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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.

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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.

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The Real Problem for this Market (Not Growth)

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The Real Problem for this Market (Not Growth): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Real Problem for this Market (Not Growth)
  • Weekly Market Preview:  Does Weak Inflation Data Make a 50 bps Cut More Likely?
  • Weekly Economic Cheat Sheet:  CPI Wednesday is the key report.

Futures are seeing a strong bounce following a generally quiet weekend of news.

There was no specific positive headline that’s rallying futures and instead we’re seeing mostly technical dip buying.

Economically, Japanese Q2 GDP missed estimates (2.9% vs. (E ) 3.1% and that’s pushing back on BOJ rate hike expectations, which is a mild positive (the yen is down 1%).

This week focus turns back to inflation and that includes today’s NY Fed Inflation Expectations (E: 3.0%).  If they fall more than expected, it’ll further boost expectations for a 50-bps cut (and help support stocks).  The other notable economic report is Consumer Credit (E: $12.5B) and there is another important tech earnings report after the close (ORCL (E: $1.33)).  Solid guidance from ORCL would be a welcomed positive for investors right now.

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Technical Update (Ahead of Jobs Report)

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What’s in Today’s Report:

  • Technical Update (Ahead of Jobs Report)
  • Abbreviated Jobs Report Preview
  • EIA and Oil Market Analysis (Will Oil Keep Falling?)

Futures are sharply lower on more disappointing AI related tech earnings and ahead of today’s jobs report.

Broadcom (AVGO) posted disappointing guidance and became the latest AI related tech company to produce underwhelming results and that’s weighing on futures.

Economic, data was mildly disappointing overnight as German IP missed estimates while EU GDP was revised lower.

Today focus will be on the jobs report and expectations are as follows:  Job Adds (160k), Unemployment Rate (4.2%), Wages (0.3% m/m, 3.7% y/y).  The mood in the markets has soured this week and investors are nervous about a disappointing jobs number. If that happens, look for an intense decline in stocks as hard landing chances rise.  However, if the report is “Just Right” a solid relief rally (S&P 500 up 1% or more) should materialize, especially if the Fed speakers today point to a 50-bps cut.

In addition to the jobs report, as mentioned, there are two important Fed speakers today:  Williams (8:45 a.m. ET) and Waller (11:00 a.m. ET).  If they hint at a 50-bps cut, that will help support markets regardless of the jobs report.

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It’s just concerns about global growth

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It’s just concerns about global growth: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Oil Prices Slide on Growth Fears

“It’s just concerns about global growth,” Sevens Report Research’s Tom Essaye told Barron’s. “China had some weak data, and I think that’s really the cause of it.”

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.

Why This Market Is So Resilient (Again)

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Why This Market Is So Resilient (Again): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why This Market Is So Resilient (Again)
  • Weekly Economic Preview – Labor Market Data in Focus

Futures are lower in sympathy with most global equity markets this morning as investors digest fresh economic data at the start of a historically volatile calendar month.

The Eurozone Manufacturing PMI was better than feared at 45.8 vs. (E) 45.6, but the sub-50 reading reminded investors the global factory sector remains deep in contraction and growth risks remain elevated.

Looking into today’s session, there are no Fed speakers on the calendar but there is one potentially market-moving economic report to start the week: the ISM Manufacturing PMI (E: 47.8). Investors will want to see evidence of stabilization in the factory sector and easing price pressures in the details of the report, otherwise growth concerns could result in renewed volatility.

There are no other major potential catalysts today, however, the Treasury will hold 3-Month and 6-Month Bill auctions at 11:30 a.m. ET and the yields awarded could shed new light on Fed policy plans in the months ahead, and in turn, impact equity markets (higher yields would weigh on stocks and other risk assets).

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The Rotation Out of Tech Continues

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The Rotation Out of Tech Continues: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Rotation Out of Tech Continues

Futures are modestly higher thanks to solid tech earnings and better than expected inflation data from Europe.

DELL and MRVL, both AI linked tech companies, posted solid earnings and guidance and that’s supporting futures.

Economically, EU HICP (their CPI) declined further to 2.8% y/y vs. (E) 2.9%, giving the ECB more room to cut rates.

Today is typically a quiet day in the markets as traders try to get a head start on the three-day weekend, but there is an important inflation report this morning:  The Core PCE Price Index (E: 0.2% m/m, 2.7% y/y).  If that report is better than expected, it’ll boost expectations for a 50-bps rate cut in September (positive for stocks) while a higher-than-expected number will push back against a 50-bps cut (negative for stocks).

Other data today includes the Chicago PMI (E: 46.4) and inflation expectations in University of Michigan Consumer Sentiment (1-Yr Inflation Expectations: 2.9%, 5-Yr. Inflation Expectations: 3.0%) but barring major surprises, neither of those numbers should move markets.

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It’s not structurally the most important stock in the market

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It’s not structurally the most important stock in the market: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Why Nvidia Is the Market’s Most Important Stock

“Nvidia is the most important stock because people have decided it’s the most important stock,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview. “It’s not structurally the most important stock in the market—their business focus is very, very slim. They just happen to be the tip of the spear of what people are convinced will be the next tech revolution.”

AI is important because the market expects AI to boost corporate profitability in the coming decades,” Essaye says. “And the whole second step of this entire thing is the uptake of AI and how it actually makes money. Nvidia is the picks and shovels of the gold mine. But people will only buy the picks and shovels if they can actually find gold, right?”

Also, click here to view the full Barron’s article published on August 27th, 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.

Is Market Momentum Faltering?

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Is Market Momentum Faltering?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Market Momentum Faltering?
  • Oil Outlook Updated

Futures are slightly higher as better than expected EU inflation metrics offset slightly underwhelming NVDA earnings.

Spanish and German regional CPIs declined more than expected and that’s increasing ECB rate cut expectations and reminding investors of the global rate cutting cycle.

With NVDA results behind us, focus turns back to data and the important reports today include Jobless Claims (E: 232K), Pending Home Sales (E: 1.0%) and Final Q2 GDP (E: 2.8% y/y saar).  Of the three, jobless claims are most likely to move markets as a jump in claims will slightly increase hard landing worries, while a drop will further reinforce soft landing expectations.  There is also one Fed speaker today, Bostic (3:30 p.m. ET), but unless he says he supports a 50 bps cut, he’s unlikely to move markets.

Turning to earnings, NVDA was the highlight of the week but there are still several important reports today that will give us important insight on tech and consumer spending.  Notable reports today include: DELL (E: $1.68), MRVL (E: $0.30), BBY (E: $1.15), DG (E: $1.79), , LULU (E: $2.93),  ULTA (E: $5.49).

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