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A Return to Reasonable Valuations? April MMT Chart

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A Return to Reasonable Valuations? April MMT Chart: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Return to Reasonable Valuations? April MMT Chart
  • Dip-Buying Becomes Riskier in Late-Cycle Environments
  • Housings Starts Plunge in March – Chart

Futures are higher this morning as the geopolitical situation in the Middle East is tense but stable, inflation data was largely as-expected, and good consumer-focused earnings are helping offset soft sales from chip-maker ASML.

Economically, EU Core CPI met estimates at 2.9% while the U.K.’s Core CPI figure was “warm” at 4.2% vs. (E) 4.1% but neither report is materially impacting the general “higher for longer” central bank policy stance in place right now.

There are no notable economic reports today and just two late-day Fed speakers: Mester (5:30 p.m. ET), Bowman (7:15 p.m. ET).

That will leave trader focus on the Treasury’s 20-Yr Bond auction at 1:00 p.m. ET as weak demand would add upward pressure on yields and pressure stocks.

Additionally, earnings season continues with TRV ($4.75), CFG ($0.75), CSX ($0.45), and DFS ($2.98) reporting today, however, none of those names should have a significant impact on the broader market unless there is a glaring disappointment or upside surprise.

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Understanding Why the Decline in Inflation Has Stalled

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Understanding Why the Decline in Inflation Has Stalled: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Understanding Why the Decline in Inflation Has Stalled

Futures are slightly lower following more disappointing Chinese economic data and as geo-political concerns rise.

Chinese exports fell –7.5% vs. (E) -1.9% underscoring that growth remains a major concern in the Chinese economy.

Oil and gold are sharply higher on a WSJ article stating Iran could directly retaliate against Israel this weekend (a direct attack on Israel by Iran would be a substantial escalation).

Today there is one notable economic report, Consumer Sentiment (E: 79.0), but barring major surprise that shouldn’t move markets.    Instead, focus will be on Fed Speak and earnings.

Starting with the Fed, we have several speakers today including Schmid (1:00 p.m.), Bostic (2:30 p.m.) and Daly (3:30 p.m.) and if they echo Thursday’s commentary that rate cuts aren’t coming soon, expect mild pressure on stocks.

On earnings, today is the start of the Q1 earnings season and several big banks report including: JPM ($4.18), BLK ($4.92), WFC ($1.09) and C ($1.29).  Focus will be on the results and on consumer commentary and the stronger the commentary, the more of a tailwind earnings will provide to stocks.

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What Does the Hot CPI Report Mean for Markets

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What Does the Hot CPI Report Mean for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Does the Hot CPI Report Mean for Markets?
  • EIA Analysis and Oil Market Update

Futures are modestly lower and extending yesterdays’ declines ahead of more inflation readings and following disappointing Chinese economic data.

China’s CPI rose less than expected (0.1% vs. (E) 0.5%) and in China that’s a negative as deflation remains a major risk in that slow-growth economy.

Geopolitically, U.S. officials have warned about an imminent Iranian retaliation against Israel either directly or via proxy groups.

Today will be another busy day of events and following the hot CPI, today’s PPI (E: 0.3% m/m, 2.3% y/y) will be in focus. If it rises more than expected, look for higher yields and lower stock prices.  Conversely, if PPI is lower than expected it should deliver a bit of relief and potentially cause a bounce in stocks (and decline in yields).  Other notable events today include the ECB Rate Decision (E: No Change) and Jobless Claims (E: 215k).

Finally, there three Fed speakers today:  Williams (8:45 a.m.), Barkin (10:00 a.m.), Bostic (1:30 p.m.).  If they push back on rate cut hopes following yesterday’s CPI expect more pressure on stocks and if they are partially dismissive of it, expect a rebound.

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The CPI report has the potential to either push the S&P 500 index to new highs

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The CPI report has the potential to either push the S&P 500 index to new highs: Sevens Report, Quoted in MarketWatch

Fed-funds futures point to doubts over June rate cut as inflation data looms

Investors this week are waiting for a reading on inflation in March due out on Wednesday from the closely watched consumer-price index. The CPI report has the potential to either push the S&P 500 index to new highs or extend the U.S. stock market’s drop last week, according to a Sevens Report Research note on Monday.

Also, click here to view the full MarketWatch article published on April 8th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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The Fed’s “Dovish Upgrade” Dilemma

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The Fed’s “Dovish Upgrade” Dilemma : Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Fed’s “Dovish Upgrade” Dilemma
  • Economic Data Takeaways – Goldilocks Narrative at Risk
  • Chart – Existing Home Sales Unexpectedly Surge

Futures are tentatively higher this morning as mostly favorable economic data overnight is helping offset a sharp drop in the yuan and subsequent volatility in Chinese markets.

Economically, Japanese Core CPI cooled down to 3.2% y/y vs. (E) 3.3% while the German Ifo Survey came in stronger than expected at 87.8 vs. (E) 86.0. U.K Retail Sales, meanwhile, were flat vs. (E) -0.5% in February after a 3.6% rise in January.

There are no notable economic reports today, but Fed Chair Powell will provide opening remarks and participate in the “Fed Listens” event that begins at 9:00 a.m. ET covering the economy’s transition to the post-pandemic environment. The Fed’s Jefferson and Bowman will also partake in the live discussion.

Bottom line, focus will return to the Fed today, and anything officials say that challenges the idea of three rate cuts in 2024, amid a stronger economy will likely spur some profit taking after this week’s robust post-Fed decision rally.

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Why Yesterday’s Data Was Worse Than the Market Reaction

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Why Yesterday’s Data Was Worse Than the Market Reaction: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Yesterday’s Data Was Worse Than the Market Reaction

Futures are seeing a mild bounce despite mixed inflation data and disappointing tech earnings overnight.

The global decline in inflation was again challenged overnight as French HICP was slightly hotter than expected.

ADBE posted solid earnings but underwhelming guidance and the stock is down 12% pre-market, weighing on the tech sector.

Today focus will remain on economic data and if there are more hints of “stagflation” (underwhelming growth and solid price pressures) expect declines from stocks.  Key reports today include, in order of importance: Empire State Manufacturing Index (E: -8.0), 1-Yr/5 yr Inflation Expectations (E: 3.0%/2.9%), Industrial Production (E: 0.0%) and Consumer Sentiment (E: 77.3).

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Hawkish central-bank policy is bad for the oil market

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Hawkish central-bank policy is bad for the oil market: Tyler Richey, Sevens Report Co-Editor, Quoted in MarketWatch on MSN

Oil settles lower after rise in U.S. CPI and OPEC’s unchanged demand forecast

The initial market reaction to the consumer-price index release was a “hawkish one which saw oil prices decline to session lows,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

“Hawkish central-bank policy is bad for the oil market, because high interest rates over time act as a steady headwind on global growth and ultimately, that weighs on consumer-demand expectations,” he said.

Also, click here to view the full MarketWatch article published by MSN on March 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.

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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 CPI release didn’t counter existing market narratives

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The market views it as keeping the Fed on schedule for June rate cuts: Tom Essaye Quoted in Barron’s

Stocks Are Rallying. Inflation Report Keeps the Fed on Track.

Sevens Report Research’s Tom Essaye told Barron’s in a phone interview that while the headline figure didn’t meet expectations, the numbers didn’t counter existing market narratives.

“People still very much subscribe to the idea that housing is artificially inflating CPI, and that whenever that begins to work its way out of the data, the number will move down even more quickly than it is,” Essaye says. “Nothing in this report refuted that, and so as a result, I think that the market views it as keeping the Fed on schedule for June rate cuts.”

“For now, the script is still in place,” Essaye says. “The issue markets have is that it’s already priced in, so we need to find the next new catalyst.”

Also, click here to view the full Barron’s article published on March 13th, 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 Rally

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The initial market reaction to the CPI release was a hawkish one

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Oil prices decline to session lows: Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch

Oil futures move up after CPI data, OPEC’s latest forecast for growth in oil demand

The initial market reaction to the CPI release was “a hawkish one, which saw oil prices decline to session lows,” said Tyler Richey, co-editor at Sevens Report Research. “Hawkish central bank policy is bad for the oil market because high interest rates over time act as a steady headwind on global growth and ultimately that weighs on consumer demand expectations.”

Looking at the reaction in the rates markets, “hawkish money flows were only modest, and investors are still pricing in a June rate cut from the Fed, just with a slight dip in confidence,” Richey said.

Also, click here to view the full MarketWatch article published on March 12th, 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.

Market Multiple Table: March Update

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

What’s in Today’s Report:

  • Market Multiple Table – March Update
  • CPI Takeaways – Minimal Impact on Fed Rate Expectations

U.S. equity futures are flat as investors digest yesterday’s tech-led rally to fresh record highs in the S&P 500.

Overseas, Chinese developer Country Garden Holdings missed a yuan-denominated bond payment overnight which weighed on Asian markets.

Economically, U.K. monthly GDP and Industrial Production both largely met estimates, but Eurozone Industrial Production badly missed, falling -6.7% vs. (E) -2.7% in January.

Looking into today’s session, there are no economic reports or Fed speakers on the calendar which will leave traders focused on AI-focused names to see if the tech sector can lead stocks to new highs.

The one notable catalyst on the schedule today is a 30-Yr Treasury Bond auction at 1:00 p.m. ET. A weak outcome could send yields higher which would act as a renewed headwind on stocks while a pullback in yields would be welcomed.

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