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Why Don’t Stocks Drop On Bad News?

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Why Don’t Stocks Drop On Bad News?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Don’t Stocks Drop On Bad News
  • Weekly Market Preview:  Earnings Are the Key This Week
  • Weekly Economic Cheat Sheet:  Important Growth Data on Thursday

Futures are slightly higher following a quiet weekend of news as investors look ahead to the first busy week of Q3 earnings and more important economic data.

Economically, Chinese exports missed expectations and the latest stimulus announcement underwhelmed, but none of it was bad enough to reverse any more of the recent rally.

This week is full of potentially market moving events from earnings and economic data but they all come later in the week and today should be mostly quiet given it’s the Columbus Day holiday (banks and bond markets closed) and there are no notable economic reports.  We do get a few Fed speakers, however (Kashkari (9:00 a.m. ET & 5:00 p.m. ET), Waller (3:00 p.m. ET)), but they shouldn’t move markets.

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Sevens Report’s Tom Essaye also sees technical indicators flashing red

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Sevens Report’s Tom Essaye also sees technical indicators flashing red: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Is Rising, but So Are the Risks. What to Do Now.

Sevens Report’s Tom Essaye also sees technical indicators flashing red. The Relative Strength Index, or RSI, a momentum indicator used to identify overbought or oversold conditions, has been diverging from the S&P 500 for about six months, turning lower even as the index keeps pushing higher.

“That is a concern because it is a bearish divergence that we have repeatedly seen when lasting market tops are being established, including the early 2022 highs,” Essaye writes. “This same divergence occurred before the market peaks in 2000, 2007, and even the short-lived bear market of 2020. Bottom line, the divergence between the outright price action of the S&P 500 (hitting higher highs) and its weekly RSI indicator (establishing lower highs) is a concerning technical dynamic that warrants attention as it suggests the risks of a more pronounced pullback in the stock market is statistically elevated right now.”

Also, click here to view the full Barron’s article published on October 9th, 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.

Why Yesterday’s Economic Data Wasn’t That Bad

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Why Yesterday’s Economic Data Wasn’t That Bad: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Yesterday’s Economic Data Wasn’t That Bad

Futures are slightly weaker this morning as Tesla’s “Cyber Cab” event underwhelmed while investors look ahead to the start of earnings season.

Economically, German CPI and UK monthly GDP both met estimates and didn’t provide any negative surprises.

Today investors will be focused on more inflation data via PPI (E: 0.2% m/m, 1.6% y/y) and Core PPI (E: 0.2% m/m, 2.7% y/y) while there are also several Fed speakers including Goolsbee (9:45 a.m. ET), Logan (10:45 a.m. ET) and Bowman (1:10 p.m. ET).  But, barring any major surprises from PPI or those Fed officials, they shouldn’t move markets.

Additionally, focus will now turn towards earnings and that will be one of the dominant forces on markets for the next three weeks.  Key reports today include: JPM ($4.02), BLK ($10.42), WFC ($1.27), FAST ($0.52).

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Are Emerging Markets Finally A Buy?

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Are Emerging Markets Finally A Buy?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are Emerging Markets Finally A Buy?
  • FOMC Minutes:  Did They Reinforce Rate Cut Expectations?

Futures are slightly lower mostly on digestion of Wednesday’s rally and as markets look ahead to today’s important economic data (CPI and claims).

Economically, Germany updated the last several retail sales reports and the net change was slightly better than expected, although that’s not moving markets.

Today focus will be on economic data as we get two potentially market moving reports:  CPI (E: 0.1% m/m, 2.3% y/y) / Core CPI (E: 0.2% m/m, 3.2% y/y) and Jobless Claims (E: 226K).  Goldilocks data, meaning an in-line CPI/Core CPI report and stable jobless claims, will keep soft landing hopes strong and likely boost stocks later today.

We also have several Fed speakers today including Cook (9:15 a.m. ET), Barkin (10:30 a.m. ET) and Williams (11:00 a.m. ET) but none of them should move markets.

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October MMT Chart: Record Targets Amid a Cautious Divergence

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October MMT Chart: Record Targets Amid a Cautious Divergence: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • October MMT Update – Scenario Targets Hit Fresh Records
  • A Concerning Technical Divergence Has Emerged on the Weekly S&P 500 Chart

Futures are mildly lower as the DOJ said it was considering a breakup of GOOGL following a monopoly ruling which dragged down tech stocks overnight while international news was mixed.

Chinese equities retreated 7% on the session amid ongoing stimulus uncertainty, prompting the government to announce a press event for Saturday to address fiscal policy.

Looking into today’s session, there are no notable economic reports to watch, leaving focus on the September FOMC meeting minutes which are due to be released at 2:00 p.m. ET.

There are a slew of Fed speakers today including: Bostic (8:00 a.m. ET), Logan (9:15 a.m. ET), Goolsbee (10:30 a.m. ET), Barkin (12:15 p.m. ET), Jefferson (12:30 p.m. ET), Collins (5:00 p.m. ET), and Daly (6:00 p.m. ET).

A less-dovish tone from Fed speakers over the course of the last week contributed to the uptick in broad market volatility, so more of the same could pressure markets again today while any hint of another 50 bp rate cut in November could spark a dovish wave of risk-on money flows (unlikely, however, after Friday’s jobs report).

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How to Cut Through the Market Noise

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How to Cut Through the Market Noise: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How to Cut Through the Market Noise
  • Weekly Market Preview:  Inflation and Earnings
  • Weekly Economic Cheat Sheet:  CPI on Thursday is the Key Report

Futures are moderately lower following underwhelming economic data and as investors continue to wait for the Israeli response to Iran.

Economically, German Manufacturers’ Orders and Euro Zone retail sales both missed estimates.

Geopolitically, investors are still awaiting the Israeli response strike to Iran and that lingering uncertainty is further boosting oil and weighing on futures.

Today the calendar is quiet as there is just one economic report, Consumer Credit (E: $13.5B) and two Fed speakers, Bowman (1:00 p.m. ET) and Kaskari (1:50 p.m. ET) but none of that should move markets.  Instead, focus will be on geo-politics as investors anxiously await the Israeli response strikes on Iran and whether they hit key infrastructure (nuclear sites, energy sites) or not will determine the impact on markets.

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The port strike could disrupt the data

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The port strike could disrupt the data: Tom Essaye Quoted in Forbes

Could Dock Worker Strike Spike Inflation? Experts Are Split.

Sevens Report analyst Tom Essaye wrote Tuesday to clients any strike-related inflation uptick is ultimately just a “temporary disruption” and shouldn’t impact the view of the broader inflation picture.

“The port strike could disrupt the data, essentially creating a smoke screen for the Fed when trying to stick the soft landing,” wrote Essaye.

Also, click here to view the full Forbes article published on October 1st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Lastly, 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.

0DTE Options Primer (3 ETF Plays)

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0DTE Options Primer (3 ETF Plays): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Primer (and Potential Plays) on 0DTE Options
  • September Flash PMI Takeaways
  • Chart: The Rally in the “Rest of the Market” Is Losing Momentum

U.S. stock futures are tracking most global equity markets higher after the People’s Bank of China announced new stimulus measures to support economic growth overnight.

The PBOC cut a key policy interest rate, reduced bank reserve requirements, and injected more than $100B into the financial system sending Chinese stocks higher by 4%+.

Today, there are three economic reports to watch: Case-Shiller Home Price Index (E: 5.9%), FHFA House Price Index m/m (E: -0.1%), and Consumer Confidence (E: 103.0). After last week’s 50 bp rate cut from the Fed, investors are looking for stable and solid economic data so the risk to markets is underwhelming data this morning.

There is one Fed speaker today: Bowman at 9:00 a.m. ET and investors are increasingly hopeful the FOMC will cut rates by 50 bp again in November in order to pull off a soft landing so any pushback on that idea from Bowman could weigh on risk assets.

Finally, there is a 2-Yr Treasury Note auction at 1:00 p.m. ET. Strong demand (lower yields) will be supportive of a continued rally in stocks while a weak auction (higher yields) could also weigh on equity markets this afternoon.

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Understanding Why the Fed Cut 50 bps

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Understanding Why the Fed Cut 50 bps: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Understanding Why the Fed Cut 50 bps
  • Weekly Market Preview:  Can Momentum Keep Pushing Markets Higher?
  • Weekly Economic Cheat Sheet:  Focus Turns Back to Growth

Futures are slightly higher following a mostly quiet weekend of news and despite soft economic data overnight.

Economically, the EU flash PMIs were weaker than expected as manufacturing declined to 44.8 vs. (E) 45.7 while services nearly broke 50 (falling to 50.5 vs. (E) 52.3).

Geopolitically, Israeli strikes against Hezbollah continued but for now, markets are ignoring the escalation.

Today brings the two most important economic reports of the week vis the Flash Manufacturing PMI (E: 48.5) and Flash Services PMI (E: 55.3).  Numbers that meet or modestly exceed estimates should keep last week’s rally going while very disappointing readings will modestly increase growth concerns.

There are also several Fed speakers today including Bostic (8:00 a.m. ET), Goolsbee (10:15 a.m. ET) and Kashkari (1:00 p.m. ET).

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.

Beyond the very short term, it’s all about growth

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Beyond the very short term, it’s all about growth: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Is Rising. It’s Not All About the Size of Rate Cuts.

Data on both retail sales and U.S. industrial production were solid, but traders still see a 61% chance of a half-point rate cut tomorrow. Sevens Report Research’s Tom Essaye says investors are still optimistic about a soft landing for the economy as the Fed prepares to cut rates. He notes tech earnings recently showed signs of life after some weaker showings in August.

Though you can expect some fireworks tomorrow as traders react to the rate decision and the forecasts for future cuts from central bank officials, Essaye argues economic data and earnings will be the market’s main driver ahead.

“Beyond the very short term, it’s all about growth,” Essaye says. “This Fed rate cut is honestly, other than from a sentiment standpoint, largely inconsequential, because whether or not the economy slows a lot between now and year end, this rate cut is not going to impact that; they take too long to filter through the economy.”

Also, click here to view the full Barron’s article published on September 17th, 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.