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Politics and Markets

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What’s in Today’s Report:

  • Politics and Markets (An Important Week)
  • Weekly Market Preview:  Can the Rebound Continue?
  • Weekly Economic Cheat Sheet:  Important Growth and Inflation Data on Friday

Futures are slightly higher following a quiet weekend as the market’s focus turns to politics this week.

Democrats must pass a “Continuing Resolution” by Thursday to avoid a government shutdown, and while markets expect it will pass, there was little actual progress on that front over the past several days.

Economic data was sparse overnight and isn’t moving markets.

Today we get Durable Goods (E: 0.6%) and there are two Fed speakers, Evans at 8:00 a.m. ET and Williams at 9:00 a.m. ET & 12:00 p.m. ET, but really the market’s focus will be on Washington.  Despite the lack of progress from Democrats so far on passing a “Continuing Resolution” to fund the government before the deadline on Thursday night, markets fully expect that “CR” will pass by then.  But, if it becomes apparent it not might not pass by then, that will cause more stock market volatility.

Tom Essaye Quoted in Barron’s on July 21, 2021

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Chipotle Rises, Netflix Falls, and the Dow Continues Rebounding

Futures are modestly higher thanks to continued momentum from Tuesday’s…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Are Cyclical Sectors Set To Rebound?

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What’s in Today’s Report:

  • Are Cyclical Sectors Set To Rebound?  (They Did Yesterday)

It’s green across the screen this morning but the gains are modest as more positive commentary on U.S./China trade and decent economic data  are supporting markets.

On trade, Treasury Secretary Mnuchin said talks have been “productive” but gave no further details.

Economically, German Retail Sales beat estimates rising 0.9% vs. (E) -1.0%, making it two days in a row of better than expected EU data.

In normal times, today the key data point would be the Core PCE Price Index (E: 0.2% m/m, 1.9% y/y) as that’s the Fed’s preferred measure of inflation.  And, if it ran hot or cold, it would have an impact on perceived Fed policy.  In today’s market, however, it’s take a massive (and almost impossible) move in that price index to change expected Fed policy, so this number likely won’t move markets.  Other notable events today include New Home Sales (E: 615k) and one Fed Speaker:  Kaplan (10:30 a.m.).

Bottom line, this market remains driven by Treasury yields.  They are over extended to the downside and rose slightly yesterday and that helped stocks – and if we see a further rise in yields today ahead of the Chinese PMIs on Sunday, that could boost markets into the weekend.