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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.

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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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CPI Preview (Good, Bad & Ugly)

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CPI Preview (Good, Bad & Ugly): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Preview (Good, Bad & Ugly)
  • EIA Analysis and Oil Market Update

Futures are slightly lower as investors digest Wednesday’s new highs while earnings this morning underwhelmed.

PEP and DAL both posted disappointing guidance and the stocks are down pre-market, weighing on futures.

Economically, data was good overnight as German CPI was in-line while UK GDP was better than expected.

The most important report of the week comes this morning via the CPI report and expectations are as follows:  CPI (E: 0.1% m/m, 3.1% y/y), Core CPI (E: 0.2% m/m, 3.4% y/y).  To keep things simple, if CPI shows a continued decline in inflation, that will make a September rate cut even more likely and help support stocks.  If inflation bounces back, that’s a real surprise negative and don’t be shocked if the S&P 500 falls 1% or more.

Other notable events today include Jobless Claims (E: 239K) and one Fed speaker, Bostic (11:30 a.m. ET), along with the start of earnings season (notable reports today include PEP ($2.15), DAL ($2.37) and CAG ($0.56)).  Each of these events are important in their own right but the morning will be dominated by CPI and as that goes, so likely goes the market today.

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July MMT Chart and Powell Testimony Takeaways

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July MMT Chart and Powell Testimony Takeaways: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Powell Testimony Takeaways – Underappreciated Growth Risks
  • July MMT Chart – All Scenario Targets Hit New Highs

Futures are higher again this morning amid firming Fed rate cut bets after Powell’s first day of semiannual testimony on Capitol Hill while inflation data was mixed overnight.

Economically, inflation data in Asia was mixed as Chinese CPI fell to 0.2% vs. (E) 0.4% y/y but Japanese PPI rose from an upwardly revised 2.6% in May to 2.9% in June.

There are no notable economic reports in the U.S. today which will leave markets primarily focused on Fed Chair Powell’s second day of Congressional testimony, this time before the House Financial Services Committee.

There are two additional Fed speakers this afternoon, Goolsbee and Bowman at 2:30 p.m. ET while Cook speaks later this evening, well after the close (7:30 p.m. ET).

Finally, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET. Yesterday’s 3-Yr Note auction saw solid demand, however there is some uncertainty about demand for longer duration Treasuries right now, and weak results at today’s auction could send those yields higher which has the potential to trigger some profit taking in equities.

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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.

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.