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A market that remains firmly anchored by two key beliefs

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A market that remains firmly anchored by two key beliefs: Sevens Report Analysts Quoted in Investing.com

Why don’t stocks drop on bad news?

As per analysts at Sevens Report, this resilience reflects a market that remains firmly anchored by two key beliefs: economic growth will remain stable, and the Federal Reserve will cut interest rates—conditions that continue to support bullish sentiment despite growing risks.

Additionally, jobless claims surged to summer highs, suggesting some softening in the labor market. “However, that number was inflated by the Boeing strike and by unemployment related to the damage from Hurricane Helene in Florida and North Carolina,” the analysts said.

Sevens Report argues that part of the reason stocks haven’t wavered is that the risks, while real, haven’t yet materialized in ways that challenge the underlying narrative of a soft landing.

“The ‘burden of proof’ remained squarely on the bears,” the analysts said, no single negative development has been powerful enough to shift market sentiment away from expectations for stable growth and falling rates.

Also, click here to view the full article featured on Investing.com published on October 19th, 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.

A soft landing remains, by far, the most likely outcome for the economy

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A soft landing remains, by far, the most likely outcome for the economy: Sevens Report Analysts Quoted in Courthousenews.com

Dow Jones, S&P hit fresh highs in wake of good retail data

“A soft landing remains, by far, the most likely outcome for the economy as important economic data strengthened across multiple fronts over the past month,” Tom Essaye of the Sevens Report wrote in an investor’s note on Friday morning.

“Now, to be clear, this doesn’t mean that a hard landing can’t happen (or won’t happen), but it is not happening right now and there are few conclusive signals that it’s going to happen, at least at this point,” he continued.

Also, click here to view the full article on Courthousenews.com published on October 18th, 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.

Hard Landing/Soft Landing Scoreboard (October Update)

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Hard Landing/Soft Landing Scoreboard (October Update): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing/Soft Landing Scoreboard (October Update)

Futures are slightly higher thanks to better-than-expected Chinese economic data and more solid tech earnings.

Chinese Retail Sales and Fixed Asset Investment both beat estimates, boosting investor sentiment towards China.

On earnings, NFLX beat estimates and is the second straight big tech company to post solid results.

Today we have one economic report, Housing Starts (1.400M) and several Fed speakers, including Bostic (9:30 a.m. & 12:30 p.m. ET), Kashkari (10:00 a.m. ET) and Waller (12:10 p.m. ET).  With recent data stronger than expectations, if today’s Fed officials (including Waller) reinforce their desire for two rate cuts that will be an incremental positive.

Earnings season also continues to roll on and today we get notable reports from AXP (E: $3.27), PG (E: $1.90) and RF (E: $0.53).

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Earnings Offer Mixed Economic Signals

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Earnings Offer Mixed Economic Signals: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Earnings Giving a More Mixed Economic View (Although It’s Still Early)
  • Empire State Manufacturing Index Takeaways
  • Insight from Oil’s Early Week Collapse

U.S. futures are steady as yesterday’s pullback is digested while overseas markets were mostly lower overnight after ASML’s downbeat guidance weighed on global tech shares and LVMH earnings rekindled concerns about consumers.

Economically, UK Core CPI favorably fell 0.4% to 3.2% vs. (E) 3.5% in September, bolstering BoE rate cut bets.

Today, there is one second-tiered inflation report to watch: Import & Export Prices (E: -0.3%, -0.4%), but barring a big surprise one way or another it is not likely to move markets.

Additionally, there is a 4-Month Treasury Bill auction at 11:30 a.m. ET. A strong auction would be received as dovish and help stocks and other risk assets stabilize in the midst of increasingly hawkish Fed policy expectations in recent weeks.

There are no Fed officials scheduled to speak today but earnings season continues to pick up with results being released by several big financials: MS ($1.57), CFG ($0.79), SYF ($1.77), DFS ($3.29) and a few more economically-sensitive companies PPG ($2.15), CSX ($0.48).

Join thousands 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.

Tom Essaye Interviewed On Yahoo Finance’s Morning Brief

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A slowing economy does not necessarily mean a recession: Tom Essaye Interviewed On Yahoo Finance

Economic, geopolitical risks could be rude awakening for market

“I want everybody to realize that a slowing economy does not necessarily mean a recession, but where stocks are right now, if growth even slows to sort of flat or sub 1%, you could see a 10% drop in the S&P 500, and we wouldn’t even be probably at fair value,” Sevens Report Research founder and president Tom Essaye tells Seana Smith and Brad Smith on the Morning Brief.’

“So look, things are good right now, but I do think the market is complacent to economic slowdown risks.”

Essaye has been “advocating for focusing on quality and lowering volatility” through ETFs, and views geopolitical risks to be a chief concern at the moment.

“And then also there’s going to be a lot of political uncertainty coming out of the election, because we’re all going to be trying to game what policy changes are going to occur. All of these things can combine to sort of fracture this perfect window we’re in in the markets,” Essay explains. “All I’m trying to do is remind investors that, hey, there are risks out there and that… the stock market can go two directions as well.”

Also, click here to view the full interview with Yahoo Finance published on October 15th, 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.

 

Is China the Next Japan?

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Is China the Next Japan?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is China the Next Japan?

Futures and EU shares are lower as cautious retailer earnings guidance and heavy trade in China overnight are offsetting easing geopolitical tensions following reports that Israel would not strike Iranian oil/energy infrastructure (oil futures are down nearly 5%).

Economically, EU Industrial Production met expectations overnight while a German Economic Sentiment gauge topped estimates, but neither report is materially moving markets this morning.

Today, there is one important economic report to watch: The Empire State Manufacturing Index (E: 0.0), and two Fed officials are scheduled to speak: Daly late morning (11:30 a.m. ET) and Kugler in the early afternoon (1:05 p.m. ET).

Additionally, there are two typically lesser-followed Treasury auctions for 3-Month and 6-Month T-Bills at 11:30 a.m. ET that could shed fresh light on market expectations for Fed policy rates between now and Q2’25 which have swung sharply hawkish over the last two weeks. Strong auction would have dovish implications for the market and be well received by equity investors today.

Finally, earnings season is getting into full swing with several more big banks reporting quarterly results today: BAC ($0.78), C ($1.34), and GS ($6.85) while two members of the Dow Jones Transportation Average: UAL ($3.10) and JBHT ($1.43) are also due to report today.

Bottom line, equity markets have rallied solidly over the last week amid a combination of earnings optimism and soft-landing hopes. If any of the economic data, Fed chatter, or earnings results damage either of those narratives, expect some mild profit taking in equities today, otherwise the path of least resistance is still higher for stocks right now.

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Why Don’t Stocks Drop On Bad News?

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Why Don’t Stocks Drop On Bad News?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Don’t Stocks Drop On Bad News
  • Weekly Market Preview:  Earnings Are the Key This Week
  • Weekly Economic Cheat Sheet:  Important Growth Data on Thursday

Futures are slightly higher following a quiet weekend of news as investors look ahead to the first busy week of Q3 earnings and more important economic data.

Economically, Chinese exports missed expectations and the latest stimulus announcement underwhelmed, but none of it was bad enough to reverse any more of the recent rally.

This week is full of potentially market moving events from earnings and economic data but they all come later in the week and today should be mostly quiet given it’s the Columbus Day holiday (banks and bond markets closed) and there are no notable economic reports.  We do get a few Fed speakers, however (Kashkari (9:00 a.m. ET & 5:00 p.m. ET), Waller (3:00 p.m. ET)), but they shouldn’t move markets.

Join thousands 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 Yesterday’s Economic Data Wasn’t That Bad

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Why Yesterday’s Economic Data Wasn’t That Bad: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Yesterday’s Economic Data Wasn’t That Bad

Futures are slightly weaker this morning as Tesla’s “Cyber Cab” event underwhelmed while investors look ahead to the start of earnings season.

Economically, German CPI and UK monthly GDP both met estimates and didn’t provide any negative surprises.

Today investors will be focused on more inflation data via PPI (E: 0.2% m/m, 1.6% y/y) and Core PPI (E: 0.2% m/m, 2.7% y/y) while there are also several Fed speakers including Goolsbee (9:45 a.m. ET), Logan (10:45 a.m. ET) and Bowman (1:10 p.m. ET).  But, barring any major surprises from PPI or those Fed officials, they shouldn’t move markets.

Additionally, focus will now turn towards earnings and that will be one of the dominant forces on markets for the next three weeks.  Key reports today include: JPM ($4.02), BLK ($10.42), WFC ($1.27), FAST ($0.52).

Join thousands 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.

October MMT Update: Positive News (But Priced In)

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How to Cut Through the Market Noise: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • October Market Multiple Table – Positive News But Priced In

U.S. futures are higher on dovish-leaning comments by the Fed’s Kugler overnight while global shares declined broadly in sympathy with a near-10% drop in Chinese shares after the latest government stimulus efforts disappointed.

Economically, German Industrial Production rose 2.9% vs. (E) 0.8% in August, helping easing EU growth worries while the NFIB Small Business Optimism Index rose to 91.5 but narrowly missed estimates of 91.7.

There are no notable economic reports today, however several Fed officials are scheduled to speak: Bostic (12:45 p.m. ET), Collins (4:00 p.m. ET), and Jefferson (7:30 p.m.). Based on the market’s positive reaction to Kugler’s comments in the pre-market, more dovish commentary has the potential to fuel a further relief rally today while a hawkish tone would likely weigh on stocks.

Finally, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and given the hawkish money flows in the wake of last week’s ISM data and September jobs report, weak demand at the auction could send yields to new highs and further pressure equity markets.

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Jobs Day

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

What’s in Today’s Report:

  • Jobs Day
  • Key VIX Levels to Watch

Futures are slightly higher following the end to the dockworkers’ strike and as investors wait for the jobs report and the Israeli retaliatory attack on Iran.

The dockworkers’ strike ended Thursday night, removing a potential economic headwind.

Geopolitically, markets are still awaiting the Israeli response to Iran, but reports are pointing to a military or domestic energy target, which is a mild positive (if Israel were to attack Iran’s nuclear facilities it’d be viewed as a major escalation and we’d expect oil to surge further and be a stronger headwind on stocks).

Today focus will be on the jobs report and expectations are as follows: 147K job-adds, 4.2% UE Rate and 3.8% wages (y/y).  As long as the job adds and unemployment rate are relatively close to expectations, we should see a mostly Goldilocks reaction as that implies a soft landing and will keep the Fed on track to cut twice more this year (50 bps).  The biggest risk for the market remains a very weak number.

Finally, there is also one Fed speaker today and he is part of leadership, Williams at 9:00 a.m. ET, but barring a substantial surprise, he shouldn’t move markets.

 

Sevens Report Quarterly Letter Delivered

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Join thousands 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.