Tom Essaye, founder of Sevens Report Research, said the timing of the Fed’s announcement on Sunday when it has a regular meeting scheduled for Wednesday may have spooked the market.
“It implies panic, (what did they know that we didn’t?), although that’s probably not…” Essaye said. Click here to read the full article.
What’s in Today’s Report:
Futures are down just under 2% which is an improvement as they were nearly down limit at the lows overnight, so there’s been a good rebound.
On the stimulus front, governments continue to act. Stimulus bill 2 was passed last night and the ECB dramatically increased its QE program by 750 bln euros. and will buy government bonds, corporates and commercial paper. Australia also launched its first ever QE program. All these measures are helping markets and sentiment.
All eyes today will be on Washington for signs of progress on stimulus bill three, and the sooner it passes, the better. From an economic standpoint, Jobless Claims (E: 220K) are the key report and we’re expecting a big increase, while Philadelphia Fed (E: 14.0) will also be important as we want to see more March data.
What’s in Today’s Report:
Futures were “limit up” for much of the night following Monday’s rout but have since pulled back to flat as fears of a coronavirus induced recession to continue to grip markets.
Overnight, the German ZEW Survey was dismal with the Current Conditions Index crashing to -43.1 vs. (E) -25.0 underscoring the rapid deterioration in investor sentiment due to the COVID-19 outbreak.
The Fed Meeting has been canceled following Sunday’s intermeeting actions and there are no Fed speakers today.
There are a few notable economic releases to watch this morning, however. In order of importance they are: Retail Sales (E: 0.1%), Industrial Production (E: 0.4%), Business Inventories (E: -0.1%), Housing Market Index (E: 74), and January JOLTS (E: 6.500M).
The first two are especially important as if the data points confirm that economic growth materially slowed in February as a result of the coronavirus outbreak, it could cause more fear-induced selling today as hopes for a swift rebound in growth will continue to fade.
Of course, any noteworthy updates on the COVID-19 pandemic, positive or negative, will continue to have a significant influence on the market and volatility is likely to remain elevated.
Tom Essaye, founder of Sevens Report Research, thinks most of Friday morning’s rally can be attributed to a “typical oversold bounce,” though he does note there are hopes global governments will unveil economic stimulus plans over the weekend. That began to take form as Germany announced such a fiscal stimulus package. And on a more positive note, Thursday’s drop could be a sign of investor capitulation, according to Essaye…Click here to read the subscribe.
Tom Essaye interviewed with Brian Sozzi and Alexis Christoforous from Yahoo Finance to discuss the stock market and more…Click here to watch the full interview.
“I think too much damage has been done [to the market]. I think rallies for now should be viewed as potential selling opportunities, unless the government comes out with something so inspiring that it really changes that dynamic,” Sevens Report Research founder Tom Essaye said on Yahoo Finance’s The First Trade.
What’s in Today’s Report:
Futures are limit down this morning despite the Fed cutting rates to 0% and restarting its QE program.
On Sunday night the Fed cut rates to 0% and announced a new 700 billion dollar QE program, along with other measures designed to boost liquidity.
Coronavirus news over the weekend wasn’t good as case counts continue to rise, especially in Italy. That country is the new center of the coronavirus outbreak.
Today all eyes will be on the bond market. Treasury yields need to stay down, and if the price action in LQD isn’t too bad, stocks can rally out from these early lows. Economically, there is a notable report this morning, Empire Manufacturing Survey (E: 4.8), as it will give us the first look at juts how bad economic activity has been in March.
What’s in Today’s Report:
Futures are sharply higher as stocks rebound from yesterday’s historic collapse.
Most of the morning rally is just a typical oversold bounce, although there is a lot of “chatter” that global governments are planning to unveil economic stimulus plans over the weekend.
In the U.S., expectations are rising for an economic stimulus plan to be announced as early as this morning. This needs to happen by the open on Monday and the plan needs to be substantial, because as we explain in the issue, this crisis has morphed into a crisis of confidence in Washington’s ability to support the economy, and that’s the real reason stocks went into free fall yesterday.
Today all eyes will be on Washington, because the market is expecting a substantial economic relief package from Congress, and if we don’t get one by Monday (or it’s small and ineffectual) then we should all brace for more volatility.
“Oil is the only market that is more volatile than stocks right now, as futures traders continue to digest the implications of the new price war…” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
Yahoo Finance’s Brian Sozzi and Alexis Christoforous discuss what’s behind this morning’s market action with Tom Essaye of The Sevens Report Research. Click here to watch the full interview.
Tom Essaye interviewed with TD Ameritrade’s Ben Lichtenstein to discuss earnings, stock markets, consumer staples, coronavirus, concerns, unknowns and much more…Click here to watch the full interview.
