Is Stagflation Possible? Yes.

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What’s in Today’s Report:

  • Is Stagflation Possible?  Yes.

Futures are little changed ahead of this morning’s jobs report.

Economic data underwhelmed overnight with Japanese Household Spending falling –3.2% while German Industrial Production missed estimates (-1.3% vs. (E) 0.5%).

On COVID, headlines remain net negative as cases continue to rise and analysts look for any signs of a loss of economic momentum (so far there’s nothing concrete).

Today the focus is on the jobs report and expectations are as follows:  Job Adds:  900K, UE Rate:  5.7% and Wages: 0.3% m/m and 3.8% y/y.  Again, the biggest risk to markets is for a “Too Hot” jobs number that shifts the tapering timeline, and if that occurs we should brace for volatility.

Tom Essaye Quoted in The Byron Review on August 3, 2021

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Analysts increase third and fourth quarter estimates after second quarter blowout

On the earnings front, most of the systemically important companies are behind…wrote Tom Essaye in a recent memo. Click here to read the full article.

Tom Essaye Quoted in Barron’s on August 4, 2021

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GM Drops, Under Armour Rises, and Stocks Are Falling After Weak Jobs Data

Markets look ahead to key economic data in the…wrote Tom Essaye, founder of Sevens Report Research before the jobs report hit the wires. Click here to read the full article.

Jobs Report Preview (Too Hot is the Risk)

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What’s in Today’s Report:

  • Jobs Report Preview (Too Hot is the Risk)
  • Oil Update and Inventory Analysis

Futures are slightly higher following a quiet night as markets tentatively bounce back from Wednesday’s losses.

Economic data was mixed overnight as German Manufacturers’ Orders beat estimates (4.1% vs. (E) 1.5%) while the UK Construction PMI missed estimates (58.7 vs. (E) 63.8).

On COVID, Los Angeles could  follow NYC in requiring proof of vaccination for indoor activities (if this becomes widespread policy in large cities it’ll be an economic headwind.)

Today we have a Bank of England meeting (No Change to Rates Expected), Jobless Claims (E: 381K), and one Fed speaker, Waller at 10:00 a.m. ET (who could be hawkish again, remember he called for tapering to start as early as September).

But, unless there’s a major surprise from the BOE or jobless claims, then COVID headlines will drive markets, and any signs of restrictions or behavior changes in people will cause volatility (and a decline in stocks).

Tom Essaye Quoted in Market Watch on August 3, 2021

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Oil ends lower, extends drop as COVID spread stokes demand worries

The 2021 oil rally, which has seen WTI and Brent both rise around 48% year-to-date, has been driven…said Tom Essaye, founder of Sevens Report, in a note. Click here to read the full article.

Tom Essaye Quoted in Barron’s on August 3, 2021

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Clorox Drops, Take-Two Interactive Falls, and the Stock Market Is Rising

Stock futures are rebounding following yesterday’s losses as positive earnings help offset…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Why Did Cyclicals Outperform?

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What’s in Today’s Report:

  • Why Did Cyclicals Outperform?

Stock futures are little changed this morning after a quiet night of news as markets look ahead to key economic data in the U.S. and the latest commentary from Fed leadership.

Economically, Composite PMI data overseas largely met estimates and therefore did not materially impact markets.

Looking into today’s session, focus will be on the ADP Employment Report (E: 715K) which is due out at 8:15 a.m. ET as investors look for the latest insights to U.S. labor market trends (important for Fed policy) and then the ISM Services Index (E: 60.4) which will hit shortly after the open (important regarding the health of the broader economic recovery).

Attention will then turn to Fed Vice Chair Clarida’s speech at 10:00 a.m. ET in which the market will be looking for further reiteration that the labor market has a ways to go before any policy changes will occur (so basically just repeating Powell’s recent comments). Any hawkish surprises could result in a spike in yields and pullback in stocks as policy expectations are very dovish right now.

Finally, earnings season continues with: CVS ($2.07), GM ($1.89), RCL (-$4.26), and KHC ($6.54) reporting before the bell while ROKU ($0.13), UBER (-$0.53), and EA ($1.28) will release Q2 results after the close.

Sevens Report Analyst Quoted in Market Watch on July 29, 2021

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Oil prices extend rise to highest finish in over 2 weeks

When we start to see broader delta fears being to subside…we should see that metric ramp back up and underscore…analysts at Sevens Report Research wrote in Thursday’s newsletter. Click here to read the full article.

Tom Essaye Qutoed in Forbes on July 30, 2021

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SEC Reportedly Halts Chinese Firm IPOs After Ride-Hailer DiDi Global’s $50 Billion Crash

In a matter of days, China introduced regulatory actions targeting both ride-hailing app…Tom Essaye, author of the Sevens Report wrote in a Tuesday note. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on July 30, 2021

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Oil prices finish higher to score a 4th-straight monthly gain

July was certainly a rollercoaster in the oil markets, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.