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The ultimate direction of the S&P 500 will still be determined by economic growth

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The ultimate direction of the S&P 500 will still be determined by economic growth: Tom Essaye Quoted in Forbes

Stocks Slide As Major Tech Earnings Get Off To ‘Underwhelming’ Start

The U.S. will report its second-quarter gross domestic product Wednesday morning, offering a glimpse into how well the broader economy is performing. “The ultimate direction of the S&P 500 will still be determined by economic growth,” remarked Sevens Report analyst Tom Essaye in a Monday note.

Also, click here to view the full Forbes article published on July 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Lastly, 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.

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What is Causing This Pullback?

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What is Causing This Pullback?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What is Causing This Pullback?
  • Yield Curve Update:  10’s-2’s Just Hit a Two-Year High
  • EIA Analysis and Oil Market Update

Futures are modestly lower as more mixed earnings are preventing a bounce in stocks.

Tech earnings were “ok” overnight (IBM and NOW posted good results) but other sectors’ results were weak, especially in the auto sector (Ford (F) is down 13% pre-market) and that’s weighing on futures.

Focus will remain on economic data and earnings today and the calendar is busy on both fronts.  Economically, the key reports today, in order of importance, are:  Jobless Claims (E: 235K), Final Q2 GDP (E: 2.1%), and Durable Goods (E: 0.3%).  Goldilocks economic data (so in-line with expectations across the board with no hints of inflation) would be a positive for stocks and help to slow this pullback.   But, if data is very soft or very strong, expect more downward pressure.

On the earnings front, results this season are, so far, very mixed and disappointing earnings are weighing on stocks.  Important results today include: AAL (E: $1.04), ABBV (E: $2.56), VLO (E: $2.61), LHX (E: $3.18) and BKR (E: $0.49).

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The oil market began the week with a thud

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The oil market began the week with a thud: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices finish lower, holding ground at lowest since mid-June

“The oil market began the week with a thud [Monday], failing to stabilize after the sharp losses in the back half of last week,” said Tyler Richey, co-editor at Sevens Report Research.

Richey said last week’s significant drop in implied gasoline demand reported by the Energy Information Administration remains a “major bearish influence on the market.”

Also, from a supply standpoint, improved prospects for a victory by former President Donald Trump in the 2024 election are “price-negative for oil,” given his plans to “support production increases to increase energy independence and lower prices,” said Richey.

Also, click here to view the full MarketWatch article published on Morningstar on July 22nd, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

Lastly, 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.

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Price-negative for oil

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Price-negative for oil: Tyler Richey Quoted in MarketWatch

Oil futures settle at lowest since mid-June

The improved prospects of a Donald Trump victory in the 2024 election are “price-negative for oil as he has said he plans to support production increases to increase energy independence and lower prices,” said Tyler Richey, co-editor at Sevens Report Research.

Also, click here to view the full MarketWatch article published on July 22nd, 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.

Market Impact of Biden’s Decision

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Market Impact of Biden’s Decision: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Impact of Biden’s Decision to Drop Out
  • Putting Last Week’s Declines in Proper Context (What Tech Giveth, Tech Taketh Away)
  • Weekly Market Preview:  Does the Changing Political Landscape Pressure Markets?
  • Weekly Economic Cheat Sheet:  The First Big National Report for July Comes This Week

Futures are solidly higher on surprise rate cuts from China and as President Biden dropped out of the Presidential election.

President Biden dropped out of the election this weekend and endorsed VP Harris as the new nominee and this should see a mild tightening of the polls.

Economically, China announced a surprise 10 bps interest rate cut and that’s helping to boost the economic outlook.

This week will be a busy one for earnings and economic data, but it starts slowly as there is just one notable economic report today, Chicago Fed National Activity (E: 0.18) and three notable earnings reports:  NXPI ($3.21),VZ ($1.15) and TFC ($0.78). NXPI is the most important earnings report today and if the semiconductor company can post strong guidance, it’ll help ease chip worries (which will help the tech sector and broader market stabilize).

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Olympic Style Ideas (Finding A Common Topic With Clients)

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Olympic Style Ideas (Finding A Common Topic With Clients): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Olympic Style Ideas (Finding A Common Topic With Clients)

Futures are little changed following a night of mixed earnings as NFLX results were in-line while industrial PPG warned of a difficult macro-economic environment.

Economically, the only notable report was UK Retail Sales and they were worse than expected (-1.2% vs. (E) -0.4%) and that will push back slightly against the growing idea that the BOE won’t cut rates in September.

Today there are no notable economic reports, but we do get two Fed speakers, Williams (10:40 a.m. ET) and Bostic (12:45 p.m.).  Of the two, Williams is more important because he’s part of Fed leadership and if he again points towards a September rate cut (by saying the Fed is close to cutting rates) that should help boost stocks.

Earnings, meanwhile, continue to roll on and results so far are mixed.  Important reports today include AXP ($3.22), SLB ($0.83) and TRV ($2.35).

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Economic growth must remain resilient and we cannot have a growth scare

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Economic growth must remain resilient and we cannot have a growth scare: Tom Essaye Quoted in MarketWatch

Stock market’s long-awaited Great Rotation needs to overcome this nagging worry

For the rotation to be sustained beyond a few weeks, “economic growth must remain resilient and we cannot have a growth scare,” said Tom Essaye, founder of Sevens Report Research, in a Friday note. “If we do get a growth scare, then cyclical sectors like energy, industrials, materials and financials will likely not do well.”

Investors can act accordingly.

Those that think growth will slow should overweight super-cap tech TDIV and defensive sectors like utilities XLU, healthcare XLV and consumer staples XLP, Essaye wrote. Those that think growth will be resilient should overweight value stocks VTV and the equal-weight S&P 500 RSP.

For his part, Essaye said he’s more concerned about growth than the
consensus, so he won’t be chasing value and cyclical stocks, instead sticking to his preference for defensive sectors and longer term Treasurys that will benefit from a sustained fall in yields alongside moderating growth.

Also, click here to view the full MarketWatch article published on July 13th, 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.

I think this will cause a bit of a correction

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I think this will cause a bit of a correction: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

What to Buy if the Stock Market Rotation Is Real

“It was almost sort of getting feverish just how relentlessly these stocks were rising,” Sevens Report Research’s Tom Essaye tells Barron’s. “I think this will cause a bit of a correction, and a bit of a widening. How long it lasts depends on growth.”

Essaye says traders are looking at the prospect of lower rates and noting small caps, utilities, and real estate investment trusts are both cheap and could benefit from lower rates.

Also, click here to view the full Barron’s article published on July 11th, 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.

The Important Question in a Noisy Market

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The Important Question in a Noisy Market: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Important Question in a Noisy Market

Futures are slightly higher mostly on momentum as markets again ignore disappointing retailer earnings.

Hugo Boss became the latest retailer to post poor results and cut guidance as anecdotal warnings on consumer spending continue to grow.

The only notable economic number overnight was the German ZEW Sentiment Index and it met expectations.

Today focus will stay on economic data and earnings. The key economic report today (and of the week) is Retail Sales (E: -0.3%) and if that number is weaker than expected, look for concerns about a slowdown to grow (although that likely won’t hit stocks immediately as bad data is still good for stocks).  We also get the Housing Market Index (E: 43) and one Fed speaker, Kugler (2:45 p.m. ET), but they shouldn’t move markets.

On the earnings front the season continues to heat up and reports we’ll be watching today include:  BAC ($0.79), UNH ($6.65) and MS ($1.65).

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Was Yesterday’s CPI Another Bullish Catalyst?

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Was Yesterday’s CPI Another Bullish Catalyst? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Was Yesterday’s CPI Another Bullish Catalyst?
  • Can the Rotation Out of Tech and Into the “Rest” of the Market Continue?

Futures are flat following a quiet night of news as investors digested the CPI report and rotation out of tech.

Politically, Biden’s press conference performance is pushing back, for now, on moves to replace him as candidate.

Economically, there was no notable data overnight.

Today focus will stay on inflation as we get PPI (E: 0.1% m/m, 2.3% y/y) and the 1-Yr Inflation Expectations (E: 3.0%) and 5-Yr. Inflation Expectations (E:  3.0%) in the University of Michigan Consumer Sentiment Survey.  As we saw yesterday with the CPI report, the better the inflation data, the stronger the tailwind on stocks (especially the “rest” of the market, meaning away from tech).

Earnings season also unofficially begins today with big bank earnings and results we’re watching include:  JPM ($4.19), WFC ($1.27), C ($1.40), BK ($1.43), FAST ($0.51).

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