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The Rally Is Broadening

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The Rally Is Broadening: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Rally Is Broadening
  • SPY vs. RSP Comparison – Bar Chart

Equity futures are higher this morning as traders position into a fairly busy morning of U.S. economic data while Chinese authorities intervened in the currency market to support the yuan which is helping general investor sentiment.

Economically, the German GfK Consumer Climate index was slightly better than feared at -27.4 vs. (E) -27.9 but the release is not materially impacting markets this morning.

Today, focus will be on economic data early with several key reports due to be released including: Durable Goods Orders (E: 1.3%), Case-Shiller Home Price Index (E: 0.2%), and Consumer Confidence (E: 106.7).

There are no Fed officials scheduled to speak today but there is a 5-Yr Treasury Note auction at 1:00 p.m. ET. With the elevated level of market anxiety surrounding Friday’s Core PCE release (when markets will be closed) any surprises via strong or weak demand in the auction could move yields and impact equities.

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Fundamentals are positive, they still don’t justify current valuations

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The market is vulnerable to a negative surprise: Tom Essaye Quoted in SwissInfo.ch

Stocks Struggle Near Record Before Inflation Data: Markets Wrap

The current set-up reflects the drivers that have powered stocks higher this year: solid growth, prospects for Fed rate cuts and artificial-intelligence enthusiasm, according to Tom Essaye, founder of the Sevens Report. “While the fundamentals are positive, they still don’t justify current valuations — making the market vulnerable to a negative surprise.”

Also, click here to view the full article published on March 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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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.

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Jobs Report Preview (Will June Cuts Still Be Expected?)

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Jobs Report Preview: Is There a Disconnect? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (Will June Cuts Still Be Expected?)
  • EIA Analysis and Oil Market Update

Futures are slightly higher following a generally quiet night of news as markets look ahead to tomorrow’s jobs report.

Economically, the only notable number overnight was German Manufacturers’ Orders and it badly missed expectations (-11.3% vs. (E ) -6.0%) but it isn’t impacting markets.

Japanese stocks fell sharply (Nikkei down more than 1%) as “chatter” grew louder the BOJ may hike rates in March.

Today is a relatively busy day of events but it’ll take some significant surprises to move markets ahead of tomorrow’s jobs report.

The key events today, in order of importance, are:   ECB Rate Decision (No change is expected but will Lagarde point to June cuts?), Jobless Claims (E: 215K, will they keep rising?), Unit Labor Costs (E: 0.7%), Powell’s Senate testimony (10:00 a.m. ET) and Cleveland Fed President Mester (11:30 a.m. ET).

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Is This A Teflon Market? (No. Here’s Why)

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Is This A Teflon Market? (No. Here’s Why): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is This A Teflon Market? (No. Here’s Why)
  • Weekly Market Preview:  Can Data and Fed Speak Extend the Rally?
  • Weekly Economic Cheat Sheet:  All About Employment (Jobs Report Friday among others).

Futures are slightly lower following quiet weekend of news as markets digest Friday’s rally.

Geopolitically, hope is growing for a six-week ceasefire in Gaza that could be announced in the coming days and that’s modestly weighing on oil prices.

The S&P 500 will become even more “AI” sensitive as SMCI  (Super Microcomputer) will in added to the S&P 500, incrementally increasing tech exposure to the index.

This will be a potentially busy week of catalysts but it starts slowly today as there are no economic reports and just one Fed speaker, Harker at 11:00 a.m. ET.  So, absent any surprises, expect yields to drive stocks.  If the 10-year Treasury yield drifts lower, don’t be surprised if stocks recoup these early losses.

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Hard vs. Soft Landing Scoreboard: More Signs of Slowing Growth

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Hard vs. Soft Landing Scoreboard: More Signs of Slowing Growth: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing vs. Soft Landing Scoreboard: Still a Soft Landing But More Signs of Slowing Growth
  • Chart: Consumer Confidence Data Points to Slowing Growth

Futures are lower as traders continue to reposition following last week’s sprint to record highs while focus shifts ahead to tomorrow’s critical inflation data.

Economically, the headline of the Eurozone Economic Sentiment report fell to 95.4 vs. (E) 96.7 which didn’t help risk assets in pre-market trade.

Today, traders will be watching the release of Q4 GDP (E: 3.3%) and International Trade in Goods (E: -$88.1B) ahead of the bell. Any data that is not Goldilocks (or “Platinumlocks”) will likely keep stocks under pressure ahead of tomorrow’s PCE Price Index report.

Later in the day, there are several Fed speakers: Bostic (12:00 p.m. ET), Collins (12:15 p.m. ET), and Williams (12:45 p.m. ET). Bostic and Williams are on the FOMC, so their comments have the potential to move markets with tomorrow’s inflation data coming into view.

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What’s Changed Since October (And Is It Worth A 25% Rally?)

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What’s Changed Since October: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What’s Changed Since October (And Is It Worth A 25% Rally?)
  • Weekly Market Preview:  Can Data and News Stay Platinumlocks?
  • Weekly Economic Cheat Sheet:  An Important Week for Inflation.

Futures are little changed following a generally quiet weekend of news.

Geopolitically, news was mixed over the weekend.  Positively, progress was made in negotiating a Israel/Hamas cease fire and there is hope an agreement can be reached this week.  Negatively, chances of a U.S. government shutdown on March 1st (this Friday) are rising.

There were no notable economic reports overnight.

This will be a busy week of important economic data, earnings and political news (possible government shutdown on Friday) but it starts slowly as the only notable economic report today is New Home Sales (E: 685k) and there is just one Fed speaker, Schmid at 7:40 p.m. ET.  So, focus will remain on the political headlines today and if shutdown chances increase, look for mild pressure on stocks.

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Growth Data Becomes Even More Important

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Growth Data Becomes Even More Important: Tom Essaye Quoted in Barron’s

The Dow Had Its Biggest Drop Since 2023. It Was Almost Worse.

Sevens Report Research’s Tom Essaye told Barron’s in a phone interview that while the report didn’t show an uptick in inflation, it did dial back expectations for a market that’s been pricing in rate cuts sooner rather than later.

Essaye adds that Thursday’s growth data becomes even more important because the bullish thesis is built on a belief the central bank cuts rates and growth stays stable.

He notes recent data is starting to imply a leveling off after months of quick disinflation.

“I think now the focus then turns to growth,” Essaye says. “And if you get, all of a sudden, some disappointing growth numbers, now you’re going to have some stagflation worries, and you’re gonna see this thing unwind, I think, kind of quick.”

Also, click here to view the full Barron’s article published on February 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

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.

What is the “Short Vol” Trade and How Is It Impacting Markets?

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What is the “Short Vol” Trade? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What is the “Short Vol” Trade and How Is It Impacting Markets?
  • An Important Trading Range to Watch
  • EIA Analysis:  A Bearish Report for Oil

Futures are slightly higher despite soft economic data and more earning guidance cuts.

UK monthly GDP declined –0.3% and the UK officially entered recession, although that’s also boosting rate cut expectations.

On earnings, both CSCO and DE cut guidance and both stocks are solidly lower pre-market.

Today is a very busy day of economic data and the data will likely determine if stocks extend yesterday’s rebound or give some of it back.

The key reports are, in order of importance:  Retail Sales (E: -0.1%), Jobless Claims (E: 219k), Philly Fed (E: -9.0), Empire Manufacturing Index (E: -12.5) and Industrial Production (E: 0.2%).  For Empire and Philly Fed, the price indices will be closely watched and if they show further substantial gains, expect that to push yields higher on inflation concerns.

There are also two Fed speakers today,  Waller (1:15 p.m. ET) and Bostic (7:00 p.m. ET), and Waller could move markets as he is part of Fed leadership.

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Was Yesterday the Start of a Pullback?

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Was Yesterday the Start of a Pullback? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Was Yesterday’s Hot CPI the Start of a Pullback? (Four Issues to Address)
  • VIX Chart Shows Options Trading Amplified Yesterday’s Selloff
  • CPI Takeaways

Stock futures are rebounding back from yesterday’s steep post-CPI selloff thanks to some “cooler” inflation data in the U.K. overnight and better than expected factory data out of Europe. The 10-Yr yield is stable, just below 4.30%.

Economically, the Q4 Eurozone GDP Flash met estimates at a tepid 0.1% y/y but EU Industrial Production jumped 2.6% vs. (E) -0.3% in December easing some ongoing growth worries.

U.K. PPI also favorably declined across the board which is offsetting the nation’s slightly higher than expected CPI data.

Looking into today’s session, there are no notable economic reports but two Fed officials who happen to be scheduled to speak at the open and close: Goolsbee (9:30 a.m. ET), Barr (4:00 p.m. ET).

Goolsbee is notably an FOMC voting member who leans towards the dovish camp and could potentially add support for a relief rally today after yesterday’s sharp decline. VIX futures expiration could also impact money flows in early trade.

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European Shares Edged Up On Better Than Feared Retail Sales

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European Shares Edged Up: Tom Essaye Quoted in Barron’s

European Stocks Drift Higher

London’s FTSE 100 gained 0.6%, with the Paris CAC 40 up 0.3%. Frankfurt’s DAX slipped 0.1% into the red, while the pan-European Stoxx 600 rose 0.1%.

“European shares edged up on better than feared Retail Sales and a very strong German Manufacturing Orders Report,” said Tom Essaye, founder of Sevens Report Research.

Also, click here to view the full Barron’s article published on February 6th, 2023. 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

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.