Posts

The Economy: Landing or Crashing?

/in , /by

The Economy: Landing or Crashing? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Economy:  Landing or Crashing?
  • Weekly Market Preview:  Will A September Rate Cut Become a Guarantee This Week?
  • Weekly Economic Data:  Inflation Back in Focus (CPI This Week)

Futures are little changed despite positive geo-political news over the weekend.

In France, the “far-right” National Rally party underperformed expectations and will not be the majority party, reducing the chances of radical French policy changes.

In the Middle East, chatter surrounding a cease-fire between Israel and Hamas continues to get louder and a deal could be announced soon.  That news is weighing on oil this morning.

This week will be an important one with two days of Powell testimony, the CPI report and the start of the Q2 earnings season, but today will be relatively quiet as there are no economic reports today and no Fed speakers.

Sevens Report Quarterly Letter

Our Q2 ’24 Quarterly Letter was delivered to subscribers last Monday, complete with compliance backup and citations. We’re already receiving feedback about how it is saving advisors time and helping them communicate with their clients in this volatile environment!

You can view our Q1 ’24 Quarterly Letter here.

To learn more about the product (including price) please click this link.

If you’re interested in subscribing, please email info@sevensreport.com.

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.

Jobs Day

/in , /by

Jobs Day: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Day
  • Why Wednesday’s Weak Economic Data Is Increasing Growth Concerns

Futures are little changed following the U.S. holiday as the last 24 didn’t provide any substantial market surprises while focus turns towards today’s jobs report.

The Labour Party won a landslide election victory in the UK, as expected, but that victory isn’t altering the outlook for growth or inflation (so it’s not impacting markets).

U.S. growth worries are creeping slightly higher following Wednesday’s surprisingly soft economic data.

Today focus will be on the jobs report and expectations are as follows: 189K Job-Adds, 4.0% Unemployment Rate, 0.3% m/m & 3.9% y/y Wage Growth.  Markets are still in a “bad is good” mode for data so the biggest risk to markets today is for a “Too Hot” number.  But, that said, Wednesday’s economic data was outright bad and for those paying attention, there are now a lot of signs that the U.S. economy may be losing more momentum than expected.  So, if there is a surprisingly weak jobs report (possible but unlikely) it will increase growth concerns and that’s a future risk to this rally.

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.

Jobs Report Preview

/in , /by

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

What’s in Today’s Report:

  • Jobs Report Preview
  • JOLTS Report Takeaways

Futures are slightly higher as Powell’s dovish comments continue to be digested amid more Goldilocks economic data overnight.

In Asia, Australian Retail Sales rose 0.6% vs. (E) 0.3% but China’s Services PMI dropped to 51.2 vs. (E) 53.4.

In Europe, the Eurozone Composite PMI fell to 50.9 vs. (E) 50.8 while the EU PPI fell -4.2% y/y vs. (E) -4.1%, both of which are helping bonds remain stable ahead of multiple important economic releases in the U.S. today.

Looking into today’s session we will first get more labor market data with the ADP Report (E: 161K) and Jobless Claims (E: 233K) releases before the open. The market is looking for as-expected numbers and any signs of material weakness or data that is “too hot” could trigger some profit taking in thin holiday trading with stock indices sitting on record highs.

At the top of the 10:00 a.m. hour Wall Street time, the ISM Services Index (E: 53.0) and Factory Orders (E: 0.2%) reports will be released. The ISM will be the release to watch with investors again looking for stability in the headline but also a favorable move lower in the prices subindex to help confirm the disinflation trend has indeed resumed.

There is also one Fed speaker today: Williams (7:00 a.m. ET) and the FOMC Minutes will be released at 2:00 p.m. ET which is after the NYSE’s early close (1:00 p.m. ET) ahead of the 4th of July holiday tomorrow.

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.

CPI Preview: Good, Bad & Ugly

/in , /by

CPI Preview: Good, Bad & Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Preview:  Good, Bad & Ugly

Futures are modestly lower again following a quiet night of news as investors focus on tomorrow’s CPI report and Fed rate decision.

Economically, the UK Labour Market Report showed higher than expected average earnings (5.9% vs. (E) 5.7%) and that’s pushing back slightly on expectations for a rate cut this summer.

European bond yields remained elevated as polling suggests France’s far-right party should win the election.

Today should be another mostly quiet day as investors await the two potentially major catalysts on Wednesday, although we do get one notable economic report today via the NFIB Small Business Optimism Index (E: 89.7).  However, it’d have to be substantially lower or higher than estimates to move markets.

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.

Recent data have traders worried that the economy is slowing

/in , /by

Recent data have traders worried that the economy is slowing: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Are Slipping. The Market Can’t Find Middle Ground.

Recent data have traders worried that the economy is slowing more than people think, Sevens Report Research’s Tom Essaye tells Barron’s. He notes that if the economy slows too much, the question becomes whether rate cuts in September and December would be enough to turn things around.

“The market can’t ever find the middle,” Essaye says.

He says that sentiment has bounced back and forth between worries about hot inflation to worries that the Federal Reserve won’t be able to navigate a slowing economy. Essaye thinks the pullback in stocks can be chalked up to already-high valuations.

“It’s not that things have suddenly turned bad,” says Essaye. “It’s that we’re priced for a very still-perfect environment, and the data is implying it’s maybe not so perfect.”

Also, click here to view the full Barron’s article published on June 5th, 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.

A Concerning Divergence in Bond Markets

/in , /by

A Concerning Divergence in Bond Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Is the Smart Market Telling Us? (Part II)
  • JOLTS Data Takeaways – Normalizing or Rolling Over?
  • Chart: JOLTS Fall Below Pre-Pandemic Trend Path

Futures are tracking European markets higher this morning on the back of “goldilocks” growth and inflation data overnight ahead of more key domestic economic data today.

Economically, China’s May Composite PMI handily beat estimates at 54.1 vs. (E) 52.7 which was a welcomed print as Chinese data has been underwhelming recently.

In Europe, the Eurozone Composite PMI rose to 52.2 vs. (E) 52.3 while April PPI fell -1.0% m/m vs. (E) -0.5%. Stabilizing growth numbers and evidence of further disinflation are exactly what the ECB want to see ahead of their first rate cut as it helps shore up the soft-landing argument.

Looking into today’s session, there are no Fed officials scheduled to speak but two important economic reports on the calendar. First, the May ADP Employment Report (E: 173K) will be released pre-market and second, the ISM Services Index (E: 50.7) is due out a half hour after the opening bell.

Investors will want to see a labor market print that is close to estimates. A number too strong will push back on the recent dovish money flows while a weak number will add to recession worries. With the ISM, a steady number above 50 with cooling price indices would be the best case scenario for risk assets leading into the jobs report Friday.

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.

Is Bad Economic Data Starting to Pressure Earnings?

/in , /by

Is Bad Economic Data Starting to Pressure Earnings? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Bad Economic Data Starting to Pressure Earnings?
  • EIA Analysis and Oil Market Update

Futures are modestly lower again following more disappointing earnings and another hot global inflation print.

DELL (down 15% pre-market) became the latest non-AI tech company to post disappointing results and that’s weighing on futures.

Economically, the EU flash HICP (their CPI) rose more than expected at 2.9% vs. (E) 2.7% y/y and that’s pushing back on expectations for multiple ECB rate cuts this year.

Today brings the biggest economic report of the week, the Core PCE Price Index (E: 0.2% m/m, 2.8% y/y).  Markets will want to see a number at, or ideally below, expectations to further ease inflation anxiety and pressure Treasury yields. If investors get that number this morning, expect a solid bounce back rally in stocks and bonds.  The other notable number today is the Chicago PMI (E: 40.8) but barring a major surprise that shouldn’t move markets.

Regarding the Trump guilty verdict, as we covered in Thursday’s Report, this could result in some temporary volatility in select sectors (oil and gas, industrials, financials) but we do not view this event as a material influence on markets.

Finally, there is one Fed speaker today, Bostic at 6:15 p.m. ET but he shouldn’t move markets.

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.

Did the Last 48 Hours Make the Fed More Hawkish?

/in , /by

Did the Last 48 Hours Make the Fed More Hawkish? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Did the Last 48 Hours Make the Fed More Hawkish?

Futures are modestly higher following a quiet night as markets bounce following Thursday’s high-rate driven declines.

Economically, UK Retail Sales declined –2.3% vs. (E ) -0.1%, although that’s not making a June cut more likely.

Geo-politically, there are reports Putin will seek a cease-fire in Ukraine, although that’s unconfirmed (it would be a surprise positive if true).

Given the looming long weekend we can expect quiet trading today but there are two notable economic reports:   Durable Goods Orders (E: -0.5%) and University of Michigan Inflation Expectations (1-Yr Inflation Expectations: 3.5%, 5-Year Inflation Expectations 3.1%). As yesterday demonstrated, strong data is “bad” for stocks in the near term so markets will want to see in-line readings or slightly soft numbers on both reports to help fuel a rebound from yesterday.

There is also one Fed speaker and it’s an important one, Waller at 9:35 a.m. ET, but it’s unlikely he’ll say anything surprising (he just spoke earlier this week).

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.

Even a small bout of stagflation would result in a 10%-20% decline in stocks

/in , /by

Even a small bout of stagflation would result in a 10%-20% decline in stocks: Tom Essaye Quoted in MarketWatch

The economy could be heading toward 1970s-style stagflation. What it means for the stock market.

 “Stagflation doesn’t have to be as bad as it was in the 1970s, but for a stock market that’s trading above 21 times earnings, the truth is that even a small bout of stagflation would result in a 10%-20% decline in stocks,” said Tom Essaye, founder of Sevens Report Research, in a Monday note.

“Of course, comparing this period to the 1970s, where GDP growth was flat or negative and CPI was running more than 10%, [Powell’s] absolutely right [that] there is no stagflation,” said Essaye. But he added that it’s somewhat “dismissive” to say that just because things aren’t as bad as they were in the 1970s, any talk of stagflation is unwarranted.

“In an absolute sense,” economic growth is not at levels that would imply stagflation — but data releases are becoming “more conclusive that economic momentum is slowing,” Essaye said. “While stagnation isn’t here yet, the data is showing a greater chance of it occurring than any time in the last year and a half.”

Also, click here to view the full MarketWatch article published on May 13th, 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.

How Long Can Goldilocks Last?

/in , /by

How Long Can Goldilocks Last? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Long Can Goldilocks Last?
  • Weekly Market Preview:  More Updates on Growth and AI Enthusiasm (NVDA Earnings on Wednesday)
  • Weekly Economic Cheat Sheet:  Will the First Big Report of May Confirm Slowing Growth?

Futures are little changed following a generally quiet weekend of news and ahead of another important week of potential market catalysts.

Geopolitics was in focus this weekend as Iranian President Raisi was killed in a helicopter crash, although it appears an accident and oil isn’t rallying on the news.

There was no notable economic data overnight.

Today there are no economic reports but there are multiple Fed speakers including: Bostic (7:30 & 8:45 a.m. ET), Barr & Waller (9:00 a.m. ET), Jefferson (10:30 a.m. ET), Mester (2:00 p.m. ET) and Bostic again (7:00 p.m. ET).  However, for all the commentary, unless multiple Fed officials start openly discussing rate hikes (which is extremely unlikely) their commentary shouldn’t meaningfully move markets.

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.