What the Iranian Missile Strike Means for Markets

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Economic Implications of the Port Strikes: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the Iranian Missile Strike Means for Markets
  • ISM Manufacturing Mildly Disappoints
  • JOLTS Top Estimates

Stock futures are lower amid a continued risk-off tone in markets as investors digest negative earnings news and await Israel’s response to Iran’s missile attack on Tuesday.

In corporate news, NKE earnings disappointed as sales fell 10% y/y and guidance was withdrawn ahead of a CEO change, leaving shares down 5% pre-market.

Economically, the Eurozone Unemployment Rate held steady at 6.4% in August, meeting estimates which is having little impact on markets today.

Today, investor focus will be on the ADP Employment Report (E: 121.5K) before the bell as well as a handful of Fed speakers on the schedule through the lunch hour: Hammack (9:00 a.m. ET), Musalem (10:05 a.m. ET), Bowman (11:00 a.m. ET), and Barkin (12:15 p.m. ET).

In addition to the jobs data and Fed chatter, tensions in the Middle East will remain a major focus as further deterioration in the Israel-Iran conflict is likely to weigh further on risk assets and influence flight-to-safety money flows.

Sevens Report Quarterly Letter Delivered

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Economic Implications of the Port Strikes

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Economic Implications of the Port Strikes: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Will the Port Strike Increase Hard Landing Chances
  • Fed Chair Powell’s Commentary Takeaways (Less-Dovish)

Futures are little changed this morning as investors weigh a favorable decline in EU inflation against news that a dockworkers strike has commenced at East Coast ports.

Economically, the Eurozone Manufacturing PMI fell to 45.0 vs. (E) 44.8 while the EU HICP Flash (their CPI) fell 0.4% to 1.8% vs. (E) 2.0% in September. The sub-2% headline was notably the first below-ECB-target print since 2021.

Looking into today’s session, there are several domestic economic data points that will be in focus including, in order of importance: The ISM Manufacturing PMI (E: 47.0), JOLTS (E: 7.7 million), and Construction Spending (E: -0.3%).

Additionally, there is one Fed speaker on the calendar for the late morning: Bostic (11:00 a.m. ET).

Bottom line, investors will be assessing what the market implications of the East Coast port strike will be as the situation develops today while also looking for more “goldilocks” economic data and a less-hawkish tone from Fed officials in order for the early week stock market gains to hold.

 

Sevens Report Quarterly Letter Delivered Today

Our Q3’24 Quarterly Letter will be delivered to subscribers today. We use our strength (writing about the markets) to help you:

  • Save time (an average of 4-6 hours per quarterly letter)
  • Show you’re on top of markets with impressive, compelling market analysis.

You can view our Q2 ’24 Quarterly Letter here. To learn more about the product (including price) please click this link.

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Why the Next Four Weeks Are So Important

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Investor Sentiment Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Next Four Weeks Are So Important
  • Weekly Market Preview:  Does Data Stay Goldilocks?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday, ISM PMIs This Week

Futures are slightly lower as markets digest last week’s rally ahead of a busy week of economic data.

Geo-politically, Mid-East tensions rose further as Israel struck Houthi targets in Yemen, expanding its current campaign.  However, for now this is not impacting stocks.

Economically, Chinese manufacturing and non-manufacturing PMIs underwhelmed, raising expectations for even more stimulus (and boosting Chinese stocks).

There are no important economic reports today (they come later this week) so the most important event today is Powell’s speech at 1:55 p.m. ET.  He’s unlikely to say much new (given the FOMC decision was less than two weeks ago) but a dovish reiteration of policy will likely continue to boost markets in the near term.

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Investor Sentiment Update

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Investor Sentiment Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment Update: Investors Aren’t Wildly Bullish, But They Are Complacent
  • August Durable Goods Come in Better-Than-Feared
  • Jobless Claims Point to Further Resilience in the Labor Market

U.S. stock futures are slightly lower this morning as more positive stimulus news out of China is being offset by a stronger yen following Japanese election results.

The PBOC cut 7-day reverse repo rates to 1.5% from 1.7% as well as lowered bank reserve ratios by another 50 bp which sent stocks in Asia solidly higher with some regional benchmarks advancing the most since 2008.

In Japan, Shigeru Ishiba’s election victory to become the nation’s next Prime Minister spurred a more than 1% rally in the yen as he is a monetary policy hawk. The yen strength is weighing on the global carry trade, specifically U.S. tech stocks in the pre-market.

Looking into today’s session, the most important potential catalysts hits before the bell with the Fed’s preferred inflation gauge, Core PCE (E: 0.2% m/m, 2.7% y/y) due out at 8:30 a.m. ET.

Additionally, the latest Consumer Sentiment Report (E: 69.0, 1-Yr Inflation Expectations: 2.7%) will be released at 10:00 a.m. ET and there is one Fed speaker in the early afternoon: Bowman (1:15 p.m.) but Fed speak has been benign this week and is likely to stay that way today.

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Tom Essaye Quoted in Bloomberg on 9/26/24

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Tom Essaye quoted in this Bloomberg article discussing Electrification-Themed ETFs and their role in the AI ‘Gold Rush’. You can read the full story here:

To Tom Essaye, president and founder of Sevens Report and a former Merrill Lynch trader, the theme is reminiscent of the entrepreneurs who sold tools to fortune-seekers during the California gold rush.

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Sevens Report Issue Featured in Investing.com on 9/26/24

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Investing.com — The CBOE Volatility Index, or VIX, often referred to as the “fear gauge,” is showing signs of another potential spike in market volatility, according to the latest Sevens Report.

Read more

Is the VIX Signaling Another Volatility Spike is Coming?

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Is the VIX Signaling Another Volatility Spike is Coming?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is the VIX Signaling Another Volatility Spike is Coming?

Futures are sharply higher thanks to strong tech earnings, more Chinese stimulus and more global rate cuts.

Micron (MU up 15% pre-market) beat earnings and raised guidance and that’s helping futures rally this morning.

An FT article promised even more Chinese stimulus is coming and that is boosted Asian markets and U.S. futures.

Today there is potentially important economic data and the key reports are:   Jobless Claims (E: 224.5K), Durable Goods (E: 0.1%) and Final Q2 GDP (E: 3.0%).  In-line to better-than-expected readings will help further fuel this rally while weak data, especially in claims and Durable Goods, will increase hard landing fears (and weigh on stocks).

On the Fed front, there are multiple speakers today with most speaking at a Treasury Market Conference (there were so many that it’d take up the whole pre-seven look if we listed them all). The most notable is Powell (9:20 a.m. ET) but don’t expect any of the comments to move markets as the Fed told markets last week what it’s going to do and until the outlook for another 50 bps of easing changes, Fed speak shouldn’t move markets.

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Are Utilities the New AI Stocks?

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Are Utilities the New AI Stocks?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are Utilities the New AI Stocks?
  • Chart – Utilities Overtakes Tech Stocks in YTD Performance

Stock futures are slightly lower this morning while international markets were mixed in quiet trading overnight.

Economically, the Organization for Economic Cooperation and Development (OECD) raised their 2024 global growth forecast to 3.2% vs. 3.1% in May which saw yields edge higher overnight.

Looking into today’s session, there is one economic report to watch: New Home Sales (E: 700K) and one Fed speaker on the calendar but not until the close: Kugler (4:00 p.m. ET).

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 5-Yr Note auction at 1:00 p.m. ET. The Note auction has more potential to move markets, especially if demand is weak and yields move higher in reaction (negative for stocks), however the Bill auction could also move short-duration yields and impact stocks today.

Finally, there is one notable tech company reporting earnings today: MU (E: $1.15), but barring a big surprise either way, it is unlikely to move the broader stock market.

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Sevens Report Co-Editor Tyler Richey Quoted in S&P Global

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Rate-cut expectations played a major role in the stock market rebound: Sevens Report Co-Editor Tyler Richey Quoted in S&P Global

Stocks surge to all-time highs; market questions if Fed cuts can sustain rally

“Rate-cut expectations played a major role in the stock market rebound off the early August pullback, but only because the increasingly dovish Fed policy expectations for sooner-and-deeper rate cuts were accompanied by encouraging economic data that helped ease the suddenly urgent fears of an imminent recession in the wake of the July jobs report,” said Tyler Richey, a co-editor with Sevens Report Research.

Rate cut expectations will weigh heavily on the stock market through the end of 2024, primarily as they relate to the outlook for economic growth, said Richey with Sevens Report Research.

“Soft landings are historically elusive, and the Fed has notably never pulled one off after a deep and prolonged yield curve inversion like we have seen in the Treasury market since the summer of 2022,” he said. “Using history as a guide, we are in a late cycle environment and very likely closer to seeing a lasting market top established than a new leg higher in a sustainable bull market.”

Also, click here to view the full S&P Global article published on September 20th, 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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Tyler Richey of the Sevens Report highlights a market breadth concern

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Tyler Richey of the Sevens Report highlights a market breadth concern and is quoted in MarketWatch

A technical concern suggests upside momentum is fading

Tyler Richey of the Sevens Report highlights a market breadth concern: there are more stocks trading below their 200-day average than their 50-day average.

“In simple terms, a situation where there are more stocks below their 200-day MA than their 50-day is a bearish one as in a healthy market environment, there should consistently be more stocks above their 200-day MAs than 50-day MAs,” Richey says. Another concern is the NYSE advance-decline line declined last week even though the S&P 500 hit record highs.

Also, click here to view the full MarketWatch article published on September 24th, 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.