Fed Preview

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Fed Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview: Hawkish-If vs. Dovish-If
  • 10-Yr Treasury Note Yield Hits 2024 High: Chart

U.S. equity futures are giving back some of yesterday’s tech-led rally as there was a modest “sell the news” reaction to NVDA’s new AI chip (Blackwell) release while central bank decisions overnight favored policy doves.

Overnight, the BOJ delivered a dovish hike and the RBA signaled an end to rate hikes which sent both currencies lower and bolstered the dollar as this week’s Fed decision comes into focus.

Today, there is just one economic report to watch: Housing Starts (E: 1.449 million) and the Treasury will hold a 20-Yr Bond auction at 1:00 p.m. ET. Neither should meaningfully move markets ahead of the Fed, but if the housing data is hot or there is weak demand for the Bonds (sending yields higher) we could see a hawkish/risk-off move in markets today.

The March FOMC meeting begins today and barring any material “tape bombs” the markets should fall into a familiar positioning churn ahead of tomorrow’s policy announcement and Powell’s press conference.

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It’s All About Growth

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It’s All About Growth: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Cut Through the Noise: It’s All About Growth
  • Weekly Market Preview – Fed Decision and Forecasts in Focus
  • Weekly Economic Cheat Sheet: Stagflation Concerns on the Rise

Futures are higher to start the week with mega-cap tech leading gains after Bloomberg reported that AAPL is in talks with GOOGL to license the Gemini AI engine for the iPhone while economic data was largely market-friendly overnight.

Economically, Chinese Retail Sales rose 5.5% vs. (E) 5.2% and Industrial Output jumped 7.0% vs. (E) 5.0% to start 2024, easing some growth concerns surrounding the world’s second largest economy, however property sector woes persist.

In Europe, Core HICP (their CPI equivalent) fell 0.2% to 3.1% in February which was inline with estimates but helped reaffirm the disinflation trend remains in place in early 2024.

Today there is just one economic report to watch: the March Housing Market Index (E: 48), but with the Fed meeting looming, it is unlikely to have a material impact on the market.

Finally, there are 3-Month and 6-Month Treasury Bill auctions at 11:30 a.m. ET and while these are typically non-events, they could impact yields with the Fed meeting looming. Any additional hawkish money flows would likely pressure equities ahead of this week’s FOMC decision.

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Why Yesterday’s Data Was Worse Than the Market Reaction

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Why Yesterday’s Data Was Worse Than the Market Reaction: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Yesterday’s Data Was Worse Than the Market Reaction

Futures are seeing a mild bounce despite mixed inflation data and disappointing tech earnings overnight.

The global decline in inflation was again challenged overnight as French HICP was slightly hotter than expected.

ADBE posted solid earnings but underwhelming guidance and the stock is down 12% pre-market, weighing on the tech sector.

Today focus will remain on economic data and if there are more hints of “stagflation” (underwhelming growth and solid price pressures) expect declines from stocks.  Key reports today include, in order of importance: Empire State Manufacturing Index (E: -8.0), 1-Yr/5 yr Inflation Expectations (E: 3.0%/2.9%), Industrial Production (E: 0.0%) and Consumer Sentiment (E: 77.3).

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The AI craze is a modern gold rush

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The AI craze is a modern gold rush: Tom Essaye Quoted in SwissInfo.ch

Tech Giants Drag Down US Stocks After Torrid Rally: Markets Wrap

“The AI craze is a modern gold rush, and the tech ‘picks and shovels companies’ are seeing earnings explode as companies buy chips and cloud space to fuel the boom,” said Tom Essaye, founder of The Sevens Report. “But if AI doesn’t result in increased profitability for the rest of the S&P 500 over the coming years, then demand for AI chips will evaporate as will AI-related cloud demand.”

Also, click here to view the full article published on February 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Fundamentals are positive, they still don’t justify current valuations

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The market is vulnerable to a negative surprise: Tom Essaye Quoted in SwissInfo.ch

Stocks Struggle Near Record Before Inflation Data: Markets Wrap

The current set-up reflects the drivers that have powered stocks higher this year: solid growth, prospects for Fed rate cuts and artificial-intelligence enthusiasm, according to Tom Essaye, founder of the Sevens Report. “While the fundamentals are positive, they still don’t justify current valuations — making the market vulnerable to a negative surprise.”

Also, click here to view the full article published on March 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Lastly, If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

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Hawkish central-bank policy is bad for the oil market

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Hawkish central-bank policy is bad for the oil market: Tyler Richey, Sevens Report Co-Editor, Quoted in MarketWatch on MSN

Oil settles lower after rise in U.S. CPI and OPEC’s unchanged demand forecast

The initial market reaction to the consumer-price index release was a “hawkish one which saw oil prices decline to session lows,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

“Hawkish central-bank policy is bad for the oil market, because high interest rates over time act as a steady headwind on global growth and ultimately, that weighs on consumer-demand expectations,” he said.

Also, click here to view the full MarketWatch article published by MSN on March 13th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

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Retail Sales Is The Next Big Number

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This will be a potentially busy week of catalysts: Tom Essaye Quoted in Barron’s

S&P 500 Notches Record Close as Stocks Rally

Retail sales and producer price inflation later this week could serve as the next major test for stocks, as traders continue to hope interest rate cuts will begin in the second half of the year.

“Retail sales is the next big number and then we’ll go from there,” Sevens Report Research’s Tom Essaye told Barron’s. “But for now, the script is still in place. The issue markets have is that it’s already also priced in, so we need to find the next news catalyst.”

Also, click here to view the full Barron’s article published on March 13th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

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The CPI release didn’t counter existing market narratives

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The market views it as keeping the Fed on schedule for June rate cuts: Tom Essaye Quoted in Barron’s

Stocks Are Rallying. Inflation Report Keeps the Fed on Track.

Sevens Report Research’s Tom Essaye told Barron’s in a phone interview that while the headline figure didn’t meet expectations, the numbers didn’t counter existing market narratives.

“People still very much subscribe to the idea that housing is artificially inflating CPI, and that whenever that begins to work its way out of the data, the number will move down even more quickly than it is,” Essaye says. “Nothing in this report refuted that, and so as a result, I think that the market views it as keeping the Fed on schedule for June rate cuts.”

“For now, the script is still in place,” Essaye says. “The issue markets have is that it’s already priced in, so we need to find the next new catalyst.”

Also, click here to view the full Barron’s article published on March 13th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to Rally

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

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The initial market reaction to the CPI release was a hawkish one

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Oil prices decline to session lows: Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch

Oil futures move up after CPI data, OPEC’s latest forecast for growth in oil demand

The initial market reaction to the CPI release was “a hawkish one, which saw oil prices decline to session lows,” said Tyler Richey, co-editor at Sevens Report Research. “Hawkish central bank policy is bad for the oil market because high interest rates over time act as a steady headwind on global growth and ultimately that weighs on consumer demand expectations.”

Looking at the reaction in the rates markets, “hawkish money flows were only modest, and investors are still pricing in a June rate cut from the Fed, just with a slight dip in confidence,” Richey said.

Also, click here to view the full MarketWatch article published on March 12th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

To strengthen your market knowledge take a free trial of The Sevens Report.

How oil futures close out the week today will largely depend on how investors digest today’s jobs data

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Sevens Report Analysts Quoted in MarketWatch

Jobs report could decide how oil closes out the week

“How oil futures close out the week today will largely depend on how investors digest today’s jobs data. If it is more ‘market-friendly’ data that points to slowing inflation (specifically wages) and more loosening in the jobs market, oil is likely to rally past the $80/barrel mark,” analysts at Sevens Report Research said in a note.

“Conversely, a ‘hot’ report would likely send futures back towards support in the mid-$70s,” they wrote.

Also, click here to view the full MarketWatch article published on March 8th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

If you want research that comes with no long term commitment, yet provides independent, value added, plain English analysis of complex macro topics, then begin your Sevens Report subscription today by clicking here.

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