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Why Has the Trump Trade Stalled? (Part One)

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Why Has the Trump Trade Stalled? (Part One): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Has the Trump Trade Stalled? (Part One)
  • Economic Takeaways – November Retail Sales

Stock futures are recovering some of yesterday’s losses as cooler-than-feared inflation data in the EU is driving modestly dovish money flows ahead of the Fed decision.

Economically, inflation data out of Europe was “cooler” than feared with U.K. Core CPI rising to 3.5% vs. (E) 3.6% while Eurozone HICP rose to 2.2% vs. (E) 2.3%. The “cooler” data saw rates traders price in more policy rate cuts from the ECB in 2025.

Today, there is one economic report due to be released mid-morning: Housing Starts and Permits (1.340M & 1.430M) but the primary market focus will be the Fed decision at 2:00 p.m. ET and likely more importantly, Fed Chair Powell’s press conference at 2:30 p.m. ET.

While the Fed will almost certainly be the primary catalyst for markets today, there is some micro-news that could influence sectors and sub-sectors of the equity markets as we will get late season earnings from GIS ($1.22), JBL ($1.88), MU ($1.75), and LEN ($4.18).

Bottom line, investors are looking for the Fed to reiterate their view that the economy is tracking for a soft-landing and that the FOMC is not overly concerned with the latest uptick in inflation data that could signal a sustained “pause” in rate cuts. A hawkish tone in the announcement or Powell’s press conference would likely trigger renewed selling pressure in equity markets and higher bond yields.

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Why Has Tech Been So Strong? (Again)

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Why Has Tech Been So Strong? (Again): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Has Tech Been So Strong? (Again)

Futures are modestly higher following better than expected tech earnings overnight.

Broadcom (AVGO) earnings were mixed but management commentary was bullish and the stock is rallying 15% pre-market and that’s helping to boost tech stocks and broader market futures.

Economically, the notable data was from the UK and it was soft.  Monthly GDP (-0.1% vs. (E) 0.2%) and Industrial Production (-0.6% vs. (E) 0.3%) both missed estimates.

Today there are no notable economic reports nor any Fed speakers, so markets will likely follow the tech sector.  If the AVGO led tech rally this morning can hold, it should pull other indices and sectors higher with it.

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What the CPI Report Means for Markets

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What the CPI Report Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the CPI Report Means for Markets

Futures are modestly lower on a surprise central bank rate hike and after ADBE posted disappointing guidance.

Brazil’s Central Bank hiked rates 100 bps (more than expected) and promised more rate hikes in the future, reflecting some mild fraying of the global rate cut cycle.

ADBE guidance missed investor expectations and it’s the second underwhelming tech report this week (after ORCL).

Today focus will be on rate cuts and economic data.  First, we get the ECB Rate Decision and markets expect a 25 bps cut (if there’s no cut, that’d be a surprise negative).  Economically, the key report today is Jobless Claims (E: 220K) and markets will want to see another Goldilocks reading (so around the 220k level).  We also get the latest PPI report (E: 0.3% m/m, 2.6% y/y) but barring a big jump, it shouldn’t move markets.

Finally, on the earnings front, the key report today is AVGO ($1.39) and markets will want to see a solid tech report to stop this mini-trend of underwhelming guidance (from ORCL and ADBE this week).

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Market indicators and cyclical signals we monitor suggest all the pieces are in place for this bull market to end

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Bull market to end in the weeks or months ahead: Tyler Richey Quoted in Business Insider

All the pieces are in place for this bull market to end’: A technical strategist who called the S&P 500’s surge to 6,000 warns that stocks are a negative catalyst away from a 20% drop

Tyler Richey laid out an argument for why the S&P 500 could climb all the way to 6,000. Investor sentiment was bullish but not excessively so.

“Looking ahead, the collection of market indicators and cyclical signals we monitor suggest all the pieces are in place for this bull market to end in the weeks or months ahead and for a cyclical bear market to begin,” Richey said in an email, adding: “There is nothing in the current fundamental backdrop that suggests a bear market in stocks is a sure thing or even likely for that matter.”

“Weekly RSI failing to ‘confirm’ the new highs in the S&P 500 is a dynamic we have seen leading up to every major market pullback in modern market history, including the tech bubble bursting and the GFC recession,” he said in an email, referencing the 2000 and 2008 stock market crashes.

Also, click here to view the full Business Insider article published on December 7th, 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: December Update

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Market Multiple Table: December Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table: A New Influence That Could Increase Volatility in 2025
  • Unbranded, Shareable MMT PDF Upon Request

Stock futures are stabilizing after Monday’s modest pullback as trader focus shifts ahead to tomorrow’s CPI report. Small caps are leading in pre-market trade thanks to a surprisingly solid NFIB report released earlier this morning.

Economically, the NFIB Small Business Optimism Index surged 8 points to 101.7 in November, handily topping estimates of 94.5 to hit the highest level since June 2021. Overseas, German CPI met estimates at 2.2% y/y, another Goldilocks inflation report.

Today, there is one economic report to watch: Productivity & Costs (E: 2.2%, 1.9%). The data has an inflation component (specifically the “Costs” part) that could move yields today and influence stocks (higher yields will weigh on equities).

Additionally, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and a few late-season earnings reports due out including AZO ($4.30), ASO ($1.25), and GME ($0.00).

The Treasury auction is another catalyst that could move yields and impact equities, but tomorrow’s CPI report is becoming the primary focus on the market as we progress through the week so market moves should be limited by trader positioning today.

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A Unique ETF Focused on Managing Tax Liabilities

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A Unique ETF Focused on Managing Tax Liabilities : Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Unique ETF Focused on Managing Tax Liabilities
  • JOLTS Data Takeaways – Another Goldilocks Report

Futures are higher with tech shares leading thanks to solid earnings reports after the close yesterday as investors look past political turmoil overseas.

Politically, lawmakers in South Korea moved to impeach President Yoon for implementing martial law yesterday while the French government faces a no-confidence vote today. Neither situation is a material negative for markets but both are weighing on sentiment.

In corporate news, CRM and OKTA (a newer cloud software focused company) both posted solid earnings after the close yesterday which is bolstering the broader tech sector in premarket trade today.

Today, we will get two more important economic reports: The ADP Report (E: 165K) and the ISM Services PMI (E: 55.5). Factory Orders (E: 0.4%) will also be released but is less likely to move markets than the first two data points.

The Fed’s Musalem is scheduled to speak at 8:45 a.m. ET, however the market’s main focus today will be Powell’s commentary (1:45 p.m. ET) as he could shed light on December rate cut plans or the policy rate path in 2025. Any hawkish surprise from the Fed Chair could spur volatility today.

Finally there is one notable earning release today from discount retailer DLTR ($1.07) that could offer insight into consumer spending habits.

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More Trade Volatility

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More Trade Volatility: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • More Trade Volatility

Futures are modestly higher as trade tensions eased following a call between Trump and the President of Mexico.

Late Wednesday Trump announced that he had a “productive” call with Mexico’s President while Canada announced measures to strengthen the border, easing trade tensions between the three countries.

Economically, the EU flash HICP (their CPI) was slightly better than expected, rising 2.7% y/y vs. (E) 2.8%.

Today should be a quiet day as there are no notable economic reports and markets close at 1:00 p.m. ET.

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Contrarian Opportunity in Chinese Tech (3 ETFs)

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Contrarian Opportunity in Chinese Tech (3 ETFs): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Can Singles’ Day and Stimulus Offset Concerns in Chinese Stocks?

Futures are lower this morning as global equity markets take a breather and digest the sizeable post-election gains.

Economically, German CPI held steady at 2.0% last month while the ZEW Survey disappointed. In the U.S., the NFIB Small Business Optimism Index rose to 93.7 vs. (E) 91.7 but the solid release is having little impact on futures in pre-market trading.

There are no further economic reports today, but the Treasury will hold 3M and 6M Bill auctions at 11:30 a.m. ET that could move yields (Treasuries were closed for Veterans Day yesterday so how bonds trade this morning could move stocks).

Turning to the Fed, the speaker circuit is picking back up in the wake of last week’s FOMC meeting with several officials scheduled to speak today including: Waller (10:00 a.m. ET), Barkin (10:15 a.m. ET), Kashkari (2:00 p.m. ET), and Harker (5:00 p.m. ET).

Finally, a few notable companies reporting earnings today include: HD ($3.65), SHOP ($0.37), and OXY ($0.81). The former two could shed light on the health of the U.S. consumer and therefore have the potential to move the broader equity markets but a continued digestion, or potentially some profit taking, in the wake of the huge post-election advance before tomorrow’s CPI release is fairly likely today.

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FOMC Preview

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FOMC Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview
  • EIA Data Takeaways – Oil Market Fundamentals Continue to Deteriorate

Futures are slightly higher this morning as markets are largely holding yesterday’s sizeable post-election gains with trader focus shifting to today’s Fed decision.

Economically, data was mostly solid overnight as Chinese exports jumped +12.7% y/y in October (+2.4% in September) while EU Retail Sales were inline with estimates, up 0.5% last month.

Today is lining up to be a critical day for markets as traders assess the big week-to-date gains. Early focus will be on economic data with two notable releases due before the open: Jobless Claims (E: 221K) and Productivity & Costs (E: 2.5%, 1.0%).

From there, markets are likely to turn sideways as traders position into the afternoon Fed events beginning with the FOMC Announcement at 2:00 p.m. ET, followed up by Fed Chair Powell’s press conference 2:30 p.m. ET. Anything other than the expected 25 basis point rate cut and steady forward guidance will almost certainly move markets today.

Finally, there are no big tech or major industrial earnings today but there are a few noteworthy companies due to report quarterly results today including: GOLD ($0.33), WBD ($-0.05), HAL ($0.75), SQ ($0.87), and ABNB ($2.17). However, to be clear, the Fed is the catalyst to watch today.

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It was not enough to derail the soft landing thesis

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It was not enough to derail the soft landing thesis: Tom Essaye Quoted in Blockworks

GDP estimates boost hopes for a soft landing

Tom Essaye, founder of Sevens Report Research, said the report “was not enough to derail the soft landing thesis by itself, but it was a step in that direction as investors will want to start seeing the decline in headline job openings slow as part of a soft landing dynamic and still-healthy labor market.”

Also, click here to view the full Blockwork article published on October 30th, 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.