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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.

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Separating Short Term vs. Longer Term in this Market

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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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Economic Data Rekindles Stagflation Fears

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Economic Data Rekindles Stagflation Fears: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Economic Data Rekindles Stagflation Fears
  • Durable Goods Orders Decline Sharply
  • Continuing Jobless Claims Hit Multi-Year High
  • Consumer Sentiment Reveals Rising Inflation Worries

Futures are little changed in thin trading following the Thanksgiving holiday. This comes as investors digest mixed economic data from Europe and the new Chinese stimulus efforts aimed at shoring up the nation’s embattled real estate sector.

Economically, German GDP fell -0.4% vs. (E) -0.3% Y/Y. However, the Eurozone PMI Composite Flash firmed to 47.1 vs. (E) 46.7 which helped ease some concerns about an imminent, sharp drop off in economic growth in the EU.

Looking into today’s session, focus will be on the one potentially market-moving economic report due this morning: PMI Composite Flash (E: 50.3) as there are no Fed speakers or Treasury auctions scheduled for the day.

The NYSE will close early today at 1:00 p.m. ET in observance of the Thanksgiving holiday.

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Economic Data Rekindles Stagflation Fears

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New York Empire State Manufacturing Release Affect on Oil

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A “Terrible” New York Empire State Manufacturing Release: Tyler Richey Quoted in MarketWatch on MSN

Oil prices finish lower as U.S. crude supplies mark a 2-week climb of more than 17 million barrels

WTI crude-oil futures had been trading lower ahead of the inventory data as investors digested a “terrible” New York Empire State Manufacturing release, said Tyler Richey, co-editor at Sevens Report Research.

The economic data “poured some cold water on soft economic landing hopes, while the ongoing conflict between Israel and Hamas has yet to have a meaningful impact on the global oil markets,” he told MarketWatch.

“As such, the fear-bid in oil has been slowly but steadily unwinding over the last month,” he said.

Also, click here to view the full article published by MSN on November 15th, 2023. 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.

November Market Multiple Table Update

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

What’s in Today’s Report:

  • Market Multiple Table – November Update

Stock futures are modestly lower following hawkish Fed speak from Kashkari late yesterday, a dovish rate hike from the RBA overnight, and downbeat economic data overseas.

Economically, Chinese Exports fell -6.4% vs. (E) -3.0% and German Industrial Production declined -3.9% vs. (E) -3.2%. This underscores global recession risks are still very much present despite increased hopes for a “soft landing.”

Looking into today’s session, there are two economic reports to watch: International Trade (E: -$60.3B) and Consumer Credit (E: $10.0B). However, neither are very widely followed and it would take significant surprises in the data to meaningfully move markets.

That will leave investors primarily focused on a busy schedule of Fed speakers: Barr, Waller, Williams, and Logan. As well as a 3-Yr Treasury Note auction at 1:00 p.m. ET.

Specifically, if Fed officials push back on the markets dovish reaction to last week’s FOMC meeting and/or we see weak demand in the Treasury auction this afternoon sending yields back higher, that will dampen sentiment and likely cause a pullback in stocks today.

Earnings season is winding down but there are a few notable releases to watch today including: UBER ($0.13), DHI ($3.90), and EBAY ($1.04).

multiple

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Key Levels to Watch on Fed Day (Technical Tear-Sheet)

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Key Levels to Watch on Fed Day: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Key Levels to Watch on Fed Day (Printable/Shareable Tear-Sheet)
  • Economic Data Takeaways – Employment Cost Index, Eurozone CPI, Case-Shiller HPI

Futures are slightly lower as traders digest more weak economic data overseas ahead of today’s Fed decision.

Economically, Manufacturing PMIs in China and the U.K. both disappointed. Both came in under the 50 threshold indicating contraction in the sector in both countries. This is weighing modestly on stocks this morning ahead of the Fed.

Looking into today’s session, focus will be on economic data early. The October ADP Employment Report (E: 150K), JOLTS (E: 9.375 million), and ISM Manufacturing Index (E: 49.0) are all due to be released this morning.

From there, attention will turn to the Fed with the FOMC Meeting Announcement at 2:00 p.m. ET followed by Fed Chair Powell’s press conference at 2:30 p.m. ET. Investors are hoping for a dovish message from the Fed, and if they deliver, a continued relief rally is likely this afternoon.

Lastly, outside of the policy decision and economic data, there are some notable earnings releases today. With: CVS ($2.13) and W ($2.98) releasing results before the open, and PYPL ($1.23), QCOM ($1.80), ABNB ($2.08), MET ($1.99) and AIG ($1.55) reporting after the close.

Key Levels to Watch on Fed Day

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FOMC Preview: Forward Guidance Will Be Critical

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Forward Guidance Will Be Critical: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview – What’s Expected, Dovish-If, Hawkish-If, Forward Guidance Will Be Critical
  • Chart: 10-Yr Yield Approaches Critical Tipping Point

Futures are cautiously higher thanks to more evidence of disinflation in Europe. While an underwhelming yield curve control policy announcement by the BOJ is digested by global investors.

Economically, Eurozone CPI fell from 4.3% in September to 2.9% in October, well below estimates calling for 3.4% which further supports the narrative that global inflation pressures are easing considerably. Meanwhile, quarterly GDP in the EU disappointed, turning negative at -0.1% vs. (E) 0.0% which is rekindling recession worries in the Eurozone.

Looking into today’s session, there are several economic reports to watch this morning. The Employment Cost Index (E: 1.0%) being the most important for markets. The Case-Shiller Home Price Index (E: 0.7%) and latest Consumer Confidence report will also be released later in the morning (E: 100.0) but are less likely to move markets.

This week’s FOMC meeting gets underway today which will likely mean a familiar sense of Fed paralysis will begin to grip markets ahead of tomorrow’s policy decision, however, there is a 52-Week Treasury Bill auction at 1:00 p.m. ET that could move yields and influence equity market trading in the early afternoon.

Finally, earnings season is winding down but there are a few notable releases today. Starting with CAT ($4.75) and JBLU (-$0.27) reporting ahead of the bell with AMD ($0.68) after the close.

FOMC Preview - Magnifying Glass

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Why Tech Is Driving This Selloff

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Why Tech Is Driving This Selloff: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Tech Is Driving This Selloff
  • S&P 500 Weekly Chart: Not A Setup You Want To See

Futures are moderately higher on solid tech earnings and optimism there won’t be a government shutdown drama.

On earnings, AMZN and INTC both posted solid numbers (up 6% and 7% after hours respectively). And that’s helping the tech sector and broader market bounce.

Politically, Speaker Johnson publicly supported passing a short term spending bill. This possibly avoids another shutdown drama.

Today focus will be on inflation, namely the Core PCE Price Index (E: 0.3% m/m, 3.7% y/y) and the five-year University of Michigan Inflation Expectations (E: 3.0%).  Lower than expected numbers will remind markets that inflation is falling and depress Treasury yields, and that should extend today’s early rally.  Conversely, if the inflation data is higher than expected, don’t be shocked if these early gains are erased as yields rise.

Why Tech Is Driving This Selloff

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Powell’s Speech Main Takeaway

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The Main Takeaway From Powell’s Speech: Tom Essaye Quoted in Barron’s on MSN

The Stock Rally Won’t Resume Any Time Soon. Here’s Why.

As Sevens Reports Tom Essaye put it, “The main takeaway from Powell’s speech was that in this situation, there’s no way the Fed can get dovish.”
Bulls have pointed to ongoing strength in the labor market as evidence that the economy is still humming, and fodder for the rally. However, as plenty of Federal Reserve watches noted after Chairman Jerome Powell’s remarks last week, the central bank doesn’t appear inclined to let rates fall.

Also, click here to view the full article published by MSN on October 23rd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Powell’s Speech

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It’ll be Very Hard for This Market to Rally

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It’ll be Very Hard for This Market to Rally: Tom Essaye Quoted in Barron’s

Dow Falls Nearly 250 Points. 10-Year Nears 5%.

Stocks tumbled and bond yields rose Thursday after Federal Reserve Chair Jerome Powell paved the way for keeping rates steady.

“Treasury yields are doing exactly what we’d expect given Powell essentially said rates won’t go any higher, but they will stay higher for longer and the economy is strong,” Sevens Report Research’s Tom Essaye told Barron’s.

 “It’ll be very hard for this market to meaningfully rally with yields this high. But, barring a major geo-political positive surprise or great earnings season.”

Also, click here to view the full Barron’s article published on October 19th, 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.