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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
  • EIA Data Takeaways – Oil Market Fundamentals Continue to Deteriorate

Futures are slightly higher this morning as markets are largely holding yesterday’s sizeable post-election gains with trader focus shifting to today’s Fed decision.

Economically, data was mostly solid overnight as Chinese exports jumped +12.7% y/y in October (+2.4% in September) while EU Retail Sales were inline with estimates, up 0.5% last month.

Today is lining up to be a critical day for markets as traders assess the big week-to-date gains. Early focus will be on economic data with two notable releases due before the open: Jobless Claims (E: 221K) and Productivity & Costs (E: 2.5%, 1.0%).

From there, markets are likely to turn sideways as traders position into the afternoon Fed events beginning with the FOMC Announcement at 2:00 p.m. ET, followed up by Fed Chair Powell’s press conference 2:30 p.m. ET. Anything other than the expected 25 basis point rate cut and steady forward guidance will almost certainly move markets today.

Finally, there are no big tech or major industrial earnings today but there are a few noteworthy companies due to report quarterly results today including: GOLD ($0.33), WBD ($-0.05), HAL ($0.75), SQ ($0.87), and ABNB ($2.17). However, to be clear, the Fed is the catalyst to watch today.

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The fundamental backdrop of the oil market

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The fundamental backdrop of the oil market: Tyler Richey Quoted in Morningstar

Oil prices end higher on surprise fall in U.S. crude supply, rise in gasoline demand

“The fundamental backdrop of the oil market has become less bearish this week, but it would be a stretch to say that market dynamics are beginning to favor the bulls on any time horizon beyond a few days,” said Tyler Richey, co-editor at Sevens Report Research.

“Concerns about a surplus emerging in the global oil market have been dialed back given the improving consumer-demand figures in [Wednesday’s] EIA report and news that OPEC+ leadership is considering postponing output cuts currently planned for December,” he told MarketWatch.

Also, click here to view the full MarketWatch article published on Morningstar on October 30th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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Election Day Scenario Analysis (Good, Bad, Ugly)

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Election Day Scenario Analysis (Good, Bad, Ugly): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Good/Bad/Ugly Election Scenario Analysis
  • Chart – S&P 500 Violates Critical Uptrend off August Lows

Stock futures turned higher with Asian shares overnight thanks to better-than-expected Chinese economic data as trader focus shifts ahead to Election Day in the U.S.

Economically, China’s October Composite PMI rose to 51.9 vs. (E) 50.4, up from 50.3 in September which supported solid gains in Asian shares overnight with Chinese benchmarks rising more than 2%.

Today, the general elections in the U.S. will clearly dominate the headlines however there is one key economic report to watch shortly after the open: ISM Services PMI (E: 53.5).

There are no Fed officials scheduled to speak ahead of this week’s FOMC meeting however there is a 10-Yr Treasury Note auction at 1:00 p.m. ET that could roil markets if it is much stronger than anticipated (flight to safety) or much weaker than expected (fiscal concerns/higher yields).

Lastly, there are a few earnings to watch today as well with MPC ($0.97) reporting ahead of the open and key semiconductor company SMCI ($0.51) after the close along with tech-focused communications company, LUMN ($-0.20).

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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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Why Stocks Dropped (Two Main Reasons)

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Why Stocks Dropped (Two Main Reasons): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Stocks Dropped (Two Main Reasons)
  • Jobs Day (Abbreviated Jobs Report Preview)

Futures are modestly higher following “ok” earnings from major tech firms overnight and ahead of the jobs report.

AMZN and INTC posted solid earnings while AAPL results were only mildly disappointing and the cumulative reports are boosting futures this morning.

Economically, the UK manufacturing PMI dropped to 49.9 vs. (E) 50.3, keeping BOE rate cut expectations elevated.

Today focus will be on economic data, starting with the jobs report and expectations are as follows:  106K Job-Adds, 4.1% UE Rate, 4.0% y/y Wage Growth.  The jobs report isn’t the only important report today, however, as we also get the October ISM Manufacturing PMI (E: 47.6).

Bottom line, both numbers need to come in close to expectations to help stocks extend this morning’s early bounce.  Data this week has been a bit “hot” and it’s pushed Treasury yields higher and Fed rate cut expectations lower and that’s weighed on stocks.  In-line reports this morning would be Goldilocks and would reverse that trend (and further fuel this morning’s bounce).

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Jobs Report Preview (Will It Decide Rate Cuts?)

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Jobs Report Preview (Will It Decide Rate Cuts?): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (Will It Decide Rate Cuts?)

Futures are moderately lower following disappointing earnings from MSFT and META overnight.

META and MSFT are both lower by around 3% following disappointing earnings results (META) and guidance (MSFT) and that’s weighing on futures.

Economically, EU inflation was a bit hotter than expected as EU HICP (their CPI) rose 2.7% y/y vs. (E) 2.6% y/y.

Today will be a busy day of economic data and earnings.  On the economy, the two key reports are Jobless Claims (E: 235K) and the Core PCE Price Index (E: 0.3% m/m, 2.6% y/y) and markets will want in-line readings on both to reinforce recent Goldilocks growth and inflation data.

On earnings, there are three major reports after the close:  AAPL ($1.49), AMZN ($1.14) and INTC ($-0.02).

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One of the more important lessons I’ve learned

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One of the more important lessons I’ve learned: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

High Yield Bonds May Be Sending an Ominous Message, Says One Analyst

One of the more important lessons I’ve learned in my two-plus decades of watching markets is that bond markets can (and often do) lead stock markets. That’s why we watch bonds so closely. A recent technical breakdown in the high-yield ETF JNK [SPDR Bloomberg High Yield Bond ETF] has caught our attention.

Also, click here to view the full Barron’s article published on October 25th, 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.

Goldilocks data that’s in-line with expectations is the best outcome

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Goldilocks data that’s in-line with expectations is the best outcome: Tom Essaye Interviewed On Yahoo Finance

S&P 500 Sees First Gain This Week as Tesla Up 22%: Markets Wrap

“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,” said Tom Essaye at The Sevens Report.

Also, click here to view the full Bloomberg article on Yahoo Finance published on October 24th, 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.

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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What Yesterday’s “Inside Day” Means for Markets

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What Yesterday’s “Inside Day” Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Yesterday’s Inside Day Means for Markets
  • Takeaways From Oil’s Reaction to Israel’s Retaliatory Air Strikes

Futures are flat this morning while global markets rallied modestly overnight amid quiet news flow as traders look ahead to multiple important catalysts looming over the next week.

Economically, data was largely encouraging overnight as the Japanese Unemployment Rate fell to 2.4% vs. (E) 2.5% while the German GfK Consumer Climate Index rose to -18.3 vs. (E) -20.5, however, neither report meaningfully impacted markets.

Looking ahead to the U.S. session, there are several noteworthy economic releases today beginning with a housing market report, the Case-Shiller Home Price Index (E: 5.2%), before we the first labor market report of this critical jobs week, JOLTS (E: 7.9 million), and finally Consumer Confidence (E: 99.1).

There are no Fed officials scheduled to speak today but there is a 7-Yr Treasury Note auction at 1:00 p.m. ET. The 7-yr auction is notable because soft demand in past auction have roiled bond markets and sparked volatility in equities, something to watch for today.

In corporate news, this critical week of earnings begins in earnest today with consumer-focused companies including PYPL ($1.08), MCD ($3.18), and BP ($0.78) reporting before the bell while tech giants AMD ($0.92) and GOOG ($1.83) report after the close along with credit card staple V ($2.58).

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