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Barron’s Senior Managing Editor and Deputy Editor speak with Tom Essaye

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Semiconductor stocks have cycle-leading characteristics: Sevens Report Editor, Tom Essaye, interviewed on Barron’s Live

Talking Markets with Sevens’ Report Tom Essaye

Barron’s Senior Managing Editor Lauren R. Rublin and Deputy Editor Ben Levisohn speak with Tom Essaye, Founder and President of Sevens Report about the outlook for financial markets, industry sectors, and individual stocks.

Tom Essaye: Absolutely. So the number one message we’re trying to convey in the Sevens Report is for investors to really stay focused on economic growth. And the reason I say that is because if growth can’t hold up, then we have to talk about this rally potentially ending in a very uncomfortable way. And for those of us who have been in the markets for a long time, at least at the start of this century, we’ve seen that happen a few times and it’s very painful. And if you think about investing, those are really the types of markets we want to avoid. So with the Fed cutting rates, we now know that if growth rolls over, they will not be able to cut fast enough to prevent any sort of a slowdown. So to use the analogy, the die has been cast to a point. Now the Fed is cutting and we must see if growth holds up. Everything that’s going on around growth, so how many cuts are they going to have in 2024? What’s going to happen with the election? Is the Chinese stimulus going to be enough? All of those are ancillary issues, but the main issue is growth. Because if growth rolls over, now we have to talk about that being a rally-killing event and those are the big events we want everyone to be able to avoid.

Also, click here to view the full Barron’s interview published on MarketWatch on October 21st, 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.

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How Bullish Are Investors? (The Answer May Surprise You)

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How Bullish Are Investors? (The Answer May Surprise You): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Bullish Are Investors?  (The Answer May Surprise You)

Futures are modestly higher following a night of solid earnings and mixed economic data.

TSLA is rallying 11% pre-market after posting stronger than expected earnings and that’s helping futures rally.

Economically, EU and UK flash PMIs were mixed but, on balance, Goldilocks enough to support a bounce in stocks.

Today focus will shift from earnings to economic data and the important reports today are:  Jobless Claims (E: 247K), Oct. Flash Manufacturing PMI (E: 47.6) and the Oct. Flash Services PMI (E: 55.0).  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 today.

We also have one Fed speaker today, Hammack at 8:45 a.m. ET, and some notable earnings including UPS ($1.65), AAL ($0.13) and COF ($3.70).  But, barring any major surprises they shouldn’t move markets.

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Why Yields Are Suddenly Surging

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Why Yields Are Suddenly Surging: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Rising Yields: Is it Growth, the Fed, or Fiscal Worries?
  • Chart: Market Based Inflation Expectations Hit 4-Month Highs

Futures are under pressure again this morning as the 10-Yr yield continues to edge further beyond 4.20%, the highest readings since July, while traders await more important earnings releases today and into the weekend.

Economically, Taiwan’s Industrial Production index, which includes the nation’s critical semiconductor output, slowed to 11.22% in September from a lower revised 12.54% rise in August signaling a potential slowdown in high-tech, AI-focused chips in H2’24.

Today, there is one economic report due out: Existing Home Sales (E: 3.90 million) but unless it is meaningfully “hot” it should not have a major impact on markets (although a cool report that influences less hawkish money flows would be well received by equity markets).

Additionally, there are two Fed speakers to watch: Bowman (9:00 a.m. ET) and Barkin (12:00 p.m. ET) from which markets will look for a less-hawkish, more accommodative tone than the recent “higher-for-longer” policy rate chatter.

Finally, earnings season continues with several notable companies reporting quarterly results including BA ($-10.34), KO ($0.74), and T ($0.59) before the open, and TSLA ($0.58), IBM ($2.27), and TMUS ($2.34) after the close.

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Why Are Utilities the Best-Performing Sector YTD?

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Why Are Utilities the Best-Performing Sector YTD?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Are Utilities the Best Performing Sector YTD?
  • Chart: 10-Yr Yields Test 3-Month Highs – A Renewed Headwind for Stocks

U.S. stock futures are extending yesterday’s losses in premarket trade this morning, led lower by small-caps as Treasury yields continue to test multi-month highs amid a higher-for-longer Fed policy outlook.

Economically, the only notable release overnight was Hong Kong’s CPI which picked up modestly in September, rising to 0.1% from 0.0% in August (2.2% y/y), but that is not moving markets today.

There are no notable economic reports today and just one Fed speaker on the calendar: Harker (10:00 a.m. ET).

The light economic calendar will leave trader focus on earnings with: VZ ($1.18), MMM ($1.93), GM ($2.50), GE ($1.13), LMT ($6.47), and FCX ($0.40) all reporting quarterly results before the bell while STX ($1.50) and TXN ($1.36), both of which are tech-proxies, will report after the closing bell.

Beyond earnings, Treasury yields will also be in focus today as the sharp, double-digit rise in the 10-Yr yield presented a significant headwind on broader equity markets yesterday. If yields continue higher, expect stocks to have a hard time stabilizing today.

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Why Didn’t Stocks Rally More Last Week?

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Why Didn’t Stocks Rally More Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Didn’t Stocks Rally More Last Week?
  • Weekly Market Preview: Earnings Are the Key This Week
  • Weekly Economic Cheat Sheet: The First Major October Datapoint

Futures are slightly lower to start the week despite more Chinese stimulus and better than expected EU inflation data.

The PBOC announced another larger than expected rate cut, continuing to add stimulus to the Chinese economy.

Economically, German PPI declined more than expected (-1.4% vs. (E) -1.2%), increasing ECB rate cut expectations.

Today there is only one notable economic report, Leading Indicators (E: -0.3%) but there are several Fed speakers: Logan (8:55 a.m. ET), Kashkari (1:00 p.m. ET), Schmid (5:05 p.m. ET).  If the data is in-line and the Fed speakers reinforce two remaining rate cuts in 2024, that should support markets (it’s the Goldilocks set up).

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A soft landing remains, by far, the most likely outcome for the economy

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A soft landing remains, by far, the most likely outcome for the economy: Sevens Report Analysts Quoted in Courthousenews.com

Dow Jones, S&P hit fresh highs in wake of good retail data

“A soft landing remains, by far, the most likely outcome for the economy as important economic data strengthened across multiple fronts over the past month,” Tom Essaye of the Sevens Report wrote in an investor’s note on Friday morning.

“Now, to be clear, this doesn’t mean that a hard landing can’t happen (or won’t happen), but it is not happening right now and there are few conclusive signals that it’s going to happen, at least at this point,” he continued.

Also, click here to view the full article on Courthousenews.com published on October 18th, 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.

Almost everything is favoring the bear case for oil right now

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Almost everything is favoring the bear case for oil right now: Tom Essaye Quoted in Market Watch

Oil futures finish higher, but analyst sees bearish trend for prices

Despite the Middle East developments, “almost everything is favoring the bear case for oil right now,” said Tyler Richey, co-editor at Sevens Report Research. “Uncertainties about global economic growth amid recently commenced central bank rate-cutting cycles, OPEC+ planning to raise production targets by year-end and evidence of fading consumer demand in the high-frequency inventory data all support the oil bears here,” he told MarketWatch.

Also, click here to view the full MarketWatch article published on October 26th, 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.

Where SOX Go, Stocks Go: A Cyclical Canary to Watch in the Market Coal Mine

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Where SOX Go, Stocks Go: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Where SOX Go, Stocks Go: A Cyclical Canary to Watch in the Market Coal Mine

Futures are modestly higher thanks to solid earnings and ahead of important central bank decisions and economic data later today.

Taiwan Semiconductor (TSM) beat earnings and is rallying 8% pre-market and that’s boosting tech and futures.

Today will be a busy day on the economic and earnings front, starting with the ECB rate decision, where the ECB is expected to cut rates 25 bps and signal an openness (but not a guarantee) of another rate cut in December.

Economically, there are several potentially important reports today including, in order of importance, Retail Sales (E: 0.3%), Jobless Claims (E: 260K), Philly Fed (E: 3.0) and Industrial Production (E: -0.1%).  With all of today’s data, Goldilocks readings around expectations are the best case for markets.

Finally, earnings season continues to roll along and NFLX (E: $5.09) after the close is the big report today.

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.

Tom Essaye Interviewed On Yahoo Finance’s Morning Brief

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A slowing economy does not necessarily mean a recession: Tom Essaye Interviewed On Yahoo Finance

Economic, geopolitical risks could be rude awakening for market

“I want everybody to realize that a slowing economy does not necessarily mean a recession, but where stocks are right now, if growth even slows to sort of flat or sub 1%, you could see a 10% drop in the S&P 500, and we wouldn’t even be probably at fair value,” Sevens Report Research founder and president Tom Essaye tells Seana Smith and Brad Smith on the Morning Brief.’

“So look, things are good right now, but I do think the market is complacent to economic slowdown risks.”

Essaye has been “advocating for focusing on quality and lowering volatility” through ETFs, and views geopolitical risks to be a chief concern at the moment.

“And then also there’s going to be a lot of political uncertainty coming out of the election, because we’re all going to be trying to game what policy changes are going to occur. All of these things can combine to sort of fracture this perfect window we’re in in the markets,” Essay explains. “All I’m trying to do is remind investors that, hey, there are risks out there and that… the stock market can go two directions as well.”

Also, click here to view the full interview with Yahoo Finance published on October 15th, 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.

 

Is China the Next Japan?

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Is China the Next Japan?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is China the Next Japan?

Futures and EU shares are lower as cautious retailer earnings guidance and heavy trade in China overnight are offsetting easing geopolitical tensions following reports that Israel would not strike Iranian oil/energy infrastructure (oil futures are down nearly 5%).

Economically, EU Industrial Production met expectations overnight while a German Economic Sentiment gauge topped estimates, but neither report is materially moving markets this morning.

Today, there is one important economic report to watch: The Empire State Manufacturing Index (E: 0.0), and two Fed officials are scheduled to speak: Daly late morning (11:30 a.m. ET) and Kugler in the early afternoon (1:05 p.m. ET).

Additionally, there are two typically lesser-followed Treasury auctions for 3-Month and 6-Month T-Bills at 11:30 a.m. ET that could shed fresh light on market expectations for Fed policy rates between now and Q2’25 which have swung sharply hawkish over the last two weeks. Strong auction would have dovish implications for the market and be well received by equity investors today.

Finally, earnings season is getting into full swing with several more big banks reporting quarterly results today: BAC ($0.78), C ($1.34), and GS ($6.85) while two members of the Dow Jones Transportation Average: UAL ($3.10) and JBHT ($1.43) are also due to report today.

Bottom line, equity markets have rallied solidly over the last week amid a combination of earnings optimism and soft-landing hopes. If any of the economic data, Fed chatter, or earnings results damage either of those narratives, expect some mild profit taking in equities today, otherwise the path of least resistance is still higher for stocks right now.

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.