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The port strike could disrupt the data

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The port strike could disrupt the data: Tom Essaye Quoted in Forbes

Could Dock Worker Strike Spike Inflation? Experts Are Split.

Sevens Report analyst Tom Essaye wrote Tuesday to clients any strike-related inflation uptick is ultimately just a “temporary disruption” and shouldn’t impact the view of the broader inflation picture.

“The port strike could disrupt the data, essentially creating a smoke screen for the Fed when trying to stick the soft landing,” wrote Essaye.

Also, click here to view the full Forbes article published on October 1st, 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.

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Hard Landing/Soft Landing Scoreboard (Updated)

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Hard Landing/Soft Landing Scoreboard (Updated): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing/Soft Landing Scoreboard (Updated)
  • Post Fed Technical Takeaways

Futures are modestly lower on disappointing earnings results and as markets digest Thursday’s big rally.

Fed Ex (FDX) missed earnings, cut guidance and voiced concern about economic growth and that negative print is contributing to the decline in futures.

The Bank of Japan kept rates unchanged (as expected) and didn’t provide a hawkish surprise, although the BOJ is expected to hike rates again between now and year-end.

Today there are no notable economic reports and just one Fed speaker (Harker (2:00 p.m. ET)) and given that lack of catalysts we’d expect some continued digestion of Thursday’s big rally.

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Fed-Day Technical Tear Sheet (Negative Divergence from Fundamentals)

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Fed-Day Technical Tear Sheet (Negative Divergence from Fundamentals): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Fed-Day Technical Tear-Sheet: Market Technicals Are Diverging Negatively from Still Optimistic Fundamentals
  • Economic Takeaways: Retail Sales and Industrial Production Top Estimates

Stock futures are trading tentatively higher as investors digest mostly as-expected inflation data out of Europe overnight and look ahead to today’s Fed decision.

Economically, Eurozone CPI met estimates at 2.2% y/y in August while the Core figure was also as-expected at an unchanged 2.8% y/y last month.

Today, focus will be on the one notable economic data point due to be released: Housing Starts (1.300M) but it is unlikely to materially move markets with the Fed decision looming this afternoon.

The FOMC Announcement will hit the wires at 2:00 p.m. ET followed by Fed Chair Powell’s Press Conference at 2:30 p.m. ET. The consensus expectation is a 25 bp rate cut will be delivered but market-based policy rate expectations are pricing in a 65% chance of a 50 bp rate cut as of this morning.

Bottom line, whether the Fed delivers a 25 bp or 50 bp rate cut today is less important than the guidance provided on future cuts as the market wants to see the framework laid out for a fairly aggressive rate cutting path in the months ahead to shore up soft-landing hopes. So projections and Powell’s speech will be critical for the market reaction late in the session.

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How to Explain This Market To Clients (September Update)

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How to Explain This Market To Clients: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How to Explain This Market To Clients (September Update)
  • Weekly Market Preview:  Two Key Central Bank Decisions (Fed on Wednesday, BOJ on Thursday)
  • Weekly Economic Cheat Sheet:  Important Growth Updates This Week

Futures are little changed despite more negative Chinese economic data as investors look ahead to the Fed decision on Wednesday.

August Chinese economic data disappointed as Industrial Production (4.5% vs. (E) 4.7% and Retail Sales (2.1% vs. (E) 2.7%) both missed estimates, raising more concerns about Chinese growth (and global growth more broadly).

Politically, there was another assassination attempt on Trump, although the event shouldn’t alter the current race.

This week will be both busy and important for this rally, but it starts slowly as the only notable number today is the September Empire Manufacturing Index (-4.1).  An in-line to slightly better than expected number would be the best-case scenario for markets today.

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What CPI Means for Markets (Fed Further Behind Curve?)

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What CPI Means for Markets (Fed Further Behind Curve?): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What CPI Means for Markets (Fed Further Behind Curve?)

Futures are modestly higher mostly on momentum from Wednesday’s impressive reversal and following encouraging Japanese inflation data.

Economically, the only notable number overnight was Japanese PPI and it rose 2.5% vs. (E) 2.8%. That may take some pressure off the BOJ to hike rates and also weigh on the yen and the Nikkei rose 3% in response.

Today the focus will remain on economic data and rate cuts via the ECB Rate Decision first (E: 25 bps cut) and later Jobless Claims (E: 230K) and PPI (E: 0.2% m/m, 1.8% y/y).  If data can meet expectations and the ECB cuts rates and signals more cuts coming, yesterday’s rally can (and likely will) continue.

There are also two notable earnings reports today via Kroger (KR $0.91) and Adobe (ADBE $4.53).  KR will give us insight into consumer spending (especially on essentials) while ADBE will be the latest tech company to post results (and the stronger the guidance, the better for the broader tech sector).

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This market remains vulnerable to negative shocks

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This market remains vulnerable to negative shocks: Sevens Report Analysts Quoted in Investing.com

S&P 500 could hit low 4,000s if ‘things get worse’: The Sevens Report

According to the latest Sevens Report Research note, the S&P 500 may face a significant drop into the low 4,000s in a worst-case scenario, if economic conditions deteriorate and key market assumptions falter.

The firm said in its latest note that recent market activity has shown that the S&P 500 is trading at a valuation that does not reflect current economic realities.

“This market remains vulnerable to negative shocks on growth, Fed rate cuts, inflation, and earnings,” the analysts explained, highlighting the risks the index faces.

Economic data, especially in the labor market, has shown a deterioration in recent months, which has led to rising concerns about a potential hard landing.

While the data still suggests a soft landing is more likely, the slowing economy does not justify the S&P 500’s current 21X multiple, according to Sevens.

“The economy is notably losing momentum, and that’s simply not an environment that warrants a 20X multiple,” Sevens stated.

Also, click here to view the full Investing.com article published on September 10th, 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.

Is Oil’s Collapse an Anecdotal Warning Sign?

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Is Oil’s Collapse an Anecdotal Warning Sign? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • More Problems With Expectations (This Time Companies)
  • Is Oil’s Collapse an Anecdotal Warning Sign?

Futures are tracking most overseas equity markets lower as investors assess global growth concerns and look ahead to today’s critical U.S. inflation data.

Economically, U.K. data was weak as monthly GDP fell to 0.5% vs. (E) 0.6%, Industrial Production was down -0.8% vs. (E) +0.2% and monthly trade data showed both imports and exports slowed -4.6% and -10.8%, respectively in July.

Looking ahead to today’s session, the most important potential market catalyst is U.S. inflation data: CPI (E: 0.2% m/m, 2.6% y/y) and Core CPI (E: 0.2% m/m, 3.2% y/y). A “cool” CPI report should bolster hopes for a 50 bp rate cut next week, and in turn, support stocks while a “hot” print could pour cold water on this week’s tentative rebound in equity markets.

There are no Fed officials scheduled to speak today however there is a 10-Yr Treasury Note auction at 1:00 p.m. ET that could shed additional light on investor expectations for inflation, growth, and Fed policy going forward. A weak auction outcome would be negative for stocks while solid demand for the 10-Yr Notes should support a continuation of this week’s rally.

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We’re seeing mostly technical dip-buying

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We’re seeing mostly technical dip-buying: Sevens Report Editor, Tom Essaye, Quoted in Bloomberg

Stocks Rise as Buyers Scoop Up Bargains After Rout: Markets Wrap

“We’re seeing mostly technical dip-buying,” said Tom Essaye at The Sevens Report. “Economic growth is undoubtedly and clearly losing momentum, but a soft landing remains more likely than a hard landing. This week focus turns back to inflation.”

Also, click here to view the full Bloomberg article published on September 8th, 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.

Market Multiple Table: Still Overvalued

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Market Multiple Table: Still Overvalued: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • September Market Multiple Table Update: Still Overvalued
  • Chart – Oil Falls to 52-Week Lows on Demand Worries

Futures are modestly lower this morning as last week’s volatility and yesterday’s relief rally are digested by investors while focus is shifting to tomorrow’s CPI release.

Economically, the NFIB Small Business Optimism Index whiffed estimates of 93.6 and fell 2.5 points to 91.2 in August while German CPI met estimates at 1.9% y/y.

Looking into today’s session, there are no notable economic reports on the calendar, but two Fed officials are scheduled to speak: Barr (10:00 a.m. ET) and Bowman (12:15 p.m. ET). It is unlikely that either move markets though.

Finally, in the afternoon, the Treasury will hold a 3-Yr Note auction at 1:00 p.m. ET. If demand for the Notes is weak it could spark hawkish money flows while an auction outcome too-strong could reignite recession worries in afternoon trade.

Bottom line, more “wait-and-see” trading is most likely for today’s session as traders await the latest inflation data which has the potential to shift Fed policy expectations (25 bop or 50 bp Fed rate cut) ahead of next week’s meeting.

Join thousands 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.

Market participants were also rotating out of this year’s winners

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Market participants were also rotating out of this year’s winners: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Technology and Energy Stocks Are Hit Hard

Sevens Report Research’s Tom Essaye told Barron’s that while the latest ISM manufacturing survey was weak, market participants were also rotating out of this year’s winners and turning to some underperforming sectors.

“The market was pretty resilient the last couple weeks on light volumes, and now people are coming back in, looking forward, and reasonably surmising that markets could be more volatile in the next couple of months, and probably just taking a little bit off the table,” he says.

“For the first time in years, the market would welcome a number as hot as could be,” Essaye says. “If you get more weakening in the labor market, then a hard landing becomes much more probable. And that’s obviously not priced in at all.”

Also, click here to view the full Barron’s article published on September 3rd, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf 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.