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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).

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.

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).

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.

Market Multiple Table: An Important Change

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Market Multiple Table: An Important Change: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table: An Important Change

Stock futures are trading higher this morning with tech stocks continuing to outperform as traders look ahead to Fed Chair Powell’s Congressional testimony today.

Economically, the NFIB Small Business Optimism Index rose 1 point to 91.5 vs. (E) 90.3 in June.

There are no additional economic reports today which will leave trader focus on Fed Chair Powell’s semi-annual testimony before Congress beginning at 10:00 a.m. ET. There are two additional Fed speakers as well today: Barr (9:15 a.m. ET) and Bowman (1:30 p.m. ET).

The only other potential catalyst on the calendar is a 3-Yr Treasury Note auction at 1:00 p.m. ET. Weak demand and subsequently rising yields after the auction could weigh on stocks as money flows have been very dovish in recent weeks.

Sevens Report Quarterly Letter

Our Q2 ’24 Quarterly Letter was delivered to subscribers last Monday, complete with compliance backup and citations. We’re already receiving feedback about how it is saving advisors time and helping them communicate with their clients in this volatile environment!

You can view our Q1 ’24 Quarterly Letter here.

To learn more about the product (including price) please click this link.

If you’re interested in subscribing, please email info@sevensreport.com.

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.

The Economy: Landing or Crashing?

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The Economy: Landing or Crashing? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Economy:  Landing or Crashing?
  • Weekly Market Preview:  Will A September Rate Cut Become a Guarantee This Week?
  • Weekly Economic Data:  Inflation Back in Focus (CPI This Week)

Futures are little changed despite positive geo-political news over the weekend.

In France, the “far-right” National Rally party underperformed expectations and will not be the majority party, reducing the chances of radical French policy changes.

In the Middle East, chatter surrounding a cease-fire between Israel and Hamas continues to get louder and a deal could be announced soon.  That news is weighing on oil this morning.

This week will be an important one with two days of Powell testimony, the CPI report and the start of the Q2 earnings season, but today will be relatively quiet as there are no economic reports today and no Fed speakers.

Sevens Report Quarterly Letter

Our Q2 ’24 Quarterly Letter was delivered to subscribers last Monday, complete with compliance backup and citations. We’re already receiving feedback about how it is saving advisors time and helping them communicate with their clients in this volatile environment!

You can view our Q1 ’24 Quarterly Letter here.

To learn more about the product (including price) please click this link.

If you’re interested in subscribing, please email info@sevensreport.com.

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.

Jobs Day

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

What’s in Today’s Report:

  • Jobs Day
  • Why Wednesday’s Weak Economic Data Is Increasing Growth Concerns

Futures are little changed following the U.S. holiday as the last 24 didn’t provide any substantial market surprises while focus turns towards today’s jobs report.

The Labour Party won a landslide election victory in the UK, as expected, but that victory isn’t altering the outlook for growth or inflation (so it’s not impacting markets).

U.S. growth worries are creeping slightly higher following Wednesday’s surprisingly soft economic data.

Today focus will be on the jobs report and expectations are as follows: 189K Job-Adds, 4.0% Unemployment Rate, 0.3% m/m & 3.9% y/y Wage Growth.  Markets are still in a “bad is good” mode for data so the biggest risk to markets today is for a “Too Hot” number.  But, that said, Wednesday’s economic data was outright bad and for those paying attention, there are now a lot of signs that the U.S. economy may be losing more momentum than expected.  So, if there is a surprisingly weak jobs report (possible but unlikely) it will increase growth concerns and that’s a future risk to this rally.

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.

This number reinforces expectations for a September rate cut

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Expectations for a September rate cut: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Give Back Gains. Bond Yields Spike.

Sevens Report Research’s Tom Essaye told Barron’s the report was more of a “Goldilocks” number, meaning it was “just right.” He cited rising new orders, a leading indicator, and declines in prices that indicate easing inflation pressures.

“In the short term, this number reinforces expectations for a September rate cut (which is positive) but at the same time, and beyond the short term, it does keep alive concerns that the economy is weaker than people think and we continue to think that’s the biggest risk to the rally as we start the second half of 2024,” says Essaye.

Also, click here to view the full Barron’s article published on July 1st, 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.

Potential slowdown in demand at the pump

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Potential slowdown in demand at the pump: Tyler Richey Quoted in MarketWatch

Oil gains on hopes for better demand as worries over wider Middle East conflict linger

There was evidence of that “potential slowdown in demand at the pump” in the Energy Information Administration’s report released Wednesday, said Tyler Richey, co-editor at Sevens Report Research. The implied measure of U.S. consumer demand, gasoline supplied, dropped to a one-month low of 8.969 million barrels per day for the week that ended June 21, he said. That compares with 9.386 million bpd a week earlier.

“The main takeaway is that the unforeseen strength in consumer demand that powered oil futures to multi-month highs in June began to show signs of easing back below trend last week,” Richey said in Thursday’s newsletter.

Also, click here to view the full MarketWatch article published on June 27th, 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.

Jobs Report Preview

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

What’s in Today’s Report:

  • Jobs Report Preview
  • JOLTS Report Takeaways

Futures are slightly higher as Powell’s dovish comments continue to be digested amid more Goldilocks economic data overnight.

In Asia, Australian Retail Sales rose 0.6% vs. (E) 0.3% but China’s Services PMI dropped to 51.2 vs. (E) 53.4.

In Europe, the Eurozone Composite PMI fell to 50.9 vs. (E) 50.8 while the EU PPI fell -4.2% y/y vs. (E) -4.1%, both of which are helping bonds remain stable ahead of multiple important economic releases in the U.S. today.

Looking into today’s session we will first get more labor market data with the ADP Report (E: 161K) and Jobless Claims (E: 233K) releases before the open. The market is looking for as-expected numbers and any signs of material weakness or data that is “too hot” could trigger some profit taking in thin holiday trading with stock indices sitting on record highs.

At the top of the 10:00 a.m. hour Wall Street time, the ISM Services Index (E: 53.0) and Factory Orders (E: 0.2%) reports will be released. The ISM will be the release to watch with investors again looking for stability in the headline but also a favorable move lower in the prices subindex to help confirm the disinflation trend has indeed resumed.

There is also one Fed speaker today: Williams (7:00 a.m. ET) and the FOMC Minutes will be released at 2:00 p.m. ET which is after the NYSE’s early close (1:00 p.m. ET) ahead of the 4th of July holiday tomorrow.

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.