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Market Multiple Table: April Update

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What’s in Today’s Report:

  • Market Multiple Table: April Update

Futures are modestly lower with European markets while oil rallies and global bond yields move higher amid simmering geopolitical tensions and lingering inflation fears.

Economically, Final Composite PMI data was mostly better than expected in Europe overnight but price measures continued to rise, suggesting inflation has still not peaked.

Today, we will get two economic reports starting with International Trade (E: -$88.8B), but the ISM Services Index (E: 58.5) will be the more important release to watch shortly after the opening bell as a continued rise in the price measures could further stoke inflation/stagflation fears.

Additionally, there are multiple Fed speakers today: Kashkari (10:00 a.m. ET), Brainard (11:05 a.m. ET), Daly (12:30 p.m. ET), and Williams (2:00 p.m. ET). And if their tone is more hawkish than current market expectations, that could send yields to new highs and pressure high growth tech names which would drag the broad market lower.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview

Stock futures are modestly lower this morning as investors continue to monitor the war in Ukraine and rising tensions between the U.S. and China surrounding the conflict.

Geopolitically, a new round of talks is scheduled between Russia and Ukraine today while the U.S. has warned China over providing Russia with military support.

Economically, several Chinese data points handily beat estimates overnight but the data was overshadowed by a sharp rise in Covid-19 cases in various regions of the country while European data came in below estimates this morning. With geopolitics still dominating news wires and the Fed meeting coming into focus, however, none of the data materially moved markets overnight.

Today, there are two economic reports to watch ahead of the bell: PPI (E: 1.0%, 10%) and Empire State Manufacturing Index (E: 8.0), and with the March FOMC meeting getting underway, the inflation data will be closely watched and could cause a dovish/hawkish reaction across asset classes ahead of tomorrow’s announcement.

Bottom line, Ukraine headlines will still move markets today and any progress towards a ceasefire will be well-received however expect a sense of Fed paralysis to increasingly grip the markets as the day goes on and traders position into the first rate hike in years.

Inflation Update

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What’s in Today’s Report:

  • Inflation Update
  • EIA Analysis and Oil Market Update

Futures are moderately lower as a meeting between the Russian and Ukrainian foreign ministers yielded no additional progress towards peace.

Russia and Ukraine’s foreign ministers met in Turkey for over an hour, but there were no tangible breakthroughs made towards a lasting case-fire.

That lack of progress aside, the tone of the meeting was partially positive and a path towards peace appears to be slowly forming.

Today focus will be on the ECB Announcement (7:45 a.m. ET, press conference at 8:30 a.m. ET) and CPI (E: 0.7% m/m, 7.9% y/y).

Regarding the ECB, the key question is “how dovish is Lagarde?” in her comments, given the economic risks to Europe from the war.  The market has priced in that she will be quite dovish, so there is a risk of a mildly hawkish surprise.

Regarding inflation, the number to watch is 8%.  If CPI prints above 8% y/y, that will show inflation pressures are not receding and given exploding commodity prices, that means higher inflation for longer, which will likely make the Fed more aggressive on rate hikes (although a 50 bps hike next week is still unlikely).

Finally, we also get Jobless Claims (E: 218K) but that’s shouldn’t move markets,

Tom Essaye Quoted in Barron’s on February 28, 2022

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Buying the Russia Dip? Consider These Stocks.

The main reason the European markets are down more than the U.S. is because Russia is a major trading partner with Europe…said Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

 

Why the SWIFT Ban and Other Sanctions Matter

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What’s in Today’s Report:

  • Why the SWIFT Ban and Other Sanctions Matter
  • Update on Value/Growth Rotation

It is a moderately risk-off morning with stock futures down just over 0.5% while Brent crude prices have jumped back above $100/barrel and the 10-Yr Treasury yields have dipped below 1.75% amid the ongoing conflict in Ukraine.

Western allies added more sanctions on Russian financial institutions overnight while a 40-mile long Russian military convoy continued to make progress towards Kyiv however high-level diplomatic talks between Russia and Ukraine are expected to resume today.

Looking at the calendar, there are two economic reports to watch today: ISM Manufacturing Index (E: 58.0) and Construction Spending (E: -0.2%) as well as one Fed speaker: Bostic (2:00 p.m. ET).

But, the market will remain largely focused on the Russia/Ukraine conflict and whether or not there is any progress in the ongoing diplomatic talks. As has been the case since last week, any deterioration in the conflict will result in further risk-off money flows across asset classes while any sense of de-escalation could support a continued relief rally.

Why Stocks Rebounded on Thursday

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What’s in Today’s Report:

  • Why Stocks Rebounded on Thursday
  • What’s Next for Russia/Ukraine (From a Market Perspective)

Futures are moderately lower (about 1%) as there were no major changes in Ukraine overnight and as markets digest Thursday’s rebound.

Russian troops have arrived at Kiev and there are reports of heavy fighting near the city, and many analysts expect Kiev to fall as soon as today or in the coming days.

There was no notable economic data overnight.

Today obviously markets will be focused on Ukraine headlines, but as long as there are no signs of the conflict spreading beyond Ukraine then it shouldn’t be too much of a direct impact on stocks.  Outside of geo-politics, the key economic report today is the Core PCE Price Index (E: 0.5% m/m, 5.2% y/y) and if that is much stronger than expectations, it will weigh on futures as it will make the Fed more hawkish, and if it shows signs of inflation peaking, it could extend yesterday’s rally.   We also get Durable Goods Orders (E: 0.5%), Consumer Sentiment (E: 61.7) and Pending Home Sales (E: 0.8%) but those numbers shouldn’t move markets unless they are large misses vs. expectations.

Tom Essaye Quoted in Coinspeaker on February 23, 2022

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Dow Jones Tanks as Tension between Russia and Ukraine Escalates

The Russia/Ukraine situation remains very fluid, and tensions remain high, and in the short term that will remain a headwind on stocks…said Tom Essaye, founder of the Sevens Report. Click here to read the full article.

What the Russian Attack on Ukraine Means for Markets

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What’s in Today’s Report:

  • What the Russian Attack on Ukraine Means for Markets
  • What’s Next in This Situation
  • What We Are Doing Today

Futures are down close to 3% as Russia launched an attack on Ukraine beyond the Donbas region.

Early Thursday morning Russia launched missiles at numerous targets in Ukraine and landed troops throughout the country, dramatically escalating the conflict.

Commodity prices shot higher, including oil, which is up more than 7%

Today focus will obviously be on the Russian attack and how far it goes, along with the severity of the international sanctions against Russia.  Anything that implies a further escalation will weigh further on markets and send commodity prices even higher.

Outside of Russia/Ukraine, there are numerous economic reports and Fed speakers:  Revised Q4 GDP (E: 7.0%), Jobless Claims (E: 230K). Fed Speak: Barkin (9:00 a.m., 12:00 p.m. ET), Bostic (11:10 a.m. ET), Mester (12:00 p.m. ET), Waller (8:00 p.m. ET).

Is a Russian Invasion of Ukraine a Bearish Gamechanger? (Updated)

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What’s in Today’s Report:

  • Is a Russian Invasion of Ukraine a Bearish Gamechanger?  (Updated)

Futures are enjoying a modest bounce as the headlines on Russia/Ukraine turned a bit more positive overnight.

The U.S. Secretary of State and his Russian counterpart will meet next week, signaling diplomatic efforts to de-escalate will continue.

Economic data was sparse but generally solid as Japanese CPI met expectations while UK Retail Sales beat estimates.

Today’s focus will again be on geopolitical headlines, and any reports of de-escalation will help stocks recoup more of Thursday’s losses, while negative headlines will likely erase these early gains.

Beyond the Russia/Ukraine situation, we do get three Fed speakers today, two of which are Fed leadership:  Williams (11:00 a.m. ET) and Brainard (1:30 p.m. ET). If they make hawkish commentary (especially Brainard) look for stocks to drop again.  Fed President Evans (10:15 a.m. ET) also speaks this morning.

Finally, on the economic front, we get one report today, Existing Home Sales (E: 6.08M), but that shouldn’t move markets.