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Why the Next Two Weeks Are So Important For This Market

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Why the Next Two Weeks Are So Important For This Market: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Next Two Weeks Are So Important For This Market
  • Weekly Market Preview:  Magnificent Seven Earnings and Important Economic Data
  • Weekly Economic Cheat Sheet:  Jobs and ISM Manufacturing PMI on Friday

Futures are sharply higher following two market-positive geo-political.

In the Mid-East, the Israeli’s response to the Iranian missile attacks was smaller than expected and is viewed as a de-escalation, as oil is down 6% on falling geo-political risks.

In Japan, the ruling LDP party lost its majority in Parliament and looming political gridlock should further delay any BOJ rate hikes (Japanese stocks rose nearly 2% on the news).

Today there are no notable economic reports but as long as oil keeps dropping, the early rally should continue. Finally, earnings season continues and some reports we’ll be watching today include: ON (0.97), F (0.49), WM ($1.86).

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How Bullish Are Investors? (The Answer May Surprise You)

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How Bullish Are Investors? (The Answer May Surprise You): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Bullish Are Investors?  (The Answer May Surprise You)

Futures are modestly higher following a night of solid earnings and mixed economic data.

TSLA is rallying 11% pre-market after posting stronger than expected earnings and that’s helping futures rally.

Economically, EU and UK flash PMIs were mixed but, on balance, Goldilocks enough to support a bounce in stocks.

Today focus will shift from earnings to economic data and the important reports today are:  Jobless Claims (E: 247K), Oct. Flash Manufacturing PMI (E: 47.6) and the Oct. Flash Services PMI (E: 55.0).  Goldilocks data that’s in-line with expectations (so not too good or too bad) is the best outcome for a continued rebound in stocks and bonds today.

We also have one Fed speaker today, Hammack at 8:45 a.m. ET, and some notable earnings including UPS ($1.65), AAL ($0.13) and COF ($3.70).  But, barring any major surprises they shouldn’t move markets.

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Why Yields Are Suddenly Surging

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Why Yields Are Suddenly Surging: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Rising Yields: Is it Growth, the Fed, or Fiscal Worries?
  • Chart: Market Based Inflation Expectations Hit 4-Month Highs

Futures are under pressure again this morning as the 10-Yr yield continues to edge further beyond 4.20%, the highest readings since July, while traders await more important earnings releases today and into the weekend.

Economically, Taiwan’s Industrial Production index, which includes the nation’s critical semiconductor output, slowed to 11.22% in September from a lower revised 12.54% rise in August signaling a potential slowdown in high-tech, AI-focused chips in H2’24.

Today, there is one economic report due out: Existing Home Sales (E: 3.90 million) but unless it is meaningfully “hot” it should not have a major impact on markets (although a cool report that influences less hawkish money flows would be well received by equity markets).

Additionally, there are two Fed speakers to watch: Bowman (9:00 a.m. ET) and Barkin (12:00 p.m. ET) from which markets will look for a less-hawkish, more accommodative tone than the recent “higher-for-longer” policy rate chatter.

Finally, earnings season continues with several notable companies reporting quarterly results including BA ($-10.34), KO ($0.74), and T ($0.59) before the open, and TSLA ($0.58), IBM ($2.27), and TMUS ($2.34) after the close.

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Why Are Utilities the Best-Performing Sector YTD?

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Why Are Utilities the Best-Performing Sector YTD?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Are Utilities the Best Performing Sector YTD?
  • Chart: 10-Yr Yields Test 3-Month Highs – A Renewed Headwind for Stocks

U.S. stock futures are extending yesterday’s losses in premarket trade this morning, led lower by small-caps as Treasury yields continue to test multi-month highs amid a higher-for-longer Fed policy outlook.

Economically, the only notable release overnight was Hong Kong’s CPI which picked up modestly in September, rising to 0.1% from 0.0% in August (2.2% y/y), but that is not moving markets today.

There are no notable economic reports today and just one Fed speaker on the calendar: Harker (10:00 a.m. ET).

The light economic calendar will leave trader focus on earnings with: VZ ($1.18), MMM ($1.93), GM ($2.50), GE ($1.13), LMT ($6.47), and FCX ($0.40) all reporting quarterly results before the bell while STX ($1.50) and TXN ($1.36), both of which are tech-proxies, will report after the closing bell.

Beyond earnings, Treasury yields will also be in focus today as the sharp, double-digit rise in the 10-Yr yield presented a significant headwind on broader equity markets yesterday. If yields continue higher, expect stocks to have a hard time stabilizing today.

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Why Didn’t Stocks Rally More Last Week?

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Why Didn’t Stocks Rally More Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Didn’t Stocks Rally More Last Week?
  • Weekly Market Preview: Earnings Are the Key This Week
  • Weekly Economic Cheat Sheet: The First Major October Datapoint

Futures are slightly lower to start the week despite more Chinese stimulus and better than expected EU inflation data.

The PBOC announced another larger than expected rate cut, continuing to add stimulus to the Chinese economy.

Economically, German PPI declined more than expected (-1.4% vs. (E) -1.2%), increasing ECB rate cut expectations.

Today there is only one notable economic report, Leading Indicators (E: -0.3%) but there are several Fed speakers: Logan (8:55 a.m. ET), Kashkari (1:00 p.m. ET), Schmid (5:05 p.m. ET).  If the data is in-line and the Fed speakers reinforce two remaining rate cuts in 2024, that should support markets (it’s the Goldilocks set up).

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A market that remains firmly anchored by two key beliefs

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A market that remains firmly anchored by two key beliefs: Sevens Report Analysts Quoted in Investing.com

Why don’t stocks drop on bad news?

As per analysts at Sevens Report, this resilience reflects a market that remains firmly anchored by two key beliefs: economic growth will remain stable, and the Federal Reserve will cut interest rates—conditions that continue to support bullish sentiment despite growing risks.

Additionally, jobless claims surged to summer highs, suggesting some softening in the labor market. “However, that number was inflated by the Boeing strike and by unemployment related to the damage from Hurricane Helene in Florida and North Carolina,” the analysts said.

Sevens Report argues that part of the reason stocks haven’t wavered is that the risks, while real, haven’t yet materialized in ways that challenge the underlying narrative of a soft landing.

“The ‘burden of proof’ remained squarely on the bears,” the analysts said, no single negative development has been powerful enough to shift market sentiment away from expectations for stable growth and falling rates.

Also, click here to view the full article featured on Investing.com published on October 19th, 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.

Semiconductor stocks have cycle-leading characteristics

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Semiconductor stocks have cycle-leading characteristics: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Tech’s Moment of Truth Has Arrived

As Sevens Report President Tom Essaye notes, “semiconductor stocks have cycle-leading characteristics,” given their volatility and risky balance sheets, meaning they “begin to roll over before most of the rest of the market as traders rotate away to lower-beta, more value-oriented names during times of uncertainty, including economic downturns (but admittedly also “growth scares” such as 2022). So, as we continue to navigate an uncertain market landscape in the second half, the SOX are offering us a ‘canary in the market coal mine’ right now that could, and likely will, offer fair warning before a more meaningful decline in the broader market indexes, such as the S&P 500 , eventually begins to take shape.

Also, click here to view the full Barron’s article published on October 18th, 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.

Almost everything is favoring the bear case for oil right now

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Almost everything is favoring the bear case for oil right now: Tom Essaye Quoted in Market Watch

Oil futures finish higher, but analyst sees bearish trend for prices

Despite the Middle East developments, “almost everything is favoring the bear case for oil right now,” said Tyler Richey, co-editor at Sevens Report Research. “Uncertainties about global economic growth amid recently commenced central bank rate-cutting cycles, OPEC+ planning to raise production targets by year-end and evidence of fading consumer demand in the high-frequency inventory data all support the oil bears here,” he told MarketWatch.

Also, click here to view the full MarketWatch article published on October 26th, 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.

Hard Landing/Soft Landing Scoreboard (October Update)

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Hard Landing/Soft Landing Scoreboard (October Update): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing/Soft Landing Scoreboard (October Update)

Futures are slightly higher thanks to better-than-expected Chinese economic data and more solid tech earnings.

Chinese Retail Sales and Fixed Asset Investment both beat estimates, boosting investor sentiment towards China.

On earnings, NFLX beat estimates and is the second straight big tech company to post solid results.

Today we have one economic report, Housing Starts (1.400M) and several Fed speakers, including Bostic (9:30 a.m. & 12:30 p.m. ET), Kashkari (10:00 a.m. ET) and Waller (12:10 p.m. ET).  With recent data stronger than expectations, if today’s Fed officials (including Waller) reinforce their desire for two rate cuts that will be an incremental positive.

Earnings season also continues to roll on and today we get notable reports from AXP (E: $3.27), PG (E: $1.90) and RF (E: $0.53).

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Tom Essaye Interviewed On Yahoo Finance’s Morning Brief

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A slowing economy does not necessarily mean a recession: Tom Essaye Interviewed On Yahoo Finance

Economic, geopolitical risks could be rude awakening for market

“I want everybody to realize that a slowing economy does not necessarily mean a recession, but where stocks are right now, if growth even slows to sort of flat or sub 1%, you could see a 10% drop in the S&P 500, and we wouldn’t even be probably at fair value,” Sevens Report Research founder and president Tom Essaye tells Seana Smith and Brad Smith on the Morning Brief.’

“So look, things are good right now, but I do think the market is complacent to economic slowdown risks.”

Essaye has been “advocating for focusing on quality and lowering volatility” through ETFs, and views geopolitical risks to be a chief concern at the moment.

“And then also there’s going to be a lot of political uncertainty coming out of the election, because we’re all going to be trying to game what policy changes are going to occur. All of these things can combine to sort of fracture this perfect window we’re in in the markets,” Essay explains. “All I’m trying to do is remind investors that, hey, there are risks out there and that… the stock market can go two directions as well.”

Also, click here to view the full interview with Yahoo Finance published on October 15th, 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.