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Earnings Season Preview

What’s in Today’s Report:

  • Earnings Season Preview
  • EIA Analysis and Oil Market Update

Futures are little changed following a quiet night of news and ahead of the long weekend.

There were no notable economic reports overnight. Geopolitically, the Russia/Ukraine war raged on as fighting intensifies in eastern Ukraine (as has been expected).

Earnings overnight were net positive as Taiwan Semiconductor (TSM) provided solid guidance and that’s helping to relieve some ongoing semiconductor supply anxiety.

Today will be a busy day, with the first potentially big event being the ECB Decision at 7:45 a.m. ET.  No change is expected to rates or QE, but if Lagarde is hawkish in her commentary it could hit stocks.

Economically, we’ll have multiple reports today including, in order of importance, Retails Sales (E: 0.6%), Consumer Sentiment (E: 58.8), and Jobless Claims (E: 175K).  As has been the case, markets will want to see continued stability in the data.

Finally, we have two Fed speakers, Mester (2:30 p.m. ET) and Harker (6:00 p.m. ET), but they shouldn’t move markets.

Will Inflation Start to Peak This Week?

What’s in Today’s Report:

  • Updated Market Outlook
  • Weekly Market Preview:  Will Inflation Start to Peak?
  • Weekly Economic Cheat Sheet:  Key Inflation Data This Week

Futures are modestly lower as Chinese inflation stayed high while the Russia/Ukraine war may be intensifying.

Chinese PPI rose 8.3% vs. (E) 8.1% while CPI gained 1.5% vs. (E) 1.4%, underscoring that inflation has not yet peaked in China.

Geo-politically, Russia is poised for a large assault on eastern Ukraine and analysts are anticipating some of the more intense fighting of the war.

Today there are no economic reports but there are several Fed speakers including Bostic (9:30 a.m. ET), Williams (12:00 p.m. ET) and Evans (12:40 p.m. ET) and we expect them to continue the trend of guiding markets towards a 50 bps hike in May and endorsing the idea of 250 basis points of tightening by year-end (but that shouldn’t move markets as that is already well known).

General Technical Take for Equities

What’s in Today’s Report:

  • What the FOMC Minute Mean for Markets (Hawkish)
  • General Technical Take for Equities
  • EIA Analysis and Oil Market Update

Futures are bouncing slightly following a quiet night as markets digest the declines of the past two days.

Economic data was mixed overnight as German Industrial Production missed estimates while Euro Zone Retail Sales beat expectations, but neither number is moving markets.

Geopolitically there was no new news on Russia/Ukraine as the conflict continues with little signs of any progress towards a cease fire.

Today we get one notable economic report, Jobless Claims (E: 202K) but three Fed speakers:  Bullard (9:00 a.m. ET), Evans (2:00 p.m. ET) and Williams (4:05 p.m.).  We expect each of them to further hammer the point that rates are rising by 50 bps in May, with balance sheet reduction beginning in the same month.  But, as long as they don’t say anything “hawkishly new” then stocks should be able to look past the commentary.

Tom Essaye Quoted in Financial Post on April 5, 2022

Treasuries Retreat While U.S. Stocks Decline: Markets Wrap

Stocks are vulnerable to disappointment once again given the recent rally, so any deterioration in the Russia/Ukraine situation, spike in oil and hints of stagflation (high inflation/lagging growth) will hit stocks, and a 10% air pocket shouldn’t shock anyone…Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter, said in a note. Click here to read the full article.

Tom Essaye Quoted in Bloomberg on February 24, 2022

Bitcoin’s Digital Gold Luster Fades as Customary Havens Win Out

Gold is doing exactly what it should be doing right now, but it’s a much more mature asset and it’s got a proven history in these types of conflicts of how it trades…said Tom Essaye. Click here to read the full article.

Tom Essaye Quoted in Coinspeaker on February 23, 2022

Dow Jones Tanks as Tension between Russia and Ukraine Escalates

The Russia/Ukraine situation remains very fluid, and tensions remain high, and in the short term that will remain a headwind on stocks…said Tom Essaye, founder of the Sevens Report. Click here to read the full article.

Tom Essaye Quoted in Big News Network on February 23, 2022

The Russia/Ukraine situation remains very fluid, and tensions remain high, and in the short term that will remain a headwind on stocks…Tom Essaye, founder of the Sevens Report told CNBC Tuesday. Click here to read the full article.

Tom Essaye Quoted by Big News Network on January 28, 2022

Yesterday’s FOMC decision and Powell’s presser was both positive and negative for markets, but in the end, it mostly reinforced what we know: The Fed is serious about raising rates, that’s going to continue to…Tom Essaye, founder of Sevens Report, said in a note to clients Thursday, as reported by CNBC. Click here to read the full article.

 

Why Did Stocks Drop Again?

What’s in Today’s Report:

  • Why Did Stocks Drop Again?
  • Technical Analysis Follow Up to Sector Valuations
  • EIA Analysis and Oil Market Update

Futures are modestly lower but that’s not that bad considering Thursday’s ugly close and the soft NFLX earnings overnight.

Earnings were generally underwhelming, highlighted by the soft NFLX guidance which sent the stock down 20% after hours.  But, PPG and CSX also cited higher costs as impacting profitability, furthering margin concerns.

UK Retail Sales was the only notable economic number, and it missed estimates (-0.9% vs. (E) 3.4%).

Today there are no economic reports and just two notable earnings announcements, SLB ($ $0.39) and ALLY ($2.01), but they shouldn’t move markets.  Instead, it’s all about tech.  If tech can stabilize today, then markets can bounce (possibly into the Fed meeting next week).

Why High Growth Tech Is Still a Risk to the Market

What’s in Today’s Report:

  • Bottom Line:  Why High Growth Tech Is Still a Risk to the Market
  • Weekly Market Preview:  Watch Treasuries and ARKK
  • Weekly Economic Cheat Sheet:  January Data Coming into Focus

Stock futures are sharply lower today as global bond yields surge to multiyear highs on tighter monetary policy expectations.

The 2-Yr T-Note yield topped 1% this morning with a rise of 7 basis points which is weighing on high valuation tech names, sending Nasdaq futures down roughly 2%.

Today, there are two economic reports to watch: Empire State Manufacturing Index (E: 26.0) and the Housing Market Index (E: 84). The market will be looking for decent numbers that don’t imply the recovery is losing momentum but not data that is “too hot” and could cause further rate hike fears. There are no Fed speakers today.

The Treasury will hold auctions for both 3-month and 6-month T-Bills at 11:30 a.m. ET today which typically does not warrant much attention, but given the increasing concerns about rate hikes this morning, the outcomes of the auctions could shed additional light on bond traders’ rate outlook and therefore move markets (soft auctions and a further rise in yields would be a stiffening headwind on tech stocks).

Finally, earning season is continuing to get underway with a few notable companies releasing results: GS ($12.10), PNC ($3.61), JBHT ($1.99).