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Stimulus Update (Are the Executive Orders Positive for Stocks?)

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What’s in Today’s Report:

  • Stimulus Update – Are The Executive Orders Positive for Stocks?
  • Is It Time to Chase This Market?
  • Weekly Economic Cheat Sheet (Jobless Claims Remain the Key)
  • Weekly Market Preview (What’s Next in the Stimulus Saga)

Futures are little changed as markets look past President Trump’s executive orders on economic stimulus following an otherwise quiet weekend.

With stimulus talks again at an impasse, President Trump issued several executive orders over the weekend to provide economic stimulus, including $300/week in federal unemployment and a payroll tax deferral.

But, for a multitude of reasons (legal and otherwise) none of these actions will have any immediate economic impact, so the market still expects a stimulus bill to be passed (but now in the coming weeks, not immediately).

Today there’s one labor market number, JOLTS (E: 5.288M), but that shouldn’t move markets, and instead focus will be on stimulus.  Today, the key is that both the Democrats and Republicans signal they are going to continue negotiations on the stimulus bill.  If the rhetoric implies the talks have stalled completely, that that will likely pressure stocks.

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.

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 Quoted in CNBC on July 28, 2020

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“To be clear, from an actual policy standpoint, it’s universally expected that the Fed won’t make any changes to 1) Rates…” wrote Tom Essaye, editor of the Sevens Report. Click here to read the full article.

Owning Gold for the Right Reasons

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What’s in Today’s Report:

  • Owning Gold for the Right Reasons
  • What About Silver?
  • Fed Day

Futures are marginally higher ahead of the Fed as markets bounce from Tuesday’s declines thanks to decent earnings.

Earnings after the bell were decent as AMD and SBUX both rallied, although Visa (V) made cautious comments on consumer spending late in Q2, which again implies we’re seeing a potential stall in the economic recovery.

Economically there were no notable reports overnight.

Today the key event is the FOMC Decision (E:  No Change to Rates or QE) and Fed Chair Press Conference at 2:30 p.m. ET.  Again, if there’s going to be a surprise from the Fed today (which is unlikely) it’s going to come from the press conference – so we’ll be watching.

Another Tailwind for European Stocks

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What’s in Today’s Report:

  • Another Positive for Europe (and European Stocks)
  • The Key Driver of the Precious Metals Rally

Stock futures are trading modestly lower this morning as rising U.S.-China tensions offset good economic data.

The U.S. directed China to close its consulate in Houston citing IP security risks, a move which China condemned as “an unprecedented escalation” of tensions.

Today, there are two economic reports to watch: FHFA House Price Index (E: 0.4%) and Existing Home Sales (E: 4.795M) while no Fed officials are scheduled to speak.

The Treasury will hold a 20-Yr Bond Auction at 1:00 p.m. ET and with yields near their lows for the year, a strong auction could act as a headwind for risk assets this afternoon.

Aside from those potential catalysts, investors will be watching the fluid situation between the U.S. and China for any signs of further deterioration in relations while earnings season remains in full swing with: BIIB ($7.99), and CP ($2.71) reporting before the open and TSLA (-$0.71), MSFT ($1.38), LVS (-$0.64), and CSX ($0.67) all due to release Q2 results after the close.

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.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • A Historic Quarter for the Energy Markets

Stock futures are trading modestly lower this morning after the S&P 500 registered its best quarterly gain in over 20 years in Q2 while economic data was mostly better than expected overnight.

Economically, China’s Caixin Manufacturing PMI firmed to 51.2 in June from 50.7 in May while the Eurozone Manufacturing PMI rose to 47.4 from 39.4 in May pointing to a continued rebound in economic activity last month.

Today, we will get our first look at June jobs data with the ADP Employment Report (E: 3.500M) due out ahead of the bell while the ISM Manufacturing Index (E: 49.0) and Construction Spending (E: 0.8%) will both be released shortly after the open.

Later in the day, the only real catalyst to watch for is the release of the latest FOMC Meeting Minutes at  2:30 p.m. ET as traders will be looking for any additional insight into the Fed’s future stimulus plans or view of the state of the economy.