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Sevens Report – Is Conflicting Data Signaling a Shift in the Economy?

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What’s in Today’s Report:

  • Is Conflicting Data Signaling a Shift in the Economy?
  • Weekly Market Preview:  Earnings Take Center Stage (Lots of Key Reports This Week)
  • Weekly Economic Cheat Sheet:  Is Disinflation Continuing? (Key Inflation Stats on Friday)

Futures are sightly lower following a quiet weekend of news as markets look ahead to key earnings reports and economic data this week.

Economically, the only notable report was German IFO Business Expectations, which slightly beat estimates.

Debt ceiling headlines will increase this week as Republicans try to pass a debt ceiling bill, and if it fails to pass that will increase debt ceiling anxiety in the markets.

Today there is only one economic report, Chicago Fed National Activity Index (E: -0.02), and barring a major surprise that shouldn’t move markets.

Focus then will be on earnings, and especially the First Republic results after the close (estimates are $0.72/share).  Markets will want to see stability from what’s viewed as one of the most vulnerable regional banks.  Other notable earnings today also include KO ($0.65) and WHR ($2.44) which will give us insight into consumer spending.

 

Special Technical Market Update Delivered Today

The special technical report will be delivered via email later this morning.

Due to increased demand for more detailed technical insights from our subscribers, we have prepared a separate, special market update that provides detailed analysis of the current technical state of this market, including:

  • Major stock indices
  • Stock sectors
  • Investment styles (growth vs. value) and
  • Major trends in Treasury, commodity, and currency markets.

As the economy (and possibly markets) approach a tipping point and the Fed readies for the likely final rate hike, we can expect more volatility and conflicting fundamental economic data. Having high quality, plain-English technical analysis can help us better navigate this market.

Tyler Richey, Sevens Report CMT, has been the lead analyst on this special report, and we are all excited to deliver this value-add research to subscribers today.

Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart (Printable/Shareable PDF Available)
  • NY Fed Inflation Expectations Data Takeaways
  • Key Levels to Watch Today in the Dollar and Treasuries

Stock futures are modestly higher thanks to good economic data overnight as traders await today’s U.S. CPI report and more Fed speak.

Economically, the U.K.’s Unemployment Rate held steady below 4% but wage growth favorably slowed to 5.9% in January from 6.5% in December.

Meanwhile the NFIB Small Business Optimistic Index in the U.S. met estimates at 90.3 which saw S&P 500 futures hit new pre-market highs at the top of the 6:00 a.m. hour ET.

Today, focus will be on economic data early with CPI (E: 0.5% m/m, 6.2% y/y) and Core CPI (E: 0.3% m/m, 5.5% y/y) due out before the opening bell. Cooling inflation pressures have largely been priced in recently so a low print could see stocks add to YTD gains, but the risk is for a hot print to spark a significant wave of selling amid further hawkish shifting money flows across asset classes.

Moving through the day, there are three Fed speakers to watch: Logan (11:00 a.m. ET), Harker (1:00 p.m. ET), and Williams (2:05 p.m. ET) and they will all likely echo the hawkish tone coming from other Fed officials recently but their comments should not have a major impact on markets.

Earnings season is winding down but a few notable companies reporting today include: KO ($0.45), MAR ($1.84), ABNB ($0.27).

Tom Essaye Interviewed by Financial Sense on February 10th, 2023

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Tom McClellan: End of Bear Market Rally; Mike McGlone on Commodities, Gold, and Bonds

Now, Tom says, that ‘bear market rally’ is complete—having fooled enough people into thinking the bear market was over—and predicts more volatility and turbulence ahead with the big moves in tech to lead the major US indices lower. Click here to listen to the full interview.

Sevens Report Co-Editor Tyler Richey Quoted in MorningStar via MarketWatch on January 18th, 2023

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Gold ends lower as investors weigh Fed rate-hike talk, even as U.S. wholesale inflation and retail sales fall

Gold came into the week in overbought territory as the precious metals have enjoyed solid gains since the early November lows, thanks to the dual tailwinds of a falling dollar and declining interest rates,” said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in MarketWatch on January 9th, 2023

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Traders made money ‘selling the rip’ in stocks last year. Why it might work again in 2023.

“A sustained break above the 200-day moving average would imply that investors are becoming fundamentally more optimistic about the market. That would require real progress toward the Fed actually stopping its rate-hike campaign. Or progress toward the economy actually achieving a soft landing. Or progress toward inflation falling somewhere that is reasonably more acceptable to the Fed,” said Tom Essaye, founder of the Sevens Report. Click here to read the full article.

Tom Essaye Interviewed on BNN Bloomberg on January 3rd, 2023

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Gold is the top metal pick for kicking off 2023: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to discuss his market take for the new year. Essaye says that nothing fundamentally changed in the markets, despite it being a new year, and discusses his advocacy for defensive sectors amid Q1 volatility and lower returns. He says that gold is looking particularly attractive when compared to its commodity peers. Click here to watch the full interview.

Sevens Report Analysts Quoted in MarketWatch on December 7th, 2022

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Gold futures up a second straight session, but hold below $1,800 an ounce

The technical outlook remains bullish for gold near term, but “if we see rates and the dollar begin to rise, we are likely to see much of the November rally retraced in the weeks ahead,” analysts at Sevens Report Research wrote in Wednesday’s newsletter. Click here to read the full article.

Was Bullard That Hawkish? (No)

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What’s in Today’s Report:

  • Was Bullard That Hawkish?  (No).

Futures are moderately higher following more geo-political progress amidst an otherwise quiet night.

Russian officials signaled they are open to high-level talks with the U.S. on strategic stability, which is being taken as another (small) step towards an ultimate cease-fire.

Economically, the only notable number was UK Retail Sales and they were better than expected, rising 0.6% vs. (E) 0.2%.

Today the calendar is sparse with just Existing Home Sales (E: 4.360M) and one Fed speaker, Collins (8:40 a.m. ET) but if she doesn’t provide any hawkish surprises, this early rally can continue as stocks recoup yesterday’s Bullard inspired losses.

Fed Wildcard to Watch: Dual Risks

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What’s in Today’s Report:

  • Fed Wildcard to Watch: Dual Risks
  • Economic Data Takeaways: A Hot JOLTS Report Offsets a Favorable ISM Release
  • Chart – The Fed Could Make or Break the Gold Market Today

Futures are higher ahead of today’s Fed announcement amid continued China reopening hopes and good earnings.

AMD is up more than 4% after good earnings yesterday evening which is bolstering tech shares this morning.

Today, the focus will be on economic data early with the ADP Employment Report (E: 200K) due out ahead of the bell. The market will want to see some headline weakness to help offset yesterday’s JOLTS data in order for stocks to rebound into the Fed. Motor Vehicle Sales (E: 14.2M) will also be released over the course of the morning.

Then focus will turn to the Fed with the FOMC Announcement at 2:00 p.m. ET followed by Powell’s Press Conference at 2:30 p.m. ET. A dovish release could trigger a sharp and squeezy rally while a hawkish decision would almost certainly result in investor pain.

Earnings will be on the backburner today but there are still a few notable releases to watch: CVS ($1.99), PGR ($1.48), CHRW ($2.15), QCOM ($3.14), EBAY ($0.93).

Tom Essaye Quoted in MorningStar on October 24th, 2022

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Gold futures retreat after Friday’s wild ride

“The trend is still lower for now but once we can actually say we have reached peak-hawkishness, the outlook for gold will very likely shift to neutral (if not bullish) from bearish,” said Tom Essaye, a former Merrill Lynch trader and the founder of the Sevens Report newsletter. Click here to read the full article.