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MMT Chart: Bearish Revisions and Building Technical Risks

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MMT Chart: Bearish Revisions and Building Technical Risks: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • MMT Chart – Bearish Revisions and Building Technical Risks
  • PPI Takeaways – Favorably, No Hawkish Surprise

Futures are higher with European shares led by U.K. stocks thanks to more “cooler-than-feared” inflation data released overnight.

Economically, U.K. Core CPI fell 0.3% to 3.2% vs. (E) 3.4% in December, favorably matching a 3+ year low. In the wake of yesterday’s lower than expected U.S. PPI report, we are seeing some recent hawkish money flows unwind and a tentative risk-on tone in the pre-market.

Today is lining up to be very busy with arguably the most important economic data of the week due out before the bell: CPI (E: 0.3% m/m, 2.9% y/y) and Core CPI (E: 0.2% m/m, 3.3% y/y). The Empire State Manufacturing Index will also be released at 8:30 a.m. ET (E: 1.0).

Fed speak also picks up materially today with multiple speakers scheduled to offer commentary over the course of the session including: Barkin (8:00 a.m. ET), Kashkari (10:00 a.m. ET), Williams (11:00 a.m. ET), and Goolsbee (11:00 a.m. ET).

Finally, today is the unofficial start to earnings season as well with big banks due to release Q4 results this morning. Noteworthy financial behemoths reporting before the bell include: JPM ($4.02), C ($1.25), BLK ($11.44), WFC ($1.34), and GS ($7.99).

Bottom line, in order for stocks to continue to stabilize near current levels, investors will want to see “cool” CPI data, less hawkish Fed speak, and solid big bank earnings. If any of those catalysts disappoint, there is a strong risk the 2025 stock market lows are retested today.

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What Does Wall Street Expect for 2025? (SPX Forecasts)

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What Does Wall Street Expect for 2025? (SPX Forecasts): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Does Wall Street Expect for 2025? (SPX Forecasts)
  • S&P Services PMI Takeaways – Slightly Hawkish

Futures are little changed this morning as global investors digest the solid rebound in stocks over the last two sessions amid largely as-expected economic data overnight.

Economically, Eurozone CPI met estimates with a 0.2% rise to 2.4% Y/Y in December while the EU Unemployment Rate held steady at 6.3%, also inline with expectations.

Today, market focus will be on economic data early with International Trade in Goods (E: $-77.6B), ISM Services PMI (E: 53.2), and JOLTS (E: 7.65 million) all due to be released this morning. The ISM report will be critical as a “hot” print is a risk to the early 2025 rally as it will support the case for a Fed “pause” in their rate cutting cycle and put upward pressure on yields.

There is also one Fed speaker who could shed light on FOMC policy plans (although that is not very likely): Barkin (8:00 a.m. ET).

Finally, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET and the results will be important to watch as yesterday’s weak 3-Yr Note auction contributed to the afternoon rise in yields that weighed on stocks. So, the best-case scenario outcome for stocks is a solid auction that turns yields lower, ideally with the 10-Yr yield falling back below 4.60%.

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

Futures are modestly lower, again in quiet trading, on disappointing Chinese economic data.

Chinese industrial profits declined –7.3%, contracting for the fourth consecutive month and reminding investors that while there’s been a lot of stimulus from Chinese officials, it will take time to impact the economy.

In Japan, economic data was better than expected as retail sales and industrial production beat estimates.

Today there are no notable economic reports and trading should be quiet.  That said, the 10-year yield will remain an influence on stocks.  The higher the yield goes, the more it’ll pressure stocks.

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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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Why Has the Trump Trade Stalled? (Part One)

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Why Has the Trump Trade Stalled? (Part One): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Has the Trump Trade Stalled? (Part One)
  • Economic Takeaways – November Retail Sales

Stock futures are recovering some of yesterday’s losses as cooler-than-feared inflation data in the EU is driving modestly dovish money flows ahead of the Fed decision.

Economically, inflation data out of Europe was “cooler” than feared with U.K. Core CPI rising to 3.5% vs. (E) 3.6% while Eurozone HICP rose to 2.2% vs. (E) 2.3%. The “cooler” data saw rates traders price in more policy rate cuts from the ECB in 2025.

Today, there is one economic report due to be released mid-morning: Housing Starts and Permits (1.340M & 1.430M) but the primary market focus will be the Fed decision at 2:00 p.m. ET and likely more importantly, Fed Chair Powell’s press conference at 2:30 p.m. ET.

While the Fed will almost certainly be the primary catalyst for markets today, there is some micro-news that could influence sectors and sub-sectors of the equity markets as we will get late season earnings from GIS ($1.22), JBL ($1.88), MU ($1.75), and LEN ($4.18).

Bottom line, investors are looking for the Fed to reiterate their view that the economy is tracking for a soft-landing and that the FOMC is not overly concerned with the latest uptick in inflation data that could signal a sustained “pause” in rate cuts. A hawkish tone in the announcement or Powell’s press conference would likely trigger renewed selling pressure in equity markets and higher bond yields.

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Market Multiple Table: December Update

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Market Multiple Table: December Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table: A New Influence That Could Increase Volatility in 2025
  • Unbranded, Shareable MMT PDF Upon Request

Stock futures are stabilizing after Monday’s modest pullback as trader focus shifts ahead to tomorrow’s CPI report. Small caps are leading in pre-market trade thanks to a surprisingly solid NFIB report released earlier this morning.

Economically, the NFIB Small Business Optimism Index surged 8 points to 101.7 in November, handily topping estimates of 94.5 to hit the highest level since June 2021. Overseas, German CPI met estimates at 2.2% y/y, another Goldilocks inflation report.

Today, there is one economic report to watch: Productivity & Costs (E: 2.2%, 1.9%). The data has an inflation component (specifically the “Costs” part) that could move yields today and influence stocks (higher yields will weigh on equities).

Additionally, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and a few late-season earnings reports due out including AZO ($4.30), ASO ($1.25), and GME ($0.00).

The Treasury auction is another catalyst that could move yields and impact equities, but tomorrow’s CPI report is becoming the primary focus on the market as we progress through the week so market moves should be limited by trader positioning today.

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One Last Hurdle for the Santa Rally

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One Last Hurdle for the Santa Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • One Last Hurdle for the Santa Rally
  • Weekly Market Preview: Can Goldilocks Data Offset Political Volatility?
  • Weekly Economic Cheat Sheet: The Last Big Week of 2024

Futures are slightly lower on political volatility as Trump issued more tariff threats and made another unorthodox cabinet appointment while President Biden pardoned his son Hunter.

Trump threatened 100% tariffs on BRICs countries (Brazil, Russia, India, China) if they abandon the U.S. dollar. In addition, Trump made another unorthodox cabinet pick with Kash Patel as FBI Director.

Finally, President Biden reversed course and gave an unconditional pardon to his son Hunter, sparking bi-partisan criticism.

Today focus will turn from politics to actual economic data and the key report today is the ISM Manufacturing PMI (E: 47.6).  As has been the case, an in-line to slightly soft number would be the best case for stocks as it wouldn’t signal any further deterioration in the manufacturing sector and, at the same time, keep a Fed rate cut more likely than not.

We also have two Fed speakers today, Waller (3:15 p.m. ET) and Williams (4:30 p.m. ET) and any commentary that makes a December rate cut more likely will be a positive for markets.

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Why the Gaetz Withdrawal Sparked Yesterday’s Rally

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Why the Gaetz Withdrawal Sparked Yesterday’s Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Gaetz Withdrawal Sparked Yesterday’s Rally
  • Examining the Strange Positive VIX and S&P 500 Correlation

Futures are modestly weaker following surprisingly disappointing economic data from Europe.

The EU November flash PMIs tumbled (48.1 vs. (E) 50.2) with all three metrics (composite, manufacturing and services) falling below 50 and signaling contraction.

Similarly, the UK November flash PMIs were also weak (49.9 vs. (E ) 51.8) signaling a sudden drop in activity.

Today focus will remain on data and the more Goldilocks the data, the better for markets.  The key reports today are the November Flash Manufacturing PMI (E: 48.8) and Flash Services PMI (E: 55.2) while we also get Consumer Sentiment (E: 73) and, within that report, the 1-Yr Inflation expectations (E: 2.6%).  Again, in-line to slightly soft data will be the best outcome for stocks, as that implies solid growth and encourages a rate cut in December.

Finally, there is one Fed speaker today, Bowman (6:15 p.m. ET), but she shouldn’t move markets.

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

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Who’s Right on the Consumer?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

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

Futures are little changed on disappointing NVDA earnings and after further escalation in the Russia/Ukraine war.

NVDA beat earnings estimates ($0.81 vs. (E) $0.74) but guidance disappointed at only 6.8% FQ4 revenue growth vs. (E) 11.75% and the stock is down 2% pre-market.

Geo-politically, Russia fired a non-nuclear ICBM into Ukraine for the first time, further escalating the conflict.

Today focus will turn back towards economic data as there are three notable reports (ranked in order or importance):  Jobless Claims (E: 219K), Philly Fed (E: 7.0) and Existing Home Sales (E: 3.90 million).  Given elevated Treasury yields, in-line to slightly soft data will be best for markets, as it reinforces a soft landing and would slightly boost December rate cut expectations.

There are also several Fed officials speaking today, including Hammack (8:45 a.m.), Goolsbee (12:25 p.m. ET) and Barr (4:40 p.m. ET) although they are unlikely to move markets (the Fed outlook is pretty known at this point and the looming jobs report will likely decide if we get a rate cut in December, or not).

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Contrarian Opportunity in Chinese Tech (3 ETFs)

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Contrarian Opportunity in Chinese Tech (3 ETFs): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Can Singles’ Day and Stimulus Offset Concerns in Chinese Stocks?

Futures are lower this morning as global equity markets take a breather and digest the sizeable post-election gains.

Economically, German CPI held steady at 2.0% last month while the ZEW Survey disappointed. In the U.S., the NFIB Small Business Optimism Index rose to 93.7 vs. (E) 91.7 but the solid release is having little impact on futures in pre-market trading.

There are no further economic reports today, but the Treasury will hold 3M and 6M Bill auctions at 11:30 a.m. ET that could move yields (Treasuries were closed for Veterans Day yesterday so how bonds trade this morning could move stocks).

Turning to the Fed, the speaker circuit is picking back up in the wake of last week’s FOMC meeting with several officials scheduled to speak today including: Waller (10:00 a.m. ET), Barkin (10:15 a.m. ET), Kashkari (2:00 p.m. ET), and Harker (5:00 p.m. ET).

Finally, a few notable companies reporting earnings today include: HD ($3.65), SHOP ($0.37), and OXY ($0.81). The former two could shed light on the health of the U.S. consumer and therefore have the potential to move the broader equity markets but a continued digestion, or potentially some profit taking, in the wake of the huge post-election advance before tomorrow’s CPI release is fairly likely today.

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