What the Fed Decision Means for Markets

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What’s in Today’s Report:

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

Futures are moderately higher mostly on momentum as yesterday’s FOMC decision reinforced market expectations that rate hikes are over, while markets anticipate a dovish hike from the ECB later this morning.

There was no market moving economic data overnight.

Today is a busy day on both the economics and earnings front.  The key event is the ECB Rate Decision (E: 25 bps hike) and markets will want to see if Lagarde implies the next rate hike (likely in September) will be the last one (if so, that’ll be a positive for markets).

Economically, there are several important reports today including, in order of importance: Jobless Claims (E: 235K), Durable Goods (E: 0.5%), Advanced Q2 GDP (E: 1.5% y/y) and Pending Home Sales (E: 0.3%).  As has been the case for much of 2023, the more “Goldilocks” the data, the better for stocks (especially cyclicals).

Finally, on the earnings front, there are numerous notable reports today including: RCL ($1.58), MCD ($2.77), LUV ($1.08), MA ($2.84), HON ($2.20), F ($0.51) and INTC (-$0.04) and investors will remain focused on margins and guidance (they want to see positive commentary on both).

Dow Theory Update: Bullish Reversal in July

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What’s in Today’s Report:

  • Dow Theory Update – Bullish Reversal in July
  • Central Bank Decision Expectations: Fed, ECB, and BOE this Week

Futures are modestly lower as traders digest mixed mega-cap tech earnings and look ahead to today’s Fed decision.

On the earnings front, GOOGL is up 8%+ in premarket trade thanks to strong reported revenue growth while MSFT is down 3.5% on soft sales and weaker guidance specifically in the company’s cloud computing division.

Today, there is one economic report to watch: New Home Sales (E: 727K) before focus will turn to the Fed with the FOMC Meeting Announcement at 2:00 p.m. ET (E: +25 bp hike) and Fed Chair Powell’s Press Conference at 2:30 p.m. ET.

A busy week of earnings will also continue with T ($0.60), BA (-$0.99), and KO ($0.72) releasing quarterly results before the bell while META ($2.87) and STX (-$0.26) will report after the close.

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Composite Flash PMI Takeaways – Service Sector Growth Falters
  • 10-Yr Note Yield Maintains Long-Term Uptrend (For Now) – Chart

Futures are little changed as mostly upbeat earnings in Europe were offset by a weaker than expected ECB Survey while focus turns to big cap tech earnings and this week’s central bank meetings.

The ECB’s latest Lending Survey revealed that corporate loan demand collapsed to the lowest on record in Q2 underscoring tighter credit conditions and the threat of a further slowdown in growth in the Eurozone.

Today, focus will be on economic data early with the Case-Shiller Home Price Index (E: 0.8%) and Consumer Confidence (E: 111.8) reports both due to be released while the July FOMC meeting gets underway.

There is a 5-Yr Treasury Note auction at 1:00 p.m. ET which could move yields and have an impact on stocks, but a material move in markets ahead of the Fed decision remains unlikely unless it is driven by earnings.

Speaking of which, today will be a busy one for corporate earnings as: VZ ($1.17), GM ($1.65), GE ($0.46), MMM ($1.65) are all scheduled to release results before the bell while tech giants MSFT ($2.54) and GOOGL ($1.32) report after the bell. Additionally, V ($2.11) will release results after the close.

Could A Recession Just Be Delayed (And Not Avoided?)

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What’s in Today’s Report:

  • Could A Recession Just Be Delayed? (And Not Avoided)
  • Weekly Market Preview:  Fed/ECB/BOE Decisions This Week and Key Earnings Reports
  • Weekly Economic Cheat Sheet:  Fed Decisions and Inflation Readings In Focus This Week

Futures are modestly higher despite underwhelming economic data as markets look ahead to a busy week of central bank decisions, earnings and economic data.

Economically, data was not Goldilocks as the Euro Zone and UK flash PMIs missed estimates, falling to 48.9 vs. (E) 49.6 and 50.7 vs. (E) 52.2 respectively, and they reminded investors rate hikes can still slow growth.

Today focus will be on the July Flash Composite PMI (E: 53.1), as this is the first “big” number of July, and markets will want to see stability in the data to keep the Goldilocks rally going.

The major earnings reports occur later in the week but results we’ll be watching today include:  DPZ ($3.04), NXPI ($3.29), WHT ($3.80), LOGI ($0.45) and we’ll be looking for any signs of margin compression due to on going disinflation.

Tom Essaye Quoted in Barron’s On July 19th 2023

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Stocks Can Keep Rising, According to Dow Theory

“Dow Theory, which is one of the most historically accurate strategies to identify the primary trend in the stock market, is now saying the path of least resistance is higher for the first time since April of 2022,” wrote Sevens Report’s Tom Essaye. Click here to read the full article.

Sevens Report Analysts Quoted in Morningstar on July 20th, 2023

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Natural-gas futures settle nearly 6% higher; oil gains

Oil prices, meanwhile, finished higher. Global demand and supply will determine if WTI crude can “trade sustainably” above $80 a barrel in the near term, analysts at Sevens Report Research wrote in Thursday’s newsletter. Click here to read the full article.

Sevens Report Analysts Quoted in Market Watch on July 18th, 2023

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Oil futures score first gain in 3 sessions

The disappointing Chinese economic data offset an increase in Russia/Ukraine tensions to push commodity prices lower on Monday, analysts at Sevens Report Research wrote in Tuesday’s newsletter. “A Chinese economic slowdown, if it happens, will add to demand concerns” they said. Click here to read the full article.

Tom Esaye Quoted in Market Watch on July 17th, 2023

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As the Dow hits 2023 high, one of the oldest stock-market forecasting tools is making a comeback

Despite numerous warning signals from cross asset analysis, including the still deeply inverted yield curve, Dow Theory, which is one of the most historically accurate strategies to identify the primary trend in the stock market, is now saying the path of least resistance is higher for the first time since April of 2022, said Tom Essaye, founder of Sevens Report Research and a former Merrill Lynch trader, in a Monday note to clients. Click here to read the full article.

Tom Essaye Quoted in Market Watch on July 17th, 2023

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Why U.S. stock-market investors shouldn’t expect positive economic data to push S&P 500 materially higher

While it’s undeniable that fears of a hard landing, inflation and hawkish Fed have not materialized, the reality is that the current level of the S&P 500 largely factors all of that in, so last week’s CPI and PPI reports didn’t provide the market with a new positive catalyst, but instead just reinforced what was already widely assumed,” Tom Essaye, founder of Sevens Report Research, wrote in a Monday note. Click here to read the full article.

Tom Essaye Quoted in Barron’s on July 17th, 2023

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4 ETFs to Play a Stock Market That Keeps Rallying

However, last week’s readings point toward falling inflation and stable economic growth—a goldilocks scenario, or Immaculate Disinflation, as Sevens Reports’ founder Tom Essaye writes. However, last week’s readings point toward falling inflation and stable economic growth—a goldilocks scenario, or Immaculate Disinflation, as Sevens Reports’ founder Tom Essaye writes. Click here to read the full article.