China’s PMI this morning was horrific, that underscores that the Chinese economy is a huge drag on global growth right now. It’s a risk to keep inflation high…said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
We shouldn’t have gone up 2% yesterday on the news…said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are enjoying a modest oversold bounce following Friday’s selloff, but there was no improvement over the weekend on the three headwinds pressuring stocks: Chinese growth worries, Ukraine war and hawkish Fed.
Economic data was mixed as the April Chinese manufacturing PMI dropped further (to 47.4 from 49.5) while the EU PMI slightly beat estimates (55.5 vs. (E) 55.3) and German Retail Sales underwhelmed (-0.1% vs. (E) 0.3%).
Today focus will be on the ISM Manufacturing PMI (E: 58.0) and markets need to see a solid number to push back on stagflation concerns. If we get a weak number, expect the selling to resume and stagflation fears to grow.
Earnings season will begin to wind down this week but there are still some important results coming and some we’re watching today include: NXPI ($3,17), CAR ($3.54) and MGM ($-0.09).
What’s in Today’s Report:
Futures are moderately lower following underwhelming earnings and guidance from AMZN and AAPL.
AMZN results underwhelmed the street (especially margins) while APPL beat earnings but had cautious guidance for Q2 based on supply chain issues.
Economically, inflation pressures remained high as core EU HICP (their CPI) rose 3.5% yoy vs. (E) 3.1%.
Today focus will be on inflation as we get two important readings: Core PCE Price Index (E: 0.3%, 5.3%) and the Employment Cost Index (E: 1.1%). Markets will want to see the actual numbers miss estimates, and in doing so further hint at a peak of inflation. If the opposite happens (the numbers are hotter than estimates) that will further pressure stocks. We also get Consumer Sentiment (E: 65.6) and the Inflation Expectations sub-index will be watched closely.
On the earnings front, some important results today include: XOM ( $2.25), CVX ($3.44), CL ($0.74).
Sevens Report Research founder Tom Essaye discusses if the market has hit its lows of the year or if there is still more to come on Fox Business’s “The Claman Countdown.” Click here to watch the interview.
What’s in Today’s Report:
S&P futures are up 1% this morning as yesterday’s steep declines are digested amid upbeat earnings and guidance out of MSFT after the close yesterday (MSFT is up 5%).
Economic data was net negative overnight as Australian CPI was hotter than expected while U.K. CBI Distributive Trades and the German GfK Consumer Climate Index both badly missed estimates, however, investors are shrugging off the data as the focus is on earnings this morning.
Looking into today’s session, there are two economic reports: International Trade in Goods (E: -$105.0B) and Pending Home Sales (E: -1.1%) but neither should move markets and no Fed officials are scheduled to speak.
There is a 5-Yr Treasury Note auction at 1:00 p.m. ET that could move the bond market as yields have pulled back considerably since last week’s highs and a reversal back higher could become a headwind on stocks again, especially growth names.
Finally, the market’s main focus at the moment is earnings and we will get results from: BA (-$0.26) and HOG ($1.52) before the bell and then FB ($2.58), F ($0.39), PYPL ($0.89), QCOM ($2.91), and DFS ( $3.58) after the close. If earnings, especially by big tech companies can top estimates, a relief rally could play out as stocks are near-term oversold, however, momentum through yesterday’s close has been decidedly negative and the price action remains heavy.
What’s in Today’s Report:
Futures are modestly lower this morning after a quiet night of news as yesterday’s big intraday reversal higher is being digested.
Today is lining up to be a busy one with a slew of economic data due to be released, in order of importance: Durable Goods (E: 1.0%), Consumer Confidence (E: 106.8), Case-Shiller Home Price Index (E: 1.5%), FHFA House Price Index (E: 1.6%), and New Home Sales (E: 772K). Investors will want to see solid data that contradicts the growing fear that the Fed is getting more aggressive with policy into an economic slowdown.
There are no Fed speakers today but there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could move the bond market and ultimately impact stocks in the early afternoon.
The market’s main focus today will be on earnings with: UPS ($2.87), PEP ($1.24), GE ($0.20), MMM ($2.33), and JBLU (-$0.85) reporting ahead of the bell while MSFT ($2.18), GOOGL ($25.63), GM ($1.57), V ($1.65), and COF ($5.39) are all scheduled to release results after the close.
Bottom line, for yesterday’s late day reversal higher in equity markets to continue today, we need to see good economic data, steady or falling bond yields, and most importantly favorable earnings, especially out of big tech names like GOOGL and MSFT.
Looking at the yield curve, the 10s-2s spread continued to widen out and is now smack in the middle of the 30-40 basis point resistance range, and we think that’s a critical resistance level…said Tom Essaye, founder of Sevens Report Research, in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are modestly lower following a generally quiet weekend of news.
Chinese economic data was better than expected as Q1 GDP rose 4.8% vs. (E) 4.2%, but concerns remain about future economic growth given continued lockdowns (concerns about future Chinese growth is a headwind on global stocks right now).
Geopolitically there was no change in the Russia/Ukraine war as fighting ranges in eastern Ukraine and there is no reason to expect a cease fire anytime soon.
Today the key report is the Housing Market Index (E: 78) and we’ll be looking for any signs that mortgage rates at 10+ year highs are starting to slow the housing market. We also get one Fed speaker, Bullard (4:00 p.m. ET), and we can expect him to be hawkish (but the market already knows that).
Finally, this is a big week for earnings and some important reports today include: BAC ($0.76), SCHW ($0.85), JBHT ($1.91).
What’s in Today’s Report:
Futures are modestly lower with European markets while oil rallies and global bond yields move higher amid simmering geopolitical tensions and lingering inflation fears.
Economically, Final Composite PMI data was mostly better than expected in Europe overnight but price measures continued to rise, suggesting inflation has still not peaked.
Today, we will get two economic reports starting with International Trade (E: -$88.8B), but the ISM Services Index (E: 58.5) will be the more important release to watch shortly after the opening bell as a continued rise in the price measures could further stoke inflation/stagflation fears.
Additionally, there are multiple Fed speakers today: Kashkari (10:00 a.m. ET), Brainard (11:05 a.m. ET), Daly (12:30 p.m. ET), and Williams (2:00 p.m. ET). And if their tone is more hawkish than current market expectations, that could send yields to new highs and pressure high growth tech names which would drag the broad market lower.