Posts

All Clear for a Santa Rally?

/in , /by

What’s in Today’s Report:

  • All Clear for a Santa Rally?
  • Weekly Market Preview:  All About the Fed
  • Weekly Economic Cheat Sheet:  First Look at December Data (Is Omicron An Economic Headwind?)

Futures are modestly higher on continued momentum from last week’s rally, following a very quiet weekend of news.

On COVID, the growing consensus is that fully vaccinated people are protected against severe illness while those with boosters are also protected against infection, so it is increasingly unlikely Omicron causes a sustained pullback.

On stimulus, Democrats are still trying to pass the $1.7-ish trillion spending bill before year-end, but Senator Manchin remains an obstacle, and passage of the bill in 2021 (or perhaps at all given high inflation and 2022 is an election year) is becoming increasingly unlikely.

Today there are no economic reports and no Fed speakers so it should be a mostly quiet day, although we could get official vaccine results vs. Omicron from PFE or MRNA any day, and if the data confirms the consensus opinion, that would be a mild tailwind on stocks.

Two Key Inflation Reports Today

/in , /by

What’s in Today’s Report:

  • Future Headwinds on Gold?

Futures are modestly higher following a generally quiet night as markets await the latest readings on inflation via today’s CPI and inflation expectations index in Consumer sentiment.

Economic data slightly underwhelmed as UK Industrial Production (1.3% vs. (E) 1.4%) and UK GDP (0.9% vs. (E) 1.0%) both missed expectations.

There were no notable Omicron updates overnight.

Today the focus will be on inflations via the  Consumer Price Index (E: 0.7% m/m, 6.8% y/y) and the inflation expectations index in the Consumer Sentiment report (E: 67.0).  Markets are already expecting the Fed to materially accelerate the pace of tapering of QE next week, but if these inflation readings come in much hotter than expected, that likely will be a headwind on stocks as it will only encourage the Fed to get even more aggressive in tapering QE.

Tom Essaye Quoted in Barron’s on December 3, 2021

/in , /by

The Dow Fell, November’s Jobs Report Missed—and What Else Happened in the Stock Market Today

Initially, the stock market took the jobs report as good news. Any result above 200,000 but not wildly above expectations..wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in CNBC on December 5, 2021

/in , /by

Dow jumps nearly 650 points, erasing last week’s losses as investors shake off omicron worries

But it was comments from the Fed that unnerved markets late last week, not fears about the…according to Tom Essaye, author of the Sevens Report. Click here to read the full article.

Tom Essaye Quoted in Unseen Opportunity on December 6, 2021

/in , /by

No “Santa Rally” for Stocks?

Super-cap tech has been well bid on the expectation of ‘forever’ low rates and support…said Sevens Report founder Tom Essaye. Click here to read the full article.

Tom Essaye Quoted in Aljazeera on December 6, 2021

/in , /by

Stocks surge as Omicron worries abate following volatile week

That’s a set up where stocks can continue to rally, although I think we all need…wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.

Are Rate Hikes a Reason to Reduce Stock Exposure?

/in , /by

What’s in Today’s Report:

  • Are Rate Hikes a Reason to Reduce Stock Exposure?
  • Chart: Level to Watch in the VIX

U.S. stock futures are tracking global equity markets higher amid easing Omicron fears and good economic data.

GlaxoSmithKline reported overnight that their antibody treatment is effective against the heavily mutated Omicron variant which is helping further ease fears about the new strain.

Economically, Chinese Imports rose 31.7% vs. (E) 21.5% y/y and Exports rose 22.0% vs. (E) 20.3% y/y in November pointing to a still-healthy economic recovery and that is supporting risk on money flows this morning.

Today, there are two lesser followed economic reports due out: International Trade in Goods and Services (E: -$66.8B), Productivity and Costs (E: -4.9%, 8.3%) but neither is likely to materially move markets while there are no Fed officials speaking today.

There is a 3-year Treasury Note auction at 1:00 p.m. ET that could impact yields and the broader curve and if we see a sharp enough flattening move (weak demand for shorter maturities amid rate hike fears) stocks could come under pressure, but to be clear, the tone is very risk on this morning as dip-buyers step into the market, chasing this bounce higher.

Tom Essaye Quoted in News Nation USA on October 8, 2021

/in , /by

Big Tech’s Stocks Have Bounced Back. But They’re Not Out of The Woods Yet.

If tech is facing headwinds, then the S&P 500 itself will have a hard time rallying since…wrote Tom Essaye of Sevens Report in a note last week. Click here to read the full article.

 

Follow Up to “How Does the Rally Ultimately End?”

/in , /by

What’s in Today’s Report:

  • Follow Up to “How Does The Rally Ultimately End?”

Futures are modestly higher mostly on momentum from Thursday’s earnings-driven rally.

Alcoa (AA) was the only notable earnings report overnight but like most reports on Thursday, it beat estimates.  While it’s very, very early in earnings season, so far the results are better than feared and that’s driving the rally.

Today is another busy day of economic data, Fed speak, and earnings.  Economically, the three key reports are Retail Sales (E: -0.1%), Empire State Manufacturing Index (E: 25.0), and Consumer Sentiment (E: 74.0).  Markets will want to see stability in the first two, and the focus will be on inflation expectations in the third (they need to stay close to last month’s readings).

On the earnings front, we have three notable reports today:  GS ($9.78), PNC ($3.64), JBHT ($1.77), and we also get two Fed speakers, Bullard (11:45 a.m. ET) and Williams (12:20 p.m. ET), with the latter being the more important of the two.

How Does This Rally Ultimately End?

/in , /by

What’s in Today’s Report:

  • How Does This Rally Ultimately End?

Futures are solidly higher following slightly underwhelming inflation data and better than expected earnings.

Chinese CPI rose 0.7% vs. (E) 0.8%, implying inflation pressures may be peaking.

On earnings, TSM beat estimates and upped guidance and that’s helping to lift stocks.

Today there are two notable economic reports, Jobless Claims (E: 320K) and PPI (0.5%, 8.7%) and markets will want to see claims continue to fall and PPI remain generally stable.  We also have multiple Fed speakers today including: Bullard (8:35 a.m. ET), Bostic (9:00 a.m. ET), Barkin & Williams (1:00 p.m. ET) and Harker (6:00 p.m. ET).  Their tone will likely be to reinforce that tapering is happening this year (as the market expects) but that shouldn’t move markets.

Finally, on the earnings front, some important results we’ll be watching today include:  TSM ($1.03), BAC ($0.71), WFC ($1.03), C ($1.82), UNH ($4.41), MS ($1.70), WBA ($1.03 and AA ($1.85).  If inflation is better than expected, that will help stocks rally.