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Five Important Events to Watch As We Start 2025

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Five Important Events to Watch As We Start 2025: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Five Important Events to Watch As We Start 2025
  • The Sevens Report Q4 Quarterly Letter Will Be Delivered to Subscribers Today

Futures are moderately higher to start the new year despite disappointing global economic data.

Manufacturing PMIs from China, the EU and the UK all missed expectations, highlighting the disparity between solid U.S. growth and lackluster global growth.

The Chinese Caixin Manufacturing PMI declined to 50.5 vs. (E) 51.7, the Euro Zone reading slipped to 45.1 vs. (E) 45.2 while the UK version dropped to 47.0 vs. (E) 47.3.

Today focus turns back to economic data and as was the case at the end of 2024, markets need in-line to slightly soft economic readings to keep Fed rate cut and soft landing expectations stable.  Today, that means Jobless Claims near their 225k estimate (and not too much lower) and the S&P Final Manufacturing PMI in-line with estimates (E: 48.3).

 

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

Futures are modestly lower, again in quiet trading, on disappointing Chinese economic data.

Chinese industrial profits declined –7.3%, contracting for the fourth consecutive month and reminding investors that while there’s been a lot of stimulus from Chinese officials, it will take time to impact the economy.

In Japan, economic data was better than expected as retail sales and industrial production beat estimates.

Today there are no notable economic reports and trading should be quiet.  That said, the 10-year yield will remain an influence on stocks.  The higher the yield goes, the more it’ll pressure stocks.

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Hard-Landing/Soft-Landing Scoreboard

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Hard-Landing/Soft-Landing Scoreboard: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard-Landing/Soft-Landing Scoreboard
  • Durable Goods Orders Takeaways

Futures are slightly higher with global markets as traders continue to digest last week’s volatile post-Fed selloff amid quiet news wires and low holiday-week trading volumes.

Overnight, Reuters reported that the Chinese government is planning to sell 3 trillion yuan worth of “special bonds” in 2025, up from 1 trillion in 2024, which supported a moderate risk-on rally in Asian markets.

Today should be a relatively quiet day in the markets as there is only one lesser followed Fed survey release: the Richmond Fed Manufacturing Index (E: -8.0) and no Fed officials are scheduled to speak.

There is a 5-Yr Treasury Note auction at 11:30 a.m. ET which could have an impact on the bond markets, and ultimately stocks (higher yields would put renewed pressure on stocks), however with light attendance and already low volumes, a sizeable move today is unlikely.

Finally, today is a holiday shortened session with the NYSE set to close at 1:00 p.m. ET.

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Can the Trump Trade Outperform in 2025?

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Can the Trump Trade Outperform in 2025?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Can the Trump Trade Outperform in 2025?

Futures are sharply lower following another failed attempt at a short-term government funding agreement.

A Republican plan for a new short-term government funding agreement was soundly defeated in a House vote and a government shutdown starting today is looking likely.

Specifically, futures aren’t down because of the shutdown itself, but instead because this is the type of political chaos markets fear in a second Trump term (that hasn’t even officially started yet).

Today politics will dominate the headlines and any positive news towards a funding agreement will fuel a bounce, while no progress will continue to weigh on stocks.

Beyond Washington, however, there is an important economic report today, the Core PCE Price Index (E: 0.2% m/m, 2.9% y/y).  This is the Fed’s preferred measure of inflation and given the Fed’s hawkish decision on Wednesday, this number needs to come in at or under expectations, otherwise it’ll just add to the selling pressure.

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Did the Fed Decision Weaken the Bull Market?

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What’s in Today’s Report:

  • Four Reasons the Fed Decision Caused Such a Big Selloff
  • Did the Fed Decision Weaken the Bull Market?

Futures are seeing a bounce following yesterday’s steep selloff despite more negative news overnight.

Politically, government shutdown risks spiked on Thursday after support for the stop-gap funding bill collapsed and a government shutdown on Friday is becoming more likely.

On earnings, Micron (MU) posted disappointing guidance and the stock is down –15% pre-open.

Today is another busy day of economic data and policy decisions.   The Bank of England has a rate decision (E: 25 bps cut) while there are numerous U.S. economic reports including, in order of importance,  Jobless Claims (E: 232K), Philly Fed (E: 2.5), Final Q3 GDP (E: 2.8%) and Existing Home Sales (E: 4.05 million).  The market needs Goldilocks data to help it hold this early bounce and any data that’s “Too Hot” (meaning much stronger than expected) will only increase hawkish Fed worries, push yields higher and likely hit stocks, again.

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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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FOMC Preview (All About the Projections)

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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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What to Expect from Markets in 2025

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What to Expect from Markets in 2025: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What to Expect from Markets in 2025
  • Weekly Market Preview:  Does the Fed Keep Cutting and Does Data Stay Goldilocks?
  • Weekly Economic Cheat Sheet:  All Eyes on the Fed Dots

Futures are slightly higher following a mostly quiet weekend of news and despite mixed global economic data.

Chinese Retail Sales (3.0% vs. (E) 4.6%) and Fixed Asset Investment (3.3% vs. (E) 3.5%) both missed estimates, reminding investors that despite promises for more stimulus, Chinese growth remains lackluster.

In Europe, data was better as the flash Composite PMIs for the EU (49.5 vs. (E) 48.0) and the UK (50.5 vs. (E) 50.0) both beat estimates.

Today focus will be on the Empire Manufacturing Survey (6.4) as that’s the first data point for December and investors will want to see in an-line to slightly soft reading to reinforce the Goldilocks narrative.

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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 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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