“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.
What’s in Today’s Report:
Stock futures are extending yesterday’s gains as traders await today’s CPI report amid mixed news from overnight.
In China, a $143B stimulus package aimed at the semiconductor industry helped offset the delay of an economic/Covid policy meeting due to a surge in Covid cases.
Economic data was mixed overnight but there were no surprises material enough to derail the tentative pre-CPI rally this morning.
Today, traders will be keenly focused on the November CPI report at 8:30 a.m. ET with the headline expected to come in at 0.3% M/M and 7.3% Y/Y while the Core figure is expected to be 0.4% M/M and 6.1% Y/Y. Bottom line, a print below 7.3% on the headline and below 6.1% in the core figure will be well received by investors but an upside miss in either could trigger a sharp reversal of this most recent move higher in the broader stock market.
Once markets digest the CPI report, money flows are likely to take on a positioning tone with tomorrow’s Fed decision looming and a limited list of catalysts for the remainder of the day. There is a 30-Yr Treasury Bond auction at 1:00 p.m. ET that could move rates and have a mild impact on stocks.
The technical outlook remains bullish for gold near term, but “if we see rates and the dollar begin to rise, we are likely to see much of the November rally retraced in the weeks ahead,” analysts at Sevens Report Research wrote in Wednesday’s newsletter. Click here to read the full article.
“Bottom line, the economic outlook is turning for the worse (outside of the labor market) and if that continues, it will support the long end of the curve,” wrote Tom Essaye of the Sevens Report. Click here to read the full article.
