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Print This Table (Updated Market Roadmap)

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What’s in Today’s Report:

  • Print This Table:  Updated Market Roadmap into Year-End
  • If you want a PDF copy of the updated Market Multiples table, please email info@sevensreport.com

Futures are slightly higher as better than feared earnings offset more disappointing economic data.

Global flash PMIs universally disappointed this morning as the Japanese (49.8 vs. (E) 51.5), German (48.6 vs. (E) 48.7) and EU ( 50.2 vs. (E) 50.4) numbers missed estimates, reminding us again that we still don’t have stabilization in the global economy.

Today there is a lot of economic data and numerous notable earnings reports, but the most important event of the day is the Pence speech on China (11:00) a.m.  Pence is expected to be tough on China, but nothing so drastic that it imperils Phase One.  However, last year’s speech sparked volatility, so this remains something to watch.

Economically there are several notable reports including, in order of importance: Flash Composite PMI (E: 50.9), Durable Goods (E: -0.7%), Jobless Claims (E: 214K), and New Home Sales (E: 698K). Additionally, there is one Fed speaker today, Williams (7:00 p.m. ET).

On the earnings front, the reports will continue to roll in, and here are the report we’re watching today: MMM ($2.47), NOC ($4.74), AMZN ($4.46), V ($1.43), INTC ($1.24), COF ($2.87).

Finally, today is the final ECB press conference for ECB President Mario Draghi.  There shouldn’t be any surprises and it won’t move markets.  But, I did want to note it for history’s sake, as this man literally saved the euro currency and the EU more broadly with these speeches and actions back in 2012 and 2013, although I’m skeptical he will ever get that credit.

Where Will the S&P End the Year?

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What’s in Today’s Report:

  • What Brexit Means for Markets
  • Where Will the S&P End the Year? (A Market Multiples Update)

Stock futures are flat amid continued Brexit uncertainty ahead of a very busy day of earnings in the U.S.

Economically, the French Business Climate Indicator fell to a more than 4 year low of 99 vs. (E) 102, underscoring the recent trend of weakness in the EU manufacturing sector.

Looking into today’s session there we will get one more data point on the housing market: FHFA House Price Index (E: 0.4%) while no Fed officials are scheduled to speak.

On the earnings front, the Q3 reporting season is nearing its peak with notable reports from: BA ($2.04), CAT ($2.83), FCX (-$0.01), GD ($3.06), WGO ($0.98), and NSC ($2.57) due out before the bell while TSLA (-$0.41), MSFT ($1.25), PYPL ($0.66), F ($0.26), and EBAY ($0.64) will release after the close.

Bottom line, markets will remain sensitive to any material developments regarding Brexit or the Trade War but investor focus is increasingly shifting to earnings, and if reports remain healthy, the S&P could reclaim 3,000 and potentially drift towards the all-time highs.

Tom Essaye Quoted in CCN on October 21, 2019

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“If corporate earnings show signs of resilience, especially by the U.S. consumer, then a run to new highs is by no means out of the question” – Tom Essaye, The Sevens Report. Click here to read the full article.

New York Stock Exchange Traders

Tom Essaye Quoted in International Business Times on October 20, 2019

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“If corporate earnings show signs of resilience, especially by the U.S. consumer, then a run to new highs is by no means out of the question,” said Tom Essaye, founder of stock market analysis firm, Sevens Report Research, in a note to clients. Click here to read the full article.

New York Traders

Is the Trade War Optimism Warranted?

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What’s in Today’s Report:

  • Is Rising Optimism Towards “Phase One” of the U.S.-China Trade Deal Warranted?

Futures are little changed while most international markets rallied overnight as investors remain optimistic about the “phase one” trade deal, continue to eye the fluid Brexit situation, and look ahead to the peak of earnings season.

There were no market-moving headlines overnight.

There are a lot of moving pieces in the market today between economic data and earnings.

On the data front, Existing Home Sales (E: 5.445M) is due out shortly after the open and then things will quiet down until the early afternoon when the Dallas Fed’s Kaplan speaks at 1:00 p.m. ET.

There is also a 10-Yr Treasury Note Auction at 1:00 p.m. ET. Yields have been steadily grinding higher in recent sessions, so strong demand (low yields) could weigh on stocks in the afternoon.

Switching to earnings, there are multiple consumer, defense, and transport companies reporting today including: LMT ($5.03), MCD ($2.20), PG ($1.24), UPS ($2.05), UTX ($2.03), JBLU ($0.53), TRV ($2.39).

For now, the trend in stocks is cautiously positive, but any of the catalysts above could potentially trigger a pullback given the tentative nature of the latest rally.

Tom Essaye Quoted in CNBC on October 18, 2019

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“If corporate earnings show signs of resilience, especially by the U.S. consumer, then a run to new highs is by no means out of the question,” Tom Essaye, founder of The Sevens Report, said in a note…Click here to read the full article.

Why Can’t the S&P 500 Get Through 3000?

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What’s in Today’s Report:

  • Why Can’t the S&P 500 Get Through 3000?
  • Brexit Resolution Today?
  • Weekly Market Preview (There’s a big speech coming on Thursday)
  • Weekly Economic Cheat Sheet

Futures are slightly higher on continued hopes of Brexit resolution and improvement in U.S./China trade relations.

The vote on the new Brexit deal was delayed in Parliament on Saturday, but it’s likely to happen today or tomorrow and passage of the deal is (narrowly) expected.

On U.S./China trade, Chinese Vice Premier Liu He made positive comments on U.S./China trade negotiations although he didn’t say anything new.

Today there are no economic reports and just one Fed speaker, Bowman (11;40 a.m. ET).  So, the focus will be on Brexit headlines as a final vote on the Brexit deal in Parliament could happen later today.  If the Brexit deal passes Parliament, we could see a short term rally, although again I don’t think Brexit resolution is enough, by itself, to send stocks sustainably higher from here.

Is Brexit Clarity a Bullish Gamechanger?

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What’s in Today’s Report:

  • Is Brexit Clarity a Bullish Gamechanger?

Futures are little changed following mixed Chinese economic data.

Chinese GDP missed estimates at 6.0% vs. (E) 6.1%, while Retail Sales met expectations at 7.8% and Industrial Production beat (5.8% vs. (E) 4.9%).  In sum, the data is slightly underwhelming but isn’t changing expectations for global growth.

Looking forward to today, there are no economic reports but there are a lot of Fed speakers including (in order of importance):  Clarida (11:30 a.m. ET), George (10:00 a.m. ET), Kaplan (9:00 & 11 a.m. ET), Kashkari (10:30 a.m. ET).  But, none of them should say anything too surprising and they shouldn’t move markets.

So, markets will stay focused on earnings and Brexit headlines.  Regarding Brexit, a vote on the new Brexit deal will happen Saturday in Parliament, and at this point passage looks to be a 50/50 chance.  So, there’s more drama yet in the three plus year Brexit saga.

Tom Essaye Quoted in Benzinga on October 16, 2019

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Tom Essaye, founder of Sevens Report Research, said this week there are three reasons why the S&P 500 won’t be breaking out above its summer highs in the 3,027 range unless investors see better trade news:

The Phase I deal provided no relief from current trade war tariffs and it contained no provisions that would boost global growth from current levels. The December tariff increases are still in play, so the Phase I deal didn’t even eliminate market uncertainty over whether things could get worse from here.

Earnings Season Technical Preview

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What’s in Today’s Report:

  • Earnings Season Technical Preview
  • Empire State Manufacturing Survey Takeaways (Released a Day Early)

Stock futures have pulled back from overnight highs after China requested the U.S. reconsider $50B in tariffs just as investor focus had shifted from the trade war to earnings.

Economically, the Business Expectations component of the German ZEW Survey was not as bad as feared (-22.8 vs. E: -29.4) which is bolstering EU shares this morning.

There are no economic reports today however there are two Fed speakers to watch: Bostic (9:00 a.m. ET) and Daly (3:30 p.m. ET), while there are a slew of companies due to report quarterly results today as earnings season gets underway.

Notable corporations reporting earnings today include: JPM ($2.44), C ($1.96), GS ($5.03), WFC ($1.15), UNH ($3.75), and JNJ ($2.00) ahead of the open and UAL ($3.93) and JBHT ($1.44) after the bell.