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Is Gasoline Demand Another Economic Warning Sign?

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Is Gasoline Demand Another Economic Warning Sign? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Gasoline Demand Another Economic Warning Sign?
  • Did Earnings Season Change the Market Outlook?

Futures are solidly higher thanks to continued momentum from Thursday’s rally following a quiet night of news.

Economically, UK data was stronger than expected (GDP and Industrial Production beat estimates) but it’s not changing BOE June rate cut assumptions.

Today there is just one notable economic report, the University of Michigan Consumer Sentiment Index (E: 77.0) and the key parts of that release will be the 1-Yr Inflation Expectations (E: 3.2%) and the 5-Yr. Inflation Expectations (E: 3.0%).  If both of those numbers are higher than expected, it’ll be another negative signal on inflation and don’t be surprised if Treasury yields rise in response to them and stocks give back these early gains.

In addition to that one economic report, we also get numerous Fed speakers today including: Bowman (9:00 a.m. ET), Logan (10:00 a.m. ET), Kashkari (10:00 a.m. ET), Goolsbee (12:45 p.m. ET) and Barr (1:30 p.m. ET).  However, unless one of them explicitly advocates for rate hikes, they shouldn’t move markets.

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An S&P 500 Priced for Perfection: May MMT Chart

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An S&P 500 Priced for Perfection: May MMT Chart: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • May MMT Chart: An S&P 500 Priced for Perfection
  • Manheim Used Vehicle Value Index Raises Questions About Growth

Futures are flat as disappointing earnings in Asia (Toyota and Nintendo) were largely offset by solid guidance from AB InBev and Siemens Energy in Europe while macroeconomic news wires were relatively quiet.

Economically, exports from Taiwan plunged to 4.3% y/y in April from 18.9% in March due to weak Chinese demand but exports to the U.S. hit a record amid strong AI demand. The soft Chinese demand is a concern, but AI optimism is for now offsetting those worries.

There are no notable economic reports today leaving focus on the Fed speaker circuit with Jefferson (11:00 a.m. ET), Collins (11:45 a.m. ET) and Cook (1:30 p.m. ET) all scheduled to speak.

Additionally, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET. Yesterday’s 3-Yr Note auction saw decent demand but if today’s longer duration Note auction is soft, that will put upward pressure on yields and weigh on equity markets as this relief rally has begun to lose momentum.

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Bull Market Warning From Dow Theory

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Bull Market Warning From Dow Theory: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Dow Theory Update: Transports Rolling Over (Charts Included)
  • Flash PMI Takeaways – Signs of Weakness
  • Has Gold Bottomed Yet (Probably Not)

Futures are higher on well-received guidance from “Mag-7” member TSLA (+11% pre-market) and U.S. semiconductor giant TXN (+7% pre-market) while economic data in Europe topped estimates overnight.

Economically, Australian CPI was “warm” at 1.0% vs. (E) 0.8% in Q1 which is supporting a modest rise in the aussie dollar while the German Ifo Survey’s Business Expectations Index firmed to 89.9 vs. (E) 88.9 helping bolster European shares.

Today, there is one economic report to watch: Durable Goods Orders (E: 2.3%) and markets will be looking for a “goldilocks,” as-expected number as either a “hot” print would initiate a hawkish reaction while a “cold” print would rekindle growth concerns.

There are no Fed speakers today, but the Treasury will hold a 5-Yr Note auction at 1:00 p.m. ET which once again could move yields. A weak auction would send yields towards 5% which is another threat to this week’s robust relief rally.

Earnings season also continues to ramp up with BA (-$1.43), T ($0.53), and GD ($2.89) reporting results ahead of the open while META ($4.32), IBM ($1.59), F ($0.42), and CMG ($11.63) will report after the close. META will be the most important to watch as the results could either bolster this strong week-to-date rally that’s been led by tech, or de-rail it and send stocks back towards the Q2 lows.

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The surging Vix briefly pushed the value of front-month Vix futures contracts

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The surging Vix briefly pushed the value of front-month Vix futures contracts: Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch

Iran-Israel fears sink stocks as traders rush to gold, Treasury bonds

The surging Vix briefly pushed the value of front-month Vix futures contracts expiring later this month above that of contracts expiring in May, causing the Vix futures curve to become inverted for the first time since February, according to Tyler Richey, co-editor of Sevens Report Research.

An inverted Vix futures curve is a sign that traders are bracing for stocks to continue sliding in the weeks ahead, Richey said.

Also, click here to view the full MarketWatch article published on April 12th, 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.

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Sevens Report founder Tom Essaye explains the gold rally

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Investors piled into a new refuge as the U.S. dollar lost value and interest rate expectations dwindled: Tom Essaye Quoted in Forbes

What’s Up With Gold? Here’s Why Everyone From Costco To Central Banks Is Rushing In.

Sevens Report founder Tom Essaye explains the rally initially began late last year, as investors piled into a new refuge as the U.S. dollar lost value and interest rate expectations dwindled before getting a further bump from renewed concerns in 2024 about the potential for lingering inflation. And despite the Costco mania, it’s actually institutional investors and central banks, especially those coming from China, driving much of the surging demand for gold, as investors and bankers from China and other largely non-Western countries look to hedge against an economic downturn scenario while simultaneously lessening their dependence on the American dollar.

Also, click here to view the full Forbes article published on April 10th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Lastly, 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.

A Return to Reasonable Valuations? April MMT Chart

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A Return to Reasonable Valuations? April MMT Chart: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Return to Reasonable Valuations? April MMT Chart
  • Dip-Buying Becomes Riskier in Late-Cycle Environments
  • Housings Starts Plunge in March – Chart

Futures are higher this morning as the geopolitical situation in the Middle East is tense but stable, inflation data was largely as-expected, and good consumer-focused earnings are helping offset soft sales from chip-maker ASML.

Economically, EU Core CPI met estimates at 2.9% while the U.K.’s Core CPI figure was “warm” at 4.2% vs. (E) 4.1% but neither report is materially impacting the general “higher for longer” central bank policy stance in place right now.

There are no notable economic reports today and just two late-day Fed speakers: Mester (5:30 p.m. ET), Bowman (7:15 p.m. ET).

That will leave trader focus on the Treasury’s 20-Yr Bond auction at 1:00 p.m. ET as weak demand would add upward pressure on yields and pressure stocks.

Additionally, earnings season continues with TRV ($4.75), CFG ($0.75), CSX ($0.45), and DFS ($2.98) reporting today, however, none of those names should have a significant impact on the broader market unless there is a glaring disappointment or upside surprise.

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How Bad Was Last Week for the Rally?

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How Bad Was Last Week for the Rally? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Initial Thoughts on the Iranian Strikes on Israel
  • How Bad Was Last Week for the Rally
  • Weekly Economic Cheat Sheet – Growth Metrics in Focus

Stock futures are rebounding modestly from Friday’s steep selloff as geopolitical developments from the weekend were not as bad as feared leaving focus on the start to Q1 earnings season and key economic data this week.

Geopolitically, Iran attacked Israel with a series of well-telegraphed drone and missile strikes over the weekend, but most were intercepted. There were limited casualties and little damage so the situation is seen as “contained” for now, however, a retaliatory strike by Israel would be a negative development for risk assets.

Looking into today’s session, there are two important investment bank earnings reports due out ahead of the bell: GS ($8.54) and SCHW ($0.73). following Friday’s disappointing results from other major banks including JPM, investors will want to see good numbers.

Economically, we get several important data points today including the Empire State Manufacturing Index (E: -5.1), Retail Sales (E: 0.4%), and the Housing Market Index (E: 51). Data needs to come in Goldilocks, especially, Retail Sales as the last two reports missed estimates and have raised concerns about the health of the consumer. Otherwise selling pressure is likely to pick up again today.

Finally, there are two Fed officials speaking today: Williams (8:30 a.m. ET) and Daly (8:00 p.m. ET). Any less hawkish tone will be welcomed while “higher for longer” commentary will be negative for stocks and bonds (yields higher).

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Why Did Stocks Drop Again?

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Why Did Stocks Drop Again? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop Again?
  • How High Can Gold Go?

Futures are bouncing modestly from Thursday’s afternoon selloff, following a quiet night of news and as investor look ahead to today’s jobs report.

Economic data overnight (German Manufacturers’ Orders and Euro Zone retail sales) slightly missed expectations but the numbers aren’t increasing growth worries.

Today the focus will be on the jobs report and expectations are as follows: 200K Job Adds, 3.9% Unemployment Rate, 4.1% y/y Wage Growth.  The risk for this market remains for a “Too Hot” report that shows strong job adds, low unemployment and hot wages, while a number modestly below expectations would be welcomed as “Goldilocks” and likely spur a rebound in stocks and bonds.

In addition to the jobs report, we also have several Fed speakers including Collins (8:30 a.m. ET), Barkin (9:15 a.m. ET), Logan (11:00 a.m. ET) and Bowman (12:15 p.m. ET). If their tone is hawkish, it could reduce June rate cut chances and increase volatility.

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Jobs Report Preview (An Important One)

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Jobs Report Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (An Important One)
  • Is the Short-Vol Trade Starting to Unwind?
  • EIA Analysis and Oil Market Update

Futures are modestly higher as economic data and corporate earnings were slightly better than expected.

Economically, Euro Zone and UK Composite PMIs were above 50 and that’s pushing back on EU recession worries.

On earnings, Levi Strauss (LEVI) posted strong results (stock up 9% pre-market) and that’s helping to counter soft retailer earnings from PVH and ULTA.

Markets are still sensitive to hawkish data or commentary that reduces June rate cut chances, so the focus today will be on Jobless Claims (E: 213K) and on several Fed speakers including Barkin (12:15 p.m. ET), Mester (2:00 p.m. ET) and Kugler (7:30 p.m. ET).  Tomorrow’s jobs report should keep volatility somewhat subdued, but if there are any hawkish surprises from the data or Fed speak, don’t be surprised if there’s more volatility.

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Is This A Teflon Market? (No. Here’s Why)

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Is This A Teflon Market? (No. Here’s Why): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is This A Teflon Market? (No. Here’s Why)
  • Weekly Market Preview:  Can Data and Fed Speak Extend the Rally?
  • Weekly Economic Cheat Sheet:  All About Employment (Jobs Report Friday among others).

Futures are slightly lower following quiet weekend of news as markets digest Friday’s rally.

Geopolitically, hope is growing for a six-week ceasefire in Gaza that could be announced in the coming days and that’s modestly weighing on oil prices.

The S&P 500 will become even more “AI” sensitive as SMCI  (Super Microcomputer) will in added to the S&P 500, incrementally increasing tech exposure to the index.

This will be a potentially busy week of catalysts but it starts slowly today as there are no economic reports and just one Fed speaker, Harker at 11:00 a.m. ET.  So, absent any surprises, expect yields to drive stocks.  If the 10-year Treasury yield drifts lower, don’t be surprised if stocks recoup these early losses.

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