Does a Broader Rally Mean a Healthier Rally?

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What’s in Today’s Report:

  • Does a Broader Rally Mean a Healthier Rally?

Futures are modestly higher following a generally quiet night of news and after economic data was better than expected.

UK and EU flash PMIs beat estimates (EU PMI rose to 52.1 vs. (E 51.6) while the UK PMI jumped to 52.5 vs. (E) 51.5) implying stable global growth.

Treasury yields are little changed overnight and the lack of a continued rally is helping futures lift.

Today focus will stay on economic data via the Flash Manufacturing PMI (E: 53.7) and Flash Services PMI (E: 53.8) and Goldilocks numbers (headline readings that meet or slightly beat estimates and no big increases in the price indices) should keep yields stable and help stocks rebound.

 

Needed Context for Rising Yields

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What’s in Today’s Report:

  • Needed Context for Rising Yields
  • What Could Push Yields Lower (Four Candidates)

Futures are little changed despite higher oil prices as President Trump threatened an “economic D-Day” for Iran.

President Trump threatened dramatic economic sanctions on countries with economic ties to Iran, increasing odds of a Iranian military response and pushing oil prices higher.

Focus today will be on yields and whether they recoup Wednesday’s losses or not.  Impacting that will be, in order of importance:  Oil prices (do they rise further than the current 2% rally) and economic data (does it come in hot or not?).

Economically, important reports today include Jobless Claims (E: 211K), Philly Fed (E: 25.0) and Leading Indicators (E: 0.1%) and the more “in-line” they are with expectations, the better (especially the Philly price indices).

Outside of economic data, there is one Fed speaker, Musalem (11:10 a.m. ET) and some notable retail earnings:  WMT ($0.73), BABA ($1.94), DE ($4.79), AAP ($0.81), ROST ($1.93).

 

The AI Trade Is Getting Bigger

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If you believe AI is here to stay, follow the link below to read our most recent Alpha issue and see how I think investors can best participate.

Sevens Report Alpha

 

What Caused Yesterday’s Selloff? AI or Yields?

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What’s in Today’s Report:

  • What Caused Yesterday’s Drop, AI or Yields?
  • Three Reasons Yields Are Rising Right Now

Futures are flat as traders digest this week’s pullback in tech stocks amid stubbornly elevated oil prices and subsequently buoyant bond yields.

Economically, U.K. Core CPI held steady at 2.6% vs. (E) 2.5% y/y while the EU’s Core CPI equivalent (Core HICP) was unchanged at 2.5% y/y in July, meeting estimates; neither release suggested inflation is beginning to slow materially which is keeping yields elevated today.

There are no noteworthy economic reports today, however the Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET which could move the bond market, and a pullback in yields would be welcomed by equities today, potentially setting up a relief rally in the broader market.

Later in the afternoon, the July FOMC meeting minutes will be released (2:00 p.m. ET) and traders will be looking for any fresh insight as to the Fed’s most likely policy rate path in H2’26; the more dovish/accommodating, the better for equities.

Finally, there are a handful of late-season earnings releases due to be released today including ADI ($3.33), TGT ($2.30), TJX ($1.18), LOW ($4.22), EL ($0.32), and BULL ($0.03). And as has been the case, the stronger the results and guidance, the better for the market.

 

Is There Finally Value in Software?

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What’s in Today’s Report:

  • Is There Finally Value in Software?
  • Empire State Manufacturing Survey Takeaways.

Futures are lower with semiconductor/tech stocks leading the declines on valuations concerns as geopolitical tensions remain elevated, pushing oil and bond yields higher (the 30-Yr Bond yield is above 5.30%).

Economically, U.K. Unemployment held steady at 4.9%, meeting expectations but the release did not materially impact markets with focus on oil, geopolitics, and global bond yields sitting at multi-decade highs.

Today, there is a fair bit of economic data to watch including Industrial Production (E: 0.3%), Housing Starts (1.345M), Pending Home Sales (E: 1.4%), and Import & Export Prices (E: 0.1% m/m, 0.0% m/m). The best case scenario for equities is healthy (but not “hot”) growth data and “cooler than feared” inflation data.

There are no Fed officials speaking today which will leave bond markets focused on 6-Week Treasury Bill auction at 11:30 a.m. ET (the stronger the demand the better).

Earnings season is winding down, however there are a handful of noteworthy companies reporting quarterly results today, including HD ($4.71), BIDU ($1.51), KEYS ($2.48), SQM ($2.03), and TOL ($2.90). As has been the case, the stronger the results/guidance, the better for stocks.

 

Four Reasons Last Week was Better than it Seemed for Markets

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What’s in Today’s Report:

  • Four Reasons Last Week was Better than it Seemed for Markets
  • Weekly Market Preview: Is the Consumer Holding Up and How Hawkish Is the Fed?
  • Weekly Economic Cheat Sheet: FOMC Minutes (Wed) and First Look at August Data

Futures are slightly higher following a mostly quiet weekend of news.

Chinese economic data was soft as Industrial Production (4.5% vs. (E) 5.0%), Retail Sales (0.6% vs. (E) 1.5%) and Fixed Asset Investment (-6.7% vs. (E) -6.1%) all missed estimates.

Geopolitically, there was no progress on U.S./Iran ceasefire talks but, positively, any military escalation still remains unlikely.

Today focus will be on the economy as we get the first look at August data via the Empire Manufacturing Index (10.60) and the best case for markets is for a Goldilocks number of solid growth (so at or slightly above expectations) and, almost as importantly, a continued decline in the price indices (which shows inflation pressures are continuing to recede in August).  The other notable economic report is the Housing Market Index (E: 33) but that shouldn’t move markets.

 

Monthly Bitcoin and Crypto Update & Outlook

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What’s in Today’s Report:

  • Monthly Bitcoin and Crypto Update & Outlook

Futures are little changed following a mostly quiet night of news.

Applied Materials (AMAT) posted strong earnings but, like CSCO, they weren’t as good as hoped for and the stocks is lower pre-market (down 6%) and that is a mild headwind on futures.

Economically, the only notable number was Q2 EU flash GDP which met expectations at 0.4% q/q.

Today focus will stay on economic data via Retail Sales (E: 0.1%), University of Michigan Consumer Sentiment (E: 54.2) and Five- Year Inflation Expectations: (E: 3.3%).  The “best” case for stocks is for solid (but not spectacular) retail sales and five-year inflation expectations that decline closer to 3.0%, as that will reinforce solid growth and continue this week’s trend of easing inflation pressure.

 

Examining the Most Important Headline This Week (It’ll Surprise You)

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What’s in Today’s Report:

  • Examining the Most Important Headline This Week (It’ll Surprise You)

Futures are slightly higher despite post earnings selling in AI linked tech stocks, as lower oil boosts futures.

CSCO earnings weren’t as good as hoped for and the stock is down 6% pre-market, although it’s not weighing on the rest of the market.

There was no discernable progress on U.S./Iran peace talks but oil dropped 1% overnight on falling fears of escalation.

Today focus will remain on inflation and the economy via PPI  (E: 0.2% m/m, 4.9% y/y) and Jobless Claims (E: 203K).  The lower PPI and the closer jobless claims are to 200k, the better for markets (it’d be a Goldilocks reading). We also have one Fed speaker today, Barkin (8:40 a.m. ET), but he shouldn’t move markets.

On earnings, tech results continue and today’s key report is AMAT ($3.38).

 

August MMT Levels: S&P 500 Chart

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What’s in Today’s Report:

  • August MMT Levels: S&P 500 Chart
  • The SPX-VIX Ratio Has Entered Dangerous Territory

Futures are higher, led by tech after SMCI was the latest AI infrastructure name to post blowout quarterly earnings after the close yesterday (shares up 9%+ pre-market), rekindling AI industry optimism ahead of the July CPI release.

Economically, German CPI met estimates at 2.8% y/y in July, unchanged from June, helping shore up hopes that inflation pressures have peaked this summer.

Today, the market’s primary focus will be on the July U.S. CPI data due out ahead of the open: (E) 0.1% m/m, 3.4% y/y, Core CPI (E) 0.2% m/m, 2.5% y/y.

There are no Fed officials scheduled to speak today but the Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 10-Yr Note auction at 1:00 p.m. ET, the latter of which will be more widely watched and has the potential to move markets (the stronger the demand the better, especially in the wake of the CPI release).

Finally, with earnings having a positive impact on the tape this morning quarterly results from NBIS ($-0.67), CSCO ($0.99), and COHR ($1.43) will all be closely monitored as AI optimism has begun to pickup again and buoy the broader equity markets this week. Any material disappointments have the potential to reverse the pre-market bid and send stocks lower as sentiment remains fragile right now.

 

August Market Multiple Table Update

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What’s in Today’s Report:

  • August Market Multiple Table – Enough Positives to Continue to Support Elevated Multiples

Futures are steady this morning amid mostly quiet news flow as focus shifts ahead to tomorrow’s CPI release.

Economically, the NFIB Small Business Optimism Index rose 2.4 points to 99.8, topping estimates calling for 97.3.

Tomorrow’s CPI release will be the most important economic report for the week but there is one release that could impact markets today: Existing Home Sales (E: 4.05 million) due out shortly after the opening bell.

There are no Fed officials scheduled to speak today however the Treasury will hold a 6-Week Bill auction at 11:30 a.m. ET and a 3-Yr Note auction at 1:00 p.m. ET (the latter will be more closely watched as a “tell” regarding Fed policy rate expectations).

Finally, earnings season continues today and investors will want to see more robust top and bottom line results as well as strong forward guidance with SE ($0.78), CAH ($2.42), ONON ($0.38), SMCI ($0.56), CRWV ($-1.67), and LITE ($2.62) all reporting today.

 

Putting New Highs in the Right Context

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What’s in Today’s Report:

  • Putting New Highs in the Right Context
  • Weekly Market Preview: Does the “Chase” Continue?
  • Weekly Economic Cheat Sheet: Inflation is Key This Week (CPI on Wednesday)

Futures are slightly higher despite no progress on the Strait of Hormuz reopening or a U.S./Iran ceasefire.

A ship was attacked over the weekend in the Strait of Hormuz and there are no more details on an Iran/Oman agreement on the Strait, so traffic remains effectively halted.

However, there appears to be no appetite from the U.S. to resume air strikes, so the lack of progress isn’t a negative for markets and oil prices are only up modestly (a bit over 1%).

Today there are no economic reports nor any Fed speakers so focus will remain on geopolitics and any details that imply increased Strait of Hormuz transit will pressure oil and help support stocks.