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Why Did Stocks Drop?

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What’s in Today’s Report:

  • Why Did Stocks Drop?
  • Fed Minutes Takeaways
  • EIA Data Takeaways and Oil Update

There are risk-off money flows across asset classes this morning as investors fear that central banks are poised to tighten policy into a global economic slowdown this fall.

This week’s options expiration is likely amplifying the volatility this morning.

There were no market-moving economic reports or material news developments overnight.

Today, there are two economic reports to watch: Jobless Claims (E: 360K) and the Philadelphia Fed Manufacturing Index (E: 25.0).

No Fed officials are scheduled to speak today but there is a 30-Year TIPS auction at 1:00 p.m. ET that could move bond yields.

Volatility is likely to remain elevated today as we get closer to tomorrow’s options expiration while trader conviction is low given Jackson Hole looming next week as well as the fact that investor sentiment has deteriorated this week.

Editor’s Note:  No Report Tomorrow

There will be no Report tomorrow, as I will be attending a funeral.  Last week, my father, Tim Essaye, Sr., unexpectedly passed away. His funeral and memorial will be held today. 

My dad helped get me on Wall Street when I got out of college and without his support and encouragement, I wouldn’t have had the courage, with my wife Alison pregnant with our first child, to leave a good job and start a new, daily market report.

He was the first subscriber to the Sevens Report.

So, for the first time in the nearly 10 years since I started the Sevens Report, there will be no issue on a trading day, as I will be focused today on celebrating his life with our family and friends.

I apologize for this inconvenience and thank you for your understanding.   

Tom Essaye Quoted in Baystreet on August 16, 2021

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Where Does Wall Street Think Oil Is Heading?

If support holds, which it likely will as long as the news flow regarding COVID does not continue to…Tom Essaye of the Sevens Report has told MarketWatch. Click here to read the full article.

Tom Essaye Quoted in Barron’s on August 16, 2021

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Dow, S&P 500 Notch Records, Overcoming Earlier Slide

A political negative for Biden which could hurt the chances any infrastructure bill is passed…wrote The Seven Report’s Tom Essaye. Click here to read the full article.

The Delta Variant and Markets

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What’s in Today’s Report:

  • Is the Delta Variant Impacting the Markets?
  • Retail Sales and Industrial Production Takeaways
  • Chart: Value Outperforming Growth In August

Stock futures are slightly lower as investors digest dovish central bank developments, mixed inflation data out of Europe and look ahead to the release of the Fed minutes.

The Reserve Bank of New Zealand unexpectedly left rates unchanged at 0.25% (E: 0.50%) citing COVID-19 uncertainties which crashed the kiwi to a fresh 9-month low overnight.

Economically, Eurozone HICP met estimates however U.K. PPI ran slightly hot versus expectations while revisions were to the upside which is keeping inflation concerns elevated for now.

Looking into today’s session, it should be a fairly slow morning as far as news flow goes with just one economic report to watch: Housing Starts (E: 1.61M) and no Fed officials scheduled to speak.

Then in the afternoon investors will be watching a 20 Year T-Note auction at 1:00 p.m. ET before the FOMC Meeting Minutes are released at 2:00 p.m. ET. Yesterday, there was a reversal higher in yields from overnight lows in the wake of the not-as-bad-as-feared Retail Sales report so the risk appears to be to the upside for yields which could weigh on big-cap growth names and drag major indexes lower if a rise in yields gains momentum.

Tom Essaye Quoted in Yahoo Finance on August 12, 2021

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3 Things That Could Send The S&P 500 Down 20%

The consensus expectations for the Federal Reserve monthly asset purchasing is that the Fed will announce a plan for tapering sometime in…Essaye said. Click here to read the full article.

How is the Market Ignoring the COVID Spike?

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What’s in Today’s Report:

  • How is the Market Ignoring the COVID Spike?
  • Weekly Market Preview:  Is the Recovery Losing Any Momentum?
  • Weekly Economic Cheat Sheet:  Key Growth Data Throughout This Week

Futures are modestly lower following underwhelming Chinese economic data and on a mild decrease in geo-political stability.

Chinese Retail Sales, Industrial Production, and Fixed Asset Investment all rose, but missed expectations and that’s weighing modestly on global stocks.

Geo-politically, the Taliban taking control of Afghanistan doesn’t have any direct market implications, but it is a political negative for Biden which could hurt the chances any infrastructure bill is passed.

Today the only notable economic report is the Empire Manufacturing Index (E: 30.0), and that’s more important than usual as markets will want to see if the Delta variant slowed economic activity in August.  If this number badly misses expectations, it will likely be a headwind on stocks today.

Tom Essaye Quoted in Benzinga on August 12, 2021

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3 Things That Could Send The S&P 500 Down 20%

The consensus expectations for the Federal Reserve monthly asset purchasing is that the Fed…Essaye said. Click here to read the full article.

 

Market Multiple Table: August Update

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What’s in Today’s Report:

  • Market Multiple Table: August Update
  • Chart: JOLTS Hit New Record

Stock futures are little changed this morning as investors digest Monday’s hawkish Fed chatter and continue to monitor the status of the Delta variant outbreak around the globe.

Economically, Germany’s August ZEW Survey was moderately disappointing while domestically, the NFIB Small Business Optimism Index came in at 99.7 vs. (E) 103.3, however neither report is materially moving markets given the recent focus on the very strong July jobs report in the U.S.

On infrastructure, the $1.2T bipartisan bill is expected to pass a final vote in the Senate later this morning but that has largely been priced into markets already.

Today, there is one economic report to watch: Productivity and Costs (E: 3.5%, 1.2%) and one Fed speaker: Evans (2:30 p.m. ET).

Additionally, there is a 3-Year Treasury Note auction at 1:00 p.m. ET, and a soft outcome could result in another wave of hawkish money flows like we saw on Monday (yields higher, dollar higher, mixed price action in equities).

Tom Essaye Quoted in Crain’s Cleveland Business on August 6, 2021

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Wall Street is watching where you’re going to make some big bets

Rising COVID cases will only hurt the market if they result in a change in…Tom Essaye, a former Merrill Lynch trader who writes the “Sevens Report” newsletter, wrote in a note. Click here to read the full article.

Tom Essaye Quoted in The Byron Review on August 6, 2021

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Jobs increased by 943,000 in July; Unemployment rate drops to 5.4%

The July jobs report reinforces the fact that the Fed will reduce its quantitative easing over the…Tom Essaye, founder and chairman of Sevens Report Research said. Click here to read the full article.