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Second Half Outlook

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What’s in Today’s Report:

  • Second Half Outlook
  • Weekly Economic Cheat Sheet

Stock futures are little changed with investors focused on OPEC+’s failure to reach a new output policy agreement yesterday while economic data was mixed overnight.

OPEC+ called off a follow-up meeting yesterday after the UAE would not agree to extending production cuts through 2022 which drove oil to new multi-year highs in overnight trading as current cuts will remain in place by default, deepening supply deficit expectations for the second half of the year.

Economically, Final Composite PMI reports were mostly as expected while EU Retail Sales topped estimates but none of the data materially moved markets overnight.

Today, there is just one notable economic report to watch: ISM Services Index (E: 63.5), and no Fed officials are scheduled to speak. That will leave investors focused on the oil market in the wake of the OPEC+ developments as well as awaiting any news on infrastructure as the calendar is otherwise fairly quiet as we start the holiday-shortened trading week today.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on June 28, 2021

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Oil prices end at a more than a 1-week low on demand concerns, OPEC+ output uncertainty

There’s a resurgence in COVID-19 fears as case counts are rising sharply in parts of Asia, while the ‘Delta variant’ of the virus is…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Oil Update: EIA Data and OPEC+ Policy Outlook

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What’s in Today’s Report:

  • June PMI Composite Flash Data Takeaways
  • Oil Update: EIA Data OPEC+ Policy Outlook

S&P futures are trading solidly higher this morning amid infrastructure deal optimism ahead of key data today.

Risk on money flows are being driven by reports that a roughly $1T-$1.2T infrastructure deal, that will not require changes to individual or corporate tax rates, is “imminent.”

This morning is lining up to be a busy one from a catalysts standpoint as there are several important economic reports to watch including: Durable Goods Orders (E: 2.0%), Final Q1 GDP (6.4%), International Trade in Goods (E: -$87.9B), and Jobless Claims (E: 380K).

Several Fed officials are also scheduled to speak: Williams (11:00 a.m. ET), Kaplan (1:00 p.m. ET), and Bullard (1:00 p.m. ET) while there is a 7-Yr Treasury Note auction at 1:00 p.m. ET.

Bottom line, investors will want to see economic data remain strong today but importantly not run “too hot” as that could spark renewed hawkish concerns and weigh on broader equity markets as we saw last week. Additionally, Fed chatter can continue to lean hawkish but not so much that we see policy expectations turn more hawkish than the post-Fed reaction. Finally, today’s 7-Yr Treasury Note auction is the wildcard to watch as if it is a repeat of the February disaster, bond market volatility could spill over into equity markets.

Sevens Report Co-Editor Tyler Richey Quoted in MarketWatch on March 17, 2021

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U.S. supply climbs a 4th week and after IEA deems supercycle unlikely

“As long as demand continues to climb…the weather-related issues in the U.S. energy industry are resolved, and there are no policy surprises from OPEC+ participants, then the backdrop…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Stimulus Update and Jobs Report Preview

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What’s in Today’s Report:

  • Stimulus Update (A Deal by Next Friday?)
  • Jobs Report Preview:  What Markets Need a “Just Right” Number
  • OPEC+ Update and Oil Outlook

Futures are marginally higher ahead of the jobs report on more positive stimulus commentary overnight.

More Dems and Republicans voiced support for the $900-billion-ish stimulus bill overnight, and some, or all, of the bill could be passed by next Friday (the budget deadline).

Economic data was again solid overnight as German Manufacturers’ Orders beat estimates (2.9% vs. (E) 1.5%).

Today focus will be on any more stimulus headlines and the Employment Situation report.

Expectations for the jobs report are: Job Adds: 500K and U.E. Rate:  6.8%.  Anything above 250kish jobs adds should be “fine” for the market, especially given the stimulus momentum and it’d likely take a negative number to hit stocks.

Finally, there are several Fed speakers today including: Williams (8:05 a.m. ET), Evans (9:00 a.m. ET) and Bowman (10:00 a.m. ET), but none of them should materially move markets.

Have Things Improved This Much?

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What’s in Today’s Report:

  • Have Things Improved This Much?
  • Weekly Market Preview:  Focus Shifts to Earnings
  • Weekly Economic Cheat Sheet:  How Bad Is The Economy? (We Get Important Updates This Week)

Futures are modestly lower following a generally quiet weekend as markets digest last week’s big rally.

OPEC+ agreed to cut global oil output by 9.7 mln barrels/day, slightly below to 10 mln barrel/day estimate.  That will improve the supply/demand imbalance, but it won’t spark a big rally in oil (it’ll take a sooner than expected reopening of the global economy to do that).  For stocks, this is a mild positive as oil probably won’t make new lows going forward.

Coronavirus trends continued to improve over the weekend as it becomes more clear virus growth has peaked, although that’s already priced into stocks at these levels.

Today there are no economic reports or Fed speak, and most of Europe is closed, so any coronavirus updates will likely drive trading.

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on March 5, 2020

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OPEC’s recommendation for the 1.5 million barrel per day cut was “a bullish surprise versus expectations on the surface, however, Russia was not willing to participate in the…” which total 500,000 barrel per day, said Tyler Richey, co-editor of Sevens Report Research. Click here to read the full article.

Sevens Report Co-editor Tyler Richey Quoted in MarketWatch on March 4, 2020

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The EIA, however, also reported that domestic production edged up to a fresh all-time high of 13.1 million barrels a day and “exports from the U.S. climbed to their second highest level on record, suggesting that the U.S…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Oil Rig

Tyler Richey, co-editor at Sevens Report Research Quoted in MarketWatch on February 10, 2020

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“Energy traders are focused on the coronavirus right now, trying to gauge how it has, and will, affect demand in China, supply internationally, and ultimately how OPEC+ will adjust…” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

China flag

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • Why Have Stocks Rallied?

Global equities rallied overnight and stock futures are trading higher today after China reduced tariffs on $75B worth of U.S. goods, spurring optimism for a “phase two” trade deal and further easing concerns about the coronavirus outbreak’s impact on the global economy.

Outside of trade news, OPEC+ has agreed to cut their collective oil output target by 600K b/d to help support oil prices which crashed into a bear market this week on Wuhan coronavirus fears.

Today, there are two economic reports to watch: Jobless Claims (E: 215K) and Productivity and Costs (E: 1.5%, 1.2%) while two Fed officials will speak: Kaplan (9:15 a.m. ET) and Quarles (7:15 p.m. ET).

Additionally, there are a few earnings releases due out including: TWTR ($0.28), BMY ($0.88) and UBER (-$0.68), however given the latest trade-war news, the markets will remain largely focused on China’s decision to cut tariffs and any new developments regarding the coronavirus outbreak.