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Why Markets Are Resilient Despite Geopolitical Risks

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Why Markets Are Resilient Despite Geopolitical Risks: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Markets Are Resilient Despite Geopolitical Risks
  • Weekly Market Preview:  Will Powell Signal Rate Hikes Are Over?
  • Weekly Economic Cheat Sheet:  Can Economic Growth Stay Strong?

Futures are slightly higher as the weekend brought no major changes to the current macroeconomic set up.

Geo-politically, an invasion of Gaza by Israel remains imminent but so far the conflict hasn’t expanded regionally and oil is little changed as a result.

Economically, inflation in India declined –0.25% vs. (E) 0.50%, reinforcing that inflation is declining globally.

Today focus will be on the October Empire Manufacturing Survey (E: -5.0) and markets will want to see “Goldilocks” data that largely meets expectations combined with declines in the price indices.  We also get one Fed speaker today, Harker (10:30 a.m. ET & 4:30 p.m. ET), and one notable earnings report, SCHW ($0.75), but barring any major surprises they shouldn’t move markets.

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Is There an Opportunity in Defensive Sectors?

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Is There an Opportunity in Defensive Sectors? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Have Defensive Sectors Traded So Poorly and Is There an Opportunity There?
  • Chart: 10-Yr Treasury Note Futures Imply Potential Reversal Lower in Benchmark Yields

U.S. stock futures are tracking global equity markets higher this morning. As investors welcome a sizeable drop in bond yields and new stimulus plans by China.

Bloomberg reported overnight that China may issue 1T yuan in debt to be used for infrastructure projects in order to help the economy meet the government’s annual growth targets. The news is alleviating some lingering concerns about the health of the world’s second-largest economy.

There are no economic reports today which will leave the market focused on more Fed speakers: Bostic, Waller, Kashkari, and Daly, and the subsequent reaction from bond markets.

Additionally, the Treasury will hold auctions for 3 and 6-month Bills at 11:30 a.m. ET and 3-Yr Notes at 1:00 p.m. ET that could impact yields.

Bottom line, the rise in Treasury futures (implying lower yields) yesterday when bond markets were closed for Columbus Day was a major factor supporting the rally in stocks, and how yields move today as fixed income markets open for the week will likely dictate the price action in stocks.

Is There an Opportunity in Defensive Sectors?

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An Important Jobs Day

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An Important Jobs Day: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • An Important Jobs Day (Jobs Report Preview – Abbreviated Version)

Futures are modestly higher following better than expected economic data overnight and on positioning ahead of today’s important jobs report.

Japanese Household Spending (3.9% vs. (E) 0.6%) and German Manufacturers’ Orders (3.9% vs. (E) 2.1%) both beat estimates. This points to some resilience in the global economy.

Today focus will be on the jobs report and expectations are as follows:  Job Adds: 160K, UE Rate: 3.7%, Wage Growth: 0.3% m/m & 4.3% y/y.  For markets, a job adds figure modestly below expectations with an increase in unemployment and drop in wages should push Treasury yields lower and spur a strong rebound in stocks.

Conversely, if we see a job adds number close to or above 250k, a decline in unemployment or rise in wages, expect higher Treasury yields and lower stock prices.

Outside of the jobs report today we also get Consumer Credit (E: $11.5B) and one Fed speaker, Waller (12:00 p.m. ET), but they shouldn’t move markets.

An Important Jobs Day

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Stock Futures Waver With Bond Yields

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Encouraging Inflation Data: Tom Essaye Quoted in Barron’s

Stock Futures Waver With Bond Yields, Oil in Focus

U.S. stock futures wavered on Thursday, whipsawing after the release of economic data, though sentiment remained under pressure from a surge in bond yields and the price of oil amid ongoing concerns over interest rates and inflation.

“Encouraging inflation data from Europe was partially offset by ongoing government shutdown and labor strike worries,” said Tom Essaye, the founder of Sevens Report Research.

Also, click here to view the full Barron’s article on stock futures are bouncing published on September 28th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Encouraging Inflation Data

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 the Near Government Shutdown Means for Markets

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Government Shutdown Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the Near Government Shutdown Means for Markets (Higher Yields)
  • ISM Manufacturing Index Takeaways – Better Than Feared

Futures are little changed this morning. More evidence of cooling inflation was offset by global central bankers continuing to threaten more rate hikes.

Economically, Swiss CPI came in at 1.7% vs. (E) 1.8% y/y in September. The Core figure fell to 1.3% from 1.5% previously which was the latest report to confirm the ongoing trend of global disinflation.

The RBA held policy rates steady at 4.10% overnight. But joined the growing chorus of ECB and Fed officials who have reiterated future hikes on the table. Global yields edged higher in early trade which is keeping a lid on equity futures this morning.

Looking into today’s session, we will receive data on Motor Vehicle Sales (E: 15.3 million). But more importantly, jobs week kicks off with today’s JOLTS release which is expected to show 8.9 million job openings.

An inline or modestly lower-than-expected JOLTS headline would be welcomed as it would help dial back some of the recent hawkish money flows. While an unexpected increase could spark a continued rise in yields, adding pressure to equity markets.

Finally, there is a 52-Wk Treasury Bill auction at 11:30 a.m. ET and while we typically do not monitor Bill auctions too closely, stocks came for sale and yields rose right at 11:30 a.m. yesterday. When the results of a 3-Month and 6-Month Bill auction hit the wires with higher yields than previous (hawkish). So if we see weak demand and higher yields in the late morning auction today, that could be a drag on equities and other risk assets.

What the Near Government Shutdown Means for Markets (Higher Yields)

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Stock Futures Are Bouncing

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Improvement in Chinese Economic Data: Sevens Report Analysts Quoted in Barron’s

Stock Futures Rebound After Selloff

“Stock futures are bouncing back modestly and bonds are stable this morning amid improvement in Chinese economic data,” said Tom Essaye, the founder of Sevens Report Research.

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

Stock Futures Are Bouncing

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.

Sectors To Hide In The Current Market

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Tom Essaye Joins BNN Bloomberg

Healthcare, consumer staples, and utilities are best sectors to hide in current market: Essaye

Tom Essaye, president of Sevens Report Research, shares why Anthropic investment is good for Amazon, tech sector will continue to lead markets, and defensive sectors such as Healthcare, consumer staples, and utilities are sectors to hide in the current market.

Also, click here to watch the full BNN Bloomberg video published on September 26th, 2023. However, to see Tom’s full comments on the current market environment in our daily report sign up here.

sectors to hide in the current market.

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.

Why This Market Is Still All About the Data

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Why This Market Is Still All About the Data: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why This Market Is Still All About the Data
  • EIA and Oil Market Analysis (How Far Can the Rally Go?)

Futures are slightly higher as encouraging inflation data from Europe was partially offset by ongoing government shutdown and labor strike worries.

Spanish Core CPI rose 5.8% vs. (E) 6.1% and importantly reminded markets that disinflation was still occurring.

Politically, a government shutdown looks increasingly likely while the UAW again threatened to expand the strike.

Today will be a busy day as there are important economic reports and notable Fed speak to watch.  Economically, the key report is Jobless Claims (E: 211K) and markets need this number to move higher to ease tight labor market concerns.  We also get the final look at Q2 GDP (E: 2.3%) but that shouldn’t move markets.

On the Fed, Powell speaks at 4:00 p.m. ET and while he’s not expected to address policy, there will be Q&A.  Other speakers today include Goolsbee (9:00 a.m. ET), Cook (1:00 p.m.), and Barkin (7:00 p.m.).

Why This Market Is Still All About the Data

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Why Did Stocks Drop Yesterday?

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Why Did Stocks Drop Yesterday? Start a free trial of The Sevens Report.

What’s in Today’s Report:

    • Bottom Line – Why Did Stocks Drop Yesterday?
    • Chart: S&P 500 Tests Key Support
    • Economic Takeaways: Case-Shiller Home Price Index & Consumer Confidence
    • Philadelphia Fed Service PMI Turns Negative, Price Readings Elevated (Stagflation)

    Stock futures are bouncing back modestly and bonds are stable this morning. This is amid improvement in Chinese economic data while data in Europe was less encouraging.

    Economically, Chinese Industrial Profits were down -11.7% y/y in August. But that was up from -15.5% y/y in July suggesting government stimulus efforts may be stabilizing the economy. The property development sector remains a major source of uncertainty.

    Meanwhile, in Europe, Eurozone M3 Money Supply declined more than expected, down -1.3% vs. (E) -1.0%. Which underscores tightening financial conditions in the EU amid aggressive policy measures by the ECB.

    Today, the calendar is fairly light as there is just one economic report to watch this morning: Durable Goods Orders (E: -0.3%) and no Fed officials are scheduled to speak.

    In the afternoon there is a 5-Yr Treasury Note auction at 1:00 p.m.. ET, and as usual, if there is any meaningful move in yields, it could impact equity markets (stable or easing yields would be welcomed by equity bulls, new highs would pressure stocks and other risk assets).

Sevens Report Q3 ’23 Quarterly Letter Coming October 2nd.

The Q3 2023 Quarterly Letter will be delivered to advisor subscribers on Monday, October 2nd.

The S&P 500 just hit the lowest level since March amid concerns about Fed rate hikes, a rebound in inflation and a possible recession.

Now is the perfect time to provide a value-add market update for clients and ensure they have the right expectations heading into the fourth quarter.

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 Q2 ’23 Quarterly Letter here.

To learn more about the product (including price) please click this link. To subscribe please email: info@sevensreport.com.

Why stocks dropped yesterday

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FOMC Preview: How Long Will Rates Stay High?

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FOMC Preview: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview – How Long Will Rates Stay High?
  • VIX Chart – Is Volatility About to Surge

S&P futures are modestly higher this morning after a favorable dip in EU inflation statistics and upward revisions to global growth forecasts while oil continues to climb towards $100/barrel.

The Eurozone’s Narrow Core HICP (their CPI equivalent) met estimates at 5.3% in August, down from 5.5% in July. The OECD raised their global growth forecast from 2.7% to 3.0%, primarily thanks to strength in the U.S. and Japan while growth estimates for Europe and China were reduced. However, the net increase in the global growth outlook was received as a mild positive this morning.

Looking into the U.S. session, there is just one economic report: Housing Starts and Permits (E: 1.435M, 1.440M). As long as there are no big surprises in the release, markets should fall into a holding pattern as the September FOMC meeting begins in Washington.

However, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET, and if the outcome moves rates materially, stocks could react amid last-minute positioning ahead of tomorrow’s Fed decision.

Fed Preview

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