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MMT Chart: S&P Reaches Technical Tipping Point

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MMT Chart: S&P Reaches Technical Tipping Point: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • MMT Chart: Steady Targets Amid Rising Technical Risks
  • Powell Testimony Takeaways – Policy on “Hold” for Now
  • NFIB Shows Fading Optimism Among Small Business Owners

Futures are mixed but little changed and bond yields are flat ahead of today’s critical U.S. CPI release.

Economically, Italian Industrial Production fell -3.1% vs. (E) -0.2% in December which served as a reminder that Europe continues to face significant growth risks.

Traders will be keenly focused on the January CPI (E: 0.3% m/m, 2.9% y/y), and Core CPI (E: 0.3% m/m, 3.2% y/y) release before the bell this morning before focus turns back to Capitol Hill for Powell’s second day of semiannual testimony (10:00 a.m. ET).

A “hot” inflation print is a considerable risk to equities and other risk assets here as hawkish money flows could result in heavy market declines today.

Looking ahead to the afternoon, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET and two additional Fed speakers to watch today: Bostic (12:00 p.m. ET), Waller (5:05 p.m. ET), however CPI and Powell will be the primary market-focus over the course of the session.

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Can Stocks Rally in the Face of Tariff Threats?

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Can Stocks Rally in the Face of Tariff Threats?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Can Stocks Rally in the Face of Tariff Threats?
  • Weekly Market Preview:  Do Fed Rate Cut Expectations Change This Week?
  • Weekly Economic Cheat Sheet:  CPI on Wednesday is the Key Report

Futures are modestly higher despite more tariff threats as markets bounce following Friday’s decline.

President Trump announced he was imposing 25% tariffs on steel and aluminum imports and will apply “reciprocal” tariffs on numerous countries later this week.

Markets are shrugging off the announcements so far, however, because they again lack specific details.

Economically, there were no notable reports overnight.

Today focus will be on the New York Fed 1-Year Consumer Inflation Expectations (E: 3.0%), which is a bit atypical.  On Friday, one year inflation expectations jumped but it was because of tariff concerns and as such, it’s not going to impact the Fed.  However, if we see another jump in inflation expectations this morning, that may be taken as a mildly hawkish signal and boost yields and pressure stocks.

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What Would Cause the Fed to Cut Rates Again? (Two Answers)

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What Would Cause the Fed to Cut Rates Again? (Two Answers): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Would Cause the Fed to Cut Rates Again? (Two Answers)

Futures are modestly higher despite mixed tech earnings.

TSLA (up 3% pre-market) and META (up 1% pre-market) results were “fine” while MSFT disappointed (MSFT down  4% pre-market) but none of the results were surprising enough to impact the broader tech sector.

Today will be a busy day of economic data and earnings including, in order of importance, the ECB Rate Decision (E: 25 bps cut), Jobless Claims (E: 224K), Advanced Q4 GDP (E: 2.7%) and Pending Home Sales (E: 0.4%).  And, following yesterday’s Fed meeting, it remains the case that in-line to slightly weak results are the “best” case for stocks as they imply solid growth but keep rate cut expectations stable.

On earnings, the key results today include: AAPL ($2.36), INTC ($0.12), V ($2.66), UPS ($2.52), MA ($3.68), CAT ($4.97).

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Was Last Week A Preview of 2025?

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Was Last Week A Preview of 2025?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Was Last Week A Preview of 2025?
  • Weekly Market Preview: Can the Santa Rally Re-start?
  • Weekly Economic Cheat Sheet: A Quiet Week, But Claims Thursday Matter

Futures are slightly weaker following a quiet weekend of news and ahead of the holiday-shortened trading week.

Economically, the only notable number overnight was UK GDP which was slightly weaker than expected, rising 0.9% vs. (E) 1.0%.

Politically, a U.S. government shutdown was averted as Congress passed a bill to fund the government but only through March, which adds complication to Republican plans to pass aggressive pro-growth legislation.

Today the only notable economic report is Consumer Confidence (E: 113.0) and barring a major surprise, it shouldn’t move markets.

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Did the Fed Decision Weaken the Bull Market?

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Did the Fed Decision Weaken the Bull Market?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Four Reasons the Fed Decision Caused Such a Big Selloff
  • Did the Fed Decision Weaken the Bull Market?

Futures are seeing a bounce following yesterday’s steep selloff despite more negative news overnight.

Politically, government shutdown risks spiked on Thursday after support for the stop-gap funding bill collapsed and a government shutdown on Friday is becoming more likely.

On earnings, Micron (MU) posted disappointing guidance and the stock is down –15% pre-open.

Today is another busy day of economic data and policy decisions.   The Bank of England has a rate decision (E: 25 bps cut) while there are numerous U.S. economic reports including, in order of importance,  Jobless Claims (E: 232K), Philly Fed (E: 2.5), Final Q3 GDP (E: 2.8%) and Existing Home Sales (E: 4.05 million).  The market needs Goldilocks data to help it hold this early bounce and any data that’s “Too Hot” (meaning much stronger than expected) will only increase hawkish Fed worries, push yields higher and likely hit stocks, again.

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Who’s Right on the Consumer? WMT (Positive) or TGT (Negative)

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What Yesterday’s Rate Cut Means for Markets

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What Yesterday’s Rate Cut Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Yesterday’s Rate Cut Means for Markets

Futures are slightly lower mostly on digestion of the week’s news and after Chinese stimulus only met expectations.

China announced a 1.4 trillion-yuan fiscal stimulus program (so government spending) although that only met expectations and is seeing a mild “sell the news” reaction.

Today the calendar is relatively quiet (especially considering what a busy week it’s been already) but there is still one notable economic release, the University of Michigan Consumer Sentiment (E: 70.8) and, contained in that report, the One-Year Inflation Expectations (E: 2.7%).  Markets will want to see both numbers hit expectations and not be “Too Hot” (especially for inflation expectations).

We also have two Fed speakers today, Bowman (11:00 a.m. ET) and Musalem (2:30 p.m. ET), but given the Fed decision yesterday they shouldn’t move markets.

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Election Roadmap

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Election Roadmap: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Election Roadmap
  • Detailing our Four-Part Election Coverage
  • Weekly Market Preview:  Election and Fed Decision
  • Weekly Economic Cheat Sheet:  All About the Fed.

Futures are slightly higher despite a tightening election and a spike in oil prices.

Politically, the race tightened over the weekend as the Des Moines Register’s final Presidential poll shockingly had Harris up three points in the state, underscoring that the election will be closer than current market expectations.

Oil is 3% higher after OPEC+ delayed a production increase by one month (although it’s not seen as a material policy shift).

Today there are no notable economic reports nor any Fed speakers so last-minute election outlook changes will be the driver of markets, although with the race so close it’s likely markets mostly chop sideways ahead of the election results on Wednesday (hopefully).

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Unhealthy Price Action and Revisiting Credit Spreads

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Unhealthy Price Action and Revisiting Credit Spreads: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Tech Update – An Unhealthy Start to a Critical Two Weeks
  • What Credit Spreads Are Saying About the Economy and Markets
  • JOLTS Data Takeaways – Available Jobs Fall Below Previous Cycle Peak (2019)

Equities are mixed in pre-market trade as earnings dominate early money flows.

Tech-heavy Nasdaq futures are outperforming and holding overnight gains thanks to solid earnings from GOOG helping to offset disappointing guidance from AMD while CAT earnings are weighing on Dow futures. S&P 500 futures are little changed.

Economically, the Eurozone’s Q3 GDP Flash firmed to +0.4% vs. (E) +0.2% largely thanks to growth in Germany which is easing concerns about the health of the EU economy and that is ultimately resulting in a favorable pullback in the recently strong dollar.

Today, focus will be on economic data early with the ADP Employment Report (E: 115K), and Q3 GDP Report (E: 3.0%) both due out before the bell while Pending Home Sales (E: 1.0%) will be released shortly after the open.

There are no Fed speakers today as they remain in their “blackout period” ahead of next week’s FOMC meeting which will leave traders watching for more earnings. Notable companies reporting today include: LLY ($1.52), CAT ($5.33), and HUM ($3.48) before the open, and  MSFT ($3.08), META ($5.17), and ALL ($2.20) after the close.

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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.

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