The Fed Pivoted, So Now What?

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What’s in Today’s Report:

  • Sevens Report Technicals First Issue Today (Delivered to subscribers later this morning)
  • The Fed Pivoted, So Now What?
  • Weekly Market Preview:  Will there be any debt ceiling progress, and does disinflation resume?
  • Weekly Economic Cheat Sheet:  CPI on Wednesday is the key report this week.

Futures are slightly higher following a mostly quiet weekend of news as markets look ahead to Wednesday’s CPI.

News was slightly positive on the debt ceiling over the weekend, as reports indicate the White House will try to negotiate a short term debt ceiling extension (to the end of September).  However, it remains uncertain if even this short-term deal can get done before the “X” date.

Economically, German Industrial Production missed estimates (-3.4% vs. (E) -1.5%) but that’s not moving markets.

Today there are no notable economic reports but there is a potentially important release at 2:00 p.m. via the Bank Senior Loan Office Survey.  Markets (and the Fed) are nervous the regional bank stress will curtail lending and put a bigger headwind on the economy.  If the loan officer survey reflects that reality (a drop in bank lending) it could cause volatility as that would increase the chances of a potential hard landing.

 

Sevens Report Technicals – First Issue Being Delivered To Trial Period Subscribers This Morning!

We have been thrilled with the response to our new research offering: Sevens Report Technicals and we are very excited to deliver the first official issue later this morning. Sevens Report Technicals will be similar in appearance to the special technical report we sent out two weeks ago, which you can view here.

This new report will offer a “deep dive” into the technical dynamics of all of the asset classes we cover in the daily Sevens Report including:

  • A “Top-Down” Technical View
  • Dow Theory Update
  • Key Levels to Watch Across Asset Classes
  • A Dynamic Equity Sector “Dashboard”
  • A Deep Dive Into Treasury Market Trends
  • Market Volatility Observations and Takeaways

During this launch phase we continue to offer an additional month free on any quarterly ($75 discount) or annual ($150 discount) subscription. With a one month “Grace Period” during which you can receive a full refund for any reason, you take no risk trying Sevens Report Technicals. We are confident that you will find the research a perfect complement to your business or investment process.

To start your risk-free trial subscription, please send an email to info@sevensreport.com. To learn more about Sevens Report Technicals, click this link.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview

Futures are moderately higher ahead of the jobs report thanks to solid earnings overnight.

Earnings overnight were good, highlighted by AAPL and SQ, which both rallied after hours and are helping lift futures.

Economic data underwhelmed as both the Chinese Composite PMI and German Manufacturers’ Orders missed expectations, but the numbers aren’t moving markets.

Today focus will be on the jobs report and expectations are as follows:  178K Job Adds, 3.6% Unemployment Rate and 0.3% m/m,4.2% y/y wages.  As we cover in the Report, risks to this jobs number are two sided, as a “Too Hot” number could reverse the Fed pause expectations, while a “Too Cold” number will spike hard landing fears.  So, the market needs a number at or modestly below the expectation, and if it gets that “Just Right” number, stocks can rally today.

We also get two Fed speakers today, Cook (1:00 p.m. ET) and Bullard (1:00 p.m. ET), but neither should move markets.

What the Fed Pause Means for Markets

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What’s in Today’s Report:

  • What the Fed Pause Means for Markets
  • EIA Analysis and Oil Market Update

Futures are slightly lower following more regional bank turmoil and disappointing earnings.

Pac West (PACW) announced overnight that it’s seeking “strategic alternatives” and the stock dropped more than 30% pre-market and is weighing on other regional banks.

On earnings, EL and QCOM both missed estimates and that’s also weighing on sentiment.

Today focus will initially be on the ECB Rate Decision (E: 25 bps hike) and economic data via Jobless Claims (E: 238K) and Unit Labor Costs (E: 3.9%).  Markets will want to see 1) A not too hawkish ECB (so no 50 bps hike), 2) A mild uptick in jobless claims (signaling more balance in the labor market) and 3) A drop in Unit Labor Costs (implying wage pressures are easing).  If we get the opposite of those events, expect more declines today.

After the close we get what’s likely the most important earnings report of the season, AAPL ($1.44), and a solid number there would help sentiment.

Why Did Banks Drop Yesterday?

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What’s in Today’s Report:

  • Why Did Banks Drop Yesterday?
  • Technical Update: Two S&P 500 Charts to Watch

Futures are slightly higher despite more pain in regional bank shares in the pre-market and soft tech earnings from late yesterday as focus shifts to today’s Fed decision.

AMD is down 7%+ after a disappointing sales forecast late yesterday while shares of PACW and WAL (which fell sharply yesterday and weighed on the broader banking complex) are both down 7% to 12% in pre-market trade this morning.

Economically, Australian Retail Sales were better than expected while the Eurozone Unemployment Rate dipped which saw bond yields move off the overnight lows.

Looking into today’s session there are two important economic reports to watch as they could alter Fed policy expectations depending on how they come in. The ADP Employment Report (E: 143K) is due out before the bell while the ISM Services Index (E: 51.7) will be released at the top of the 10:00 a.m. hour ET.

From there focus will turn to the Fed with the FOMC Decision at 2:00 p.m. ET (E: +25 bp) and Fed Chair Powell’s press conference at 2:30 p.m. ET. How the Fed handles forward guidance in the statement and any insights Powell provides in the presser will be the key factors in determining whether stocks extend yesterday’s declines or stabilize and recover to test the YTD highs.

 

Sevens Report Technicals – A New Timely Report Dedicated to Technical Analysis

Response to our announcement of Sevens Report Technicals was tremendous yesterday, and we are very excited to produce the first issue this coming Monday (May 8th) and deliver compelling value!

Sevens Report Technicals will be similar in appearance to last week’s special technical report, which you can view here.

During this launch phase we continue to offer an additional month free on any quarterly (savings of $75 dollars) or annual (savings of $150 dollars) subscription.

With a one month “Grace Period” during which you can receive a full refund for any reason, you take no risk trying Sevens Report Technicals to see if it’s a complement to your business or investment process.

To start your risk-free trial subscription, please send an email to info@sevensreport.com. To learn more about Sevens Report Technicals, click this link.

An Exciting Announcement Today

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What’s in Today’s Report:

  • We Are Excited to Announce a New Service Launching This Monday, May 8th – Sevens Report Technicals (Details Below)
  • FOMC Preview – Will the Fed Signal a Pause Tomorrow?
  • ISM Manufacturing Index Takeaways: Stagflation Risks Rising?

Stock futures are slightly lower as investors digest an unexpected rate hike by the RBA and mixed economic data overnight.

The RBA raised rates 25 bp to 3.85% overnight (E: no change) citing stubbornly high inflation which triggered a hawkish reaction in markets in overnight trading.

Economically, European Manufacturing PMI data was largely in line with estimates although the readings remained deep in contraction territory while the “Narrow Core” HICP Flash reading for April was 5.6% vs. (E) 5.7%, the first decline in the reading in 10 months. On balance, the European data eased some of the hawkish concerns weighing on risk assets in pre-market trading.

Today, there are a few economic releases to watch: Motor Vehicle Sales (E: 14.8 million), Factory Orders (E: 1.3%), and JOLTS (E: 9.650 million) and investors will want to see signs of a continued but steady slowdown in growth and easing price pressures in order to keep soft landing hopes alive.

Earnings season continues today with UBER (-$0.10), PFE ($1.00), BP ($1.33), MPC ($5.75), and SYY ($0.92) reporting before the bell, and AMD ($0.56), F ($0.39), and SBUX ($0.64) after the close.

 

Introducing Sevens Report Technicals – A New Timely Report Dedicated to Technical Analysis

I’ve always wanted to do more to help advisors grow their businesses, and the incredibly enthusiastic response to last week’s special technical report confirmed to me that there is a need for more technical research.

So, today I’m very proud to announce the creation of a new research solution to complement the daily Sevens Report:  Sevens Report Technicals.

Sevens Report Technicals will provide in-depth technical analysis of all of the asset classes, investment styles, and market sectors that we cover in the daily Sevens Report. I’ve long believed we need both fundamental and technical analysis to best navigate markets, so we created Sevens Report Technicals to be the perfect complement to the fundamentally driven Sevens Report.

Ten-year Sevens Report veteran Tyler Richey, CMT, will be the lead analyst on Sevens Report Technicals.

Sevens Report Technicals will be delivered at the start of each trading week, and will be similar in appearance and coverage to last week’s popular special technical report. The first issue will be delivered this coming Monday, May 8th.

Sevens Report Research is a retention-driven business, so like all our research products, pricing for Sevens Report Technicals will be among the lowest in the industry for the quality and depth of analysis provided at just $225/quarter or $825 per year (a savings of $75).  We are also extending a one month “Grace Period” where you can choose to cancel and receive a full refund—so there is literally no risk to try Sevens Report Technicals and see if it’s right for your business!

Additionally, we are offering even more savings to existing Sevens Report Research subscribers by extending a special, limited-time offer of one additional month free on a quarterly or annual subscription. That means quarterly subscribers get four months but only pay for three (a $75 dollar savings) while annual subscribers get 13 months but only pay for 11 (a $150 savings!).

To start your risk-free trial of Sevens Report Technicals and claim your additional one-month free offer, please send an email to info@sevensreport.com and we’ll handle the rest.

To see last week’s special edition technical report, click here.

To learn more about Sevens Report Technicals, including the inspiration behind it, please click this link.

Moment of Truth: Does the Fed Signal a Pause?

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What’s in Today’s Report:

  • Moment of Truth:  Does the Fed Signal a Pause?
  • Weekly Market Preview:  Important New Insight into the Hard vs. Soft Landing Debate
  • Weekly Economic Cheat Sheet:  ISM Manufacturing Today, Services Wednesday, Jobs Report Friday (It’s a Very Busy and Important Week)

Futures are little changed as markets digest the FRC seizure and asset sale to JPM and look ahead to this week’s FOMC decision and important economic data.

First Republic (FRC) failed over the weekend and was seized by the FDIC.  Assets were then sold to JPM who will effectively absorb the bank.  FRC’s failure was widely expected, and as such it’s not a new negative on markets.

Economically, the Chinese April manufacturing PMI missed expectations and fell back below 50 (49.2 vs. (E) 51.4.).

Today there is only one notable economic report, the April ISM Manufacturing PMI (E: 46.8), and markets will want to see stability in the data (so no further declines).

On the banks, again FRC’s failure was priced in last week, so it’s not a new negative on markets.  The key now is seeing if any other regional banks with large uninsured deposits come under pressure, so as we said last week, we’ll be watching WAL, CMA and ZION over the coming days.

Why Soft Landing Hopes Powered Thursday’s Rally

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What’s in Today’s Report:

  • Why Soft Landing Hopes Powered Thursday’s Rally

Futures are modestly lower following Thursday’s rally as markets digest disappointing earnings and economic data.

AMZN results beat estimates but warned on cloud growth while Capital One (COF) cautioned on rising credit card delinquency rates.

Economically, French CPI came in much hotter than expected at 0.6% m/m vs. (E) 0.3% m/m.

Today focus will be on inflation, and specifically the Core PCE Price Index (E: 0.3% m/m, 4.5% y/y) and the Employment Cost Index (E: 1.0%).  If both numbers come in under expectations and imply disinflation has returned and is gaining momentum, then markets can add to yesterday’s gains.   However, hotter than expected numbers will weigh on markets because at these levels, the S&P 500 is already pricing in ongoing disinflation,

On the earnings front, some reports we’re watching this morning include:   XOM ($2.65), CVX ($3.36), CL ($0.70).

Tom Essaye Quoted in Barron’s on April 25th, 2023

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Stocks Plunge as UPS, First Republic Earnings Shake Investors

The lower than expected deposit levels rekindled worries about the health of the banking system and financials are dragging the broader market lower this morning, writes Tom Essaye, founder of the Sevens Report. Click here to read the full article.

Tom Essaye Interviewed on BNN Bloomberg on April 25th, 2023

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These earnings aren’t enough to push markets materially higher: Sevens Report Research’s president

Tom Essaye, president of Sevens Report Research, joins BNN Bloomberg to run through his take on prominent companies reporting earnings this week. Click here to watch the full interview.

Tom Essaye Quoted in Barron’s on April 21st, 2023

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Stocks Gain on Signs of Economic Distress

“Since April 3, we’ve seen the yield on the 1-month Treasury bill fall from 4.7% to 3.9%, as investors have shunned near-term Treasury bills that might get caught up in the debt ceiling fight. Conversely, the 3-month Treasury bill yield has risen from 4.9% to 5.2% since April 3, as investors have sold that debt as it will be subject to potential increased volatility as the debt ceiling fight comes to a head,” Tom Essaye, founder of the Sevens Report, wrote Friday. Click here to read the full article.