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It’s just concerns about global growth

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It’s just concerns about global growth: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Oil Prices Slide on Growth Fears

“It’s just concerns about global growth,” Sevens Report Research’s Tom Essaye told Barron’s. “China had some weak data, and I think that’s really the cause of it.”

Also, click here to view the full Barron’s article published on September 3rd, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Market participants were also rotating out of this year’s winners

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Market participants were also rotating out of this year’s winners: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Technology and Energy Stocks Are Hit Hard

Sevens Report Research’s Tom Essaye told Barron’s that while the latest ISM manufacturing survey was weak, market participants were also rotating out of this year’s winners and turning to some underperforming sectors.

“The market was pretty resilient the last couple weeks on light volumes, and now people are coming back in, looking forward, and reasonably surmising that markets could be more volatile in the next couple of months, and probably just taking a little bit off the table,” he says.

“For the first time in years, the market would welcome a number as hot as could be,” Essaye says. “If you get more weakening in the labor market, then a hard landing becomes much more probable. And that’s obviously not priced in at all.”

Also, click here to view the full Barron’s article published on September 3rd, 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.

Jobs Report Preview (A Significant Change)

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Jobs Report Preview (A Significant Change): Start a free trial of The Sevens Report.

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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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 Rotation Out of Tech Continues

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The Rotation Out of Tech Continues: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Rotation Out of Tech Continues

Futures are modestly higher thanks to solid tech earnings and better than expected inflation data from Europe.

DELL and MRVL, both AI linked tech companies, posted solid earnings and guidance and that’s supporting futures.

Economically, EU HICP (their CPI) declined further to 2.8% y/y vs. (E) 2.9%, giving the ECB more room to cut rates.

Today is typically a quiet day in the markets as traders try to get a head start on the three-day weekend, but there is an important inflation report this morning:  The Core PCE Price Index (E: 0.2% m/m, 2.7% y/y).  If that report is better than expected, it’ll boost expectations for a 50-bps rate cut in September (positive for stocks) while a higher-than-expected number will push back against a 50-bps cut (negative for stocks).

Other data today includes the Chicago PMI (E: 46.4) and inflation expectations in University of Michigan Consumer Sentiment (1-Yr Inflation Expectations: 2.9%, 5-Yr. Inflation Expectations: 3.0%) but barring major surprises, neither of those numbers should move markets.

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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.

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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What Powell and Uedas’ Friday Comments Mean for Markets

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What Powell and Uedas’ Friday Comments Mean for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Powell and Uedas’ Friday Comments Mean for Markets
  • Weekly Market Preview:  A Big Week for Tech Earnings (Including NVDA on Wednesday)
  • Weekly Economic Cheat Sheet:  A Most Quiet Week But Thursday/Friday Are Important

Futures are slightly higher following a mostly quiet weekend, thanks to momentum from Friday’s rally as investors digest Powell’s promise of coming rate cuts.

Economically, the only notable number overnight was the German Ifo Business Expectations and it slightly beat estimates (86.8 vs. (E) 86.5).

Geopolitically, a cease fire was not reached this weekend between Israel and Hamas although investors remain optimistic that a deal is close.

Today the only notable economic report is July Durable Goods (E: 4.0%) and markets will want to see stability in the data (so close to expectations) to ensure the recent plateau in business spending isn’t becoming a decline.  If Durable Goods is in-line, expect a continuation of the early rally.

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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.