Earnings Season Takeaways

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Earnings Season Takeaways: S&P 500: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Earnings Season Takeaways (More Reasons to Expect A Growth Scare)
  • A Contrarian Case for Long Oil

Futures are little changed following a generally quiet night of news.

Economically, Chinese CPI declined –0.2% y/y, signaling mild deflation and increasing Chinese economic concerns.

Geopolitically, the U.S. struck weapons depots in Syria in response to attacks on U.S. bases in the region and that’s slightly increasing geo-political tensions.

Today focus will remain on economic data and Fed speak. As has been the case, any data or comment that pushes the 10 year Treasury yield higher will likely weigh on stocks.

Economically, the only notable report is weekly Jobless Claims (E: 220K) and that’s slightly deteriorated over the past few weeks.  If that continues and accelerates it could be a short term tailwind for stocks.

Looking at the Fed, there are multiple speakers today but Powel (2:00 p.m. ET) is the only potential market mover.  Other speakers include: Bostic, Barkin, and O’Neill-Paese.

Earnings Season Takeaways

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Investors Are Searching For What’s Next

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Investors Are Searching For What’s Next: Tom Essaye Quoted in Morningstar

Dow edges higher as stock-market bulls look to build on momentum after best week of 2023

U.S. stocks edged higher Monday, with bulls hoping to build on upside momentum. This is after the best week of 2023 for major indexes.

Investors are “searching for ‘what’s next’ and that could be either 1) A growth scare or 2) A resumption of the soft landing and disinflation narrative that push stocks higher this summer,” Tom Essaye, founder of Sevens Report Research, said in a note. “We will all find out together via the data.”

Also, click here to view the full Morningstar article published on November 6th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Futures

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November Market Multiple Levels Chart: S&P 500

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November Market Multiple Levels Chart: S&P 500: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • November Market Multiple Levels Chart – S&P 500 (Printable/Sharable PDF)
  • Manheim Used Vehicle Value Index Falls 4% Y/Y – Chart

Stock futures are flat as Treasury yields edge higher following a mostly quiet night of new with Powell’s morning commentary coming in to focus.

Economically, German CPI was unchanged in October at 3.8% y/y, meeting estimates, while Eurozone Retail Sales were not as bad as feared, falling -2.9% vs. (E) -3.2%.

Looking into today’s session, there are no market-moving economic reports in the U.S. today, but the Treasury will hold a 10-Yr Note auction at 1:00 p.m. ET that could move bond markets. And if we see yields begin to creep higher after the auction, that will act as a strengthening headwind for equity markets.

Outside of the Treasury auction, focus will be on Fed speak starting with Powell this morning before Williams, Barr, and Jefferson speak after the lunch hour.

Earnings continue to wind down but there are two notable companies reporting today: DIS ($0.68), LYFT ($0.13).

Bottom line, a lot of the November rally in stocks has been based on a dovish shift in Fed policy expectations and if either the Treasury auction or commentary from Fed officials suggest markets have become too dovish, stocks are likely to give back some of the recent gains.

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Treasury Yields To Continue To Drive Short-Term Trading

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Treasury Yields To Continue To Drive Short-Term Trading: Tom Essaye Quoted in Barron’s

Stocks Extend Rally After Best Week of the Year

“Today there are no notable economic reports and just one Fed speaker, [Lisa] Cook (11:00 a.m. ET), so look for Treasury yields to continue to drive short-term trading,” writes Sevens Report Research’s Tom Essaye.

The 10-year Treasury yield ticked higher on Monday but was still at 4.614%. The 10-year yield was trading around 5% in October, which weighed on rate-sensitive stocks.

“If the 10-year yield continues to decline then the S&P 500 can extend last week’s rally.”

Also, click here to view the full Barron’s article published on November 6th, 2023. 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

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Important To Watch The S&P 500 Index’s Support Zone

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there’s no way The Fed Can Get Dovish: Tom Essaye Quoted in MarketWatch on MSN

Fed day is here. Here are important technical levels to watch for stocks, bonds, and VIX

It is important to watch the S&P500 index’s support zone from 4,050 to 4,170, where the index spent most of April and May, according to Tom Essaye, founder and president of Sevens Report Research. 
On the other hand, “if policy makers deliver a dovish message and signal the hiking cycle is indeed ‘over’ then a relief rally could see stocks rise rapidly back towards the October highs,” according to Essaye.
The first important technical resistance level to watch is 4,225, while beyond that, investors should keep an eye on the level of 4,330, where the index saw a mid-October reversal. For the 2023 stock market rally to resume, the S&P 500 has to beat its October high of 4,377, Essaye wrote. 
“There is growing evidence that the VIX may be forming a near-term top as the ‘fear gauge’ did not close at new October highs last week despite the S&P 500 falling to new multi -month lows,” Essaye wrote.

Also, click here to view the full article published by MSN on November 2nd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Index’s Support Zone

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Tighter Financial Conditions

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Tighter Financial Conditions: Tyler Richey Quoted in MarketWatch on MSN

Oil prices finish lower with concerns of an economic slowdown raising prospects for a supply surplus

The initial drop in oil upon the release of the Fed decision “seemed to be in reaction to the addition of the phrase ‘tighter financial conditions’ for households and businesses,” Tyler Richey, co-editor at Sevens Report Research told MarketWatch. The added wording “implies demand is likely to suffer in the near-to-medium term.”
“With longer-term demand expectations fading with the latest string of disappointing global economic reports we received this week, there is growing concern the physical markets will tip into a surplus in the months or quarter ahead,” said Richey.

Also, click here to view the full article published by MSN on November 2nd, 2023. 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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The Longer-Term Outlook For Oil

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The Longer-Term Outlook For Oil: Tyler Richey Quoted in Morningstar

Oil futures give up early gains to finish lower

The longer-term outlook for oil remains much less certain with a significant increase in U.S. oil production “dulling the effects of the OPEC+ output cuts led by Saudi Arabia and Russia,” said Tyler Richey, co-editor at Sevens Report Research.

“With longer-term demand expectations fading with the latest string of disappointing global economic reports we received this week, there is growing concern the physical markets will tip into a surplus in the months or quarter ahead.” 

Also, click here to view the full Morningstar article published on November 1st, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Futures

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.

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.

November Market Multiple Table Update

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November Market Multiple Table Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table – November Update

Stock futures are modestly lower following hawkish Fed speak from Kashkari late yesterday, a dovish rate hike from the RBA overnight, and downbeat economic data overseas.

Economically, Chinese Exports fell -6.4% vs. (E) -3.0% and German Industrial Production declined -3.9% vs. (E) -3.2%. This underscores global recession risks are still very much present despite increased hopes for a “soft landing.”

Looking into today’s session, there are two economic reports to watch: International Trade (E: -$60.3B) and Consumer Credit (E: $10.0B). However, neither are very widely followed and it would take significant surprises in the data to meaningfully move markets.

That will leave investors primarily focused on a busy schedule of Fed speakers: Barr, Waller, Williams, and Logan. As well as a 3-Yr Treasury Note auction at 1:00 p.m. ET.

Specifically, if Fed officials push back on the markets dovish reaction to last week’s FOMC meeting and/or we see weak demand in the Treasury auction this afternoon sending yields back higher, that will dampen sentiment and likely cause a pullback in stocks today.

Earnings season is winding down but there are a few notable releases to watch today including: UBER ($0.13), DHI ($3.90), and EBAY ($1.04).

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Was Last Week’s Rally Legitimate?

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Was Last Week’s Rally Legitimate? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Was Last Week’s Rally Legitimate?
  • Weekly Market Preview:  Do Falling Treasury Yields Fuel More Upside in Stocks?
  • Weekly Economic Cheat Sheet:  Is the “Growth Scare” Starting to Appear?

Futures are modestly higher on momentum from last week’s big rally, following a mostly quiet weekend of news.

Economically, Euro Zone Composite PMI met expectations (46.5) while German Manufacturers’ Orders beat (0.2% vs. (E ) -1.1%) but there was a negative revision and overall, the data isn’t moving markets.

Geo-politically, Israeli forces are moving further into Gaza but so far risks of a broadening conflict remain relatively low.

Today there are no notable economic reports and just one Fed speaker, Cook (11:00 a.m. ET), so look for Treasury yields to continue to drive short term trading.  If the 10-year yield continues to decline then the S&P 500 can extend last week’s rally.

Please email info@sevensreport.com if you need to contact us.

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Jobs Report Preview

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

What’s in Today’s Report:

  • Jobs Report Preview
  • Post Fed Technical Levels Update

Futures are slightly lower ahead of today’s jobs report following another night of underwhelming earnings.

AAPL (down 3% pre-market) earnings underwhelmed and global shipping giant Maersk (down –6% pre-market) warned of a potentially slowing global economy and that’s modestly weighing on sentiment this morning.

EU and UK economic data overnight was sparse and largely in-line and aren’t moving markets.

Today focus will be on economic data.  Expectations for the jobs report are as follows:  Job Adds 183K, UE Rate: 3.8%, Wages: 0.3% m/m, 4.0% y/y.  Numbers at or below those readings will be welcomed as Goldilocks and likely further pressure Treasury yields (and lift stocks).

Additionally, we also get the ISM Services PMI (E: 53.0) and the key here is the number stay comfortably above 50.  Finally, there is one Fed speaker: Kashkari at 12:45 p.m. ET, but he shouldn’t move markets.

Jobs Report Preview

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