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Earnings are not providing the proverbial ‘ray of sunshine’

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Earnings are not providing the proverbial ‘ray of sunshine’: Tom Essaye Quoted in Forbes

S&P 500 Dips To 5-Month Low As Earnings Season Highlights Struggles Of ‘Magnificent 7’ Tech Stocks To Keep Rally Afloat

Major stock indexes slipped to their lowest levels since May this week. This is as the largest technology companies struggle to hold up the broader market’s gains. An issue on full display amidst the ongoing third-quarter earnings season.

“Earnings are not providing the proverbial ‘ray of sunshine’ they did in Q1 or Q2,” Sevens Report analyst Tom Essaye wrote to clients Thursday. This earnings season “has not been good” and “hints at a potentially slowing economy,” Essaye noted.

Also, click here to view the full Forbes article published on October 26th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Three Keys to a Bottom Updated

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What’s in Today’s Report:

  • Three Keys to a Bottom Updated
  • Was Friday’s WSJ Article A “Fed Pivot?”  No.  Here’s Why.
  • Weekly Market Preview:  The Height of Earnings Season
  • Weekly Economic Cheat Sheet:  More Hints of Stagflation?

Futures are slightly higher as momentum from Friday’s close offset steep losses in Chinese markets.

The Hang Seng fell 6% as Premier Xi emerged from China’s National Conference with an even tighter grip on power, ensuring continued “zero COVID” policies and heightened tensions with the West.

Economically, the Euro Zone and UK flash PMIs missed estimates as both remained below 50 (47.1 and 47.2 respectively).

This week will being a deluge of critical earnings reports but that doesn’t’ start until tomorrow, so focus today will be on the flash PMIs (October Flash Manufacturing PMI (E: 51.2), October Flash Services PMI (E: 49.3)) and if those numbers show solid activity and falling prices, stocks can extend the rally.

An Important Earnings Season (It Really Starts This Week)

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What’s in Today’s Report:

  • An Important Earnings Season (It Starts This Week)
  • Weekly Market Preview:  Can Solid Earnings Spark a Rally?
  • Weekly Economic Cheat Sheet:  If Housing Finally Starting to Cool?

Futures are modestly lower following a generally quiet weekend of news.

Chinese economic data was better than expected as Q1 GDP rose 4.8% vs. (E) 4.2%, but concerns remain about future economic growth given continued lockdowns (concerns about future Chinese growth is a headwind on global stocks right now).

Geopolitically there was no change in the Russia/Ukraine war as fighting ranges in eastern Ukraine and there is no reason to expect a cease fire anytime soon.

Today the key report is the Housing Market Index (E: 78) and we’ll be looking for any signs that mortgage rates at 10+ year highs are starting to slow the housing market.    We also get one Fed speaker, Bullard (4:00 p.m. ET), and we can expect him to be hawkish (but the market already knows that).

Finally, this is a big week for earnings and some important reports today include: BAC ($0.76), SCHW ($0.85), JBHT ($1.91).

Tom Essaye Quoted in Barron’s on October 20, 2021

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The S&P 500 Makes a Comeback. The Funk Is Coming to an End.

Earnings season has been better than expected so far and that has been the main driver of the…wrote Tom Essaye, founder of Sevens Report Research. Click here to read the full article. 

Markets Still Need Macro Clarity

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What’s in Today’s Report:

  • Bottom Line:  Markets Still Need Macro Clarity
  • Weekly Market Preview:  The Heart of Earnings Season
  • Weekly Economic Cheat Sheet:  October Flash PMIs are the Key Report this Week

Futures are modestly lower thanks to underwhelming Chinese economic data and rising global bond yields.

Chinese data disappointed as GDP (4.9% vs. (E) 5.2%), Industrial Production, and Fixed Asset Investment all missed estimates, raising concern about the strength of the Chinese economy.

Global yields are higher as New Zealand CPI spiked to 2.2% (a decade high) while BOE Governor Bailey hinted at a rate hike in December.

Today there are two notable economic reports, Industrial Production (E: 0.2%) and the Housing Market Index (E: 75) and one Fed speaker: Kashkari (2:15 p.m.ET).   On the earnings front, the majority of the important reports come later this week but reports we’ll be watching today include:  STT ($ 1.92), STLD ($4.95), ZION ($1.38).

However, unless there are major surprises in the data or earnings today, they shouldn’t move markets.  So, yields will be the main influence on stocks today and if yields rise throughout the day, expect a stiffening headwind on stocks.

Market Multiple Table: May Update

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What’s in Today’s Report:

  • Market Multiple Table: May Update
  • ISM Manufacturing PMI Takeaways
  • Is the Bank of England About to Become the Second Large Central Bank to Taper QE?

Stock futures are modestly lower this morning after a mostly quiet night of news as investors continue to digest the equity market’s latest run to record highs and technology shares lag.

Economically, the U.K.’s Manufacturing PMI was 60.9 vs. (E) 60.7 in April, helping the FTSE outperform this morning.

Today, there are a few economic reports to watch early in the day including: Motor Vehicle Sales (E: 17.5M), International Trade in Goods (E: -$74.0B), and Factory Orders (E: 1.3%) however none of them should materially move markets.

There are no Fed officials scheduled to speak today and no Treasury auctions.

Earnings season is still underway with a few notable companies reporting Q1 results today including: CVS ($1.72), PFE ($0.79), and LYFT (-$0.53).

Earnings Season Takeaways in the COVID Era

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What’s in Today’s Report:

  • In the Era of COVID, How Can We Use Earnings to Generate Market Insights?

Stock futures are trading modestly higher this morning as investors digest yesterday’s new record highs in the S&P after a mostly quiet night of news.

Traders remain optimistic for a stimulus deal however there were no positive developments overnight while economic data was sparse and did not move markets.

Looking into today’s session, there are no economic reports to watch and the calendar is fairly quiet in the morning.

Potential market catalysts do pick up in the afternoon as the Treasury will hold a 20-Yr Bond auction at 1:00 p.m. ET which has the potential to move rates, the yield curve and ultimately impact equity markets.

Later in the afternoon, the minutes from the most recent Fed meeting will be released at 2:00 p.m. ET before Richmond Fed President Barkin speaks at 3:00 p.m. ET.

The market’s primary focus right now however remains the stimulus package and with rising chatter about potential concessions in the front half of the week, the prospects for a deal have improved. And any additional positive news regarding a stimulus deal should help the market continue to grind to new record levels.

Market Multiple Table: August Update

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What’s in Today’s Report:

  • Market Multiple Table: August Update

Futures are rallying on optimistic comments from Secretary Mnuchin about a new stimulus deal being reached by the end of the week as well as upbeat economic data.

Composite PMIs were mostly in line with expectations overnight but EU Retail Sales notably rose 1.3% vs. (E) 0.2% Y/Y in June, a recovery to pre-pandemic levels that is rekindling hopes for a V-shaped economic recovery.

This morning, investor focus will be on economic data early as we get the first look at July jobs data via the ADP Employment Report (E: 1.888M) ahead of the bell while International Trade (E: -$50.3B) and the ISM Non-Manufacturing Index (E: 55.0) will both be released after the open.

Earnings season is still in full swing as well with several companies due to report Q2 results today including: CVS ($1.93), MRNA (-$0.36), HUM ($10.34), ROKU (-$0.55), MET ($0.96), ADT ($0.27).

Beyond economic data and earnings, the market’s main focus is clearly the stimulus bill and any news of further progress will be a tailwind for stocks while any new “roadblocks” will likely trigger some risk-off money flows across asset classes.

Tom Essaye on Yahoo Finance on July 16, 2019

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“Looking at this earnings season, the key question is: Will trade uncertainty cause businesses to pullback on spending and…” said Tom Essaye, founder of the Sevens Report, in a note. Click here to read the full Yahoo Finance article.

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Tom Essaye Quoted in MarketWatch on April 17, 2019

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What is the health-care sector doing these days. Tom Essaye quoted in MarketWatch on April 17, 2019. He talks about this topic, earnings season and more. Read the full article here.