Tom Essaye Quoted in MarketWatch on January 9th, 2023

/in , /by

Traders made money ‘selling the rip’ in stocks last year. Why it might work again in 2023.

“A sustained break above the 200-day moving average would imply that investors are becoming fundamentally more optimistic about the market. That would require real progress toward the Fed actually stopping its rate-hike campaign. Or progress toward the economy actually achieving a soft landing. Or progress toward inflation falling somewhere that is reasonably more acceptable to the Fed,” said Tom Essaye, founder of the Sevens Report. Click here to read the full article.

Market Multiple Table: January Update

/in , /by

What’s in Today’s Report:

  • Market Multiple Table – January Update: Still More Optimistic Than Fundamentals Warrant

S&P 500 futures are trading with modest losses this morning as investors digest positive economic news out of Europe ahead of Powell’s speech today.

In Europe, French Industrial Production rose 2.0% vs. (E) 0.8% in November while GS dropped their Euro-area recession call for 2023 bolstering market hopes for a soft landing.

Domestically, the NFIB Small Business Optimism Index fell to 89.8 vs. (E) 91.3 which is weighing modestly on sentiment in pre-market trading.

There are no additional economic reports in the U.S. today which will leave investors focused on any insight Fed Chair Powell offers on either the economy or monetary policy plans when he speaks in Sweden at a Riksbank symposium beginning at 9:00 a.m. ET.

Hawkish Fed speak out of Daly and Bostic is what caused stocks to reverse early gains and close lower yesterday, so if Powell strikes a hawkish tone and pushes back against the market’s latest optimism for a lower terminal rate (below 5%), that could see stocks extend yesterday’s afternoon selloff and the market give back some or all of Friday’s post-jobs report gains.

Finally, The Treasury will hold a 3-Yr Note auction at 1:00 p.m. ET that could signal the bond markets response to Powell (if he even says anything notable). A weak outcome to the auction and rising yields could amplify any hawkish money flows and result in more broad market volatility.

Tom Essaye Interviewed on Yahoo Finance on January 5th, 2023

/in , /by

Fed, bond market playing a ‘game of chicken,’ strategist says

Sevens Report Research Tom Essaye Founder and President joins Yahoo Finance Live to discuss the Fed’s policy pathway moving ahead, inflation, the state of the economy, jobs data, a recession, what investors should be watching for, and the outlook for markets. Click here to watch the full interview.

Why Friday’s Data Wasn’t As Positive As the Market Implied

/in , /by

What’s in Today’s Report:

  • Why Friday’s Data Wasn’t As Positive As The Market Implied
  • Weekly Market Preview:  Can Inflation Fall Faster than Growth?
  • Weekly Economic Cheat Sheet:  All About Inflation (CPI the Key Report)

Futures are modestly higher mostly on momentum from Friday’s close, following a quiet weekend of news.

Stocks rallied on Friday thanks to increasing hopes for an economic soft landing, and nothing happened over the weekend to offset that hope.

Economic data met expectations as German Industrial Production and EU Unemployment were both in-line.

Today focus will be on the NY Fed Inflation Expectations (Previous:  4.0% one-year, 3.8% three-year), and if they decline from previous levels that will be positive.  We also get one Fed speaker, Bostic (12:30 p.m. ET).

Jobs Day

/in , /by

What’s in Today’s Report:

  • Why Yesterday’s Employment Data was Bad for Stocks and Bonds
  • Answering a Question About the Bond Market

Futures are little changed ahead of the jobs report and following mixed European economic data.

EU HICP (their CPI) was disappointing on balance as the headline rose less than expected (9.2% vs. (E) 9.5%) but the more important Core HICP gained 5.2% vs. (E) 5.0%. This report partially refutes the encouraging inflation data from earlier this week.

Today focus will be on the Jobs Report and expectations are as follows:  Job Adds 200K, UE Rate 3.7%, Wages 0.4% m/m, 5.0% y/y.  If we get another solid number above 200k, expect more weakness in stocks and bonds as that will be viewed as “hawkish” data, while a job adds number close to 100k could spark a sharp rally, given yesterday’s declines.

The jobs report isn’t the only important economic report today, however, as the ISM Services Index (E: 55.0) is released later this morning.  Markets will want to see a moderation in both the headline and prices readings.

Finally, there are three Fed speakers today:  Cook (11:15 a.m. ET), Bostic (11:15 a.m. and 3:30 p.m. ET), and Barkin (12:15 p.m. ET).

Tom Essaye Interviewed on BNN Bloomberg on January 3rd, 2023

/in , /by

Gold is the top metal pick for kicking off 2023: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to discuss his market take for the new year. Essaye says that nothing fundamentally changed in the markets, despite it being a new year, and discusses his advocacy for defensive sectors amid Q1 volatility and lower returns. He says that gold is looking particularly attractive when compared to its commodity peers. Click here to watch the full interview.

Jobs Report Preview

/in , /by

What’s in Today’s Report:

  • Jobs Report Preview
  • What Political Dysfunction Means for Markets (Not Now, But Later)

Futures are slightly higher following more signs of disinflation in the EU.

Euro Zone PPI fell more than expected (-0.9% vs. (E ) -0.5%) and that’s the third EU inflation statistic this week to imply inflation has peaked and is receding.

Politically, Rep. McCarthy failed to become Speaker again yesterday although he is expected to win eventually.

Focus today will be on economic data and the key reports are all employment related:  Challenger job cuts (Previous 76,835), ADP Employment Report (E: 145K) and Jobless Claims (E: 228K).  Again, markets want to see a moderation in this employment data so underwhelming reports will be embraced by the market.  Finally, we also have two Fed speakers, Bostic (9:20 a.m. ET) and Bullard (1:20 p.m. ET), but data will move markets more than Fed speak at this point.

Technical Outlook for Growth vs. Value

/in , /by

What’s in Today’s Report:

  • Current Technical Outlook for Growth vs. Value
  • Cooler Than Feared German CPI Roils Currency Markets

Markets are trading with a risk-on tone this morning following favorable economic data overnight while traders look ahead to today’s domestic data and the release of the Fed minutes.

Economically, France’s December CPI headline fell to 5.9% vs. (E) 6.3% y/y while Composite PMI headlines across Europe were revised solidly higher from the Flash prints. Those data points indicate a faster drop in inflation and more resilient economic activity which bolsters the prospects of a soft landing.

Looking into today’s session, we get a few notable economic reports this morning including: Motor Vehicle Sales (E: 13.7 million), ISM Manufacturing Index (E: 48.0), and JOLTS (10.1 million) before the focus will turn to the release of the December FOMC Meeting Minutes at 2:00 p.m. ET.

Bottom line, optimism about quickly retreating inflation rates overseas and better-than-feared growth readings are driving risk-on money flows overseas today and if we see more of the same in the U.S. data today, that can continue. Regarding the Fed Minutes, any positive mention about progress on getting inflation under control will be well received and could see the pre-market gains extended into the afternoon.

Tom Essaye Quoted in Yahoo via Bloomberg on December 29th, 2022

/in , /by

Stocks Post Month’s Best Day as Rate Surge Fades: Markets Wrap

“Markets enter 2023 at important transition points. One path is paved with continued disinflation, resilient earnings, moderating growth, a balanced labor market, and higher stock and bond prices. The other path is paved with sticky inflation, slowing growth, a continued tight labor market and lower stock and bond prices. Data points at the start of the year will offer important clues as to which path the markets are taking.” Said Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.

Tom Essaye Quoted in Barron’s on December 21st, 2022

/in , /by

Dow Soars 500 Points as Consumer Data Adds Some Cheer

“Stocks are digesting the declines of the past two weeks and while there are some notable employment and inflation numbers looming on Thursday and Friday, the bottom line is the calendar into year-end should be mostly quiet, again barring any material surprises,” Tom Essaye, the founder of Sevens Report Research, wrote Wednesday. Click here to read the full article.