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What Is the Bitcoin “Halving?”

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What Is the Bitcoin “Halving?”: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Is the Bitcoin “Halving?”
  • Manheim Used Vehicle Index Continues to Decline – Chart

Stock futures are little changed this morning as yields drift sideways and the dollar firms ahead of the Fed decision.

European markets were led lower by luxury brand names after soft earnings from Gucci’s parent company (Kering SA) offset favorable inflation data out of the UK.

Economically, the PBOC left the Loan Prime Rate at 3.45% which is seen as accommodative while U.K. CPI favorably fell from 5.1% to 4.5% vs. (E) 4.6% in February.

There are no notable economic reports today which will leave investor focus pretty much exclusively on the Fed with the FOMC Meeting Announcement at 2:00 p.m. ET followed by Fed Chair Powell’s press conference at 2:30 p.m. ET.

If the Fed is hawkish and signals a higher-for-longer policy stance (more so than is already priced in), expect some volatility in the wake of the decision while a dovish decision projecting confidence in a soft landing could see the 2024 rally extend to new highs.

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Is It Time to Buy Gold

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Is It Time to Buy Gold? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is It Time to Buy Gold? Bull Case vs. Bear Case
  • ISM Services Index Takeaways – Still Healthy Readings But Cracks Emerge
  • JOLTS Plunge Below Pre-Pandemic Trend

U.S. equity futures are tracking global stocks higher this morning. More underwhelming economic data overseas is helping bolster the case for rate cuts from the world’s biggest central banks in the first quarter of 2024.

Economically, German Manufacturer’s Orders fell -3.7% vs. (E) +0.5% in October. Eurozone Retail Sales edged up just +0.1% vs. (E) +0.3%. This is helping drive a bid in bond markets amid dovish money flows across asset classes today.

Looking into today’s session, focus will be on economic data early. The ADP Employment Report (E: 123K), International Trade in Goods and Services (E: -$64.1B) and Productivity and Costs (E: +4.8%, -0.9%) data will release before the bell.

Finally, there are no Fed officials scheduled to speak today. So the market will be looking for a still healthy but not “hot” ADP print, steady trade data, and a continued decline in unit labor costs (wage inflation) to help support soft-landing hopes and extend the November rally.

Is It Time to Buy Gold

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November Market Multiple Levels Chart: S&P 500

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November Market Multiple Levels Chart: S&P 500: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • November Market Multiple Levels Chart – S&P 500 (Printable/Sharable PDF)
  • Manheim Used Vehicle Value Index Falls 4% Y/Y – Chart

Stock futures are flat as Treasury yields edge higher following a mostly quiet night of new with Powell’s morning commentary coming in to focus.

Economically, German CPI was unchanged in October at 3.8% y/y, meeting estimates, while Eurozone Retail Sales were not as bad as feared, falling -2.9% vs. (E) -3.2%.

Looking into today’s session, there are no market-moving economic reports in the U.S. today, but the Treasury will hold a 10-Yr Note auction at 1:00 p.m. ET that could move bond markets. And if we see yields begin to creep higher after the auction, that will act as a strengthening headwind for equity markets.

Outside of the Treasury auction, focus will be on Fed speak starting with Powell this morning before Williams, Barr, and Jefferson speak after the lunch hour.

Earnings continue to wind down but there are two notable companies reporting today: DIS ($0.68), LYFT ($0.13).

Bottom line, a lot of the November rally in stocks has been based on a dovish shift in Fed policy expectations and if either the Treasury auction or commentary from Fed officials suggest markets have become too dovish, stocks are likely to give back some of the recent gains.

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Trading Today Will be Dominated by Politics, Geopolitics, and Yields

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Trading Today Will be Dominated by Politics, Geopolitics, and Yields: Tom Essaye Quoted in Barron’s

Stocks Continue Falling Following Powell Remarks

The 10-year Treasury yield ticked lower to 4.949% after threatening to hit 5% for the first time since 2007.

Sevens Reports Research’s Tom Essaye notes that although two Federal Reserve officials are set to speak publicly today. He doesn’t expect either to move markets following Powell’s comments on Thursday.

“So, trading today will be dominated by politics, geopolitics, and yields,” he writes. “Any progress on finding a Speaker of the House will be welcomed by markets (regardless of whether it’s Jordan, McHenry or anyone else), and calming of tensions in the Middle East will similarly be welcomed by markets as would a decline in the 10-year yield. Meanwhile, the opposite of any of those will likely add more headwinds to stocks.”

Also, click here to view the full Barron’s article published on October 21st, 2023. 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 Rally

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Why Didn’t Powells’ Comments Cause A Rally?

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Why Didn’t Powells’ Comments Cause A Rally? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Didn’t Powells’ Comments Cause A Rally?

Futures are modestly lower as global economic data pointed to slowing growth and falling inflation pressures.

German PPI declined more than expected (-0.2% vs. (E) 0.4%). While UK Retail Sales were weak (-0.9% vs. (E) -0.1%) pointing to slowing growth and lower inflation.

Politically, there remains no end in sight to Republicans’ efforts to elect a Speaker, as Jim Jordan is expected to seek a third round of voting (one he is likely to lose, again).

Today there are no economic reports but there are two Fed speakers, Harker (9:00 a.m. ET) and Mester (12:15 p.m. ET), although given Powell’s comments yesterday neither should move markets.

So, trading today will be dominated by politics, geopolitics and yields.  Any progress on finding a Speaker of the House will be welcomed by market (regardless of whether it’s Jordan, McHenry or anyone else), any calming of tensions in the Middle East will similarly be welcomed by markets as would a decline in the 10-year yield.  Meanwhile, the opposite of any of those will likely add more headwinds to stocks.

Why Didn’t Powells’ Comments Cause A Rally?

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Stable Treasury Yields: Tom Essaye’s Insight

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Stable Treasury Yields: Tom Essaye Quoted in Barron’s

Stocks Are Rising, With Tech Leading the Way Higher

Technology stocks were leading the broader market higher in early Monday trading as traders braced for a busy week ahead.

“Today there are no notable economic reports nor any Fed speakers, so focus will remain on Treasury yields and if yields are relatively stable, then stocks can rebound from last week’s losses,” writes Sevens Report Research’s Tom Essaye. 

The big event of the week will be the release of the consumer-price index for August on Wednesday. The inflation reading will inform the Federal Reserve’s next moves on inflation. 

Also, click here to view the full Barron’s article published on September 11th, 2023. However, to see Tom’s full comments on the current market environment sign up here.

Treasury Yields

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.

Is the Bullish Argument for Stocks Becoming Unsustainable?

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The Bullish Argument for Stocks: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is the Bullish Argument for Stocks Becoming Unsustainable?
  • Weekly Market Preview:  Does Disinflation Continue or Reverse?
  • Weekly Economic Cheat Sheet:  CPI on Wednesday is the Key Report This Week

Futures are moderately higher on encouraging Chinese economic data. As well as multiple financial publications predicted the Fed is done with rate hikes.

Chinese New Yuan Loans rose 1,360 billion vs. (E) 1,200 billion hinting the Chinese economy may be stabilizing.

Reuters, Bloomberg and the WSJ have published articles since Friday essentially saying the Fed is done with rate hikes and while that’s not new news, it’s helping futures rally this morning.

Today there are no notable economic reports nor any Fed speakers. Today’s focus will remain on Treasury yields and if yields are relatively stable, then stocks can rebound from last week’s losses.

Join us for an in-depth exploration of the stock market’s current trajectory. 

Bullish argument

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Navigating Market Signals: Tom Essaye’s Insight on Growth and Demand

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Market Growth and Demand Signals – Tom Essaye Quoted in Barron’s: Strengthen your market knowledge with a free trial of The Sevens Report.

U.S. Stock Futures Slip as Higher Oil Prices Renew Inflation Fears

Economic data on tap includes the ISM services index for August, the trade balance for July, and the release of the Fed’s Beige Book, an anecdotal report of current economic conditions published eight times a year.

“As has been the case lately, the market is looking for signs of slowing demand but not a sharp downturn in growth,” said Tom Essaye, the founder of Sevens Report Research.

“The ISM will be the more important report to watch so a number that is ‘too hot’ or ‘too cold’ will likely see yesterday’s stock market declines extended, while a Goldilocks print will help markets stabilize.”

Also, click here to view the full Barron’s article published on September 7th, 2023. However, to see Tom’s full comments on market growth and demand signals sign up here.

Market Growth and Demand Signals

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What’s Causing the Increased Volatility in Stocks?

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What’s in Today’s Report:

  • What’s Causing the Increased Volatility in Stocks?
  • Weekly Market Preview:  Do the Three Pillars of the Rally Stay Intact?
  • Weekly Economic Cheat Sheet:  Key Inflation Data This Week (CPI on Thursday)

Futures are rebounding modestly from last week’s declines following a quiet weekend of news and ahead of an important week of inflation data.

Economically, the only notable number was German Industrial Production, which fell more than expected (-1.5% vs. (E.) -0.5%) and again underscored growing recession risks in Europe.

Today the key economic report is the Manheim Used Vehicle Value Index (9:00 a.m. ET) as this is viewed as an anecdotal reading on inflation, and markets will want to see a further decline in car prices.

We also get Consumer Credit (E: $13.00B) and there are two Fed speakers, Harker (8:15 a.m. ET) and Bowman (8:30 a.m. ET), and markets will want to see those events reinforce the Goldilocks narrative (solid consumer spending and the Fed basically done with rate hikes).

What Caused Yesterday’s Selloff? (It Wasn’t the Fitch Downgrade)

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What’s in Today’s Report:

  • What Caused Yesterday’s Selloff? (It Wasn’t the Fitch Downgrade)
  • Jobs Report Preview
  • EIA Analysis and Oil Market Update

Futures are modestly lower following Wednesday’s selloff on more disappointing earnings and mixed economic data.

Economically, the EU Composite PMI slightly missed estimates (48.6 vs. (E) 48.9) as recession worries creep higher.

Tech earnings underwhelmed again, with disappointing results from QCOM and PYPL (both stocks down 7%-ish).

Today will be a busy day of data and earnings.  First, the BOE is set to hike rates 50 bps, but markets will want to see if they signal this is the last hike of the cycle.

Turning to the U.S., there are several important economic reports today including: Jobless Claims (E: 225K), ISM Services PMI (E: 53.0) and Unit Labor Costs (E: 2.6%).  Investors need Goldilocks economic data to help stabilize stocks, and if these reports are stronger than expected, look for Treasury yields to rise and for stocks to fall (like what happened yesterday).

Finally, on earnings, we get results from two of the biggest stocks in the market after the close:  AAPL ($1.19) and AMZN ($0.34).