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FOMC Preview (What Makes It Dovish Enough?)

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What’s in Today’s Report:

  • FOMC Preview (What Will Make It Dovish Enough for the Market?)
  • Why Did Stocks Rally on Monday?

Futures are moderately higher again following better than expected economic data overnight.

Chinese economic data was solid as August Retail Sales (0.5% vs. (E) 0.1%) and Industrial Production (5.6% vs. (E) 5.1%) both beat estimates.  In Europe, the German ZEW expectations index also beat estimates (77.4 vs. (E) 69.5).  Bottom line, the data implies the global economic recovery is still on going.

On the vaccine front, headlines were more mixed as the resumption of the AZN trial in the U.S. isn’t expected until the middle of this week, at the earliest.  But, markets still very much expect a vaccine to be approved by Election Day and distributed by year-end (and that remains a very optimistic assumption).

Today the looming Fed meeting (tomorrow) should keep the markets generally quiet, although we do get the September Empire Manufacturing Survey (E: 6.5), which is the first data point for September.  If it’s stronger than expected, that will further confirm the U.S. economy remains resilient despite no more stimulus, and that will help support the early rally in futures.

Tom Essaye Quoted in Barron’s on August 28, 2020

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“Now, over the medium and long term, the Fed’s average inflation target means that when cyclicals start to outperform, and when yields begin to rise, both those rallies will last longer…” writes Tom Essaye of The Sevens Report newsletter. Click here to read the full article.

Tom Essaye Quoted in Forbes on August 13, 2020

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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 CNBC on August 4, 2020

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“The bottom line is that if we do see real disappointment in stimulus or the vaccine, then a 10% correction is the likely best-case scenario, and it’ll come…” said Tom Essaye of The Sevens Report, in a note. Click here to read the full article.

Tom Essaye Interviewed with Yahoo Finance on August 4, 2020

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Yahoo Finance’s Brian Sozzi and Alexis Christoforous break down latest market action with The Sevens Report Founder, Tom Essaye. Click here to watch the full interview.

What to Make of this Market (In Plain English)

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What’s in Today’s Report:

  • What to Make of This Market (In Plain English)
  • Weekly Market Preview:  Is the Recovery Pausing/Stalling?
  • Weekly Economic Cheat Sheet:  Jobs Friday, Manufacturing Today

Futures are marginally higher following decent economic data combined with some mild progress on stimulus hopes.

Global manufacturing PMIs were generally better than expected as the Chinese PMI rose to 52.8 vs. (E) 51.1 while the EU number also beat expectations (51.8 vs. (E) 51.1).

On the stimulus front, both parties acknowledged some progress on negotiations, but they remained far apart.

Today focus will be on the ISM Manufacturing PMI (E: 53.5) and the market needs/wants a strong number here to help refute the growing list of indicators that imply the economic recovery is pausing/stalling.

Regarding stimulus, headlines will move the market this week but more broadly, investors are expecting some significant progress by the end of the week.  If that progress doesn’t occur, that will become a headwind on stocks.

Finally, there are also two Fed speakers today, Bullard (12:30 p.m.ET) and Evans (2:00 p.m. ET), but neither should move markets.

Tom Essaye Interviewed with Yahoo Finance on June 29, 2020

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Tom Essaye – Sevens Report Founder and President weighs on on current market moves with Adam Shapiro and Julie Hyman on Yahoo Finance’s On The Move. Click here to watch the full interview.

Tom Essaye

Can Stocks Go Down Anymore?

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What’s in Today’s Report:

  • “Can Stocks Go Down Anymore?”
  • Weekly Economic Preview

Futures are higher this morning suggesting that U.S. equities will extend last week’s rally and rise in sympathy with global shares today as investors look ahead to earnings season while coronavirus cases continue to surge globally.

New COVID-19 cases continued to rise sharply over the weekend (Florida set a record with more than 15,000 new cases in a single day Saturday) but the death rate importantly remains low which is allowing the market to largely shrug off the spike.

PEP ($1.25) unofficially kicks off earnings season today while major banks including JPM, C, and WFC are due to report their earnings tomorrow which will be one of the more important market catalysts of the week ahead.

Looking into today’s session, things are lining up to be relatively quiet as there are no economic reports and investors will hear from just two Fed officials: Williams (11:30 a.m. ET) and Kaplan (1:00 p.m. ET).

Market Multiple Table July Update

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What’s in Today’s Report:

  • Market Multiple Table July Update

Stock futures are little changed today as investors digest the choppy trade from the front half of the week amid negative coronavirus headlines, ongoing tensions between the U.S. and China, but still mostly upbeat economic data.

Johns Hopkins University reported a new single day record increase of +60K new coronavirus cases in the U.S. yesterday which is weighing on sentiment this morning.

There were no market moving economic reports overnight and no new data is scheduled to be released in the U.S. today.

One Fed official will speak this afternoon: Bostic (12:15 p.m. ET) however investor focus will largely remain on the trends of the coronavirus outbreak and any new indication as to whether or not there will be another round of economic shutdowns which would be a clear negative for risk assets at current levels.

Tom Essaye Interviewed with Yahoo Finance on June 30, 2020

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Tom Essaye, Sevens Report Research Founder, joins Yahoo Finance’s Brian Sozzi and Jared Blikre to discuss the latest market action. Click here to watch the full interview.