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Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar on June 15th, 2023

Oil prices climb as traders weigh prospects for energy demand

Tyler Richey, co-editor at Sevens Report Research, pointed out that the EIA showed that the four-week moving average of gasoline supplied, a proxy for consumer fuel demand, rose to a new 18-month high of 9.24 million barrels a day. That suggests that the trend in gasoline demand is “one that is increasing, and that is a good thing for the time being,” he said. Click here to read the full article.

Market Multiple Levels: S&P 500 Chart

What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart (Unbranded PDF Available)
  • Why Did Small Caps Surge?

Stock futures are little changed in premarket trade indicating this week’s digestive churn sideways could continue today following mixed economic data overnight.

Chinese exports dropped -7.5% vs. (E) +1.0% year-over-year in May adding to worries about the health of the recovery in the world’s second largest economy.

Conversely, in Europe, German Industrial Production jumped 1.8% vs. (E) 1.4% y/y helping ease some worries about the health of the EU economy.

Looking into today’s session, the list of potential catalysts remains light as there are just two economic reports to watch: International Trade in Goods and Services (E: -$76.0B) and Consumer Credit (E: $21.0B) while there are no Fed officials scheduled to speak.

That will leave focus on market internals and whether or not the early June money flows into cyclicals and small cap stocks can continue. If so, the improving breadth in the market with the S&P 500 sitting just under YTD highs will add to the case that the 2023 rally is sustainable.

Sevens Report Analyst Quoted in MarketWatch on May 31st, 2023

U.S. oil futures settle at lowest since March

The potential fallout from the U.S. debt-ceiling debacle and rising odds of a June interest-rate hike both “weighed on oil as the former influence would be a broader riskoff market event, while the latter would further reduce already waning optimism for a soft economic landing this year,” analysts at Sevens Report Research wrote in Wednesday’s newsletter. Click here to read the full article.

 

What Is Immaculate Disinflation, and Why Did It Cause Last Week’s Rally?

What’s in Today’s Report:

  • What Is Immaculate Disinflation, and Why Did It Cause Last Week’s Rally?
  • Weekly Market Preview:  Does Economic Data Stay Resilient?
  • Weekly Economic Cheat Sheet:  Service Sector in Focus This Week

Futures are little changed as markets digest the Thursday/Friday rally amidst a mostly quiet weekend of news.

Oil prices are solidly higher (Brent crude up 1.7%) after Saudi Arabia announced a voluntary 1M bpd production cut for the next month, although that’s not seen as a sustainable bullish catalyst.

Economically, global service PMIs were mixed as the Euro Zone Service PMI missed expectations (55.1 vs. (E) 55.9) while the UK and Chinese service PMIs were in-line.

Today focus will be on the ISM Services Index (E: 52.0.) and specifically the price index in this report.  Last week, a sharp drop in the ISM Manufacturing PMI Prices Paid Index ignited the rally, and if we see a similar drop in the services price index, it’ll help extend the rally as markets will get more confident disinflation is accelerating.

Hard vs. Soft Landing Scoreboard Update

What’s in Today’s Report:

  • Hard vs. Soft Landing Scoreboard Update

Futures are slightly higher mostly on momentum from Wednesday’s rally and despite more disappointing earnings, this time from Cisco (CSCO).

CSCO orders underwhelmed and that’s weighing on the stock (down 4% after hours) and limiting gains in futures.

There was no new news on the debt ceiling but optimism remains high and a deal is expected before the “X” date.

Focus today will be on economic data, because beyond any short-term debt ceiling drama (or resolution) the bigger issue for this market remains hard vs. soft landing.  Key reports today include (in order of importance):  Jobless Claims (E: 255K), Philly Fed (E: -20.0) and Existing Home Sales (E: 4.295M).  As has been the case, stability remains the key for stocks to extend the rally.

We also have two Fed speakers, Jefferson (9:05 a.m. ET) and Logan (10:00 a.m. ET), but they shouldn’t move markets.

What the Fed Pause Means for Markets

What’s in Today’s Report:

  • What the Fed Pause Means for Markets
  • EIA Analysis and Oil Market Update

Futures are slightly lower following more regional bank turmoil and disappointing earnings.

Pac West (PACW) announced overnight that it’s seeking “strategic alternatives” and the stock dropped more than 30% pre-market and is weighing on other regional banks.

On earnings, EL and QCOM both missed estimates and that’s also weighing on sentiment.

Today focus will initially be on the ECB Rate Decision (E: 25 bps hike) and economic data via Jobless Claims (E: 238K) and Unit Labor Costs (E: 3.9%).  Markets will want to see 1) A not too hawkish ECB (so no 50 bps hike), 2) A mild uptick in jobless claims (signaling more balance in the labor market) and 3) A drop in Unit Labor Costs (implying wage pressures are easing).  If we get the opposite of those events, expect more declines today.

After the close we get what’s likely the most important earnings report of the season, AAPL ($1.44), and a solid number there would help sentiment.

Special Technical Report Coming Monday

What’s in Today’s Report:

  • Special Technical Report Coming Monday
  • Why Did the VIX Just Hit 52 Week Lows?
  • EIA Analysis and Oil Market Update
  • Two Notable Observations from a Quiet Trading Day

Futures are moderately weaker following a disappointing night of earnings.

TSLA, NOK, FFIV and TSMC all missed earnings and provided cautious commentary or guidance, and that’s increasing concerns about an economic slowdown.

Today there are numerous potential catalysts including important economic reports, lots of Fed speak and more earnings reports.

Starting with the data, the key report today is Philly Fed (E: -19.4) and markets will want to see if it confirms the rebound we saw in Empire (if it does, expect some stock weakness as Fed expectations become slightly more hawkish).  We also get Jobless Claims (E: 242K) and any move closer to 300k will be welcomed as it signals a slightly more normal labor market.

Turning to the Fed, there are multiple speakers today including Waller (12:00 p.m. ET), Mester (12:20 p.m. ET), Logan (3:00 p.m. ET) and Bostic (5:00 p.m. ET) and it will be notable to see if they all push back on the rate cut expectations in the markets.

Finally, on earnings, results lately have been underwhelming so these reports are becoming more important.  Earnings we’re watching today include: T ($0.58), TSM ($1.21), AXP ($2.63), UNP ($2.57), PPG ($1.55), CSX ($0.43), STX ($0.18).

Sevens Report – Market Multiple Table Chart

What’s in Today’s Report:

  • Market Multiple Table Chart
  • What CPI Means for Markets
  • EIA Analysis and Oil Update

Futures are slightly higher following better than expected economic data.

Chinese exports handily beat expectations in March rising 14.8% vs. (E) -7.0%, in what is the latest signal that the global economy remains resilient.

On inflation, German CPI met expectations rising 0.8% m/m and 7.4% y/y, numbers that are still too high in aggregate, but won’t make the ECB incrementally hawkish.

Today focus will remain on inflation and the labor market via PPI (E: 0.0% m/m, 3.0% y/y), Core PPI (E: 0.3% m/m, 3.4% y/y) and Jobless Claims (E: 233k).  PPI is expected to show moderation and importantly PPI is viewed as a quasi-leading indicator to CPI, so if numbers come in under expectations that’ll increase hopes inflation is truly easing.  For jobless claims, the higher the better as it implies normalization in the labor market, something the Fed wants to see before it can pause.

Jobs Report Preview (Two Sided Risks)

What’s in Today’s Report:

  • Jobs Report Preview:  Two Sided Risks
  • EIA Analysis and Oil Update
  • Why Yesterday’s Service PMI was a Negative for Markets

Futures are little changed following a mostly quiet night of news as markets digest this week’s underwhelming economic data ahead of the jobs report and long weekend.

Economic data overnight was better than expected as the Chinese Composite PMI beat estimates (57.8 vs. (E) 55.0) as did German Industrial Production (2.0% vs. (E) 0.0%).

Regional banks remained stable overnight following WAL’s update on deposit statistics yesterday.

Today focus will be on Jobless Claims (E: 201K) and a speech by Fed president Bullard (10:00 a.m. ET).  Investors will want to see claims move higher, above 200k, to signal some moderation in the labor market, while we can expect Bullard to be hawkish, although keep in mind he does not represent the consensus at the FOMC (and as such his comments shouldn’t move markets, unless they’re a dovish surprise).

Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch on March 23rd, 2023

Oil futures settle lower, with U.S. prices back below $70 a barrel

“The banks are the main driver of oil, and really all risk assets today, as fading confidence in the financial system is reigniting fears that another crisis may be looming after we saw some of the biggest bank failures since 2008 in early March,” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.