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General Technical Take for Equities

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What’s in Today’s Report:

  • What the FOMC Minute Mean for Markets (Hawkish)
  • General Technical Take for Equities
  • EIA Analysis and Oil Market Update

Futures are bouncing slightly following a quiet night as markets digest the declines of the past two days.

Economic data was mixed overnight as German Industrial Production missed estimates while Euro Zone Retail Sales beat expectations, but neither number is moving markets.

Geopolitically there was no new news on Russia/Ukraine as the conflict continues with little signs of any progress towards a cease fire.

Today we get one notable economic report, Jobless Claims (E: 202K) but three Fed speakers:  Bullard (9:00 a.m. ET), Evans (2:00 p.m. ET) and Williams (4:05 p.m.).  We expect each of them to further hammer the point that rates are rising by 50 bps in May, with balance sheet reduction beginning in the same month.  But, as long as they don’t say anything “hawkishly new” then stocks should be able to look past the commentary.

Tom Essaye Quoted in Financial Post on April 5, 2022

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Treasuries Retreat While U.S. Stocks Decline: Markets Wrap

Stocks are vulnerable to disappointment once again given the recent rally, so any deterioration in the Russia/Ukraine situation, spike in oil and hints of stagflation (high inflation/lagging growth) will hit stocks, and a 10% air pocket shouldn’t shock anyone…Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter, said in a note. Click here to read the full article.

Market Multiple Table: April Update

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What’s in Today’s Report:

  • Market Multiple Table: April Update

Futures are modestly lower with European markets while oil rallies and global bond yields move higher amid simmering geopolitical tensions and lingering inflation fears.

Economically, Final Composite PMI data was mostly better than expected in Europe overnight but price measures continued to rise, suggesting inflation has still not peaked.

Today, we will get two economic reports starting with International Trade (E: -$88.8B), but the ISM Services Index (E: 58.5) will be the more important release to watch shortly after the opening bell as a continued rise in the price measures could further stoke inflation/stagflation fears.

Additionally, there are multiple Fed speakers today: Kashkari (10:00 a.m. ET), Brainard (11:05 a.m. ET), Daly (12:30 p.m. ET), and Williams (2:00 p.m. ET). And if their tone is more hawkish than current market expectations, that could send yields to new highs and pressure high growth tech names which would drag the broad market lower.

Tom Essaye Quoted in CNBC on March 31, 2022

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Dow drops to snap four-day winning streak, Nasdaq falls more than 1%

Above 4,600 in the S&P 500, markets have now traded through most fundamental bounds of valuation, and for this rally to continue, we’ll need to see real, actual positive events (not just events that aren’t as bad as feared)…Tom Essaye of The Sevens Report said in a note to clients Wednesday. Click here to read the full article.

Tom Essaye Quoted in Big News Network on March 31, 2022

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Above 4,600 in the S&P 500, markets have now traded through most fundamental bounds of valuation, and for this rally to continue, we’ll need to see real actual positive events…Tom Essaye of the Sevens Report. Click here to read the full article.

 

Tom Essaye Quoted in Forbes on April 1, 2022

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This Recession Indicator Is Flashing Warning Signs As Fed, War And Oil Threaten Economic Recovery

Instead, it’s a signal that the bull market’s time is now limited… said market analyst Tom Essaye of the Sevens Report. Click here to read the full article.

Staying Focused on What Really Causes Bear Markets

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What’s in Today’s Report:

  • Staying Focused on What Really Causes Bear Markets
  • Weekly Market Preview:  Can Oil Further Stabilize?
  • Weekly Economic Cheat Sheet:  Fed Minutes (Wednesday) Are the Key Report

Futures are slightly higher following a generally quiet weekend of news.

Geopolitically,  there are calls for more sanctions on Russia as the international community is now accusing Russia of war crimes following the discovery of a mass grave outside of Kiev. Oil, which is the key proxy for additional sanctions, is only slightly higher, however, implying the market isn’t expecting significant additional sanctions in the near term.

Economic data was sparse as the only notable report was German exports which rose solidly (up 6.4%).

Today there are no notable economic reports and no Fed speakers, so the focus will be on geopolitics, and again any hints of progress towards a ceasefire will help extend the recent rally.

Updated Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview (Slightly Updated)

Futures are modestly higher ahead of today’s jobs report as markets bounce back from Thursday’s late-day selloff.

Markets dropped into the close yesterday but that was driven by quarter-end re-positioning and rebalancing, not be any news, so it’s being partially unwound this morning.

Economic data underwhelmed as the EU and UK March Manufacturing PMIs both slightly missed estimates.

Today’s focus will be on the Jobs Report and expectations are as follows: Job Adds:  490K, UE Rate:  3.7%, Wages: 0.4% m/m, 5.5% y/y).  The estimates for the jobs report have crept higher the past two days so we slightly revised our “Too Hot” and “Just Right” ranges for today’s jobs report, and they are included inside today’s Sevens Report.

Outside of the jobs report, we also get the ISM Manufacturing PMI (E: 58.6), and markets will want to see stability in the data above all else (so no big miss vs. expectations).  We also get one Fed speaker, Evans at 9:05 a.m. ET, but he shouldn’t move markets.

For Sevens Report Quarterly Letter subscribers, the Q1 ’22 Quarterly Letter and compliance back up will be delivered via email around mid-day today.  If you are not a subscriber and are interested in the letter, please click this link to learn more.

Finally, today is April Fools Day, so be extra wary of any preposterous declarations from your family, friends, or colleagues.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Analysis/Oil Market Update

Futures are slightly higher as oil drops sharply on reports the U.S. is considering a massive oil release from the Strategic Petroleum Reserve.

Reports hit overnight that the U.S. is considering releasing 180 million barrels of oil from the SPR over the coming six months, and oil is down 6% as a result.

Economic data was slightly underwhelming as the March Chinese manufacturing PMI dropped below 50 to 49.5.

Today focus will be on inflation, as we get the Fed’s preferred measure of inflation via the Core PCE Price Index (E: 0.4%, 5.5%).  If these numbers slightly underwhelm vs. expectations, that could lead to more hope inflation pressures are finally peaking, and we could see a rally as a result.  Today we also get Jobless Claims (E: 195K) and have one Fed speaker, Williams at 9:00 a.m. ET.

Would a Ceasefire Be a Bullish Catalyst?

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What’s in Today’s Report:

  • Is a Ceasefire in Ukraine a Bullish Catalyst?
  • Oil Chart: Trend Remains Higher

Stock futures are lower with EU shares amid negative economic forecasts, a deteriorating state of Russia-Ukraine negotiations, and growing concerns about the yield curve.

Geopolitically, the Kremlin stated that the latest talks have not been “promising” and much work still needs to be done which is weighing on risk assets and bolstering oil prices this morning.

Economically, Germany cut its GDP growth forecast to just 1.8% in 2022 from 4.6% previously and an EU economic sentiment survey missed estimates.

Looking into today’s session, focus will be on jobs and growth data early with the ADP Employment Report (E: 438K) and Final Q4 GDP report (E: 7.1%) due out before the bell.

Additionally, there are two Fed speakers: Barkin (9:15 a.m. ET) and George (1:00 p.m. ET) but based on this morning’s price action, geopolitics remain the most notable influence on markets, and sentiment towards the war in Ukraine will likely be the biggest driver of markets again today.