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.

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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.

To strengthen your market knowledge take a free trial of The Sevens Report.

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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.

The threat of significant earnings reports or major economic releases

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The threat of significant earnings reports or major economic releases: Sevens Report Analysts Quoted in Investing.com

What the Fed decision means for markets, beyond the near term

Without the threat of significant earnings reports or major economic releases, investors appear to be operating in an environment that is “1) easing Fed, 2) slowing but ‘OK’ economic data, and 3) generally solid earnings,” Sevens Report said in a recent note.

According to the Sevens Report, if the rate cuts are timely, they could lead to falling yields, strong earnings growth, and positive economic tailwinds. This would likely result in continued upward momentum for stocks, with the potential for the S&P 500 to hit 6,000.

“I say that confidently because the Fed cutting in time would create this macroeconomic outcome: 1) Falling yields, 2) Continued very strong earnings growth, 3) Positive economic tailwinds, 4) The prominent existence of the Fed put and 5) Expectations of accelerating growth in the future,” President of Sevens Report wrote in the note.

Also, click here to view the full Investing.com article published on September 20th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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.

0DTE Options Primer (3 ETF Plays)

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0DTE Options Primer (3 ETF Plays): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Primer (and Potential Plays) on 0DTE Options
  • September Flash PMI Takeaways
  • Chart: The Rally in the “Rest of the Market” Is Losing Momentum

U.S. stock futures are tracking most global equity markets higher after the People’s Bank of China announced new stimulus measures to support economic growth overnight.

The PBOC cut a key policy interest rate, reduced bank reserve requirements, and injected more than $100B into the financial system sending Chinese stocks higher by 4%+.

Today, there are three economic reports to watch: Case-Shiller Home Price Index (E: 5.9%), FHFA House Price Index m/m (E: -0.1%), and Consumer Confidence (E: 103.0). After last week’s 50 bp rate cut from the Fed, investors are looking for stable and solid economic data so the risk to markets is underwhelming data this morning.

There is one Fed speaker today: Bowman at 9:00 a.m. ET and investors are increasingly hopeful the FOMC will cut rates by 50 bp again in November in order to pull off a soft landing so any pushback on that idea from Bowman could weigh on risk assets.

Finally, there is a 2-Yr Treasury Note auction at 1:00 p.m. ET. Strong demand (lower yields) will be supportive of a continued rally in stocks while a weak auction (higher yields) could also weigh on equity markets this afternoon.

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Understanding Why the Fed Cut 50 bps

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Understanding Why the Fed Cut 50 bps: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Understanding Why the Fed Cut 50 bps
  • Weekly Market Preview:  Can Momentum Keep Pushing Markets Higher?
  • Weekly Economic Cheat Sheet:  Focus Turns Back to Growth

Futures are slightly higher following a mostly quiet weekend of news and despite soft economic data overnight.

Economically, the EU flash PMIs were weaker than expected as manufacturing declined to 44.8 vs. (E) 45.7 while services nearly broke 50 (falling to 50.5 vs. (E) 52.3).

Geopolitically, Israeli strikes against Hezbollah continued but for now, markets are ignoring the escalation.

Today brings the two most important economic reports of the week vis the Flash Manufacturing PMI (E: 48.5) and Flash Services PMI (E: 55.3).  Numbers that meet or modestly exceed estimates should keep last week’s rally going while very disappointing readings will modestly increase growth concerns.

There are also several Fed speakers today including Bostic (8:00 a.m. ET), Goolsbee (10:15 a.m. ET) and Kashkari (1:00 p.m. ET).

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