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Two Analogies to Explain Tariffs to Clients

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What’s in Today’s Report:

  • Two Analogies to Explain Tariffs to Clients
  • Weekly Market Preview:  How Does Iran Respond? (And Does That Increase Worries About the Conflict Spreading?)
  • Weekly Economic Cheat Sheet:  More Important Growth Data This Week

Futures are slightly higher despite an increase in geopolitical tensions over the weekend.

The U.S. attacked and destroyed three Iranian nuclear facilities over the weekend. But, despite ominous headlines, we are not seeing an increase in oil prices or geopolitical tensions in the markets as fears of the conflict spreading remain low.

Today focus will remain on geopolitics and specifically how Iran responds to the direct U.S. attack.  Despite the headlines about this event, from a market standpoint, unless investors fear the conflict will spread and engulf the entire region and dramatically reduce oil supplies, then rising geopolitical tensions won’t be a material negative on this market.

Economically, there are two notable reports today: Flash Manufacturing PMI (E: 51.1) and the Flash Services PMI (E: 52.9) and markets will want to see stability in both to push back on slowdown fears. On the Fed front, there are multiple speakers today including Bowman (10:00 a.m. ET), Goolsbee (1:10 p.m. ET), Kugler & Williams (2:30 p.m. ET). But, with Powell’s testimony before Congress starting tomorrow, these speakers shouldn’t move markets.

Why Are Markets Ignoring Scary Headlines?

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What’s in Today’s Report:

  • Why Are Markets Ignoring Scary Headlines?
  • Weekly Market Preview: Does the Fed Signal Rate Cuts Ahead?
  • Weekly Economic Cheat Sheet: Is Consumer Spending Losing Momentum?

Futures are modestly higher as geopolitical risks didn’t rise substantially over the weekend while Chinese economic data was stronger than expected.

Geopolitically, the Israel/Iran conflict escalated as the two countries exchanged attacks over the weekend, but there are no signs it’s spiraling into a broader regional conflict and that’s keeping geopolitical concerns anchored.

Economically, Chinese retail sales rose 6.4% y/y vs. (E) 4.9%, pushing back on concerns of a dramatic slowdown.

Today focus will remain on geo-political headlines but as long as the conflict stays limited between Israel and Iran, it’s unlikely to materially impact the markets.  Outside of geopolitics, the notable report today is the June Empire Manufacturing Survey (-7.3) and markets will want to see stable data and declining prices (further pushing back on stagflation fears).

Bitcoin/Crypto Industry Update

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What’s in Today’s Report:

  • Bitcoin/Crypto Industry Update
  • Did TACO Just Quietly Break?

Futures are down sharply (more than 1%) following the large-scale Israeli missile attack on Iran.

Israel launched a massive missile attack on Iran overnight, targeting Iran’s nuclear facilities and military leadership.

Market reaction was as expected as global stocks dropped (but not dramatically) and oil and gold rallied hard.

Looking forward, the main risk for markets is this conflict leads to a broader war in the Mid-East although, for now, those risks remain relatively low despite elevated tensions.

Today focus will be on geo-political headlines and any indication the conflict may drag in other nations will be an additional market negative.  Economically, the only notable number is the University of Michigan Consumer Sentiment (E: 53.5) and if inflation expectations stay grounded (as they have been) it’ll be the third positive inflation report this week (and it could help stocks recover some of these early losses

Any materially positive or negative trade-talk headlines could meaningfully move markets

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Any materially positive or negative trade-talk headlines could meaningfully move markets: Sevens Report Founder, Tom Essaye Quoted in Swissinfo.ch

S&P 500 Gains as Lutnick Signals US-China Progress

“Any materially positive or negative trade-talk headlines out of London, where US and Chinese negotiations remain underway, could meaningfully move markets,” said Tom Essaye at The Sevens Report.

Also, click here to view the full article, published on June 10th, 2025. 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.

This market is solidly above any fundamental valuation

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This market is solidly above any fundamental valuation: Sevens Report Founder, Tom Essaye Quoted in MarketWatch

Stock-market rally has pushed S&P 500 above ‘fundamental valuation levels’

“This market is solidly above any fundamental valuation and really only justifiable if we assume extremely positive resolution to the numerous risks facing this market and economy,” Tom Essaye, founder and president of Sevens Report Research, said in a note Tuesday. “The S&P 500 at these levels reflects a very optimistic view of how this all works out.”

The stock market faces the risk of tariffs slowing the economy and hurting corporate earnings, as well as concerns about inflation and the U.S. fiscal outlook, according to his note.

“The environment is much better than what was feared in April, but it’s still an environment with several distinct equity market headwinds, especially compared to the start of the year,” said Essaye. “While the rally is legitimate, the S&P 500 is solidly above fundamental valuation levels.”

Also, click here to view the full MarketWatch article, published on June 10th, 2025. 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.

June Market Multiple Table (All About TACO)

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What’s in Today’s Report:

  • June Market Multiple Table Update – All About “TACO”

Futures are slightly higher this morning as traders remain optimistic about progress in the ongoing U.S.-China trade talks ahead of the May CPI release tomorrow.

Economically, the NFIB Small Business Optimism Index rose 3 points to 98.8 in May, topping estimates of 95.9 which is supporting modest gains in U.S. equity futures.

There are no additional economic reports today and no Fed officials are scheduled to speak which limits potential catalysts to today’s Treasury auctions which include 6-Week and 52-Week Bill auctions at 11:30 a.m. ET and a (more important) 3-Yr Note auction at 1:30 p.m. ET.

Late season earnings continue to trickle in as well with: ASO ($0.84), SJM ($2.25), UNFI ($0.24), GME ($0.08), and PLAY ($0.96) all due to report Q1 results today.

Bottom line, today is lining up to be fairly quiet as far as scheduled catalysts are concerned. However, any materially positive or negative trade talk headlines out of London where U.S. and Chinese negotiations remain underway, could meaningfully move markets today before focus turns to tomorrow’s critical May CPI release.

There is a risk of profit-taking

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There is a risk of profit-taking: Sevens Report Founder, Tom Essaye Quoted in Bloomingbit.io

NYSE starts mixed as it awaits employment data

Tom Essaye of Sevens Report mentioned in a note to clients, “Today is likely to be a relatively quiet day for the market as investors digest the large May rebound, but if negative news emerges, there is a risk of profit-taking.”

Also, click here to view the full Bloomingbit article, published on June 3rd, 2025. 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.

Halfway to a Soft Landing?

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What’s in Today’s Report:

  • Halfway to a Soft Landing?
  • Weekly Market Preview:  Does Trade Progress Actually Occur? (Where Are the Trade Deals?)
  • Weekly Economic Cheat Sheet:  Focus on Inflation (The Lower, the Better)

Futures are flat following a mostly quiet weekend as investors await the results of the latest U.S./China trade talks.

A meeting between U.S. and Chinese trade officials in London should end shortly and markets are waiting for the results (the meeting could see more on Chinese efforts to curb fentanyl shipments to the U.S.).

Economically, Chinese exports missed expectations (4.8% y/y vs. (E) 6.0%) underscoring economic headwinds.

Today focus remain on trade and any positive (or negative) headlines from the U.S./China meeting in London will move markets.  Outside of trade, focus will be on the N.Y. Fed 1-Year Consumer Inflation Expectations (E: 3.6%).  These have cooled lately as the trade war has de-escalated and further cooling would be a positive for markets.

Jobs Day

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What’s in Today’s Report:

  • Jobs Report Preview (Abbreviated)
  • Jobless Claims Show Potential Cracks Emerging in Labor Market
  • Productivity and Costs Point to Sticky Wage Inflation
  • Collapsing Trade Deficit Reveals Significant Tariff Impact on Trade

Futures are modestly higher this morning as TSLA shares (+4%) are recovering some of yesterday’s heavy losses amid prospects of a Trump-Musk call today while economic data was solid overnight ahead of today’s jobs report.

Economically, Eurozone GDP rose +1.5% y/y in Q1 vs. (E) +1.3% while Retail Sales rose +2.3% vs. (E) +1.0% y/y. Both data points support the case for ongoing resilience and bolster prospects for a soft economic landing in the EU.

Market will be primarily focused on the May BLS Employment Situation Report this morning at 8:30 a.m. ET (E: 129K Job-Adds, 4.2% Unemployment Rate, 3.7% Wage Growth).

From there focus will shift to the financial news headlines as traders look for additional insight on trade negotiations, particularly talks between the U.S. and both Europe and China, however there is a “second tiered” economic release in the afternoon with Consumer Credit (E: $10.2B) due out at 3:00 p.m. ET.

Finally, two late season earnings releases to watch today are ABM ($0.87) and MANU ($-0.33) but neither is likely to meaningfully move markets with the focus on the May jobs report.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • ADP Employment and ISM Services PMI Takeaways
  • Oil Update – Prices Resilient Despite Three Bearish Catalysts

Futures are little changed as global traders digest yesterday’s soft U.S. economic data after a mostly quiet night of news.

Economically, China’s Services PMI rose from 50.7 to 51.1, meeting estimates while Eurozone PPI favorably cooled to 0.7% from 1.9%.

Looking into today’s session, there are several economic reports to watch including International Trade in Goods (E: $-118.1B), Jobless Claims (E: 235K), and Productivity & Costs (E: -0.8%, 5.7%). However, with the May Jobs Report looming large tomorrow, it will take a significant surprise in one of these reports to materially move markets.

There are also multiple Fed speakers again today including Kugler (12:00 p.m. ET), Harker (1:30 p.m. ET), and Schmid (1:30 p.m. ET). Any dovish commentary regarding yesterday’s soft economic data is likely to be well received, supporting both stocks and bonds.

Finally, there are a handful of late-season earnings releases this afternoon: AVGO ($1.35), LULU ($2.59), DOCU ($0.25), BF.B ($0.36), and WOOF ($-0.05). AVGO is particularly in focus as an increasingly important semiconductor manufacturer and its quarterly results could move the broader tech space on a material beat/miss.