. ET), Harker (1:00 p.m. ET), and Williams (2:05 p.m. ET) and they will all likely echo the hawkish tone coming from other Fed officials recently but their comments should not have a major impact on markets.

Earnings season is winding down but a few notable companies reporting today include: KO ($0.45), MAR ($1.84), ABNB ($0.27).

Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch on February 8th, 2023

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Oil futures up a third consecutive session on expectations for higher demand

The data, however, also showed “some evidence of improving consumer demand for refined products,” said Tyler Richey, co-editor of Sevens Report Research, with the four-week moving average of gasoline supplied up by just over 200,000 barrels a day to 8.3 million barrels a day. Click here to read the full article.

Tom Essaye Interviewed by Financial Sense on February 10th, 2023

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Tom McClellan: End of Bear Market Rally; Mike McGlone on Commodities, Gold, and Bonds

Now, Tom says, that ‘bear market rally’ is complete—having fooled enough people into thinking the bear market was over—and predicts more volatility and turbulence ahead with the big moves in tech to lead the major US indices lower. Click here to listen to the full interview.

Two Reasons Rising Bond Yields Haven’t Caused a Pullback (Yet)

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What’s in Today’s Report:

  • Two Reasons Rising Bond Yields Haven’t Caused a Pullback (Yet)
  • Natural Gas Update

Futures are modestly weaker following a rally in oil prices and a continued rise in bond yields overnight.

Oil rallied 2% after Russia announced it was voluntarily reducing output by 500k bpd while OPEC+ did not signal any intention to increase output to offset the reduction.

Global bond yields moved higher after Nikkei reported Kazuo Ueda will become the next BOJ governor, and not the ultra-dove Masayoshi Amamiya (who was expected).

Today focus will remain on the data and specifically University of Michigan Consumer Sentiment (E: 65.0) and the inflation expectations in the report (any further decline will be positive for stocks).  We also get two Fed speakers: Waller (12:30 p.m. ET) and Harker (4:00 p.m. ET) and markets will want to see if they echo the hawkish tone from regional Fed presidents this week.

Market Multiple Table: February Update

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What’s in Today’s Report:

  • Market Multiple Table: February Update
  • EIA Analysis and Oil Update

Futures are enjoying a moderate bounce overnight thanks to slightly better than expected inflation data and earnings.

German CPI rose less than expected (8.7% vs. (E) 9.1%) and that’s helping to slightly calm fears of a bounce back in inflation.

Earnings overnight were also solid as DIS beat estimates and it’s fair to say this earnings season has been not as bad as feared.

Focus will remain on economic data and the only notable report today is Jobless Claims (E: 190K).  Holiday effects should be working their way out of these numbers so investors will want to see claims begin to rise over the coming weeks, otherwise it’ll imply the labor market remains much, much too tight (and that means more potential future rate hikes).

Earnings season is winding down but some notable reports today include: PM ($1.29), PYPL ($1.20), LYFT ($0.13).

Will the October Lows Hold?

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What’s in Today’s Report:

  • Subscriber Q&A: Will the October Lows Hold and What Is Going On Below the Market’s Surface?
  • The Gap Between the Fed and Markets is Closing
  • Chart: 2-Yr Yield Approaches 2023 Highs

Stock futures are little changed while the dollar and Treasuries are steady following a quiet night of news as traders await Powell’s speech today.

Economically, German Industrial Production fell -3.1% vs. (E) -0.6% in December which is rekindling recession worries this morning and helping support the stabilization in bond markets.

Looking into today’s session focus will be on Powell’s speech at 12: 40 p.m. ET as traders brace for the Fed Chair to potentially push back on the market’s dovish reaction to last week’s FOMC decision, something that happened multiple times in 2022 sparking big waves of volatility across asset classes each time.

Expectations for Powell’s speech have already become more hawkish since the January jobs report, however, so he would need to be explicit and firm about raising rates beyond 5% and not cutting rates in 2023 to cause a meaningfully hawkish reaction.

Beyond Powell, there are two lesser followed economic reports to watch: International Trade in Goods Services (E: -$68.8B) and Consumer Credit (E: $25.0B) although neither should have a material impact on markets while the Fed’s Barr also speaks this afternoon (2:00 p.m. ET).

There is a 3-Yr Treasury Note auction at 1:00 p.m. ET and the outcome will offer some evidence of bond traders’ initial take on Powell’s comments. If the auction tails significantly, expect some hawkish follow-through money flows into the afternoon.

Finally, earnings season continues with a couple of notable reports after the close today: CMG ($8.88) and PRU ($2.57).

Was Powell’s Press Conference A Bullish Gamechanger?

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What’s in Today’s Report:

  • Why Did Stocks Rally During Powell’s Press Conference?
  • Was the FOMC Decision A Bullish Gamechanger (No, But It Was a Positive Event)
  • EIA Update and Oil Market Analysis

Futures are solidly higher on continued momentum from Wednesday’s “not hawkish” post-FOMC rally and following better-than-expected META earnings.

META surged 19% overnight as the company reported better-than-feared earnings driven by gains in artificial intelligence and aggressive cost-cutting.

Today will be a very busy day of micro and macro-economic events as we get major central bank decisions, more important economic data, and key earnings.

First, this morning there are two central bank decisions:  BOE Rate Decision (E: 50 bps hike) and ECB Rate Decision (E: 50 bps hit).  If either is overtly hawkish (maybe the ECB) it could send global yields higher and take back some of yesterday’s rally.

After those two central bank decisions, we get an update on the labor market via Jobless Claims (E: 193K),  inflation via Productivity & Costs (E: 2.4%, 1.5%), and economic growth via Factory Orders (E: 2.2%).  Especially in light of Powell’s not hawkish press conference, data that shows stability and declining price pressures will support stocks.

Finally, on earnings, today is likely the single most important day of the earnings season as we get results from three of the most widely held stocks in the market:  AAPL ($1.93), AMZN ($0.15), and GOOGL ($1.14).

Tom Essaye Quoted in Forbes on January 30th, 2023

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Natural Gas Prices Crashing Amid Warmest January In 15 Years—Here’s How Bad Bear Market Could Get

“Warmer-than-average temperatures across much of the country is suppressing heating demand, domestic production remains at record highs, and inventories are seasonably healthy,” explains analyst Tom Essaye, founder of the Sevens Report, of the recently collapsing market for natural gas. Click here to read the full article.

FOMC Meeting Preview

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What’s in Today’s Report:

  • FOMC Preview
  • VIX Chart – Is Volatility About to Surge Again?

U.S. stock futures are tracking European markets lower this morning amid a hawkish reaction to strong economic data and disappointing earnings from UBS and Samsung.

Economic data in Europe showed a reversal back higher in French inflation and better than-feared growth in the EU which is resulting in more hawkish money flows ahead of the several key central bank decisions this week and that is ultimately weighing on risk assets this morning.

Looking into today’s session, there are a few economic reports to watch in the U.S. (in order of importance): Q4 Employment Cost Index (E: 1.1%), Consumer Confidence (E: 109.0), Chicago PMI (E: 45.1), and the Case-Shiller Home Price Index (E: -0.5%).

With the FOMC Meeting getting underway, the macro focus will be on rate markets and expectations for the terminal rate as tomorrow’s 25 basis point hike is priced in with nearly 100% confidence. If market-based terminal rate expectations rise today, expect further pressure on risk assets and lower equity prices broadly.

Meanwhile, earnings season continues in full force today with notable releases coming from: UPS ($3.58), GM ($1.65), XOM ($3.32), MCD ($2.45), CAT ($3.95), and AMD ($0.67).

Did Yesterday’s Data Imply a Soft Landing is More Likely?

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What’s in Today’s Report:

  • Did Yesterday’s Data Imply a Soft Landing is More Likely?

Futures are slightly lower as markets digest Thursday’s rally following a mostly disappointing night of earnings.

Intel (INTC) posted very disappointing results and the stock dropped –9% overnight while other earnings reports were mostly mixed.

Economic data was sparse as Euro Zone Money supply was the only notable indicator and it rose 4.7% vs. (E) 4.8%.

Today focus will turn to inflation via the Core PCE Price Index (E: 0.3%, 4.4%) and five-year inflation expectations in U-Michigan Consumer Sentiment (E: 64.6).  The lower those inflation numbers, the better, and if we get soft inflation data that likely will help extend this week’s rally as it’ll increase expectations for a Fed pause in the next month or two.  We also get Pending Home Sales (E: -1.0%) but that shouldn’t move markets.

On the earnings front, important reports today include: CVX ($4.16), AXP ($2.18), and CL ($0.76).