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Two Differences In 2024 That Could Be Negative For Equity Markets

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2 Differences In 2024: Sevens Report Analysts Quoted in Investing.com

Sevens Research sees 2 differences in 2024 that could be negative for equity markets

In its latest daily note, Sevens Report Research said there are two important differences for investors to consider in 2024.

“The market has priced in six Fed rate cuts and year-end 2024 fed funds below 4%,” analysts said.

“If we see the 10-year Treasury yield continue to fall to the low 3% or sub 3% range, that’s not going to be a major tailwind for stocks. Because that won’t be forecasting a dovish Fed, it’ll be forecasting slowing growth,” analysts explained. “And those falling yields will then become a harbinger of a potential economic slowdown and not the welcomed signal of a Fed that’s finally turning dovish.”

The second difference is that earnings results won’t have low expectations to excuse poor performance.

“Consensus S&P 500 earnings growth is nearly 10% year over year. Well above the longer-term averages of around 5%-ish annual growth. And keep in mind, at 4,800 the S&P 500 is trading over 19.5X that $245 earnings estimate, which means there’s little room for disappointment from a valuation perspective,” analysts explained. “Bottom line, ‘ok’ earnings won’t be good enough and we got a preview of that in the Q3 numbers.”

Also, click here to view the full Investing.com article published on December 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

 

Lastly, 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.

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Happy New Year

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Happy New Year: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Happy New Year

Futures are little changed following a quiet night of news and ahead of the final trading day of the year.

Economically there was more evidence of global disinflation overnight as South Korea’s Core CPI fell to 2.8% vs. (E) 2.9% while Spain’s Core CPI also declined to 3.8% from 4.5%.

Geo-politically, there were no significant events overnight and the number of ships transiting the Suez Canal is rising again although tensions remain high.

Today there is one economic report, the Chicago PMI (E: 50.0), but barring a massive drop that shouldn’t move markets and we’d expect a mostly quiet trading on the final day of a good year in the markets and ahead of a long weekend.   From all of us at Sevens Report Research please have a happy and safe New Year.

Sevens Report Q4 ’23 Quarterly Letter

The Q4 2023 Quarterly Letter will be delivered to advisor subscribers on Tuesday, January 2nd.

The S&P 500 will end 2023 close to all-time highs but the Santa rally has left many investors complacent towards risks in 2024.  Showing clients and prospects a balanced view of markets is an opportunity to differentiate yourself from your competition and strengthen client relationships!

We will deliver the letter on the first business day of the quarter because we want you to be able to send your quarterly letter before your competition (and with little to no work from you).

You can view our Q3 ’23 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

Annual Discounts on Sevens Report, Alpha, Quarterly Letter, and Technicals.

If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you would like to extend current subscriptions or save money by upgrading to an annual subscription, please email info@sevensreport.com.

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.

Two Important Differences in 2024

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Why Last Week’s Price Action is Important for 2024: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Two Important Differences in 2024

Futures are little changed following a generally quiet night of news as there was no notable economic data or significant market moving events.

Chinese industrial profits rose 29.5% in November, accelerating substantially from the 2.7% gain in October and offering some anecdotal optimism about future growth.

Geo-political tensions remained elevated in the Mid-East following increased attacks on U.S. troops in the region, but no specific escalation occurred overnight.

Today the most notable event is a five-year Treasury bond auction and markets will want to see strong demand (like we saw at yesterday’s two-year auction) to keep rates drifting lower and dovish Fed/lower rates momentum in place through year-end.

Sevens Report Q4 ’23 Quarterly Letter

The Q4 2023 Quarterly Letter will be delivered to advisor subscribers on Tuesday, January 2nd.

The S&P 500 will end 2023 close to all-time highs but the Santa rally has left many investors complacent towards risks in 2024.  Showing clients and prospects a balanced view of markets is an opportunity to differentiate yourself from your competition and strengthen client relationships!

We will deliver the letter on the first business day of the quarter because we want you to be able to send your quarterly letter before your competition (and with little to no work from you).

You can view our Q3 ’23 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

Annual Discounts on Sevens Report, Alpha, Quarterly Letter, and Technicals.

If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you would like to extend current subscriptions or save money by upgrading to an annual subscription, please email info@sevensreport.com.

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 Last Week’s Price Action is Important for 2024

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Why Last Week’s Price Action is Important for 2024: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Last Week’s Price Action Is Important for 2024.

Futures are slightly higher following a mostly quiet holiday weekend and on more signs inflation is falling globally.

Singapore’s CPI dropped to 3.6% vs. (E) 3.9% yoy and down handily from 4.7% in October, providing more evidence that inflation is declining globally.

Geo-politically, U.S./Iran tensions rose after U.S. forces struck Iranian backed militants in Iraq, although oil (the best geo-political barometer) is little changed on the news.

Today will be a quiet day as most European markets and Hong Kong are closed, but there are two notable housing reports we’ll be watching: Case-Shiller Home Price Index (E: 0.06% m/m, 5.0% y/y) and the FHFA House Price Index (E: 0.5%).  Declines is housing prices is part of the reason investors remain convinced CPI will continue to fall in early 2024 so these home price metrics need to show declines in housing prices, otherwise investors may be too optimistic on falling CPI and Fed rate cuts in the new year.

Annual Discounts on Sevens Report, Alpha, Quarterly Letter, and Technicals.

If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you would like to extend current subscriptions or save money by upgrading to an annual subscription, please email info@sevensreport.com.

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.

Sevens Report Research’s Tom Essaye Quoted in Barron’s

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One Potential Catalyst That Could Shake Up Markets: Tom Essaye Quoted in Barron’s

Stocks Close Lower, Pausing November Rally

Sevens Report Research’s Tom Essaye told Barron’s it looked like a “wait and see day” ahead of the personal consumption expenditures price index on Thursday, among other data points ahead.

“More times than not, if you’re wondering what’s driving markets right now, it’s usually yields,” Essaye said.

As the end of the year approaches, Essaye thinks it will take a major surprise from the upcoming data releases to send stocks tumbling.

“The bar to get people to heavily sell stocks is pretty high, considering if we can just kind of hold on right for the next five weeks, then we put in the books a pretty good year,” he said.

He said that will change once the calendar flips to 2024, when the market will have to live up to high expectations priced in by traders.

Also, click here to view the full Barron’s article published on November 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Sevens Report Research’s

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.

Separating Short Term vs. Longer Term in this Market

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Separating Short Term vs. Longer Term: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Separating Short Term vs. Longer Term in this Market
  • Important Context for Economic Data Going Forward
  • Weekly Market Preview:  How Much Higher Can Markets Rally in 2023?
  • Weekly Economic Cheat Sheet:  Does Data Start to Roll Over?

Futures are modestly lower following a generally quiet weekend as markets further digested last week’s stock and bond rally.

On inflation, Swiss CPI rose less than expected (1.4% y/y vs. (E) 1.7%) continuing last week’s trend of smaller than expected increases in inflation in the EU region.

On growth, German exports underwhelmed (-0.2% vs. (E) 1.1%) continuing the recent trend of both lower inflation and slowing growth.

Today the only notable economic report is Factory Orders (E: -2.6%) and it’d take a major beat or miss to move markets, so we should expect continued general digestion of last week’s rally.

Please email info@sevensreport.com if you have any trouble downloading today’s Report or need to contact us.

Separating Short Term vs. Longer Term in this Market

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.

Bull Case vs. Bear Case: What’s It Mean Mean for Markets?

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Bull Case vs. Bear Case: What’s It Mean for Markets? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Bull Case vs. Bear Case:  What’s It Mean for Markets?
  • What Should Outperform in Q1/H1
  • OPEC+ Decision Takeaways

Futures are little changed as global manufacturing PMIs were better than expected, but looming commentary from Fed Chair Powell is keeping futures little changed.

Economically, Euro Zone (44.2 vs. (E) 43.8) and UK (47.2 vs. (E) 46.2) manufacturing PMIs beat estimates, reducing concerns about regional economic slowdowns.

Today focus will be on Fed speak and economic data.  Fed Chair Powell speaks twice today at 11:00 a.m. and 2:00 p.m. ET. Markets will want to see if Powell repeats the “policy is appropriate” message we received from Fed Governor Waller earlier this week.  If he does, stocks can rally.

On the economic front, we get one of the “big three” monthly economic reports today via the November ISM Manufacturing PMI (E: 47.5). So the markets will want to see more Goldilocks data (activity that meets estimates with declines in price indices).  Beyond Powell, we also get two other Fed speakers, Goolsbee (10:00 a.m. ET) and Cook (2:00 p.m. ET), but they shouldn’t move markets.

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.

Bullish or Bearish? My Analysis

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Bullish or Bearish? My Analysis.: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Bullish or Bearish?  My Analysis.
  • EIA and OPEC Analysis

Futures are slightly higher following more encouraging inflation readings and despite underwhelming Chinese economic data.

EU HICP (their CPI) rose less than expected (3.6% vs. (E) 3.9%) furthering the idea the ECB is done with rate hikes.

Economically, Chinese Nov. PMIs disappointed as both the manufacturing and composite PMIs missed estimates.

Focus now turns to economic data as today and tomorrow contain the week’s most important economic reports.  Today, the Core PCE Price Index (E: 0.2%, 3.5%) is the key report and anything that shows a greater than expected decline in inflation will likely spur a rally.

Other notable data today includes Jobless Claims (E: 219K) and Pending Home Sales Index (E: -2.0%) and we also have one Fed speaker: Williams (9:15 p.m. ET).  Again, data that is “Goldilocks” on growth combined with commentary from Fed officials that imply rate hikes are done should continue to support stocks.

Bullish or Bearish?  My Analysis.

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Bull vs. Bear Case: Part II

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Bull vs. Bear Case: Part II: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Bull Case vs. The Bear Case – Part II
  • Chart – Gold Breaks Out to the Upside
  • Consumer Confidence Data Points to Soft Landing

Stock futures are tracking European equities higher this morning while the 10-Yr Note yield is below 4.30% at two month lows following less-hawkish ECB commentary and more evidence of disinflation in the Eurozone.

Economically, Spanish CPI fell to 3.2% vs. (E) 3.7% y/y while multiple regional German inflation prints suggest headline German CPI will come in well below the 3.5% estimate later this morning.

The ECB’s Stournaras notably said in commentary early this morning that rate cuts could come as soon as the middle of next year which saw more policy easing priced into rates futures markets in Europe and invited new bids into the bond markets.

Looking into today’s session, there are two domestic economic reports to watch this morning: GDP (E: 4.9%) and International Trade in Goods (E: -$86.7B) while there is just one Fed speaker in the afternoon: Mester (1:45 p.m. ET).

Bottom line, the early bid in the U.S. equity futures market and new lows in bond yields are being driven by cooler-than-expected inflation data in the EU, so it will be critical for the German CPI report to come in below estimates of 3.5% when the data is released at 8:00 a.m. ET. If so, expect the dovish rally to extend into Wall Street trading today.

Bull vs. Bear Case: Part II

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Bull vs. Bear Case (Part 1 of 3)

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Bull vs. Bear Case (Part 1 of 3): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Bull vs. Bear Case – What the Bulls Think Will Happen

Futures are flat with the 10-Yr yield hovering near 4.40% as traders await a slew of Fed speak and fresh economic data.

Economic data overnight was mildly disappointing. As Australian Retail Sales, the German GfK Consumer Climate report and Eurozone M3 Money Supply all missed estimates.

Looking into the U.S. session, there are a few second-tiered economic reports to watch today: Case-Shiller Home Price Index (E: 0.7%), FHFA House Price Index (E: 0.4%), and Consumer Confidence (E: 101.5), but none are likely to move markets ahead of the key inflation data due out Thursday.

Additionally, there are several Fed officials scheduled to speak today: Goolsbee, Waller, Bowman, and Barr. If any of them strike a materially hawkish tone or stray from the “soft landing” outlook narrative, it could weigh on stocks today.

Finally, there is a 7-Yr Treasury Note Auction at 1:00 p.m. ET. If the results are weak and yields move higher, expect that to be a headwind for equities today. Conversely, a strong auction could push rates to new lows and power stocks higher into the end of the month.

Bull vs. Bear Case

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