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The Burden Of Proof Lies Squarely With The Bears

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Futures Are Slightly Higher: Sevens Report Quoted in Investing.com

Despite the S&P 500 rally, there are a number of risks emerging – Sevens Report

The burden of proof lies squarely with the bears and so far, the economic data and Fed speak hasn’t done enough to disprove any of those four bullish factors,” wrote the firm.

However, Sevens Research said the reality is there are still a number of risks emerging that need to be watched, and amidst 5k euphoria, they think that needs to be pointed out.

“Yes, data has pointed to a sweet spot for growth, inflation and the Fed. But that won’t last forever and there will be bad news for this market, there always is,” they added.

The firm notes that the risks that have quietly grown in the background during the rally are the chances of rate cut disappointment, the growing list of layoffs, commercial real estate, and valuations.

“Bottom line, it’s important to acknowledge that this rally has been driven by actual good news and bullish expectations being reinforced by actual data. At the same time, the risks that kept investors worried in October (and even throughout 2023) haven’t been vanquished—they simply haven’t shown up, yet,” concluded Sevens.

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.

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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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Is the Bullish Argument for Stocks Becoming Unsustainable?

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The Bullish Argument for Stocks: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is the Bullish Argument for Stocks Becoming Unsustainable?
  • Weekly Market Preview:  Does Disinflation Continue or Reverse?
  • Weekly Economic Cheat Sheet:  CPI on Wednesday is the Key Report This Week

Futures are moderately higher on encouraging Chinese economic data. As well as multiple financial publications predicted the Fed is done with rate hikes.

Chinese New Yuan Loans rose 1,360 billion vs. (E) 1,200 billion hinting the Chinese economy may be stabilizing.

Reuters, Bloomberg and the WSJ have published articles since Friday essentially saying the Fed is done with rate hikes and while that’s not new news, it’s helping futures rally this morning.

Today there are no notable economic reports nor any Fed speakers. Today’s focus will remain on Treasury yields and if yields are relatively stable, then stocks can rebound from last week’s losses.

Join us for an in-depth exploration of the stock market’s current trajectory. 

Bullish argument

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The Two Biggest Risks to the 2023 Year-end Rally

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The Two Biggest Risks to the Rally Until Year-end: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Two Biggest Risks to the Rally Until Year-end
  • Weekly Market Preview: Three Pillars of the Rally Remain Intact (For Now)
  • Weekly Economic Cheat Sheet – Service Sector Data in Focus

Stock futures are modestly lower with most global markets this morning amid renewed global growth concerns.

Economic data disappointed overnight with China’s Service PMI falling to a 2023 low of 51.8 vs. (E) 53.7 in August while the Eurozone Service PMI declined to 47.9 vs. (E) 48.3. The soft data rekindled global recession concerns putting risk-assets under pressure as we start the holiday shortened trading week.

Today, two second-tiered economic reports are due: Motor Vehicle Sales (E: 15.6M) and Factory Orders (E: -2.6%). But, neither are likely to meaningfully impact markets.

No Fed officials are on schedule to speak today. The Treasury will hold auctions for 3-Month, 6-Month, and 52-Week Bills late this morning. The results of the auctions could shed light on the market’s outlook for Fed policy plans in the months ahead. However, weak demand leading to a rise in short-duration yields will be viewed as hawkish which has the potential to put additional pressure on equity markets and risk assets today.

Risks to rally

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Tom Essaye Quoted in Barron’s on December 21, 2022

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Dow Soars 500 Points as Consumer Data Adds Some Cheer

“Stocks are digesting the declines of the past two weeks and while there are some notable employment and inflation numbers looming on Thursday and Friday, the bottom line is the calendar into year-end should be mostly quiet, again barring any material surprises,” Tom Essaye, the founder of Sevens Report Research, wrote Wednesday. Click here to read the full article.