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Not As Bad As Feared, But How Much Better Are Fundamentals?

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What’s in Today’s Report:

  • Fundamentals:  Not As Bad As Feared, But How Much Better Are They?
  • Weekly Market Preview:  Can the S&P 500 Hold This Recent Bounce?
  • Weekly Economic Cheat Sheet:  Friday’s CPI is the Key Report This Week

Futures are solidly higher thanks to positive news from China.

The economic reopening in China progressed over the weekend as COVID cases continued to decline, authorities relaxed more restrictions in Beijing, and none of the fifty largest cities in China have intense restrictions in place.

Also in China, the WSJ reported authorities may soon end their probe into Didi, and that might also signal an end to the government crackdown on Chinese tech stocks (if so that’d be a major positive for Chinese tech names and a peripheral positive for tech stocks more broadly).

Today there are no notable economic reports or Fed speakers, so it should be a generally quiet day of news.  Across the pond, UK Prime Minister Johnson faces a “no confidence” vote in Parliament, but he’s expected to survive it (if he doesn’t, that could be a surprise negative for stocks today but again that is unlikely).

Are Semiconductors A Buy?

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What’s in Today’s Report:

  • Are Semiconductors A Buy?

Futures are little changed following a quiet night of news.

Economic data was mixed as final May manufacturing PMIs were in-line with expectations for the EU and UK, although German Retail Sales missed estimates (–5.4% vs. (E) -0.1%).

On the Fed front, Bostic said his comments about a “pause” on rate hikes shouldn’t be interpreted that the Fed will help rescue volatile markets.

Today focus will be on economic data and Fed speak via the ISM Manufacturing PMI (E: 54.5), JOLTS (E: 11.40M) and comments by Williams (11:30 a.m. ET) and Bullard (1:00 p.m. ET).  Bottom line, the ideas of slowly moderating (but not collapsing) growth and the possibility for a Fed “pause” in rate hikes in late summer/early fall have helped stocks rally, and as long as today’s data and Fed speak don’t refute those possibilities, stocks can extend the recent rally.

Tom Essaye Quoted in Barron’s on May 26th, 2022

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The Dow Rose, and What Else Is Happening in the Stock Market Today

This two-day rally in the market is mostly built on the premise that the Fed may ‘pause’ rate hikes after the two 50-bps adjustments this summer…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Bounce or Bottom? A Key Level to Watch

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What’s in Today’s Report:

  • Bounce or Bottom?  A Key Level to Watch

Futures are slightly higher following a night of mixed earnings and continued reopening in China.

Shanghai continued to reopen and Beijing is still avoiding the most draconian lockdowns and that’s helping broader market sentiment.

Economic data was sparse as the only notable report was Euro Zone M3 (6.2% vs. (E) 6.3%) but that’s not moving markets.

Today the key report is the Core PCE Price Index (E: 0.3%, 4.9%) and if it underwhelms vs. expectations and furthers the idea that inflation has peaked, look for a continuation of this week’s rally.  We also get Consumer Sentiment (E: 59.1) and the key there will be the five-year inflation expectations.  If they drop below 3.0%, that’ll be an additional positive for stocks today.

Tom Essaye Quoted in Forbes on May 18, 2018

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Target Stock Plunge Wipes $25 Billion As Inflation Squeezes Customers And Sends Costs Soaring—Spurring ‘Dramatic’ Earnings Shortfall

In a morning note, market analyst Tom Essaye of the Sevens Report pointed out retail customers are buying less high-margin merchandise (like apparel and electronics) to instead spend more on lower-margin food (like bread and eggs), and also shifting spending away from brand names to cheaper private labels—signs that “consumers are starting to…” to read the full report, click here.

Tom Essaye Quoted in Barron’s on May 9th, 2022

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The Dow Fell, Palantir Tumbled—and What Else Happened in the Stock Market Today

The selling is technical and emotions (fear/greed) that are driving the markets on an intraday basis and we should all prepare for more elevated volatility ahead…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in CNBC on May 9th, 2022

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10-year Treasury yield rises to its highest level since November 2018

To start the year, we knew that central bank tightening would make for a challenging market, but that has been compounded by two surprise events: The Russia/Ukraine war (no one expected that in January) and Chinese lock-downs (it’s quasi-shocking the Chinese are still adopting these policies and crushing their economy)…wrote Tom Essaye of The Sevens Report. Click here to read the full article.

Market Multiple Table

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What’s in Today’s Report:

  • Why Stocks Dropped Again (It Wasn’t Actual News)
  • Market Multiple Table – May Update

Stock futures are trading with tentative gains this morning as yesterday’s steep declines are digested after a mostly quiet night of news.

Economically, data overseas was slightly better than feared (specifically Economic Sentiment within the German ZEW Survey) while the NFIB Small Business Optimism Index in the U.S. held steady at 93.2, topping estimates of 92.9.

There are no notable economic reports today but there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and if the results help the bond market stabilize, that could help equities bounce today.

Finally, there are a slew of Fed speakers today including: Williams (7:40 a.m. ET), Bostic (8:30 a.m. ET), Barkin (9:15 a.m. ET), Kashkari (1:00 p.m. ET), and Mester (3:00 p.m. ET). If they collectively strike a “less-hawkish” tone, that could also help fuel a relief rally in stocks today.

Tom Essaye Quoted in Barron’s on May 5th, 2022

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The Dow Lost More Than 1,000 Points as Wednesday Gain Vanishes

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.

Tom Essaye Quoted in The Madison Leader Gazette on May 5, 2022

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Stock Market Today: Dow Slides, Shopify Tumbles, NIO Slumps

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.