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Is Oil’s Collapse an Anecdotal Warning Sign?

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Is Oil’s Collapse an Anecdotal Warning Sign? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • More Problems With Expectations (This Time Companies)
  • Is Oil’s Collapse an Anecdotal Warning Sign?

Futures are tracking most overseas equity markets lower as investors assess global growth concerns and look ahead to today’s critical U.S. inflation data.

Economically, U.K. data was weak as monthly GDP fell to 0.5% vs. (E) 0.6%, Industrial Production was down -0.8% vs. (E) +0.2% and monthly trade data showed both imports and exports slowed -4.6% and -10.8%, respectively in July.

Looking ahead to today’s session, the most important potential market catalyst is U.S. inflation data: CPI (E: 0.2% m/m, 2.6% y/y) and Core CPI (E: 0.2% m/m, 3.2% y/y). A “cool” CPI report should bolster hopes for a 50 bp rate cut next week, and in turn, support stocks while a “hot” print could pour cold water on this week’s tentative rebound in equity markets.

There are no Fed officials scheduled to speak today however there is a 10-Yr Treasury Note auction at 1:00 p.m. ET that could shed additional light on investor expectations for inflation, growth, and Fed policy going forward. A weak auction outcome would be negative for stocks while solid demand for the 10-Yr Notes should support a continuation of this week’s rally.

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The Real Problem for this Market (Not Growth)

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The Real Problem for this Market (Not Growth): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Real Problem for this Market (Not Growth)
  • Weekly Market Preview:  Does Weak Inflation Data Make a 50 bps Cut More Likely?
  • Weekly Economic Cheat Sheet:  CPI Wednesday is the key report.

Futures are seeing a strong bounce following a generally quiet weekend of news.

There was no specific positive headline that’s rallying futures and instead we’re seeing mostly technical dip buying.

Economically, Japanese Q2 GDP missed estimates (2.9% vs. (E ) 3.1% and that’s pushing back on BOJ rate hike expectations, which is a mild positive (the yen is down 1%).

This week focus turns back to inflation and that includes today’s NY Fed Inflation Expectations (E: 3.0%).  If they fall more than expected, it’ll further boost expectations for a 50-bps cut (and help support stocks).  The other notable economic report is Consumer Credit (E: $12.5B) and there is another important tech earnings report after the close (ORCL (E: $1.33)).  Solid guidance from ORCL would be a welcomed positive for investors right now.

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Demand worries linked to the threat of a slowdown in global growth

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Demand worries linked to the threat of a slowdown in global growth: Tom Essaye Quoted in Forbes

Nvidia Stock Plunges 10% Amid Broader Stock Losses As Rocky September Kicks Off

“Demand worries linked to the threat of a slowdown in global growth are acting as the biggest influence on the oil market right now,” remarked Sevens Report analyst Tom Essaye in a Tuesday note to clients.

Also, click here to view the full Forbes article published on September 3rd, 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.

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Powell Speech Preview (What’s Expected, Dovish If, Hawkish If Scenarios)

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Powell Speech Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Powell Speech Preview (What’s Expected, Dovish If, Hawkish If Scenarios)

Futures are solidly higher ahead of Fed Chair Powell’s speech thanks to not hawkish commentary from BOJ Governor Ueda.

Ueda stated that rates would continue higher but that increases would be data dependent and in conjunction with monitoring market conditions (meaning the yen spike from last month won’t be repeated, which is a good thing).

Economically, Japanese CPI rose 2.7% y/y, as expected and that’s further reducing hawkish BOJ concerns.

Today focus will be on Fed Chair Powell’s speech (10:00 a.m. ET) and as long as he removes any lingering doubts about a September rate cut, this rally can continue.

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Two “Smart Market” Recession Signals to Watch For

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Two “Smart Market” Recession Signals to Watch For: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Follow-Up Thoughts on the Yield Curve Reversion Process – Two Signals to Watch For
  • PPI Takeaways – Will Falling Inflation Flip from a Tailwind to a Headwind?
  • NFIB Small Business Optimism Index Echoes HD Sales Concerns

U.S. stock futures are flat as traders digest yesterday’s sizeable rally ahead of today’s critical CPI release.

Overseas, the Reserve Bank of New Zealand unexpectedly cut rates overnight citing recession concerns in H2’24 while the EU GDP Flash met estimates at 0.6% y/y helping push back on imminent recession fears.

Today, market focus will be on the key U.S. inflation data due ahead of the bell: CPI (E: 0.2% m/m, 3.0% y/y), Core CPI (E: 0.2% m/m, 3.2% y/y). A “cool” release will be welcomed and likely support an extension of the week-to-date gains while a “hot” print would be negative for risk assets.

There are no Fed speakers today, however there is a 4-Week Treasury Bill auction at 11:30 a.m. ET which normally wouldn’t pique investors interest, but this one lines up with the September Fed meeting and could shed light on the market’s policy rate expectations.

Finally, earnings season continues to wind down with a few noteworthy companies reporting today including: CAH (E: $1.72), UBS (E: $0.12), TCEHY (E: $0.61), CSCO (E: $0.85).

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FOMC Preview

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FOMC Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview
  • Chart: Stocks Are Trading With an 85% Correlation to 2007

U.S. equity futures are tracking European stocks higher as traders look ahead to the Fed, big-tech earnings, and more important economic data due in the sessions ahead.

Economically, Japan’s Unemployment Rate fell to 2.5% vs. (E) 2.6% while the EU’s GDP Flash rose to 0.6% vs. (E) 0.5%. The reports are not meaningfully moving markets but seem to be easing recession fears to some degree in pre-market trade.

Looking into today’s session, there are two housing market reports due out early: Case-Shiller Home Price Index (E: 7.2%) and the FHFA House Price Index (E: 6.3%) before Consumer Confidence (E: 99.5) and JOLTS (E: 8.0 million) will be released after the opening bell.

The July FOMC meeting begins today so there are no Fed speakers which will likely bring a sense of “Fed paralysis” before tomorrow’s meeting announcement and Powell’s press conference.

That will leave trader focus on earnings with BP ($0.92), PG ($1.37) and PYPL ($0.97) all due to report before the open while AMD ($0.67), MSFT ($2.90), and SBUX ($0.93) will release results after the close.

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The ultimate direction of the S&P 500 will still be determined by economic growth

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The ultimate direction of the S&P 500 will still be determined by economic growth: Tom Essaye Quoted in Forbes

Stocks Slide As Major Tech Earnings Get Off To ‘Underwhelming’ Start

The U.S. will report its second-quarter gross domestic product Wednesday morning, offering a glimpse into how well the broader economy is performing. “The ultimate direction of the S&P 500 will still be determined by economic growth,” remarked Sevens Report analyst Tom Essaye in a Monday note.

Also, click here to view the full Forbes article published on July 24th, 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.

The performance gap between tech and the rest of the market

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The performance gap between tech and the rest of the market: Tom Essaye Quoted in Forbes

Why A Magnificent 7 Breather Could Be A Good Thing For The Stock Market

“The performance gap between tech and the rest of the market is so wide that it’s reasonable to expect continued closing of that gap as markets more fully embrace the idea of the start of a rate cutting cycle,” summarized Sevens Report founder Tom Essaye, noting in the “near term” non-tech sectors may mount a catchup rally. Essaye is referring to Thursday’s strong inflation data which bolstered calls for the Federal Reserve to soon lower interest rates, which broadly help most equities but tend to favor certain rate-sensitive sectors like real estate.

Also, click here to view the full Forbes article published on July 12th, 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.

Jobs Day

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What’s in Today’s Report:

  • Jobs Day
  • Why Wednesday’s Weak Economic Data Is Increasing Growth Concerns

Futures are little changed following the U.S. holiday as the last 24 didn’t provide any substantial market surprises while focus turns towards today’s jobs report.

The Labour Party won a landslide election victory in the UK, as expected, but that victory isn’t altering the outlook for growth or inflation (so it’s not impacting markets).

U.S. growth worries are creeping slightly higher following Wednesday’s surprisingly soft economic data.

Today focus will be on the jobs report and expectations are as follows: 189K Job-Adds, 4.0% Unemployment Rate, 0.3% m/m & 3.9% y/y Wage Growth.  Markets are still in a “bad is good” mode for data so the biggest risk to markets today is for a “Too Hot” number.  But, that said, Wednesday’s economic data was outright bad and for those paying attention, there are now a lot of signs that the U.S. economy may be losing more momentum than expected.  So, if there is a surprisingly weak jobs report (possible but unlikely) it will increase growth concerns and that’s a future risk to this rally.

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Strong demand (lower yields) will reaffirm the dovish shift in Fed policy

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Strong demand will reaffirm the dovish shift in Fed policy: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Open Mixed. Tech Is Bouncing Back.

“Strong demand (lower yields) will reaffirm the dovish shift in Fed policy expectations this month while weak demand (rising yields) could rekindle higher-for-longer policy rate worries and spark risk-off money flows,” writes Sevens Report Research’s Tom Essaye.

Also, click here to view the full Barron’s article published on June 24th, 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.