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Market Multiple Table: January Update

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What’s in Today’s Report:

  • Market Multiple Table: January Update
  • OPEC+ Meeting Takeaways (Not So Bullish)

Stock futures are down modestly this morning, but off the overnight lows in sympathy with rising European shares while Asian markets declined on Chinese regulatory concerns and fresh COVID lockdowns in Hong Kong.

Final December Composite PMI’s were slightly disappointing but investors are already looking ahead to 2022.

Today, there are three economic reports to watch: Motor Vehicle Sales (E: 13.2M), ADP Employment Report (E: 414K), PMI Composite Final (E: 56.9). It will be important for the latter two to point to continued growth but not at a pace that would cause an additional hawkish shift by the Fed as that would likely send rates sharply higher and act as a headwind on broader equity markets.

There are no Fed speakers today but the minutes from the December FOMC meeting will be released at 2:00 p.m. ET.

Tom Essaye Quoted in Bloomberg Quint on January 4, 2022

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U.S. Stocks Start 2022 at Record; Treasuries Fall: Markets Wrap

Bottom line, the outlook is positive for stocks, but the removal of stimulus…wrote Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter. Click here to read the full article.

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Why Did Treasury Yields Surge Yesterday?

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What’s in Today’s Report:

  • Why Did Treasury Yields Surge Yesterday?
  • Oil Update – OPEC+ Meeting Preview

Stock futures are trading at record highs as investors shrug off surging COVID cases and digest upbeat economic data.

New COVID cases topped 1 million in the U.S. Monday, nearly doubling the previous record, however, hospitalizations and deaths remain low, keeping economic lockdown odds minimal as the Omicron outbreak is increasingly expected to burn itself out in the coming weeks.

China’s Manufacturing PMI rose to 50.9 vs. (E) 50.0 in December further easing global growth concerns.

Today, there are two economic reports to watch: ISM Manufacturing Index (E: 60.5) and JOLTS (E: 11.060M). Investors will be looking for more good data, but not so good that rate hike expectations are brought forward.

There are no Fed speakers today. The January OPEC+ policy meeting will be underway soon (E: +400K b/d production hike in February) and if the group of oil producers disappoint the market, expect a potential spike in volatility that could spill over into both equity and bond markets.

Two Questions to Start 2022

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What’s in Today’s Report:

  • Two Key Questions To Start 2022
  • Weekly Market Preview:  Omicron, Build Back Better Progress?
  • Weekly Economic Cheat Sheet:  A Busy Start to the Year (Highlighted by the Jobs Report Friday)

Futures are starting the new year with moderate gains driven mostly by momentum/start of year positioning, following a quiet weekend of news.  Many major markets today (London, Japan, Australia, U.S. Bonds) are closed.

Tesla (TSLA) reported better than expected deliveries for the fourth quarter and the stock is up 7% pre-market, and that’s helping markets rally.

There was no new news on Omicron over the weekend as cases skyrocket but hospitalizations remain relatively low.

With so many major markets closed, today will be a mostly quiet day, and barring any surprises tomorrow will be the first “real” trading day of the year.  We do get one notable economic report today, the Markit December Manufacturing PMI (E: 57.8), and markets will want to see a “Goldilocks” number that shows Omicron isn’t a major economic headwind, but at the same time the data isn’t so strong it makes the Fed more aggressive.

 

Sevens Report Quarterly Letter Delivered Today

Our Q4 ’21 Quarterly Letter will be released today.

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You can view our Q3 ’21 Quarterly Letter here

To learn more about the product (including price) please click this link.

If you’re interested in subscribing, please email info@sevensreport.com.

Tom Essaye Quoted in Market Research Telecast on December 28, 2021

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Wall Street opens green and the Dow Jones rises 0.16%

Optimism about omicron continues to help drive risk assets higher as markets continue to believe…said the president of the firm Seven Reports, Tom Essaye, in a note. Click here to read the full article.

What Could Go Wrong in 2022

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What’s in Today’s Report:

  • What Could Go Wrong in 2022
  • Chart: Rate Hike Prospects Weigh on Nasdaq

Futures are modestly higher despite negative COVID headlines and a mixed outlook for China’s economy.

New COVID cases topped 1 million and set a record for a second day Tuesday as the highly contagious, but less severe Omicron variant continues to rip through hot spots around the globe. But for now, few nations have implemented new lockdowns allowing investors to look past the latest surge in cases.

According to Bloomberg Economics, China’s economy grew this month but property sector risks remain a key concern and that weighed on Asian shares overnight.

Today, there are two economic reports due out: International Trade in Goods (E: -$86.0B), and Pending Home Sales (E: 0.6%) but once again, neither should move markets as they should not shift the outlook for monetary policy.

There are no Fed speakers today but there is a 7-Year Treasury Note auction at 1:00 p.m. ET. If the auction is weak and yields rise materially, that could add pressure to higher valuation sectors of the market like tech/Nasdaq and drag the broader equity markets lower in thin holiday trading today. Otherwise, the Santa Claus rally remains in effect and the path of least resistance does still remain higher given the recent records in the S&P 500.

 

Sevens Report Q4 ’21 Quarterly Letter Coming January 3rd

The Q4 2021 Quarterly Letter will be delivered to advisor subscribers on Monday, January 3rd.

With several key macro issues coming to a head in the next few weeks, we believe the first quarter could be the most volatile of 2022.

We deliver the letter on the first business day of the new quarter because we want you to be able to send your quarterly letter before your competition (and with little to no work from you).

You can view our Q3’21 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

Looking Ahead to 2022

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What’s in Today’s Report:

  • Looking Ahead to 2022 (The Omicron Threat May be Fading But the Coast Isn’t Clear)
  • Weekly Market Preview (Clear for a Santa Rally but Depends on Omicron Headlines)
  • Weekly Economic Cheat Sheet (Housing Data and Jobless Claims This Week)

Futures are slightly higher on continued momentum from last week’s rally following a quiet holiday weekend.

Omicron optimism continued to help push risk assets higher as markets continued to adopt the idea that while COVID cases will soar, hospitalizations will remain low and as such there won’t be any major lockdowns.

There were no economic reports overnight and the global economic calendar for the week is pretty empty (as is usually the case for this week).

Today there are no notable economic reports and no Fed speakers, so we’d expect generally quiet trading that will be driven by Omicron headlines and year-end positioning (that’s likely to be the case all week).  Any stories that further confirm Omicron COVID is not as severe as the previous COVID will help stocks extend the rally into year-end, while any headlines about lockdowns will be a headwind.

 

Annual Discounts on Sevens Report, Alpha and Quarterly Letter

We’ve continued to be contacted by advisor subscribers who want to use the remainder of their 2021 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free), or add a new product (Alpha or Quarterly Letter).

If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you want to extend current subscriptions or save money by upgrading to an annual subscription (across any Sevens Report product), please email info@sevensreport.com.

Omicron Optimism

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What’s in Today’s Report:

  • Why Omicron Optimism is Helping Stocks Rally

Futures are marginally higher as studies and articles continue to be released that confirm that the Omicron variant results in much fewer severe COVID cases.

Over the past 48 hours, studies from South Africa, Denmark, and England and numerous articles (Washington Post, Bloomberg, WSJ) have all generated the same conclusion, that Omicron results in substantially fewer severe

COVID cases and that confirmation is easing COVID anxiety.

Today there is a lot of economic data but the most important report is the Core PCE Price Index (E: 0.4% m/m, 4.5% y/y).  As long as it’s not materially worse than feared, it likely won’t hit markets.  And, if the data comes in better than expected, that will add to the idea that inflation pressures have peaked, and we could easily see an extension of this week’s rally.

Other data today includes Durable Goods (E: 1.5%), Jobless Claims (E: 205k),  New Home Sales (E: 770k), and Consumer Sentiment (E: 70.4), but barring a major surprise those numbers shouldn’t move markets.

December Economic Breaker Panel

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What’s in Today’s Report:

  • December Economic Breaker Panel – Are Economic Clouds Gathering on the Horizon?

Futures are little changed following a quiet night as investors digest the recent volatility and look ahead to the holiday at the end of the week.

Economic data was sparse overnight and the only notable report was UK GDP which slightly missed estimates (1.1% vs. (E ) 1.3%) although that’s not moving markets.

The Omicron outlook remained unchanged, as cases continued to surge but hospitalizations remain low, and as long as that’s the case market fallout will be limited.

Today we get three economic reports including Final Q3 GDP (E: 2.1%), Consumer Confidence (E: 110.7) and Existing Home Sales (E: 6.510M) but unless they provide a major surprise they won’t move markets. So, with the holiday quickly approaching and tomorrow’s Core PCE Price Index the only remaining “big” report of the week, and we’d expect both liquidity and activity to begin to decline into the weekend starting today.

 

Annual Discounts on Sevens Report, Alpha and Quarterly Letter

We’ve continued to be contacted by advisor subscribers who want to use the remainder of their 2021 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free), or add a new product (Alpha or Quarterly Letter).

If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you want to extend current subscriptions or save money by upgrading to an annual subscription (across any Sevens Report product), please email:  info@sevensreport.com.

Why Stocks Have Dropped

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What’s in Today’s Report:

  • Why Are Stocks Dropping?
  • Nasdaq Composite Chart: Below the 100 Day Moving Average

U.S. futures are rebounding with global shares after the U.K. decided against new lockdown measures due to Omicron while there is renewed hope for Biden’s spending bill.

Reports of a late Sunday call between Biden and Manchin, after Manchin announced that he would not support the bill on live TV, have revived hopes for the potential passage of Build Back Better in the weeks ahead.

The German GfK Consumer Climate Index fell to -6.8 vs. (E) -2.5 for January which points to a further deterioration in consumers’ outlook for income and spending in Europe’s largest economy.

There are no economic reports and no Fed officials speak today which will leave traders focused on the political drama surrounding Build Back Better and any new developments about Omicron and subsequent economic lockdown measures.

The one potential catalyst on the calendar is a 20-Yr Treasury Bond auction at 1:00 p.m. ET. A weak auction could send yields higher which could add renewed pressure on high multiple tech names and cause the major indexes to roll over.