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Is Investor Sentiment Getting Too Bullish?

How Important Is AI to This Market? Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Is Investor Sentiment Getting Too Bullish?
  • Why the FOMC Minutes Weren’t Hawkish
  • EIA Analysis and Oil Update

Futures are solidly higher following stronger than expected NVDA earnings and guidance.

NVDA results beat across the board as earnings, revenue and guidance all beat estimates while the company announced a 10:1 stock spilt and increased the dividend.  NVDA is up 6% pre-open and pushing futures higher.

Economically, EU and UK May flash PMIs were mixed but both above 50, importantly signaling economic expansion.

Today focus will switch back to economic data and the key report today will be the May Flash PMI (E: 51.0).  For now, investors still view “bad data as good for stocks” as it makes rate cuts more likely so a small miss vs. expectations should extend the early rally.  We also get the latest Jobless Claims (E: 220K) and again a small miss will be welcomed by investors.  Turning to the Fed, the surge of speakers subsides today as we only have one speaker, Bostic (3:00 p.m. ET) and he shouldn’t move markets.


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How Important Is AI to This Market?

How Important Is AI to This Market? Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • How Important Is AI to This Market?
  • Chart: Key Levels to Watch in NVDA Today
  • Fed’s “SHED” Release Takeaways Support Soft Landing

Futures are mildly lower as UK core inflation data failed to “cool” as much as hoped in April while traders await NVDA earnings after the close today.

Economically, the UK’s Core CPI figure came in at 3.9% vs. (E) 3.7% y/y in April, down from 4.3% in March which was a mild disappointment for broader global disinflation hopes.

Looking into today’s session it is a fairly busy day from a catalyst standpoint as we will get the latest Existing Home Sales report (E: 4.195 million) later this morning while the Fed’s Goolsbee is scheduled to speak at 9:40 a.m. ET.

As we move into the afternoon traders will be watching the results of a 20-Yr Treasury Bond auction (1:00 p.m. ET) before waiting on the release of the latest FOMC meeting minutes (2:00 p.m. ET).

Finally, some late season earnings could move markets with two notable retailers releasing results in the premarket: TGT ($2.05), TJX ($0.87) before all eyes turn the widely anticipated release of NVDA earnings ($5.55) after the close.

Bottom line, with stocks sitting on record highs investors will need to see economic data that remains “goldilocks,” the absence of any hawkish Fed surprises (i.e. consideration of rate hikes), steady yields, good retailer earnings, and solid guidance from AI bellwether NVDA to meaningfully advance beyond current levels.


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The AI craze is a modern gold rush

The AI craze is a modern gold rush: Tom Essaye Quoted in SwissInfo.ch


Tech Giants Drag Down US Stocks After Torrid Rally: Markets Wrap

“The AI craze is a modern gold rush, and the tech ‘picks and shovels companies’ are seeing earnings explode as companies buy chips and cloud space to fuel the boom,” said Tom Essaye, founder of The Sevens Report. “But if AI doesn’t result in increased profitability for the rest of the S&P 500 over the coming years, then demand for AI chips will evaporate as will AI-related cloud demand.”

Also, click here to view the full article published on February 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Market Multiple Table Chart: Bullish Momentum vs. Fair Value

Market Multiple Table Chart: Bullish Momentum vs. Fair Value: Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Market Multiple Table Chart:  Bullish Momentum vs. Fair Value
  • EIA Analysis and Oil Market Update

Futures are modestly higher as stocks rebound from Wednesday’s late day dip ahead of key economic data.

Economically, the only notable number was Swedish CPI which rose 2.5% vs. (E) 2.8% and that’s reinforcing summer rate cut expectations.

AI enthusiasm got a small boost overnight as Apple supplier Foxconn posted optimistic guidance on strong AI server demand.

Today focus will be on economic data, especially Jobless Claims (E: 218k) and Retail Sales (E: 0.8% m/m).  Continuing claims (contained in the jobless claims report) and retail sales disappointed recently and if we see that again, it’ll add to growth concerns and could hit stocks.

On inflation, we also get PPI (E: 0.3% m/m, 1.1% y/y) and given CPI ran a touch hot, it wouldn’t be a surprise if PPI did the same.  But, it’ll likely take a much hotter than expected number to hit markets (because they’ve already priced in the slightly hot CPI 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 AI Craze Is A Modern Gold Rush

The AI Craze Is A Modern Gold Rush: Tom Essaye Quoted on BNN Bloomberg


Markets today: tech giants drag down U.S. stocks after torrid rally

“The AI craze is a modern gold rush, and the tech ‘picks and shovels companies’ are seeing earnings explode as companies buy chips and cloud space to fuel the boom,” said Tom Essaye, founder of The Sevens Report. “But if AI doesn’t result in increased profitability for the rest of the S&P 500 over the coming years, then demand for AI chips will evaporate as will AI-related cloud demand.”

Also, click here to view the full BNN Bloomberg article published on March 4th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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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 Market Is “Sitting On Big Gains”

The Market Is “Sitting On Big Gains”: Tom Essaye Quoted on BNN Bloomberg


Markets today: AI mania driving Nasdaq 100’s best run since 1999

The market is “sitting on big gains” and most participants just want the year to end to register those gains, according to Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter.

“But I’ve been in this industry long enough to know that when everyone seems to be leaning on one side of the proverbial canoe, it pays to move to the middle.”

Warnings about a market that’s flashing overbought signals have been raising concern about a pullback, with some market observers saying that traders have gone too far, too fast in pricing in a dovish Fed pivot.

Also, click here to view the full BNN Bloomberg article published on December 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up 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.

What Is “R Star” and Why Is It Important?

What’s in Today’s Report:

  • What is “R*” and Why Is It Important?
  • Palo Alto Shares Rip Higher by 15%, Sparking Tech Rally – Chart

Stock futures are higher this morning with mega-cap tech shares extending this week’s strong advance following news that SoftBank’s Arm semiconductor unit has filed for the largest U.S. IPO in 2 years after the close yesterday while traders await NVDA earnings tomorrow.

Overseas, the PBOC set the strongest yuan fixing on record overnight which has helped the currency stabilize and that is contributing to risk-on money flows this morning.

There were no other market moving headlines overnight and no notable economic reports were released.

Looking into today’s session, there is one economic report due out in the U.S. this morning: Existing Home Sales (E: 4.160 million) but it is unlikely to impact markets with traders primarily focused on tech so far this week.

There are two Fed speakers today: Barkin (7:15 a.m. ET) and Goolsbee (2:30 p.m. ET) and their commentary could move markets as markets look ahead to Fed Chair Powell’s remarks from Jackson Hole on Friday. Anything that sparks a further rise in Treasury yields could pour cold water on this week’s tech rally which is basically entirely responsible for the week-to-date gains in the broader equity markets.

Tom Essaye Quoted in Yahoo Finance on May 31st, 2023

Stock Rally Loses Steam After AI-Fueled Euphoria: Markets Wrap

Yes, AI does have great potential and it does appear to be the ‘next big thing’. But I don’t see how that promise can offset the reality of higher interest rates and more pressure on the economy, at least not for a sustainable period…wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.

What Drove Yesterday’s Rally? (It Wasn’t AI)

What’s in Today’s Report:

  • What Drove Yesterday’s Rally? (It Wasn’t AI)

Futures are higher and global markets rallied overnight on rising hopes for a rapid decline in inflation.

Inflation metrics on Thursday hinted at accelerating disinflation (ISM Prices Paid and Unit Labor Costs were yesterday’s bullish catalysts) and that was reinforced this morning by a decline in Korean CPI.

Chinese stocks surged overnight thanks to a Bloomberg article that raised hopes for more government stimulus.

Today focus will be on the jobs report and estimates are as follows: 180K job adds, 3.5% Unemployment Rate and 0.3% m/m & 4.4% y/y wage gains.  Given yesterday’s momentum, if the jobs report shows solid job gains and underwhelming wage growth, the rally should continue.  However, if the jobs report comes in “Too Hot” on the headline or wages, don’t be surprised if markets give back part of yesterday’s rally.

Tom Essaye Quoted in Swissinfo.ch on May 30th, 2023

“Yes, AI does have great potential and it does appear to be the ‘next big thing’,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “But I don’t see how that promise can offset the reality of higher interest rates and more pressure on the economy, at least not for a sustainable period.” Click here to read the full article.

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