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Tom Essaye Quoted in U.S. News on April 5, 2019

7 Things Need to Happen For Stocks to Move Higher

Tom Essaye, founder of Sevens Report Research, recently compiled this list of seven things that need to happen for the market to make it back to new highs this year. Click here to read the full article.

Can The S&P 500 Breakthrough 2900?

What’s in Today’s Report:

  • The Next Positive Catalyst For Stocks (Potentially)
  • Weekly Market Preview
  • Weekly Economic Cheat Sheet (Chinese Exports The Big Number This Week)

Futures are slightly weaker following a generally quiet weekend as markets digest last week’s rally.

Economic data was mixed and is putting mild pressure on stocks this morning as German exports missed expectations (-1.3% vs. (E) 0.1%), reminding markets the global economy isn’t healed yet.

U.S./China trade talks ended last week without an announcement of a deal but talks will continue this week via video-conference and a deal is still widely expected.

Today there are no economic reports and no Fed speakers, so focus will remain on any U.S./China headlines (again a deal could be announced any minute).  But, barring any surprises today should be generally quiet as the big events of the week (FOMC Minutes, Chinese data, bank earnings) happen Wed-Friday.

Tom Essaye Quoted in Barron’s on April 3, 2019

The Dow Rose 39 Points After a Late Comeback

Economic data clearly remain soft on an absolute level, wrote Tom Essaye of Sevens Report on Wednesday. “There is now a laundry list of economic indicators that are flashing their worst readings since 2016…” Click here to read the full article.

Tom Essaye Interviewed on Yahoo Finance on April 4, 2019

Tom Essaye, Sevens Report Founder and President, says we shouldn’t expect a potential U.S.-China trade deal “to create a lasting rally” for the markets. Yahoo Finance’s Alexis Christoforous speaks to him, Brian Sozzi and Brian Cheung. Click here to watch the full interview.

 

New Highs From a Leading Indicator

What’s in Today’s Report:

  • Jobs Report Preview
  • New Highs From a Leading Indicator
  • EIA Analysis & Oil Market Update
  • Update on Global Growth (Better, But Not Good)

Futures are slightly lower despite more positive U.S./China headlines as markets digest this week’s rally.

The WSJ reported a U.S./China trade deal is now very close, with an announcement of a signing ceremony possibly coming as early as today.  But, the reason this headline didn’t cause a rally is because it’s been expected for some time.  The key going forward is how quickly tariffs are reduced, and the sooner, the better for stocks.

Economic data was sparse but German Factory Orders dropped –4.2% vs. (E) 0.3% but that number isn’t enough to offset the other good data this week.

Today is generally quiet on the data front as we only get Jobless Claims (E: 216K).  There are three Fed speakers today: Williams (9:00 a.m. ET), Harker (1:00 p.m. ET), Mester (1:00 p.m. ET) but unless they say something surprising they shouldn’t move markets.

So, absent any other catalysts, China headlines will likely be the main influence on stocks today as an official headline about a signing ceremony could cause a very short term algo-led rally, but until we find out when tariffs will be rescinded, the U.S./China news likely won’t be enough to power the market materially higher from here.

Economic Data Takeaways

What’s in Today’s Report:

  • Bottom Line – “Pump the Breaks”
  • Retail Sales and ISM Manufacturing Takeaways

Futures are flat and international shares were mildly higher overnight as yesterday’s sizeable rally in the U.S. was digested amid a slight pullback in bond yields.

The Reserve Bank of Australia was the latest central bank to note downside risks in the global economy overnight.

Economically, Eurozone PPI was a mild miss: 0.1% vs. (E) 0.2% in February but inflation has been subdued and the report does not change the outlook for ECB policy.

Today, Motor Vehicle Sales (E: 16.8M) will begin to come in over the course of the morning while there is one notable economic report ahead of the open: Durable Goods Orders (E: -1.8%). There are no Fed speakers today.

With a lack of material catalysts between now and Friday’s jobs report, macro focus will be on U.S. – China trade negotiations and the bond market. If Treasury yields revisit last week’s lows, stocks will have a hard time holding the strong gains of the last few sessions, so watch bonds closely.

Tom Essaye Quoted in CNBC on March 29, 2019

“Looking forward, there’s been material progress in alleviating the earnings growth and Fed worries that caused the Q4 2018 correction. But it would be a…” Click here to read the full article.

 

Updated Equity Market Outlook

What’s in Today’s Report:

  • Updated Equity Outlook:  A Resilient Market vs. Two Building Headwinds
  • Weekly Market Preview (All About Data)
  • Weekly Economic Cheat Sheet

Futures are sharply higher following better than expected global PMIs as hope for a global economic rebound stays alive.

China’s “official” Manufacturing PMI rose to 50.5 vs. (E) 49.8 in March, Japan’s Manufacturing PMI rose to 49.2 vs. (E) 48.9, and the UK’s Manufacturing PMI surged to 55.1 vs. (E) 51.2.

The only disappointment in Europe, where the EU Manufacturing PMI slipped to 47.5 vs. (E) 47.6, and inflation also underwhelmed.

Today focus will remain on economic data and the key report today is the ISM Manufacturing Index (E: 54.2).  If that number can beat expectations, it will further reinforce the idea of a growth rebound and bonds yields should rise, the dollar should fall, and this morning’s rally should be extended, although I think it’s hard to imagine the S&P 500 moving more than a percent or two ahead from here of earnings season (more on that in the issue).  Other reports today include Retail Sales (E: 0.3%) and Construction Spending (E: -0.2%).

Finally, a “head’s up” that today is April Fool’s Day, just in case anyone (in my case most likely my children) tells you something preposterous!

Are Cyclical Sectors Set To Rebound?

What’s in Today’s Report:

  • Are Cyclical Sectors Set To Rebound?  (They Did Yesterday)

It’s green across the screen this morning but the gains are modest as more positive commentary on U.S./China trade and decent economic data  are supporting markets.

On trade, Treasury Secretary Mnuchin said talks have been “productive” but gave no further details.

Economically, German Retail Sales beat estimates rising 0.9% vs. (E) -1.0%, making it two days in a row of better than expected EU data.

In normal times, today the key data point would be the Core PCE Price Index (E: 0.2% m/m, 1.9% y/y) as that’s the Fed’s preferred measure of inflation.  And, if it ran hot or cold, it would have an impact on perceived Fed policy.  In today’s market, however, it’s take a massive (and almost impossible) move in that price index to change expected Fed policy, so this number likely won’t move markets.  Other notable events today include New Home Sales (E: 615k) and one Fed Speaker:  Kaplan (10:30 a.m.).

Bottom line, this market remains driven by Treasury yields.  They are over extended to the downside and rose slightly yesterday and that helped stocks – and if we see a further rise in yields today ahead of the Chinese PMIs on Sunday, that could boost markets into the weekend.

Tom Essaye Quoted in ETF Daily News on March 27, 2019

“We need global growth to stabilize to help propel stocks higher from here. The currency and bond markets continue to flash large and…” Tom Essaye, founder of The Sevens Report, said in a note. Click here to read the full article.