“In China, Covid-19 cases continue to explode higher and there were reports of overwhelmed hospitals, but officials are proceeding with a full economic reopening.” said Tom Essaye, the founder of Sevens Report Research. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower following a quiet night of news as markets digest Thursday’s rally.
Economically the only notable number was the UK Home Price Index, which like the U.S. readings this week saw smaller than expected declines, falling –0.1% vs. (E) -0.7%.
Geopolitically, Russia continued Thursday’s missile bombardment of Ukraine is a clear signal that fighting will rage on as the New Year begins.
Trading today will be dominated by book squaring and year-end positioning but there is one notable economic report, Chicago PMI (E: 41.0), and if it’s weak it could weigh on markets moderately.
What’s in Today’s Report:
Stock futures are modestly higher in cautious trade this morning with Treasuries largely steady and overseas markets mixed as focus remains on China’s reopening efforts.
China’s government will resume the issuance of passports and visas while Hong Kong dropped PCR testing requirements for travelers, however the rapid move away from “Zero Covid” is beginning to rekindle inflation worries which could become a renewed headwind on equities.
Looking into today’s session, there are two economic reports to watch: Pending Home Sales (E: -0.5%) and the Richmond Fed Manufacturing Index (E: -6) but neither should impact Fed policy expectations or meaningfully move markets in quiet holiday trading.
There are no Fed speakers to watch today but the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET and following yesterday’s large move higher in yields, surprisingly strong or unexpectedly weak demand could influence equity market trading.
“Specifically, despite skyrocketing cases and reports of stressed hospitals, Chinese authorities are not locking down cities and that implies continued increases in energy demand as the world’s second largest economy comes back online,” said analysts at Sevens Report Research, in a note. Click here to read the full article.
“Stocks are digesting the declines of the past two weeks and while there are some notable employment and inflation numbers looming on Thursday and Friday, the bottom line is the calendar into year-end should be mostly quiet, again barring any material surprises,” Tom Essaye, the founder of Sevens Report Research, wrote Wednesday. Click here to read the full article.
“A lot of people are throwing in the towel on the year, for lack of a better word, and you’re seeing people sort of remove some of those hopeful year-end bullish bets,” Tom Essaye, founder of Sevens Research, told Barron’s on Monday. Click here to read the full article.
What’s in Today’s Report:
Futures are sharply lower on momentum from Thursday’s selling as investors further digest the hawkish ECB decision and yesterday’s lackluster economic data.
Despite weaker stock prices this morning, economic data overnight was mildly encouraging. EU and UK December flash PMIs both slightly beat estimates while the EU HICP wasn’t any worse than feared at 10.1% y/y.
Today there are two important economic reports, the Flash Manufacturing PMI (E: 47.7) and Flash Services PMI (E: 46.5) and markets will need to see those data points show 1) Resilient activity and 2) Declining price pressures (more dis-inflation) if they are going to help stocks stabilize. We also get one Fed speaker, Daly (12:00 p.m. ET), but she shouldn’t move markets.
Finally, today is a Quadruple Witching options expiration and it could cause some intense volatility as many traders had been positioned for a year-end rally, and as those hopes are being dashed, some book-squaring is likely in order. Point being, don’t be surprised by an uptick in volatility this afternoon and into the close.
Oil traded lower into the weekend, but the pace of declines “slowed as WTI approached technical support between $70 and $72,” said analysts at Sevens Report Research in Monday’s newsletter. Click here to read the full article.
“We remain in a liquidation phase of the market cycle during which more sophisticated, institutional investors are selling their long-term equity holdings,” Tom Essaye, founder of Sevens Report Research said. Click here to read the full article.
The report “pointed to some further deterioration in consumer demand as we approach the end of the year,” Tyler Richey, co-editor at Sevens Report Research wrote in Thursday’s newsletter. Click here to read the full article.
