None of this pullback includes growth worries, and that’s what we have to watch for to make this go from a pullback to something worse. I am still concerned about growth but the data over the past week has been ‘OK,” said Tom Essaye, founder of Sevens Report Research.
Wednesday’s EIA report was “solid and oil futures appropriately popped in the wake of the release,” said Tyler Richey, co-editor at Sevens Report Research.
“The ultimate direction of the S&P 500 will still be determined by economic growth,” remarked Sevens Report analyst Tom Essaye in a Monday note.
“The oil market began the week with a thud [Monday], failing to stabilize after the sharp losses in the back half of last week,” said Tyler Richey, co-editor at Sevens Report Research.
The improved prospects of a Donald Trump victory in the 2024 election are “price-negative for oil as he has said he plans to support production increases to increase energy independence and lower prices,” said Tyler Richey, co-editor at Sevens Report Research.
The stock market fallout of shifting expectations for November’s election will likely be “very short term,” Sevens Report founder Tom Essaye wrote to clients, as more directly impactful developments like corporate earnings growth and interest rate movements are likely to more directly impact equity prices.
“This political shake-up shouldn’t materially alter the direction of the markets,” said Tom Essaye at The Sevens Report. “The ultimate direction of the S&P 500 will still be determined by economic growth.”
Bottom line, this massive rotation from tech and tech related sectors was caused primarily by investors positioning for a rate cutting cycle and secondarily by anticipation for a Trump administration and negative tech news,” writes Sevens Report’s Tom Essaye.
The 10-year Treasury constant maturity minus the 2-year (aka 10s-2s), currently around -0.26, is moving in a positive direction, Sevens Report founder Tom Essaye said. This generally isn’t great for markets.
History suggests the answer is probably no. More often, the reversal of a yield-curve inversion has signaled that the wheels are about to come off the economy and the stock market with it, according to Tom Essaye, a former Merrill Lynch trader and founder of Sevens Report Research.