When to Brace for More Volatility

What’s in Today’s Report:

  • Revisiting the VIX – When to Brace for More Volatility
  • Familiar Holiday Volatility Courtesy of OPEC & Russia

U.S. equity futures are slightly higher and the dollar is pulling back modestly after a mostly quiet night of news as traders eye a stabilizing oil market.

After a volatile session yesterday, WTI crude oil is trading comfortably above $80/barrel this morning, fueling a rally in energy companies which is buoying index futures in pre-market trading.

Today, there is only one lesser-followed economic report due out: Richmond Fed Manufacturing Index (E: -1.0) and two Fed officials are scheduled to speak: Mester (11:00 a.m. ET) and George (2:15 p.m. ET).

Additionally, there is a 7-Yr Treasury Note auction at 1:00 p.m. ET that could move markets but the tape has been very quiet this week as attendance is light and volumes are down given the Thanksgiving holiday schedule. So more choppy and rangebound trading between 3,900 and 4,000 in the S&P is likely.

Sevens Report Analysts Quoted in Market Watch on August 31st, 2022

Oil futures end lower, with economic jitters fueling a more than 9% monthly loss for U.S. prices

All of yesterday’s news flow was digested as bearish for oil as the threat of OPEC+ cuts were reduced, demand estimates in Europe were adjusted lower on poor data while ‘hot’ data in the U.S. added to already hawkish money flows that bolstered the dollar and further pressured oil, wrote analysts at Sevens Report Research, in a note. Click here to read the full article.

Tom Essaye Quoted in Barron’s on August 9th, 2022

Oil Earnings Outlook Dims. Blame Cheaper Oil.

For oil’s drop, it’s mostly a demand story. If you see oil move into the high to mid 70s, people are going rethink the idea that these companies are cash flow-generating machines, Essaye said. Click here to read the full article.

Jobs Report Preview

What’s in Today’s Report:

  • Jobs Report Preview (First of Two Key Economic Reports)
  • EIA and OPEC Meeting Analysis

Futures are slightly higher on momentum from Wednesday’s rally and as the market again ignored soft economic data.

Economic data from Europe was again disappointing as German Manufacturers’ Orders slightly missed estimates (-9.0% vs. (E) -8.9%) as did the UK Construction PMI (48.9 vs. (E) 52.0).

Geo-politically, China began massive military drills around Taiwan, although they were previously announced.

Today focus will be on the Bank of England rate decision (E: 50 bps hike) and on weekly Jobless Claims (E: 260K).  Specifically, markets will want to see if the BOE implies more 50 bps hikes are ahead (if so that’s a mild negative for the region).  On jobless claims, will they continue to move methodically towards 300k? (That would be a mild positive as it implies slowing in the labor market, which the Fed needs to get to peak hawkishness).

From a Fed speak standpoint, Mester speaks at 12:00 p.m. ET.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on July 19th, 2022

Oil futures finish higher, with U.S. prices holding above $100 as supply concerns resurface

Biden’s visit to Saudi Arabia last week has “already become old news as traders refocus on the major influences on the oil market right now: the Russia-Ukraine war, OPEC+ policy outlook, and recession concerns linked to high inflation, COVID lockdowns in China, and aggressive central bank policy around the globe…Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

Market Multiple Table: January Update

What’s in Today’s Report:

  • Market Multiple Table: January Update
  • OPEC+ Meeting Takeaways (Not So Bullish)

Stock futures are down modestly this morning, but off the overnight lows in sympathy with rising European shares while Asian markets declined on Chinese regulatory concerns and fresh COVID lockdowns in Hong Kong.

Final December Composite PMI’s were slightly disappointing but investors are already looking ahead to 2022.

Today, there are three economic reports to watch: Motor Vehicle Sales (E: 13.2M), ADP Employment Report (E: 414K), PMI Composite Final (E: 56.9). It will be important for the latter two to point to continued growth but not at a pace that would cause an additional hawkish shift by the Fed as that would likely send rates sharply higher and act as a headwind on broader equity markets.

There are no Fed speakers today but the minutes from the December FOMC meeting will be released at 2:00 p.m. ET.

Why Did Treasury Yields Surge Yesterday?

What’s in Today’s Report:

  • Why Did Treasury Yields Surge Yesterday?
  • Oil Update – OPEC+ Meeting Preview

Stock futures are trading at record highs as investors shrug off surging COVID cases and digest upbeat economic data.

New COVID cases topped 1 million in the U.S. Monday, nearly doubling the previous record, however, hospitalizations and deaths remain low, keeping economic lockdown odds minimal as the Omicron outbreak is increasingly expected to burn itself out in the coming weeks.

China’s Manufacturing PMI rose to 50.9 vs. (E) 50.0 in December further easing global growth concerns.

Today, there are two economic reports to watch: ISM Manufacturing Index (E: 60.5) and JOLTS (E: 11.060M). Investors will be looking for more good data, but not so good that rate hike expectations are brought forward.

There are no Fed speakers today. The January OPEC+ policy meeting will be underway soon (E: +400K b/d production hike in February) and if the group of oil producers disappoint the market, expect a potential spike in volatility that could spill over into both equity and bond markets.

Jobs Day

What’s in Today’s Report:

  • Omicron Update
  • OPEC Meeting Takeways

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.

Jobs Report Preview

What’s in Today’s Report:

  • Jobs Report Preview
  • Why the Bank of England Surprise Matters to You
  • OPEC Decision and Oil Market Update

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.

Sevens Report Co-Editor Tyler Richey Quoted in Independent Journal Review on August 29, 2021

Ida Slams US Coast Harder than Katrina, Virtually All Gulf Oil Production Now Crippled by Monster Storm

How demand expectations change in the wake of the storm will depend…said Tyler Richey, co-editor at Sevens Report Research, according to MarketWatch. Click here to read the full article.