What the Fed Decision Means for Markets

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What the Fed Decision Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the Fed Decision Means for Markets: Still All About Growth
  • Fed Statement and SEP Takeaways
  • Lesser Followed, But Still Important Data Eases Stagflation Threat
  • EIA Data Takeaways and Oil Update

Futures are rallying to new highs after the SNB unexpectedly cut rates overnight, the first major central bank to do so, while MU is up 18% pre-market on solid AI driven earnings which is bolstering big tech shares.

The March Eurozone Composite PMI rose to 49.9 vs. (E) 49.6 due to a 0.9-point rise in the Services index while the Manufacturing index unexpectedly fell 0.8 points to 45.7 pointing to an imbalanced EU economy that is at risk of slowing down meaningfully.

Looking into today session, there is a lot of domestic economic data to watch with Jobless Claims (E: 209K), the Philadelphia Fed Business Survey (E: -5.0), the PMI Composite Flash (E: 51.5), and the Existing Home Sales report (E: 3.92 million) all due to be released.

Additionally, traders will be focused on the BoE Decision and meeting minutes (8:00 a.m. ET) before the bell and then later the Fed’s Vice Chair, Michael Barr is schedule to speak at a  University of Michigan round table event (12:00 p.m. ET).

Bottom line, after the Fed yesterday, investors will want to see data hold up well but not be so “hot” that it dents the case for three rate cuts before yearend. Data that comes in “too hot” or “too cold” will be a negative for stocks as the Fed has a very narrow path to achieving a soft landing here.

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What Is the Bitcoin “Halving?”

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What Is the Bitcoin “Halving?”: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Is the Bitcoin “Halving?”
  • Manheim Used Vehicle Index Continues to Decline – Chart

Stock futures are little changed this morning as yields drift sideways and the dollar firms ahead of the Fed decision.

European markets were led lower by luxury brand names after soft earnings from Gucci’s parent company (Kering SA) offset favorable inflation data out of the UK.

Economically, the PBOC left the Loan Prime Rate at 3.45% which is seen as accommodative while U.K. CPI favorably fell from 5.1% to 4.5% vs. (E) 4.6% in February.

There are no notable economic reports today which will leave investor focus pretty much exclusively on the Fed with the FOMC Meeting Announcement at 2:00 p.m. ET followed by Fed Chair Powell’s press conference at 2:30 p.m. ET.

If the Fed is hawkish and signals a higher-for-longer policy stance (more so than is already priced in), expect some volatility in the wake of the decision while a dovish decision projecting confidence in a soft landing could see the 2024 rally extend to new highs.

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The major question for tomorrow’s meeting is what do the dots say?

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The major question for tomorrow’s meeting: two or three rate hikes? Tom Essaye Quoted in Barron’s

Dow Turns Higher. Tech Stocks Pull Back.

“I think what we’re seeing today is just a little bit of hedging by investors,” Sevens Report Research’s Essaye told Barron’s in a phone interview.

Essaye says that ahead of the Fed meeting, traders may be looking at defensive stocks on the chance that the Federal Open Market Committee’s March meeting sends stocks lower or pushes yields lower.

“The major question for tomorrow’s meeting is what do the dots say: two or three rate hikes?” Essaye says. “That’s really gonna determine how the market reacts to this meeting.”

“AI enthusiasm has been a major factor in this rally, and as long as nothing else is particularly negative, AI enthusiasm can continue to push markets higher,” Essaye says. “That’s what happened yesterday. Today, we don’t have that sort of new shiny object in AI to focus on, and we have the Fed decision tomorrow.”

Also, click here to view the full Barron’s article published on March 19th, 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.

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The March FOMC meeting begins today

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The March FOMC meeting begins today: Tom Essaye Quoted in Barron’s

Stocks Open Lower Ahead of Fed Meeting

The FOMC’s March meeting kicks off on Tuesday. While a rate cut has been ruled out by traders, they will pay close attention to Federal Reserve Chair Jerome Powell’s press conference on Wednesday.

“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,” writes Sevens Report Research’s Tom Essaye.

Also, click here to view the full Barron’s article published on March 19th, 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.

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The key is growth, it’s not rate cuts

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The key is growth, it’s not rate cuts: Tom Essaye Quoted in Barron’s

S&P 500 Edges Higher. Tech Still Lags.

Stocks have been holding up in recent weeks even though expectations for a rate cut sooner rather than later have dipped.

“The key is growth, it’s not rate cuts,” Sevens Report Research’s Tom Essaye told Barron’s. “As long as growth is stable, the markets can tolerate fewer rate cuts—up to a certain point.”

Also, click here to view the full Barron’s article published on March 19th, 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.

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Easing growth concerns surrounding the world’s second largest economy

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Easing growth concerns surrounding the world’s second largest economy: Tom Essaye Quoted in Barron’s

Asian Stocks Gain Amid Positive Chinese Data, Bank of Japan Expectations

“Chinese retail sales rose 5.5% [versus expectations of 5.2%] and industrial output jumped 7% [versus expectations of 5%] to start 2024, easing some growth concerns surrounding the world’s second largest economy, however property sector woes persist,” said Tom Essaye, the founder of Sevens Report Research.

Also, click here to view the full Barron’s article published on March 18th, 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.

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Economic data this week has not been positive for stocks

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Economic data this week has not been positive for stocks: Tom Essaye Quoted in Blockworks

Bitcoin holds below $70k on disappointing inflation reads this week

“Economic data this week has not been positive for stocks and while it hasn’t invalidated any of that bullish mantra, it has weakened it,” Tom Essaye, founder of Sevens Report Research, said. 

Also, click here to view the full Blockwork article published on March 15th, 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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The fundamentals are positive but they still don’t justify current valuations

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The fundamentals are positive but they still don’t justify current valuations: Tom Essaye Quoted in Bloomberg Featured on Yahoo Finance

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 Bloomberg article featured on Yahoo Finance published 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.

Join hundreds of advisors from huge brokerage firms like Morgan Stanley, Merrill Lynch, Wells Fargo Advisors, Raymond James, and more! To start your quarterly subscription and see how The Sevens Report can help you grow your business, click here.

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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