Posts

FOMC Meeting Preview

/in , /by

What’s in Today’s Report:

  • FOMC Preview
  • VIX Chart – Is Volatility About to Surge Again?

U.S. stock futures are tracking European markets lower this morning amid a hawkish reaction to strong economic data and disappointing earnings from UBS and Samsung.

Economic data in Europe showed a reversal back higher in French inflation and better than-feared growth in the EU which is resulting in more hawkish money flows ahead of the several key central bank decisions this week and that is ultimately weighing on risk assets this morning.

Looking into today’s session, there are a few economic reports to watch in the U.S. (in order of importance): Q4 Employment Cost Index (E: 1.1%), Consumer Confidence (E: 109.0), Chicago PMI (E: 45.1), and the Case-Shiller Home Price Index (E: -0.5%).

With the FOMC Meeting getting underway, the macro focus will be on rate markets and expectations for the terminal rate as tomorrow’s 25 basis point hike is priced in with nearly 100% confidence. If market-based terminal rate expectations rise today, expect further pressure on risk assets and lower equity prices broadly.

Meanwhile, earnings season continues in full force today with notable releases coming from: UPS ($3.58), GM ($1.65), XOM ($3.32), MCD ($2.45), CAT ($3.95), and AMD ($0.67).

Tom Essaye Interviewed on BNN Bloomberg on January 3rd, 2023

/in , /by

Gold is the top metal pick for kicking off 2023: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to discuss his market take for the new year. Essaye says that nothing fundamentally changed in the markets, despite it being a new year, and discusses his advocacy for defensive sectors amid Q1 volatility and lower returns. He says that gold is looking particularly attractive when compared to its commodity peers. Click here to watch the full interview.

The Key Events to Start 2023

/in , /by

What’s in Today’s Report:

  • The Key Events to Start 2023

Futures are slightly higher following a quiet night of news as markets bounce following Wednesday’s declines.

The economic calendar was mostly quiet overnight and the only notable economic report was Euro Zone Money Supply while was essentially in-line with expectations, rising 5.4% vs. (E) 5.5%.

In China, COVID cases continue to explode higher and there were reports of overwhelmed hospitals, but officials are proceeding with a full economic reopening.

Today the focus will be on Jobless Claims (E: 222K) and markets will want to see this number move higher towards 250k (and ultimately 300k).  If claims remain stubbornly low, that could weigh on stocks (like it did last week).

Is the VIX Broken?

/in , /by

What’s in Today’s Report:

  • Is the VIX Broken?

Futures are modestly higher following in-line inflation readings from China and more gridlock in Washington as markets look ahead to today’s inflation readings.

Chinese CPI met expectations rising 1.6% and that benign reading will keep stimulus coming in that economy.

Politically, Arizona Senator Sinema left the Democrat party and registered as an independent, although the move is unlikely to change her voting patterns.

Today focus will be on inflation data, specifically PPI (E: 0.2% m/m, 7.2% y/y) and the University of Michigan Five Year Inflation Expectations (E: 3.0%).  If those reports come in under expectations and further hint at dis-inflation, it will extend the early rally.

Sevens Report Co-Editor Tyler Richey Quoted in S&P Global on December 7th, 2022

/in , /by

Stock market’s ‘fear gauge’ plunges as investors shift hedging strategies

Still, the VIX has not behaved in its typical fashion for much of this year, said Tyler Richey, a co-editor at Sevens Report Research. Click here to read the full article.

Market Multiple Levels: S&P 500 Chart

/in , /by

What’s in Today’s Report:

  • Market Multiple Levels – S&P 500 Chart
  • VIX Breaks Longstanding Downtrend in Cautious Signal

Futures are modestly lower as persistent concerns about hawkish Fed policy and fading global growth overshadow positive Covid policy news out of China and encouraging EU economic data.

Economically, German Industrial Production was better than feared at -0.1% vs. (E) -0.6% while  Q3 Eurozone GDP topped estimates at 2.3% vs. (E) 2.1% Y/Y suggesting the EU economy may be stabilizing.

China’s NHC issued new guidelines on Covid restrictions overnight that eased certain testing and quarantine requirements and will hold a press conference tomorrow which points to the potential for more progress in moving away from Covid-Zero.

Looking into today session, there is one economic report before the bell: Productivity & Costs (E: 0.4%, 3.3%) and then Consumer Credit (E: 27.3B) will be released in the afternoon. The latter report is not one we typically follow closely but there has been increasing concern about the health of household balance sheets, so a sharp move higher in outstanding credit could raise concerns about defaults in the coming quarters.

Finally, there are no Fed speakers today but stocks have been taking queues from rate markets and the dollar so if either meaningfully move higher, that will add pressure to the broader equity market today.

When to Brace for More Volatility

/in , /by

What’s in Today’s Report:

  • Revisiting the VIX – When to Brace for More Volatility
  • Familiar Holiday Volatility Courtesy of OPEC & Russia

U.S. equity futures are slightly higher and the dollar is pulling back modestly after a mostly quiet night of news as traders eye a stabilizing oil market.

After a volatile session yesterday, WTI crude oil is trading comfortably above $80/barrel this morning, fueling a rally in energy companies which is buoying index futures in pre-market trading.

Today, there is only one lesser-followed economic report due out: Richmond Fed Manufacturing Index (E: -1.0) and two Fed officials are scheduled to speak: Mester (11:00 a.m. ET) and George (2:15 p.m. ET).

Additionally, there is a 7-Yr Treasury Note auction at 1:00 p.m. ET that could move markets but the tape has been very quiet this week as attendance is light and volumes are down given the Thanksgiving holiday schedule. So more choppy and rangebound trading between 3,900 and 4,000 in the S&P is likely.

Staying Focused on the True Cause of Market Volatility

/in , /by

What’s in Today’s Report:

  • Staying Focused on the True Cause of Market Volatility
  • Weekly Market Preview:  Can Global Yields Drop?
  • Weekly Economic Cheat Sheet:  How strong is US Growth?

Futures are moderately higher after new UK Chancellor of the Exchequer Jeremy Hunt abandoned virtually all of the tax cut proposals in PM Truss’s spending/stimulus plan.

Hunt’s announcement of the abandoning of tax cuts and a review in April of the energy subsidies are easing market concerns and pushing the Pound higher and global yields lower.

Outside of the UK fiscal news it was a mostly quiet weekend.

Today focus will be on the Empire Manufacturing Survey (E: -2.5) which is our first look at October data, and markets will want to see moderation in the headline and a continued drop in the price index, and if that occurs stocks can extend the rebound.

On the earnings front, activity ramps up later in the week but some results we’re watching today include:  BAC ($0.79), SCHW ($1.05), BK ($1.10).

Tom Essaye Interviewed by BNN Bloomberg on August 30th, 2022

/in , /by

Invest in defensive sectors so you don’t get shaken out by oncoming volatility: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to talk on the markets. Click here to watch the full interview.

Are Rate Hikes a Reason to Reduce Stock Exposure?

/in , /by

What’s in Today’s Report:

  • Are Rate Hikes a Reason to Reduce Stock Exposure?
  • Chart: Level to Watch in the VIX

U.S. stock futures are tracking global equity markets higher amid easing Omicron fears and good economic data.

GlaxoSmithKline reported overnight that their antibody treatment is effective against the heavily mutated Omicron variant which is helping further ease fears about the new strain.

Economically, Chinese Imports rose 31.7% vs. (E) 21.5% y/y and Exports rose 22.0% vs. (E) 20.3% y/y in November pointing to a still-healthy economic recovery and that is supporting risk on money flows this morning.

Today, there are two lesser followed economic reports due out: International Trade in Goods and Services (E: -$66.8B), Productivity and Costs (E: -4.9%, 8.3%) but neither is likely to materially move markets while there are no Fed officials speaking today.

There is a 3-year Treasury Note auction at 1:00 p.m. ET that could impact yields and the broader curve and if we see a sharp enough flattening move (weak demand for shorter maturities amid rate hike fears) stocks could come under pressure, but to be clear, the tone is very risk on this morning as dip-buyers step into the market, chasing this bounce higher.