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Sentiment Update: A Somewhat Shocking Discovery

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Sentiment Update: A Somewhat Shocking Discovery: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment Update: A Somewhat Shocking Discovery

Futures are little changed following slightly disappointing economic data overnight.

EU and UK flash PMIs underwhelmed as the EU Services PMI declined to 50.7 vs. (51.5) while the UK Manufacturing PMI dropped to 46.4 vs. (E) 48.5, underscoring the economic headwinds facing the EU and UK.

Today focus will stay on economic data and the two key reports are the Flash Manufacturing PMI (E: 51.3) and Flash Services PMI (E: 53.0).  Markets will want to see in-line to slightly weak readings but most importantly, no big jumps in the price indices like we saw in Empire and Philly earlier this week.

Other notable events today include Existing Home Sales (E: 4.16 million) and Consumer Sentiment (E: 68.0) as well as two Fed speakers:  Jefferson (11:30 a.m. ET) and Daly (11:30 a.m. ET).

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Latest Bitcoin & Crypto Insights (New Regular Series)

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Latest Bitcoin & Crypto Insights (New Regular Series): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Latest Bitcoin & Crypto Insights (New Regular Series)
  • FOMC Minutes:  Why Markets Still Expect a Rate Cut in 2025

Futures are slightly lower mostly on digestion following a generally quiet night of news.

Economically, the only notable report was German PPI, which was better than expected (-1.2% vs. (E) -0.5% y/y).

Politically, there has been little progress on a debt ceiling extension (March 12th deadline) and markets are starting to notice.

Today focus will be on economic data and Fed speak.  The key economic reports today are Philly Fed (E: 22.7) and Jobless Claims (E: 215K) and readings that are right around expectations will be the best case for markets.  For Philly Fed specifically, investors will be watching the price indices and if they leap higher, like we saw in Tuesday’s Empire State Manufacturing Index, that will increase inflation concerns and likely weigh on stocks.

Turning to the Fed, there are multiple speakers today including Goolsbee (9:35 a.m. ET), Musalem (12:05 p.m. ET), Barr (2:30 p.m. ET) and Kugler (5:00 p.m. ET) but as long as they don’t imply the Fed is done cutting rates, they shouldn’t impact markets.

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Lowering Energy Prices To “Combat Sticky High Inflation”

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Lowering energy prices to combat sticky high inflation: Tyler Richey Quoted in Morningstar

Oil prices end lower as U.S. crude supplies climb for a third week in a row

A Russia-Ukraine ceasefire, or end of the war, could be bearish for oil if Trump, who is adamant about lowering energy prices to “combat sticky high inflation” pushes for an immediate removal of all sanctions on the Russian energy industry, Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Also, geopolitical stability may “largely extinguish the still simmering ‘fear bid’ in the oil market.”

The market’s reaction to the CPI data underscored that “higher-for-longer Fed policy is becoming increasingly likely in 2025,” Richey said. “That ultimately raises the risk that restrictive rates choke off growth and tip the economy over a fragile edge into a recession, a historically demand-crippling phase of the economic cycle for oil and refined products.”

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Hard Landing/Soft Landing Scoreboard

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Hard Landing/Soft Landing Scoreboard: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing/Soft Landing Scoreboard
  • Empire State Manufacturing Survey Takeaways

Futures are modestly lower as investors digest fresh tariff threats from President Trump and more “hot” inflation data out of Europe, both of which are driving global bond yields higher.

Economically, China’s House Price Index fell -5.0% in January rekindling concerns about the nation’s housing sector while UK CPI was 3.0% vs. (E) 2.8%, up from 2.5% in December, stoking inflation fears and adding upward pressure to bond yields.

Today, there is one economic report to watch: Housing Starts (1.397M) before the January FOMC Meeting Minutes will come into focus in the afternoon (2:00 p.m. ET).

There is also one Fed speaker but not until after the close: Jefferson (5:00 p.m. ET) while we will get a few noteworthy (but not likely market-moving) earnings releases from ETSY ($0.95), CVNA ($0.32), and TOST ($0.06).

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Where Do We Stand With Tariffs?

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Where Do We Stand With Tariffs?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Where Do We Stand With Tariffs?
  • Weekly Market Preview: Tariff Threats Remain Centerstage
  • Weekly Economic Cheat Sheet: Stagflation Risks Turn Investor Focus to Fed Meeting Minutes

Stock futures are higher despite a rise in global bond yields thanks to growing fiscal concerns in Europe and hawkish commentary from the Fed’s Waller over the long weekend.

Economically, U.K. jobs data from January was solid while the German ZEW Survey was better than expected which added upside pressure to global yields overnight.

Looking into today’s session, there are two economic reports to watch this morning: Empire State Manufacturing Index (E: -0.5) and the Housing Market Index (E: 47.0) as well as two Fed speakers on the calendar Daly (10:20 a.m. ET) and Barr (1:00 p.m. ET).

Finally, there is a 52-Week Treasury Bill auction at 1:00 p.m. ET that could impact yields and move equity markets and earning season continues with a few noteworthy companies due to report quarterly results today including: BIDU ($1.78), MDT ($1.36), OXY ($0.67).

Bottom line, investors will want to see more “Goldilocks” data to contradict last week’s “whiff of stagflation,” and a less hawkish tone from Fed officials. Additionally, stabilizing yields and solid earnings would offer added tailwinds for equity markets at the start of the holiday-shortened trading week.

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Are Tariffs a Negotiating Tool or Real Risk?

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Are Tariffs a Negotiating Tool or Real Risk?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are Tariffs a Negotiating Tool or Real Risk?
  • Why Are Tariffs Positive for the Dollar?
  • ISM Manufacturing Index Takeaways
  • Chart – A Volatility Warning From the VIX Futures Market

Futures are modestly lower as optimism surrounding strong earnings from data software company, PLTR (+20% pre-market), is being offset by simmering trade war fears.

After the close yesterday, news broke that U.S. tariffs on Canada would be paused like those on Mexico (for one month) which was well received by markets.

However, China retaliated against the U.S. with 10% tariffs overnight and opened an antitrust investigation into GOOGL, rekindling trade war fears which is weighing on global investor sentiment in early trade.

Looking into today’s session, there are two potentially market moving economic reports: Factory Orders (E: -0.6%) and JOLTS (E: 8.0 MM). Investors will be looking for more “Goldilocks” data that supports the case for a soft landing.

There are also, two Fed officials scheduled to speak today: Bostic (11:00 a.m. ET) and Daly (2:00 p.m. ET), and several big name earnings releases due out, including PYPL ($1.13), PEP ($1.95), PFE ($0.48), AMD ($1.09), GOOGL ($2.12), CMG ($0.24).

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Two Sector Rotation Strategies With Proven Outperformance

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Two Sector Rotation Strategies With Proven Outperformance: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Two Sector Rotation Strategies With Proven Outperformance
  • Dueling Political Influences on Oil Prices

Futures are modestly higher on more solid tech earnings and as markets are in a “show me” mode on tariff threats.

Apple (AAPL) beat earnings overnight and the stock is up 3% pre-market and that’s helping push futures higher.

On tariffs, markets remain skeptical tariffs will be implemented against Canada and Mexico tomorrow and if they are, they’ll be largely ineffectual.

Today focus will be squarely on the Core PCE Price Index (E: 0.2% m/m, 2.6% y/y).  This is the Fed’s favorite measure of inflation and markets will want to see an in-line to weaker number to keep rate cut expectations intact.  If this number is above expectations, however, look for yields to jump and for that to likely hit stocks.

In addition to the core PCE Price Index we do have one Fed speaker today (Bowman at 8:30 a.m. ET) and some more notable earnings (XOM ($1.58), ABBV ($2.13), CL ($0.89)) but they’re unlikely to move markets.

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Were Tariff Fears Exaggerated? (No. Two Reasons Why)

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Were Tariff Fears Exaggerated? (No. Two Reasons Why): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Were Tariff Fears Exaggerated? (No. Two Reasons Why)

Futures are slightly lower following a major central bank rate hike and despite better-than-expected economic data.

The Bank of Japan raised interest rates 25 bps, as expected, and signaled further rate hikes are coming (also as expected).

Economically, Euro Zone and UK Manufacturing PMIs slightly beat estimates but both remained in contraction territory.

Today we get the most important economic reports of the week via the January Flash Manufacturing PMI (E: 48.9) and Flash Services PMI (E: 56.7) and again, markets will want to see in-line to slightly soft data.  Stronger than expected readings would likely boost yields and pressure stocks.  Other economic reports today include Existing Home Sales (E: 4.16 million) and Consumer Sentiment (E: 73.2).

Turning to earnings, the key report I’m watching today is AXP ($3.03) as that will give us insight into consumer spending and the stronger the report, the better.

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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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