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Why Did Stocks Drop Last Week?

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Why Did Stocks Drop Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop Last Week?
  • Weekly Market Preview:  Focus on Treasury Secretary, NVDA earnings and economic growth (Thursday/Friday).
  • Weekly Economic Cheat Sheet:  Important Growth Data Late This Week

Futures are little changed following a quiet weekend of news as markets continue to digest last week’s rise in Treasury yields, and the return of political surprises (via Trump’s cabinet announcements).

There were no notable economic reports overnight.

Politically, the major remaining cabinet pick from Trump is Treasury Secretary and it should come early this week (and another unorthodox choice would further roil markets).

Today the calendar is quiet as there is just one economic report, Housing Market Index (E: 43), and one Fed speaker, Goolsbee (10:00 a.m. ET).  So, focus will be on Trump’s cabinet (again, the more traditional choice for Treasury, the better for markets) and on the 10-year yield.  If it keeps rising, that will be a continued headwind on stocks.

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The bullish thesis for stocks is stronger now

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The bullish thesis for stocks is stronger now: Tom Essaye Quoted in Market Watch

The market has passed four key tests, newsletter writer says

Tom Essaye, founder and president of the Sevens Report, says the bullish thesis for stocks is stronger now because all of the tests set up two weeks ago were passed.

The major economic reports of the past two weeks were solid, with the payrolls disappointment largely explained by hurricanes and strikes;

The Fed remains committed to cutting rates;

Earnings were more mixed than excellent but still haven’t changed estimates for S&P 500 earnings per share next year very much;

And Republicans have large enough majorities to push through pro-growth legislative changes.

“While the bullish thesis passed the tests of the past two weeks, do not confuse this with a market that cannot go down,” he says. “There are real risks to this rally that we cannot ignore over the medium/longer term, although investors could ignore them unless forced not to between now and year-end.” A move to 6,200 on the S&P 500 before the end of the year is “entirely possible” as he said the market will likely favor value, cyclical sectors and the equal-weight S&P 500 over the market-weighted index.

Also, click here to view the full MarketWatch article published on November 11th, 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.

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I’d expect some digestion of the move or a mild drift higher

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I’d expect some digestion of the move or a mild drift higher: Tom Essaye Quoted in Blockworks

In a surprise to no one, Fed cuts rates by 25bps

It’s the same crucial sentence we’ve seen before, which shouldn’t shock markets. And, as a result of no surprises, stocks should see at least a mild extension of their Trump-fueled rally, according to Sevens Report Research founder Tom Essaye.

“Given yesterday’s strong rally, I’d expect some digestion of the move or a mild drift higher,” Essaye said. “However, this outcome should keep expectations for a rally into year-end in place, led by cyclical sectors — industrials, financials, small caps [and] energy — with tech and defensives lagging.”

Also, click here to view the full Blockwork article published on November 7th, 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.

It’s been a stellar year so far for U.S. markets

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It’s been a stellar year so far for U.S. markets: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Why Trump’s Win Can Stoke the Bull Market for the Rest of 2024

It’s been a stellar year so far for U.S. markets. Investors should expect the surge to carry on until the end of 2024 now that Donald Trump has won the race to the White House, Sevens Report Research founder and president Tom Essaye said on Wednesday.

While the result isn’t “a bullish gamechanger” because stocks are already up so much this year, the election results “should spur a rally into year-end, barring any other major surprises,” he wrote in a research note.

The expectation that Trump could roll out pro-growth economic policies and tax cuts, combined with a solid macroeconomic environment, could power the S&P 500 past 6,000 points by the end of 2024, Essaye added.

Also, click here to view the full Barron’s article published on November 6th, 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.

Market Multiple Table: How High Can This Market Go?

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Market Multiple Table: How High Can Stocks Go?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table: How High Can This Market Go?

Stock futures are modestly lower with the dollar index at a multi-year high and the 10-Yr yield holding above 4.40%, a multi-month high, as traders look ahead to the CPI report.

Economically, Japanese PPI notably jumped from 2.8% to 3.4% y/y in October which raised inflation concerns in Asian markets.

Today, trader focus will almost exclusively be on the latest U.S. inflation data due out before the bell: CPI (E: 0.2% m/m, 2.6% y/y), Core CPI (E: 0.3% m/m, 3.3% y/y). A “hotter” than anticipated print will likely trigger hawkish money flows, pushing the dollar index and Treasury yields to new highs which would weigh on stocks while an as-expected or “cool” print would be well-received.

Additionally, there are several Fed speakers on the calendar who could move markets: Logan (9:45 a.m. ET),  Musalem (1:00 p.m. ET), and Schmid (1:30 p.m. ET).

Lastly, earnings season continues to slow down but a few notable companies reporting quarterly results today include: HUT (-$0.24), NU ($0.10), and CSCO ($0.87).

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What Yesterday’s Rate Cut Means for Markets

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What Yesterday’s Rate Cut Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Yesterday’s Rate Cut Means for Markets

Futures are slightly lower mostly on digestion of the week’s news and after Chinese stimulus only met expectations.

China announced a 1.4 trillion-yuan fiscal stimulus program (so government spending) although that only met expectations and is seeing a mild “sell the news” reaction.

Today the calendar is relatively quiet (especially considering what a busy week it’s been already) but there is still one notable economic release, the University of Michigan Consumer Sentiment (E: 70.8) and, contained in that report, the One-Year Inflation Expectations (E: 2.7%).  Markets will want to see both numbers hit expectations and not be “Too Hot” (especially for inflation expectations).

We also have two Fed speakers today, Bowman (11:00 a.m. ET) and Musalem (2:30 p.m. ET), but given the Fed decision yesterday they shouldn’t move markets.

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Earnings across the board were disappointing

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Earnings across the board were disappointing : Tom Essaye Quoted in Blockworks

Major earnings week weighs on tech stocks

Tom Essaye, founder of Sevens Report Research, said it wasn’t just Big Tech weighing on equities Thursday. Earnings across the board were disappointing (looking at you, Uber, Ebay and Intercontinental Exchange), plus economic data looks like we may see higher rates for a more sustained period of time.

Also, click here to view the full Blockwork article published on November 1st, 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.

The biggest risk for the market would be if the data come in strong anyway

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The biggest risk for the market would be if the data come in strong anyway: Tom Essaye Quoted in Market Watch

The stakes for the October jobs report are high — here’s what to expect: Sevens Report

The stakes for the latest reading from the main U.S. employment barometer are high. Although not in the way many investors might think, according to Tom Essaye, founder and president of Sevens Report Research.

Fallout from hurricanes that hit Florida, Georgia and North Carolina, coupled with the ongoing Boeing strike, are expected to push up the unemployment rate. Because of this, investors are already expecting a weak report, Essaye said in commentary shared with MarketWatch on Thursday.

It also means that the biggest risk for the market would be if the data come in strong anyway. Signs of a still-resilient labor market could pressure the Federal Reserve to leave its policy interest-rate target on hold next week, Essaye added.

A too-hot number could push stocks lower and Treasury yields higher as traders account for a greater likelihood of a “no landing” scenario.

“A second straight monthly jobs report above 200k and the unemployment rate dropping back below 4% will bolster the no landing expectation and push back hard on another rate cut quickly following the cut in September,” Essaye said.

Also, click here to view the full MarketWatch article published on October 31st, 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.

It was not enough to derail the soft landing thesis

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It was not enough to derail the soft landing thesis: Tom Essaye Quoted in Blockworks

GDP estimates boost hopes for a soft landing

Tom Essaye, founder of Sevens Report Research, said the report “was not enough to derail the soft landing thesis by itself, but it was a step in that direction as investors will want to start seeing the decline in headline job openings slow as part of a soft landing dynamic and still-healthy labor market.”

Also, click here to view the full Blockwork article published on October 30th, 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.

Election Day Scenario Analysis (Good, Bad, Ugly)

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Election Day Scenario Analysis (Good, Bad, Ugly): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Good/Bad/Ugly Election Scenario Analysis
  • Chart – S&P 500 Violates Critical Uptrend off August Lows

Stock futures turned higher with Asian shares overnight thanks to better-than-expected Chinese economic data as trader focus shifts ahead to Election Day in the U.S.

Economically, China’s October Composite PMI rose to 51.9 vs. (E) 50.4, up from 50.3 in September which supported solid gains in Asian shares overnight with Chinese benchmarks rising more than 2%.

Today, the general elections in the U.S. will clearly dominate the headlines however there is one key economic report to watch shortly after the open: ISM Services PMI (E: 53.5).

There are no Fed officials scheduled to speak ahead of this week’s FOMC meeting however there is a 10-Yr Treasury Note auction at 1:00 p.m. ET that could roil markets if it is much stronger than anticipated (flight to safety) or much weaker than expected (fiscal concerns/higher yields).

Lastly, there are a few earnings to watch today as well with MPC ($0.97) reporting ahead of the open and key semiconductor company SMCI ($0.51) after the close along with tech-focused communications company, LUMN ($-0.20).

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.