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Sevens Report – October Economic Breaker Panel

What’s in Today’s Report:

  • October Economic Breaker Panel:  How Long Can the Economic Plateau Last?

Futures are sharply lower as surging coronavirus cases in Europe are sparking fears of another self-imposed economic slowdown.

New lockdowns were announced across Europe, with some of the toughest measures coming in London and Paris.

Today there are several important economic reports, including Jobless Claims (E: 833K), Empire State Manufacturing (E: 14.5) and Philly Fed (E: 14.5).  Markets will want to see jobless claims get below 800k to show the labor market is improving, while Empire and Philly provide the first look at October economic data and markets will want to see stability.  With futures down sharply, any disappointment in the economic data could exacerbate the losses.

We also get multiple Fed speakers today, Bostic (9:00 a.m. ET), Kaplan (11:00 a.m. ET), Quarles (11:00 a.m. ET) plus some notable earnings, TSM ($0.92), WBA ($0.96), MS ($1.26), but I don’t think any of that will move markets unless there’s a big surprise lurking.

Is A Blue Wave Really Good for Stocks?

What’s in Today’s Report:

  • Is a Blue Wave Really Good for Stocks?

Futures are moderately higher again on momentum from the previous day’s rally, as it was another quiet night of news.

Economic data overnight was disappointing, as the Chinese Composite PMI missed estimates (54.5 vs. (E) 55.0), as did Japanese Household Spending and UK IP.

Politically, nothing  changed overnight, as no stimulus is expected until after the election.

Today there are no notable economic reports and only one Fed speaker, Barkin at 9:00 a.m. ET, so stimulus headlines will likely drive trading, as they have all week.

Market Multiple Table: September Update

What’s in Today’s Report:

  • Market Multiple Table: September Update

Stock futures are modestly lower today as investors digest yesterday’s strong equity rally and assess the COVID-19 outbreak among politicians after President Trump’s return to the White House from Walter Reed Medical Center.

Economically, German Manufacturers’ Orders grew 4.5% vs. (E) 2.3% in August but positive economic data remains a near-term negative for risk assets as it reduces pressure for lawmakers to unleash more stimulus.

Looking into today’s session, there are two economic reports to watch: Goods & Services Trade (E: -$66.5) before the bell and JOLTS (E: 6.250M) shortly after the open but neither is expected to materially move markets.

There are also multiple Fed speakers today including: Harker (12:00 p.m. ET), Bostic (2:00 p.m. ET), and Kaplan (6:00 p.m. ET) but Powell (10:40 a.m. ET) will be the most closely watched as the market looks for further clues into future policy.

Beyond economic data and Fed speakers, markets will continue to focus on Capitol Hill and the ongoing negotiations for the next stimulus deal. Specifically, Speaker Pelosi and Treasury Secretary Mnuchin are expected to have a follow up call today so investors will be anxiously waiting for any updates from their conversation.

Tom Essaye Quoted in CNBC on September 10, 2020

“Hopes for a stimulus deal before the election (Nov 3rd) are fading, and if that’s the case we should expect that to weigh on stocks in the coming weeks…” Tom Essaye, founder of The Sevens Report. Click here to read the full article.

Trader on the Stock Exchange floor

S&P 500 Technical Update (Chart)

What’s in Today’s Report:

  • Market Multiple Table Chart

Futures are moderately lower on digestion of Wednesday’s rally following a generally quiet night.

Economic data was sparse as Japanese Machine Orders was the only notable report, as it beat estimates (6.3% vs. (E) 2.0%).

On the stimulus front, Senate Republicans will pass a $500 bln stimulus bill today but it won’t pass the House, and hopes for a stimulus deal before the election (Nov 3rd) are fading, and if that’s the case we should expect that to weigh on stocks in the coming weeks, especially if economic data starts to roll over.

Today we get the ECB Decision at 7:45 a.m. ET and the expectation is for no change to rates or QE.  But, ECB President Lagarde could be dovish in her comments starting at 8:30 ET, and if so that could boost the dollar and be a mild headwind on stocks today.

Away from the ECB, the key report today is Jobless Claims (E: 830K) and markets will want to no major back tracking on the recent drop in claims (so no numbers close to 1MM).  Finally, we also get PPI (E: 0.3%), which was “hot” last month.  But, with the Fed max dovish, it’s unlikely even a high PPI would cause much volatility in stocks.

Tom Essaye Quoted in Unseen Opportunity on September 3, 2020

“Let me be clear: The only reason we do not have a stimulus bill passed yet is because the economy and…” explained Tom Essaye, founder of The Sevens Report. Click here to read the full article.

Earnings Season Takeaways in the COVID Era

What’s in Today’s Report:

  • In the Era of COVID, How Can We Use Earnings to Generate Market Insights?

Stock futures are trading modestly higher this morning as investors digest yesterday’s new record highs in the S&P after a mostly quiet night of news.

Traders remain optimistic for a stimulus deal however there were no positive developments overnight while economic data was sparse and did not move markets.

Looking into today’s session, there are no economic reports to watch and the calendar is fairly quiet in the morning.

Potential market catalysts do pick up in the afternoon as the Treasury will hold a 20-Yr Bond auction at 1:00 p.m. ET which has the potential to move rates, the yield curve and ultimately impact equity markets.

Later in the afternoon, the minutes from the most recent Fed meeting will be released at 2:00 p.m. ET before Richmond Fed President Barkin speaks at 3:00 p.m. ET.

The market’s primary focus right now however remains the stimulus package and with rising chatter about potential concessions in the front half of the week, the prospects for a deal have improved. And any additional positive news regarding a stimulus deal should help the market continue to grind to new record levels.

Tom Essaye Quoted in Forbes on August 13, 2020

Investors are still expecting another stimulus package will eventually get passed: “The market still wants, and very much expects, an actual stimulus bill to be signed…” according to Tom Essaye, editor of the Sevens Report. Click here to read the full article.

Tom Essaye Quoted in FinTech Zoom on August 13, 2020

“The market nonetheless needs, and really a lot expects, a precise stimulus invoice to be signed…” wrote Tom Essaye, editor of the Sevens Report. Click here to read the full article.

Tom Essaye Quoted in CNBC on August 12, 2020

“The market still wants, and very much expects, an actual stimulus bill to be signed. Looking forward, stimulus bill negotiations will…” wrote Tom Essaye, editor of the Sevens Report. Click here to read the full article.

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