“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.
“The stock serves as a little bit of a proxy for sentiment toward Donald Trump himself,” Tyler Richey, an analyst at Sevens Report Research, told ABC News.
“While expectations of a Trump win in November are boosting futures this morning, the event is unlikely to sustainably impact markets,” wrote Tom Essaye, president and founder of Sevens Report.
Economic growth must remain resilient and we cannot have a growth scare,” said Tom Essaye, founder of Sevens Report Research.
“The performance gap between tech and the rest of the market is so wide that it’s reasonable to expect continued closing of that gap as markets more fully embrace the idea of the start of a rate cutting cycle,” summarized Sevens Report founder Tom Essaye.
“I think this will cause a bit of a correction, and a bit of a widening. How long it lasts depends on growth.” Sevens Report Research’s Tom Essaye tells Barron’s.
“Stepping back, the Fed needs a few more ‘good’ reports on inflation to cut rates in September. This can be one of those needed ‘good’ reports and keep the rally rolling (although it won’t be a new, positive catalyst as markets already assume ongoing disinflation),” said Tom Essaye, founder of Sevens Report Research, in a note.