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There were several legitimate reasons for last week’s rally

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There were several legitimate reasons for last week’s rally: Sevens Report Analysts Quoted in Investing.com

Can Trump’s “Happy Talk” keep the S&P 500 above 5,500? Strategist weighs in

According to Sevens Report, “there were several legitimate reasons for last week’s rally, including (in order of importance): De-escalation of the trade war with China, de-escalation of the Trump/Powell feud, rising anticipation for the announcement of numerous trade deals, and solid Q1 earnings.”

However, Sevens Report cautioned that “none of these events are materially bullish,” and warned that while “still-negative sentiment helped the S&P 500 temporarily break through 5,500 on some good earnings or further trade de-escalation briefly, I do not think the news has turned good enough to sustain a rally.”

“Trump understands that firing Powell would hammer markets, so he (probably) won’t try it, but that doesn’t mean the negative headlines are done,” Sevens Report said.

They added, “The Fed meets next on Wednesday, May 7, and the Fed is very unlikely to cut rates at that meeting and that could draw Trump’s ire.”

On the trade front, Sevens Report noted that while tariff reductions are better than escalation, “the baseline level of tariffs will be much higher than it was in January and that will be a headwind on growth and a tailwind on inflation.”

Looking ahead, Sevens Report stated, “it is very unlikely that 2025 S&P 500 EPS expectations stay at $270,” suggesting that “a $10/share reduction to $260 (or even lower) seems more appropriate.”

Also, click here to view the full article featured on Investing.com published on April 28th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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How much economic damage have tariffs done?

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How much economic damage have tariffs done?: Tom Essaye Quoted in MarketWatch

Is the stock market overvalued? Investors look for ‘economic damage’ from tariffs

Investors are hoping trade deals that reduce tariffs may be announced soon, which would help inform whether the U.S. stock market is currently overvalued, according to Tom Essaye, founder and president of Sevens Report Research.

“‘How much economic damage have tariffs done?’ is one of the most important questions for investors right now because if the answer is ‘a lot,’ then this market is still substantially overvalued,” Essaye said in a note Monday. “If the answer is ‘not too much’ and tariff reduction occurs, then the case can be made for a sustainable rally (as long as we get consistent policy).”

Also, click here to view the full article featured on MarketWatch published on April 28th, 2025. 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.

Reading Market Volatility: If, Then.

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What’s in Today’s Report:

  • Reading Market Volatility:  If, Then…

Futures are little changed despite solid earnings overnight and more signs of trade war de-escalation.

GOOGL posted stronger than expected results and tech earnings broadly last night were solid, boosting the sector.

On trade, China exempted several categories of U.S. imports from 125% tariffs in a further small de-escalation of trade tensions.

Trade headlines will continue to dominate intra-day trading today but there’s also a notable economic report this morning via University of Michigan Consumer Sentiment (E: 50.8).  The key part of this report will be the inflation expectations and estimates are as follows: One Year Inflation Expectations: 6.7%, Five-Year Inflation Expectations 4.4%.  If the actual data is hotter than those estimates, it will put upward pressure on yields and could weigh on stocks.

On earnings, results so far have been better than expected and that has helped this rally.  Notable results today include: ABBV ($2.40),  CHTR ($8.53) and PSX ($-0.77).

Hard Landing/Soft Landing Scoreboard (Hard Data Holding Up)

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What’s in Today’s Report:

  • Hard Landing/Soft Landing Scoreboard: Hard Data Is Hanging in There

U.S. stock futures are solidly higher this morning with mega-cap tech leading while bonds are stabilizing after President Trump dialed back rhetoric about firing Fed Chair Powell and made encouraging comments on trade deal progress while TSLA is up 6%+ after Q1 earnings.

Economically, the EU Composite Flash PMI fell to 50.1 vs. (E) 50.4,in April down from 50.9 in March amid weakness in the Services index but investors are taking the disappointing data in stride, instead focusing on the reported trade deal progress.

Today, economic data in the U.S. will be in focus early in the day with the Flash Manufacturing PMI (E: 49.4) and Flash Services PMI (E: 52.5), as well as New Home Sales (E: 682K) data due to be released shortly after the open.

There are also multiple Fed speakers to watch today including: Goolsbee (9:00 a.m. ET), Waller (9:35 a.m. ET), and Hammack later in the day (6:30 p.m. ET).

There is a 5-Yr Treasury Note auction at 1:00 p.m. ET that could impact bond markets and in turn move stocks in the early afternoon. The stronger the auction results the better after the recent rout in Treasuries.

Finally earnings season continues with notable releases due out from: BA ($-1.54), T ($0.52), IBM ($1.42), and CMG ($0.28).

Trump Attacking Powell Is a Potentially Large Negative

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What’s in Today’s Report:

  • Trump Attacking Powell Is a Potentially Large Negative
  • Chart – Dollar Index’s 10% YTD Decline Underscores U.S. Policy Uncertainty

Equity futures are solidly higher in pre-market trade as investor focus shifts from political tensions to earnings as we approach the peak of the Q1 reporting season.

There were no noteworthy economic reports overnight and there is just one lesser-followed economic report due out in the U.S. today: Richmond Fed Manufacturing Index (E: -5.0) which is unlikely to materially move markets.

There are several Fed officials scheduled to speak today including Jefferson (9:00 a.m. ET), Harker (9:30 a.m. ET), Kashkari (1:40 p.m. ET), and Barkin (2:30 p.m. ET). Given Trump’s recent attacks on Powell’s Fed leadership, their comments have the potential to trigger risk-on or risk-off money flows in intraday trade today.

In the afternoon, there is a 2-Yr Treasury Note auction at 1:00 p.m. ET. Because the 2-Yr is viewed as a “policy-rate-sensitive” Treasury security, the level of demand for the Notes could lead to yield swings that could ultimately impact the stock market.

Finally, earnings season is in full swing this week with notable quarterly results due from VZ ($1.15), GE ($1.26), LMT ($6.32), TSLA ($0.35), and COF ($3.70) today. There will be particular focus on guidance, forecasts, and commentary from leadership as forward earnings expectations have both deteriorated and become increasingly uncertain since the start of the year.

Why This Is (Likely) A Rangebound Market

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What’s in Today’s Report:

  • Why This Is (Likely) A Rangebound Market
  • Weekly Market Preview:  Earnings in Focus (Will Corporate America Confirm Investors’ fears?)
  • Weekly Economic Cheat Sheet:  Is Uncertainty Pressuring Economic Growth Yet?

Futures are sharply lower (down around 1%) following the holiday weekend as rising tension between Fed Chair Powell and President Trump pressured sentiment.

On Friday, National Economic Director Hasset said the White House was studying if Powell can be fired, adding another potential source of uncertainty to the markets.

Today volumes will be low given many global markets (including the UK, EU, Hong Kong and Australia) are closed.  But, there is one economic report, Leading Indicators (E: -0.3%) and one Fed speaker Goolsbee (8:30 a.m. ET).  Any data that implies stable growth and a dovish Fed should help support stocks.

Why Powell Caused Stocks to Drop

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What’s in Today’s Report:

  • Why Powell Caused Stocks to Drop

Futures are moderately higher on positive trade headlines and strong tech earnings.

President Trump posted on social media that “Big Progress” has been made in a trade deal with Japan and that’s helping stocks rally (although details were light).

On earnings, TSM beat earnings and boosted guidance and provided some needed good news for the tech sector.

Today there are several economic reports including, on order of importance, Jobless Claims (E: 225K), Philly Fed (E: 6.7) and Housing Starts (1.420M).  As has been the case, markets will be looking for solid data that pushed back on the slowdown narrative.  We also have one Fed speaker, Barr (11:45 a.m. ET), but he shouldn’t move markets.

Earnings season continues to heat up, meanwhile, and important reports today include UNH ($7.27), AXP ($3.46) and NFLX ($5.74).

MMT Chart: A Rare Oversold Condition

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What’s in Today’s Report:

  • Market Multiple Table Chart:  A Rare Oversold Condition

Futures are moderately lower (down around 1%) as investors take profits following Wednesday’s massive rally.

There was no new tariff or trade news overnight and investors digested the good news/bad news of no punitive global reciprocal tariffs (positive) but still-in-place 125% tariffs on China and 10% tariffs on most U.S. imports (negative).

Today focus will turn back towards economic data and the two key reports are CPI (E: 0.1% m/m, 2.6% y/y) and Jobless Claims (E: 225K).  A weaker than expected CPI and lower than expected jobless claims will push back against stagflation concerns and help stocks potentially extend yesterday’s rebound.

Turning to the Fed, there are multiple speakers today but they are unlikely to move markets (the Fed is in “wait and see” mode like the rest of us).  Speakers today include:  Barkin (8:30 a.m. ET), Logan (9:30 a.m. ET), Schmid & Bowman (10:00 a.m. ET), Goolsbee & Harker (12:00 p.m. ET).

April Market Multiple Table Update

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What’s in Today’s Report:

  • April Market Multiple Table Update
  • Chart – March Small Business Optimism Turns Sharply Lower

Futures are recovering from overnight losses as investors await China’s reaction to the latest wave of tariffs that went into effect overnight amid otherwise quiet news flow.

Economically, there were no market-moving reports overnight, however the Reserve Bank of New Zealand did cut their policy rate by 25 bp (3.75%), meeting expectations.

There are no notable economic reports today which will leave investors largely focused on trade war developments and tariff headlines today.

Outside of tariff news, traders will be watching a 10-Yr Treasury Note auction at 1:00 p.m. ET as well as the March FOMC meeting minutes which will be release at 2:00 p.m. ET.

Finally, there is one Fed officials scheduled to speak: Barkin (12:30 p.m. ET). Any less discouraging commentary will be welcomed by markets today.

Bull vs. Bear: Which Argument Makes More Sense?

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What’s in Today’s Report:

  • Bull vs. Bear:  Which Argument Makes More Sense?
  • Weekly Market Preview:  Will There Be Any Tariff Relief?
  • Weekly Economic Cheat Sheet:  Focus Turns to Inflation (CPI on Thursday)

Futures are sharply lower again (down close to 2%) as there was no meaningful tariff relief over the weekend while administration officials reiterated their support for the current tariff policy.

Trump, Bessent and Lutnick all downplayed the market declines and doubled down on the current tariff policy.

On tariff relief, Vietnam, Japan, the UK and others expressed a desire to negotiate tariffs lower, but nothing concrete occurred.

Today focus will remain on tariff headlines and any headlines that imply tariff relief could cause a sharp rebound, given the intensity of the recent declines.  There is one Fed speaker today, Kugler (10:30 a.m. ET), but she shouldn’t move markets.