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FOMC Preview (All About the Projections)

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FOMC Preview (All About the Projections): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview – All About the Projections
  • NVDA Chart – Three Negative Technical Developments
  • Economic Data Takeaways – Empire Survey and PMIs “Goldilocks Enough”

Futures are moderately lower as mostly strong international economic data overnight is putting upward pressure on global bond yields as focus turns to this week’s central bank decisions, including the Fed tomorrow.

Economically, Germany’s December Ifo Survey was mixed with Current Conditions edging up to 85.1 vs. (E) 83.8 but Business Expectations declined to 84.4 vs. (E) 87.0 while UK wage growth jumped 5.2% y/y vs. (E) 4.6% which sent Gilt yields higher.

Today, trader focus will be on economic data early with Retail Sales (E: 0.5%), Industrial Production (E: 0.3%) and the Housing Market Index (E: 47) all due to be released.

However, with the FOMC meeting getting underway in Washington, market moves are likely to be limited (barring any material surprises) as a familiar sense of “Fed-Paralysis” is likely to begin gripping the market with tomorrow’s FOMC decision looming.

Finally, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that has the potential to move yields and impact equity market trading but odds of that happening ahead of the Fed announcement tomorrow are relatively low.

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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.

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Sentiment Divergence Between Advisors and Investors

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Sentiment Divergence Between Advisors and Investors: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment: Divergence Appearing Between Investors and Advisors
  • ISM Manufacturing PMI Takeaways

Futures are little changed amid escalating U.S.-China trade tensions and ongoing political turmoil in Europe.

Overnight, China announced an export ban of specific rare minerals with military applications to the U.S. in the latest escalation of trade tensions between the two countries.

EU shares edged higher ahead of the French government’s “vote of no confidence” (tomorrow) linked to ongoing budget turmoil.

Looking into today’s session, there are two economic reports to watch: JOLTS (E: 7.49 million) and Motor Vehicle Sales (E: 16.0 million). Investors will want to see more “Goldilocks” data to support post-election growth optimism.

Additionally, there are two Fed speakers to watch: Kugler (12:35 p.m. ET) and Goolsbee (1:30 p.m. ET and 3:45 p.m. ET), and as long as they do not offer any hawkish surprises, stocks should be able to extend gains to new record highs today.

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Why the Gaetz Withdrawal Sparked Yesterday’s Rally

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Why the Gaetz Withdrawal Sparked Yesterday’s Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Gaetz Withdrawal Sparked Yesterday’s Rally
  • Examining the Strange Positive VIX and S&P 500 Correlation

Futures are modestly weaker following surprisingly disappointing economic data from Europe.

The EU November flash PMIs tumbled (48.1 vs. (E) 50.2) with all three metrics (composite, manufacturing and services) falling below 50 and signaling contraction.

Similarly, the UK November flash PMIs were also weak (49.9 vs. (E ) 51.8) signaling a sudden drop in activity.

Today focus will remain on data and the more Goldilocks the data, the better for markets.  The key reports today are the November Flash Manufacturing PMI (E: 48.8) and Flash Services PMI (E: 55.2) while we also get Consumer Sentiment (E: 73) and, within that report, the 1-Yr Inflation expectations (E: 2.6%).  Again, in-line to slightly soft data will be the best outcome for stocks, as that implies solid growth and encourages a rate cut in December.

Finally, there is one Fed speaker today, Bowman (6:15 p.m. ET), but she shouldn’t move markets.

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Why Did Stocks Drop Last Week?

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Why Did Stocks Drop Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop Last Week?
  • Weekly Market Preview:  Focus on Treasury Secretary, NVDA earnings and economic growth (Thursday/Friday).
  • Weekly Economic Cheat Sheet:  Important Growth Data Late This Week

Futures are little changed following a quiet weekend of news as markets continue to digest last week’s rise in Treasury yields, and the return of political surprises (via Trump’s cabinet announcements).

There were no notable economic reports overnight.

Politically, the major remaining cabinet pick from Trump is Treasury Secretary and it should come early this week (and another unorthodox choice would further roil markets).

Today the calendar is quiet as there is just one economic report, Housing Market Index (E: 43), and one Fed speaker, Goolsbee (10:00 a.m. ET).  So, focus will be on Trump’s cabinet (again, the more traditional choice for Treasury, the better for markets) and on the 10-year yield.  If it keeps rising, that will be a continued headwind on stocks.

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Why the Next Two Weeks Are So Important For This Market

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Why the Next Two Weeks Are So Important For This Market: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Next Two Weeks Are So Important For This Market
  • Weekly Market Preview:  Magnificent Seven Earnings and Important Economic Data
  • Weekly Economic Cheat Sheet:  Jobs and ISM Manufacturing PMI on Friday

Futures are sharply higher following two market-positive geo-political.

In the Mid-East, the Israeli’s response to the Iranian missile attacks was smaller than expected and is viewed as a de-escalation, as oil is down 6% on falling geo-political risks.

In Japan, the ruling LDP party lost its majority in Parliament and looming political gridlock should further delay any BOJ rate hikes (Japanese stocks rose nearly 2% on the news).

Today there are no notable economic reports but as long as oil keeps dropping, the early rally should continue. Finally, earnings season continues and some reports we’ll be watching today include: ON (0.97), F (0.49), WM ($1.86).

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Futures contracts tied to the index are telling a different story

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Futures contracts tied to the index are telling a different story: Tom Essaye Quoted in Market Watch

Why Wall Street’s ‘fear gauge’ could spike again around the election

But futures contracts tied to the index are telling a different story, and it’s one worth paying attention to, according to Tom Essaye, founder of Sevens Report Research.

The October VIX contract is trading at a premium to the November contract, an unusual development known to futures traders as “backwardation.” Typically, the VIX futures curve exhibits a smooth upward slope. But for most of this year, there has been a kink along this part of the curve.

According to Essaye, the inversion is notable not so much for its degree — the October contract was just 0.3 points above its September sibling as of early Thursday — but for its staying power. This segment of the curve has been in backwardation since the October contract started trading in February.

Also, click here to view the full MarketWatch article published on September 26th, 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 Fed could fall behind the curve as real interest rates continue to rise.=

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The Fed could fall behind the curve: Sevens Report Analysts Quoted in Investing.com

The Fed may be further behind the curve

“If we excluded housing from Core CPI, yesterday’s Core CPI reading would have increased just 0.1%,” they explained, downplaying fears of a significant inflation resurgence.

Despite this, the inflation data has reduced the likelihood of a 50-basis-point rate cut by the Fed.

The real risk, according to Sevens, is that the Fed could fall behind the curve as real interest rates continue to rise.

“Real interest rates are now putting more pressure on the economy than they have at any point during the Fed’s tightening cycle,” Sevens stated.

Also, click here to view the full Investing.com article published on September 12th, 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.

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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Oil futures appropriately popped in the wake of the release

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 Oil futures appropriately popped in the wake of the release: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices climb as U.S. data show crude supplies down a fourth straight week

Wednesday’s EIA report was “solid and oil futures appropriately popped in the wake of the release,” said Tyler Richey, co-editor at Sevens Report Research.

Still, the “trend of strong consumer demand has faltered in July,” underscored by the fact the four-week moving average of gasoline supplied remains about 30,000 barrels per day off the early July year-to-date highs, he told MarketWatch.

Going forward, the “energy bulls will want to see more evidence of strong and persistent consumer demand in order for oil to hold above key technical support at $76.50 because recession worries are on the rise and volatility is picking up, both of which are typically headwinds for the price of oil,” said Richey.

Also, click here to view the full MarketWatch article published on Morningstar on July 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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.