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Market Multiple Table

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What’s in Today’s Report:

  • August Market Multiple Table
  • Growth and Inflation – Which One Falls Faster? (It’s an Important Question Going Forward)

Futures are modestly higher as markets digest Wednesday’s big rally and following better than expected earnings.

Disney (DIS) posted better than expected earnings driven by theme park performance and strong Disney+ subscriber numbers and that’s anecdotally adding to the idea that the economy remains resilient.

There was no notable economic data overnight and investors are looking ahead to this week’s claims data.

Today focus will be on Jobless Claims (E: 260k) and PPI (E: 0.3% m/m, 10.3% y/y) and the market will want to see continued moderation in the jobs market (so claims slowly drifting towards 300k) and for the PPI to also signal a peak in inflation pressures (so numbers that a better than expectations).  If the markets get those two readings from the data, the rally can continue.

Tom Essaye Quoted in Barron’s on August 9th, 2022

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Oil Earnings Outlook Dims. Blame Cheaper Oil.

For oil’s drop, it’s mostly a demand story. If you see oil move into the high to mid 70s, people are going rethink the idea that these companies are cash flow-generating machines, Essaye said. Click here to read the full article.

Tom Essaye Quoted in Yahoo on August 8th, 2022

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S&P 500 Finishes Lower After Wiping Out 1% Rally: Markets Wrap

The economy still has to digest all this tightening, and that will materially slow things…wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.

Tom Essaye Quoted in CNBC on August 8th, 2022

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Strong economic data puts ‘Fed pivot’ rally in danger, Essaye says

The market has rallied hard on the idea of a Fed pivot. Friday’s jobs report didn’t support that hope and, if anything, will make the Fed more resolute about rate hikes. So, now inflation needs to clearly show signs of peaking and declining, otherwise we’d expect this market to abandon some of that near-term hope, and for volatility to increase, Essaye wrote. Click here to read the full article.

Tom Essaye Quoted in Barron’s on August 5th, 2022

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Dow Wavered After Jobs Report, Virgin Galactic Slides—and What Else Happened in the Stock Market Today

That could be because traders are “holding out hope that the consumer price index report is going to be good,” Tom Essaye, founder of Sevens Report Research, said on Friday. Click here to read the full article.

Tom Essaye Quoted in Barron’s on August 4th, 2022

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The Dow Wavered, Alibaba Gained—and What Else Happened in the Stock Market Today

I think that as we are on the precipice of this jobs report, really what we’re seeing today is a bit of digestion of that of the recent of the two days gains,” Tom Essaye, founder of Sevens Report Research, told Barron’s on Thursday. Click here to read the full article.

 

A Critical Week for Markets

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What’s in Today’s Report:

  • A Critical Week for Markets
  • Weekly Economic Cheatsheet:  CPI on Wednesday is the key report.
  • Weekly Market Preview:  Can a soft CPI report continue to support markets?

Futures are slightly higher thanks to solid Chinese economic data and following a mostly quiet weekend.

Chinese exports rose more than expected (18% vs. (E) 14.1%) and that’s helping to slightly improve global economic sentiment.

Politically, Senate Democrats passed the Inflation Reduction Act over the weekend as expected and it should become law this week. But, markets don’t expect any meaningful impact on corporate earnings in the n

Today there are no notable economic reports and most of the focus will be on the specific implications of the Inflation Reduction Act, which should pass the House this week.  But, this bill does not appear to have any meaningful macro-economic implications.  So, markets will look ahead to Wednesday’s all-important CPI report, and with stocks still extended, it needs to be better than expectations to support the rally.

Tom Essaye Quoted in SP Global on August 5th, 2022

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Hiking rates, Fed attempts to strike a risky balance

Hiking fed funds to 4%, 5% or higher won’t make semiconductor factories in Asia run more consistently, nor will it deter the Chinese from future lockdowns. Tom Essaye, a trader and founder of financial research firm Sevens Report Research, wrote. Click here to read the full article.

Jobs Day

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What’s in Today’s Report:

  • Jobs Day
  • Why the BOE Hiked 50 bps Yesterday

Futures are flat ahead of today’s jobs report and following a generally quiet night of news.

The only notable economic report was German Industrial Production and it beat estimates rising 0.4% vs. (E) -0.4%.

Geo-politically, China suspended military, climate, and drug enforcement communications with the U.S in retaliation for the Pelosi visit to Taiwan.  But, unless retaliation from China impacts U.S./China trade or commodities prices, markets will largely ignore it.

Today the focus will be on the jobs report and the key for markets is that it shows easing wage pressures and moderation in the labor market.  So, a mildly underwhelming reports vs expectations (E: 250K job adds, 3.6% UE Rate, 5.0% y/y wage growth) is the best outcome for stocks.

There’s also one Fed speaker today, Barkin at 8:00 a.m. ET, but he shouldn’t move markets.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview (First of Two Key Economic Reports)
  • EIA and OPEC Meeting Analysis

Futures are slightly higher on momentum from Wednesday’s rally and as the market again ignored soft economic data.

Economic data from Europe was again disappointing as German Manufacturers’ Orders slightly missed estimates (-9.0% vs. (E) -8.9%) as did the UK Construction PMI (48.9 vs. (E) 52.0).

Geo-politically, China began massive military drills around Taiwan, although they were previously announced.

Today focus will be on the Bank of England rate decision (E: 50 bps hike) and on weekly Jobless Claims (E: 260K).  Specifically, markets will want to see if the BOE implies more 50 bps hikes are ahead (if so that’s a mild negative for the region).  On jobless claims, will they continue to move methodically towards 300k? (That would be a mild positive as it implies slowing in the labor market, which the Fed needs to get to peak hawkishness).

From a Fed speak standpoint, Mester speaks at 12:00 p.m. ET.