Posts

Political Update

/in /by

What’s in Today’s Report:

  • Political Update
  • S&P 500: Market Multiples Price Chart

U.S. stock futures are up over 1% this morning, tracking solid gains in international markets after China’s central bank initiated another round of emergency stimulus overnight.

The PBOC has injected over $240B into the financial system this week to ease the economic impact of the coronavirus outbreak.

Politically, the official results for the Iowa caucuses have been delayed due to technical issues with voting apps but sources say that the results should be released later today.

Looking into today’s session, there are two lesser followed economic data points due out: Motor Vehicle Sales (E: 16.8MM) and Factory Orders (E: 1.2%) while no Fed officials are scheduled to speak.

That will leave focus on the delayed results from the Iowa caucuses as well as earnings from several big names including: DIS ($1.43), F ($0.17), STX ($2.72), ALL ($3.12), PRU ($2.01).

Lastly, the market remains sensitive to the coronavirus outbreak and any significantly negative headlines regarding the spread of the virus or a rising mortality rate could weigh on stocks again.

Tom Essaye Quoted in Yahoo Finance on January 30, 2020

/in /by

The National Health Commission of China reported 7,711 confirmed cases of the coronavirus, including 170 casualties. According to CNBC, Sevens Report founder Tom Essaye said that global markets are “becoming more concerned” about future earnings and economic growth…Click here to read the full article.

Graph

Normal Pullback or Something Bigger?

/in /by

What’s in Today’s Report:

  • Normal Pullback or Something Bigger?
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Three Big Reports This Week)

Futures are bouncing modestly following Friday’s selloff.  The weekend was a quiet one from a market standpoint.

The Wuhan virus situation didn’t change (the virus continues to spread) but there are reports that existing anti-viral drugs are helping to treat the disease (a small positive).

Economically, The EU and British manufacturing PMIs slightly beat estimates, but still remain weak on an absolute basis (47.9 and 50.0 respectively).

Today the key economic report is the January ISM Manufacturing PMI (E: 48.7), and following Friday’s bad Chicago PMI, the market needs a decent number to help reassure investors the U.S. economic remains on solid footing.  There’s also one Fed speaker, Bostic at 4:30 p.m. ET, but he shouldn’t move markets.

Regarding any Wuhan headlines, the key remains whether they will add more pressure to global growth.  If we hear about more plant closures/flight & travel restrictions, etc. that will pressure stocks.

Tom Essaye Quoted in CNBC on January 30, 2020

/in /by

“The spread of the Wuhan virus isn’t accelerating, but markets becoming more concerned about future earnings and economic…” said Tom Essaye, founder of The Sevens Report. Click here to read the full article.

Coronavirus

Tom Essaye Quoted in Investor Place on January 28, 2020

/in /by

Tom Essaye, founder of Sevens Report Research, says investors have a clear playbook for Wuhan.

“From a market standpoint, since this disease is closely related to SARS, I think the market…” Essaye says. Click here to read the full article.

Tom Essaye

Tom Essaye Quoted in Axios on January 27, 2020

/in /by

Between the lines: That likely paints the Fed into a corner in addressing the program at its meeting tomorrow, Tom Essaye, director of Sevens Report Research, says in a note.

  • “[T]he dovish Fed has underwritten a lot of this four-plus-month rally, and they need to reassure markets they’re going…” Click here to read the full article.

FOMC Takeaways (An End to QE4?)

/in /by

What’s in Today’s Report:

  • FOMC Takeaways:  Slightly Dovish, But Could Set Up For a More Volatile Q2
  • Are Repo Operations Really QE?  (And Why You Should Care)

Futures are sharply lower as concerns about the economic fallout from the Wuhan coronavirus continue to mount.

The spread of the Wuhan virus isn’t accelerating, but markets becoming more concerned about future earnings and economic growth as companies implement work stoppages to reduce the chance of the disease spreading.

Today there is a Bank of England rate decision and while the official market expectation is for no change, don’t be shocked if there’s a 25 bps rate cut.  Outside of the BOE, we also get the first look at Q1 GDP (E: 2.1%) and Jobless Claims (E: 215K).

On the earnings front, today is really the last “big” day of earnings, and the clear highlight is AMZN ($3.98) after the close, followed by: V ($1.46), KO ($0.43), UPS ($2.10), VZ ($1.15), MO ($1.01).

Yield Curve Update and Fed Meeting Preview

/in /by

What’s in Today’s Report:

  • Technical Outlook: S&P 500
  • Fed Meeting Preview
  • Yield Curve Update

Futures are slightly higher this morning as the coronavirus outbreak continues to spread but other market influences including key earnings and the Fed  are coming into focus.

Reports show that the number of coronavirus cases has climbed to more than 4,500 and the death toll has topped 100 in China however the mortality rate encouragingly remains ~2%, well below the 10% rate of SARS in the early 2000s.

The number of market catalysts picks up today starting with three economic data points to watch: Durable Goods Orders (E: 0.5%) being the key report to watch while the S&P Case-Shiller HPI (0.4%) and Consumer Confidence (E: 127.8) will also be released.

Additionally, the January FOMC Meeting begins and earnings season remains in full swing. The key report to watch today is AAPL ($4.54) after the closing bell but other notables include: LMT ($4.99), MMM ($2.10), PFE ($0.57), UTX ($1.84), AMD ($0.31), and EBAY ($0.75).

Will the Wuhan Virus Cause a Correction?

/in /by

What’s in Today’s Report:

  • Will the Wuhan Virus Cause a Correction?
  • Weekly Market Preview:  A Fed Meeting Wednesday and the Biggest Week of Earnings
  • Weekly Economic Cheat Sheet (Several Important Report This Week)

Futures are down more than 1% as the continued spread of the Wuhan coronavirus over the weekend further raised fears of a global economic slowdown.

Total cases of the Wuhan virus continued to rise over the weekend (nearly 3000 confirmed cases globally) and the number of U.S. cases rose to five.

Economically, German IFO Business Expectations missed estimates at 92.9 vs. (E) 95.0.

This is going to be a very busy week, but the calendar is a bit sparse today as we get just one economic report, New Home Sales (E: 728k), and one notable earnings report after the close: WHR ($4.30).  So, any updates on the spread of the Wuhan virus will continue to drive markets today, although that will change later in the week as we get more earnings and the Fed decision on Wednesday.

Tom Essaye Quoted in Barron’s on January 22, 2020

/in /by

According to Sevens Report, the two factors that could reverse the upward trajectory of valuations would be stalling economic growth and higher interest rates. Until those occur, the rally is expected to shoot up to “20 times earnings, which equates to about 3,500 in the…” Click here to read the full article.