Small Cracks in the Three Pillars of the Rally?

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What’s in Today’s Report:

  • Small Cracks in the Three Pillars of the Rally?
  • Weekly Market Preview:  Can the Ideas of A Dovish Fed and Economic Soft-Landing Power Stocks to 2023 Highs?
  • Weekly Economic Preview:  Key Inflation and Growth Data This Week

Futures are slightly lower after a mostly quiet weekend as Chinese growth worries offset geo-political positives.

Chinese industrial profit growth slowed to 2.7% in Oct vs. 11.9% in Sept and that data combined with news of a quickly spreading respiratory illness in China is weighing on growth expectations.

Geo-politically, the Israel-Hamas cease fire will likely be extended several days and that’s easing geo-political tensions and oil is falling as a result (down more than 1%).

This week contains several potentially important catalysts on inflation and economic growth, but they come later in the week. So, focus today will be on holiday spending commentary and New Home Sales (E: 721k).  Positive commentary on spending and Goldilocks data would help support stocks.

Three Pillars of the Rally?


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Economic Data Rekindles Stagflation Fears

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What’s in Today’s Report:

  • Economic Data Rekindles Stagflation Fears
  • Durable Goods Orders Decline Sharply
  • Continuing Jobless Claims Hit Multi-Year High
  • Consumer Sentiment Reveals Rising Inflation Worries

Futures are little changed in thin trading following the Thanksgiving holiday. This comes as investors digest mixed economic data from Europe and the new Chinese stimulus efforts aimed at shoring up the nation’s embattled real estate sector.

Economically, German GDP fell -0.4% vs. (E) -0.3% Y/Y. However, the Eurozone PMI Composite Flash firmed to 47.1 vs. (E) 46.7 which helped ease some concerns about an imminent, sharp drop off in economic growth in the EU.

Looking into today’s session, focus will be on the one potentially market-moving economic report due this morning: PMI Composite Flash (E: 50.3) as there are no Fed speakers or Treasury auctions scheduled for the day.

The NYSE will close early today at 1:00 p.m. ET in observance of the Thanksgiving holiday.

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Economic Data Rekindles Stagflation Fears


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One Potential Catalyst That Could Shake Up Markets

One Potential Catalyst That Could Shake Up Markets: Tom Essaye Quoted in Barron’s


Stocks Begin Holiday-Shortened Trading Week With a Pause

“One potential catalyst that could shake up markets today is the 20-Year Treasury Bond auction at 1:00 p.m. ET as weak results could trigger a rebound in yields, especially given fading attendance this week and subsequently less liquid market conditions across asset classes,” writes Sevens Report Research’s Tom Essaye.

In the absence of major data that could shift the narrative, investors will be watching key earnings reports like Nvidia on Tuesday. Bond yields will also be in focus.

Also, click here to view the full Barron’s article published on November 20th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

One Potential Catalyst

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Bullish Market Momentum

Bullish Market Momentum: Tom Essaye Quoted in Barron’s


Stocks Look to Close Out Another Week of Gains

“If the Fed speakers stick to the same narrative (less hawkish) expect more of the same sideways, digestive trading in equities today with the threat of a continued move higher based on bullish market momentum,” Tom Essaye writes.

Sevens Report Research’s Tom Essaye adds that a handful of Federal Reserve officials will speak on Friday.

Stocks were little changed Friday, but poised to close out another week of gains.

Also, click here to view the full Barron’s article published on November 17th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Bullish Market Momentum

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FOMC Meeting Minutes Takeaways

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What’s in Today’s Report:

  • FOMC Meeting Minutes Takeaways (Dovish in Hindsight)
  • Existing Home Sales Data Offers Mixed Signals

Futures are modestly higher this morning as a pullback in oil futures is pushing bond yields lower while investors digest a volatile reaction to mostly positive NVDA earnings.

Economically, U.K. CBI Industrial Trends saw the headline Orders Balance fall -35% vs. (E) -25% in November which is driving dovish money flows this morning.

Today’s economic calendar is a busy one with Durable Goods Orders (E: -3.2%), Jobless Claims (E: 225K), and Consumer Sentiment (E: 60.5, 1-Yr Inflation Expectations: 4.4%) all due to be released before 10:00 a.m. ET.

There are no Fed speakers today so markets will trade off of the data. If the reports are largely in line, expect mostly sideways price action with the Thanksgiving Day break looming, however, hawkish or dovish surprises will still move markets despite thin attendance and low volumes.

The Treasury will hold auctions for 4-week and 8-week Bills at 11:30 a.m. ET. While auctions for these securities usually don’t move markets, investors are more closely watching auction results following the recent weak 30-Yr auction that roiled markets. As there is potential the outcomes impact equities in an otherwise quiet environment ahead of Thanksgiving.

FOMC Meeting Minutes Takeaways


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It’s Different This Time…Until It’s Not (Like 2000 and 2007)

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What’s in Today’s Report:

  • It’s Different This Time… Until It’s Not (Like ’00 and ’07)
  • Chart – Visualizing Where We Are in the Market Cycle

Stock futures are trading with a slight bias to the downside as inflation data overseas showed an uptick in price pressures ahead of the latest Fed minutes release today.

Economically, Hong Kong CPI rose to 2.7% vs. (E) 2.1% in October marking the first “warm” inflation print in months. There were several one-off factors influencing the increase in price pressures but the “hot print” was a reminder that the global inflation fight is not officially over just yet.

Looking into today’s session, there is one economic report to watch: Existing Home Sales (E: 3.91 million) and if it comes in strong, that could weigh on Treasuries (yields higher) and in turn pour some cold water on stocks.

There is another Treasury auction today at 1:00 p.m. ET, but this one is for 10-Yr TIPS and will likely receive less attention than yesterday’s 20-Yr Bond auction, limiting its market impact.

From there focus will turn to the release of the minutes from the November FOMC meeting at 2:00 p.m. ET. Any language that is more hawkish than the currently very dovish shift in policy expectations could also trigger a pullback in equities in thinning holiday week trading today.

Finally, although earnings season is effectively over, there is one notable release today as NVDA ($3.18), one of the “Magnificent Seven” mega-cap tech stocks that have led the market higher in 2023, will report results after the close.

 It's Different This Time... Until It's Not (Like 2000 and 2007)


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Three Pillars of the Rally Updated

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What’s in Today’s Report:

  • Three Pillars of the Rally Updated (An Important Change to Watch)
  • Weekly Economic Cheat Sheet – Friday’s Flash Composite PMI in Focus

Futures are steady after a mostly quiet weekend of financial news and thinning volumes coming into the holiday-shortened Thanksgiving trading week.

Geopolitically, Iran-backed Houthi rebels seized a cargo ship in the Red Sea. This is rekindling a fear bid in global energy markets as seaborne oil cargoes are viewed as “at risk.” The rise in oil prices is modestly pressuring Treasuries this morning (yields up slightly).

Economically, German PPI met estimates of -11.0% Y/Y in October further solidifying the global peak-inflation argument.

Looking into today’s session, there is just one economic report on the calendar with Leading Indicators (E: -0.6%) due out shortly after the open and there is just one Fed speaker midday: Barkin (12:00 p.m. ET).

One potential catalyst that could shake up markets today is the 20-Year Treasury Bond auction at 1:00 p.m. ET as weak results could trigger a rebound in yields. Especially given fading attendance this week and subsequently less liquid market conditions across asset classes.

Three Pillars


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Hard vs. Soft Landing Scoreboard Update

Hard vs. Soft Landing Scoreboard Update: Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Hard vs. Soft Landing Scoreboard Update
  • Continuing Claims Hit 2-Year High: Chart
  • Philly Fed Survey Takeaways – More Signs of Stagflation
  • Industrial Production Confirms Slowdown in Factor Sector

Stock futures are modestly higher this morning as soft U.K. consumer spending data. Combined with an as-expected drop in EU inflation are supporting a continued bid in bond markets.

Economically, U.K. Retail Sales fell -0.3% vs. (E) +0.3%. As the Eurozone HICP (their CPI equivalent) met estimates across the board, falling significantly from 4.3% to 2.9% y/y. Positively the “Narrow Core” figure eased to 4.2% from 4.5%.

Looking into today’s session, there is just one economic report to watch: Housing Starts (E: 1.35 million) and barring a big surprise, the release should not move markets.

There are a handful of Fed officials speaking today with Barr & Collins, Daly, Goolsbee, and Collins again all on the schedule. If the Fed speakers stick to the same narrative (less hawkish) expect more of the same sideways, digestive trading in equities today with the threat of a continued move higher based on bullish market momentum.

Hard vs. Soft Landing Scoreboard Update


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New York Empire State Manufacturing Release Affect on Oil

A “Terrible” New York Empire State Manufacturing Release: Tyler Richey Quoted in MarketWatch on MSN


Oil prices finish lower as U.S. crude supplies mark a 2-week climb of more than 17 million barrels

WTI crude-oil futures had been trading lower ahead of the inventory data as investors digested a “terrible” New York Empire State Manufacturing release, said Tyler Richey, co-editor at Sevens Report Research.

The economic data “poured some cold water on soft economic landing hopes, while the ongoing conflict between Israel and Hamas has yet to have a meaningful impact on the global oil markets,” he told MarketWatch.

“As such, the fear-bid in oil has been slowly but steadily unwinding over the last month,” he said.

Also, click here to view the full article published by MSN on November 15th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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EIA Data Changes: Impact on Oil Inventories

EIA Data Changes: Impact on Oil Inventories: Tyler Richey Quoted in Morningstar


Why the U.S. government is changing the way it collects data on the oil market

It appears that previous data collection processes had “‘loopholes’. Which allowed certain condensates and ‘other oils’ to not be reported in inventories. But now will require them to report in total oil inventory figures,” he said.

Looking through the changes to the EIA’s data collection process, Tyler Richey, co-editor at Sevens Report Research, said it was “not very clear exactly how the data will be affected.”

The simplest takeaway is that the next effect of this change should result in oil inventories being higher than they previously were, said Richey.

The EIA in March explained the difference in its estimates of supply. As disposition had increased in its U.S. crude-oil balances it was studying the growing difference. It identified ways in which it has been “overstating disposition and understating supply.”

Also, click here to view the full MarketWatch article published on Morningstar on November 15th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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