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Jobs Report Preview (A Significant Change)

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What’s in Today’s Report:

  • Jobs Report Preview (A Significant Change)

Futures are little changed following a quiet night of news and ahead of more important economic reports.

On earnings, HPE became the latest tech company to post solid but “not as good as hoped for” earnings (the stock is down 3% pre-market).

Economically, the only notable report beat estimates as German Manufacturers’ Orders rose 2.9% vs. (E) 1.8%.

Today focus will remain on economic data and the key reports are (in order of importance):  ADP Employment Report (E: 140K), Jobless Claims (E: 230K), ISM Services PMI (E: 51.1) and Unit Labor Costs (E: 0.8%).   From a market reaction standpoint, bad data is now bad for the markets (given growth concerns), so the stronger these numbers, the better for stocks.

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Revisiting the Yield Curve

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Revisiting the Yield Curve: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Stocks Dropped
  • Another Month, Another VIX Squeeze
  • Revisiting the Yield Curve Reversion
  • ISM Manufacturing Index Takeaways

Stock futures are lower again this morning as global equity markets sold off overnight following the tech-led declines in the U.S. yesterday amid mixed economic data overseas.

Economically, China’s Composite PMI was unchanged at 51.2 in August but the Services Index fell to 51.6 vs. (E) 52.1 while the EU Composite PMI rose to 51.0 vs. (E) 51.2.

Looking into today’s session, there are several economic reports due to be released including: JOLTS (E: 8.1 million), Factory Orders (E: 4.6%), and Monthly Motor Vehicle Sales (E: 15.4 million).

There are no Fed officials scheduled to speak today however a few late season earnings reports are due out including: DLTR (E: $1.03) and HPE (E: $0.47) which could have an impact on markets today.

Bottom line, markets began September with heavy selling pressure and broad risk-off money flows yesterday, and for stocks to stabilize here investors will need to see support at 5,500 in the S&P 500 hold today, otherwise more downside is likely ahead of the jobs report Friday.

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Why This Market Is So Resilient (Again)

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Why This Market Is So Resilient (Again): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why This Market Is So Resilient (Again)
  • Weekly Economic Preview – Labor Market Data in Focus

Futures are lower in sympathy with most global equity markets this morning as investors digest fresh economic data at the start of a historically volatile calendar month.

The Eurozone Manufacturing PMI was better than feared at 45.8 vs. (E) 45.6, but the sub-50 reading reminded investors the global factory sector remains deep in contraction and growth risks remain elevated.

Looking into today’s session, there are no Fed speakers on the calendar but there is one potentially market-moving economic report to start the week: the ISM Manufacturing PMI (E: 47.8). Investors will want to see evidence of stabilization in the factory sector and easing price pressures in the details of the report, otherwise growth concerns could result in renewed volatility.

There are no other major potential catalysts today, however, the Treasury will hold 3-Month and 6-Month Bill auctions at 11:30 a.m. ET and the yields awarded could shed new light on Fed policy plans in the months ahead, and in turn, impact equity markets (higher yields would weigh on stocks and other risk assets).

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The market is just sort of drifting around

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The market is just sort of drifting around: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The S&P 500 Turns Around. Tech Stocks Are Rising Again.

“The market is just sort of drifting around,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview.

Essaye says Nvidia and the personal consumption expenditures price index on Friday will add some drama to an otherwise empty week ahead of the Labor Day holiday weekend in the U.S.

Also, click here to view the full Barron’s article published on August 27th, 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 RallyIf 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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It’s not structurally the most important stock in the market

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It’s not structurally the most important stock in the market: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Why Nvidia Is the Market’s Most Important Stock

“Nvidia is the most important stock because people have decided it’s the most important stock,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview. “It’s not structurally the most important stock in the market—their business focus is very, very slim. They just happen to be the tip of the spear of what people are convinced will be the next tech revolution.”

AI is important because the market expects AI to boost corporate profitability in the coming decades,” Essaye says. “And the whole second step of this entire thing is the uptake of AI and how it actually makes money. Nvidia is the picks and shovels of the gold mine. But people will only buy the picks and shovels if they can actually find gold, right?”

Also, click here to view the full Barron’s article published on August 27th, 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 RallyIf 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.

Is Market Momentum Faltering?

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What’s in Today’s Report:

  • Is Market Momentum Faltering?
  • Oil Outlook Updated

Futures are slightly higher as better than expected EU inflation metrics offset slightly underwhelming NVDA earnings.

Spanish and German regional CPIs declined more than expected and that’s increasing ECB rate cut expectations and reminding investors of the global rate cutting cycle.

With NVDA results behind us, focus turns back to data and the important reports today include Jobless Claims (E: 232K), Pending Home Sales (E: 1.0%) and Final Q2 GDP (E: 2.8% y/y saar).  Of the three, jobless claims are most likely to move markets as a jump in claims will slightly increase hard landing worries, while a drop will further reinforce soft landing expectations.  There is also one Fed speaker today, Bostic (3:30 p.m. ET), but unless he says he supports a 50 bps cut, he’s unlikely to move markets.

Turning to earnings, NVDA was the highlight of the week but there are still several important reports today that will give us important insight on tech and consumer spending.  Notable reports today include: DELL (E: $1.68), MRVL (E: $0.30), BBY (E: $1.15), DG (E: $1.79), , LULU (E: $2.93),  ULTA (E: $5.49).

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Renewed Rotation Risks (Smart Money Is Getting Defensive)

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Renewed Rotation Risks (Smart Money Is Getting Defensive): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Recent Sector Performance Points to Smart Money Getting Defensive
  • Chart – 10Y-2Y Yield Curve Spread Revisits the Zero-Bound

U.S. equity futures are slightly higher after a mostly quiet night of news as traders look ahead to NVDA earnings.

There was no economic data overnight but the BOJ’s Deputy Governor, Himino, reiterated that policy makers would continue raising rates with the “utmost vigilance,” which supported a modest bid in equity markets and other risk assets overnight.

Looking into today’s session, there are no notable economic reports and just one Fed speaker after the close: Bostic (6:00 p.m. ET).

There is a 5-Yr Treasury Note auction at 1:00 p.m. ET and given the strong performance in the belly of the duration curve since the start of August, traders will be looking for demand to remain solid to confirm the recent drop in yields is sustainable.

Finally, likely the biggest catalyst of the week will come after the close today with NVDA earnings ($0.65) due shortly after the bell. Other notable companies reporting quarterly results today include CRM ($2.35) and HPQ ($0.86) but the main focus will be on NVDA as options traders are pricing in a volatile 10%+ reaction (up or down) to the earnings release and given the stocks heavy weight in the major indexes, a move of that magnitude will have an impact on the broader market in the back half of the week.

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Tech Weakness Amid Bullish Investor Sentiment

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Tech Weakness Amid Bullish Investor Sentiment: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Was Tech So Weak Yesterday?
  • How Bullish Is Investor Sentiment? (Very Bullish)
  • Chart – A Concerning Pattern in the SOX

U.S. stock futures are little changed this morning after a mostly quiet night of news as investors look ahead to NVDA earnings tomorrow.

Economically, German GDP rose to 0.0% vs. (E) -0.1% while the German GfK Consumer Climate Index fell to -22.0 vs. (E) -17.9, both of which are reinforcing growth concerns for the Eurozone right now.

Today, there are multiple economic releases to watch including the Case-Shiller Home Price Index (E: 6.9%), FHFA House Price Index (E: 5.7%), Consumer Confidence (E: 100.1), and the Richmond Fed Manufacturing Index (E: -14.0). Most of the releases are “second tiered” and lesser followed reports but investors will still want to see evidence of stabilizing growth and disinflation trends continuing.

There are no Fed officials scheduled to speak today but there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could shed light on investor expectations for Fed policy in the months ahead in the wake of Powell’s Jackson Hole commentary. An auction with demand that is “too strong” could rekindle recession fears while an auction that is “too weak” could trigger hawkish money flows.

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Powell Speech Preview (What’s Expected, Dovish If, Hawkish If Scenarios)

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Powell Speech Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Powell Speech Preview (What’s Expected, Dovish If, Hawkish If Scenarios)

Futures are solidly higher ahead of Fed Chair Powell’s speech thanks to not hawkish commentary from BOJ Governor Ueda.

Ueda stated that rates would continue higher but that increases would be data dependent and in conjunction with monitoring market conditions (meaning the yen spike from last month won’t be repeated, which is a good thing).

Economically, Japanese CPI rose 2.7% y/y, as expected and that’s further reducing hawkish BOJ concerns.

Today focus will be on Fed Chair Powell’s speech (10:00 a.m. ET) and as long as he removes any lingering doubts about a September rate cut, this rally can continue.

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The market is very sensitive to soft labor market data

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The market is very sensitive to soft labor market data: Tom Essaye Quoted in MarketWatch

Revisions to U.S. jobs data due Wednesday have the potential to weigh on the stock market

The 12-month average for job additions over the revision period was 241,000 — a “very strong” figure that implies a solid labor market, noted Tom Essaye, founder of Sevens Report Research. A downward revision of 600,000 would drop the average payrolls gain to 191,000, while a downward revision of 1 million would make what’s been strong jobs data “more middling,” he wrote.

“This matters because the market is very sensitive to soft labor market data and we know that from the recent pop in jobless claims and July jobs report. So, while investors are ok ignoring most disappointing data, they aren’t ignoring soft labor market data and if these revisions are worse than expected, look for it to weigh on stocks today,” Essaye said.

Also, click here to view the full MarketWatch article published on August 21st, 2024. 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.