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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.”

Also, click here to view the full MarketWatch article published in Morningstar on February 12th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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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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What the January Barometer Says for Markets in 2025

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What the January Barometer Says for Markets in 2025: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the January Barometer Says for Markets in 2025

Futures are slightly lower as markets digest lingering tariff uncertainty and despite better than expected economic data.

The only notable economic report overnight was Euro Zone Flash GDP and it beat estimates, rising 0.1% vs. (E) 0.0%.

On tariffs, the lack of detail and action on reciprocal tariffs was a relief but a “tariff cliff” has formed on or around April 1st and that uncertainty will stay a market headwind.

Tariff headlines should theoretically slow down for the next few weeks given the various trade studies that need to occur before tariff announcements in March/April, so focus will turn back towards data and there are two notable reports today:   Retail Sales (E: -0.1%) and Industrial Production (E: 0.3%).  As has been the case, Goldilocks data that’s at or slightly under expectations remains the best case for stocks as it implies solid growth but won’t make the Fed less dovish.

There is also one Fed speaker today, Logan at 3:00 p.m. ET, but she shouldn’t move markets.

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Can Stocks Rally in the Face of Tariff Threats?

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Can Stocks Rally in the Face of Tariff Threats?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Can Stocks Rally in the Face of Tariff Threats?
  • Weekly Market Preview:  Do Fed Rate Cut Expectations Change This Week?
  • Weekly Economic Cheat Sheet:  CPI on Wednesday is the Key Report

Futures are modestly higher despite more tariff threats as markets bounce following Friday’s decline.

President Trump announced he was imposing 25% tariffs on steel and aluminum imports and will apply “reciprocal” tariffs on numerous countries later this week.

Markets are shrugging off the announcements so far, however, because they again lack specific details.

Economically, there were no notable reports overnight.

Today focus will be on the New York Fed 1-Year Consumer Inflation Expectations (E: 3.0%), which is a bit atypical.  On Friday, one year inflation expectations jumped but it was because of tariff concerns and as such, it’s not going to impact the Fed.  However, if we see another jump in inflation expectations this morning, that may be taken as a mildly hawkish signal and boost yields and pressure stocks.

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Jobs Report Preview: Why A Goldilocks Report Matters For This Market

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Jobs Report Preview: Why A Goldilocks Report Matters For This Market: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview:  Why A Goldilocks Report Matters For This Market

Futures are little changed as markets await the next round of news on tariffs while economic data was mixed.

Economically, Euro Zone Retail Sales missed estimates (-0.2% vs. (E) 0.0%) underscoring still tepid EU growth.

On trade, a call between Trump and Xi still hasn’t happened but most expect tariffs to be reduced when it does.

Today will be a busy day in the markets, starting with a major central bank decision as the Bank of England is expected to cut rates 25 bps.

Economically, there are two notable reports today including Jobless Claims (E: 215K) and Unit Labor Costs (E: 3.3%) and as we’ve seen the last two days, slight misses vs. expectations will be positives for stocks and bonds.  On the Fed front, there are two speakers today but they won’t move markets as they both speak after the close (Logan at 5:10 p.m. ET and Waller at 7:30 p.m. ET.

Finally, on earnings, the key report today is AMZN ($1.52) after the bell.

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Trade War 2.0 Primer (Needed Context)

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Trade War 2.0 Primer (Needed Context): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • U.S. Trade Primer (Needed Context for Trade War 2.0)
  • Chart – JOLTS Drop Consistent With Cooling Labor Market

Futures are lower thanks to lingering trade war jitters and soft earnings from two big tech companies late yesterday.

GOOGL (-7%) missed estimates on revenue due to a slowdown in their cloud business while AMD (-9%) offered weak forward guidance, both of which are weighing on tech today, dragging stock futures lower in pre-market trade.

Today, there are two potentially market moving economic reports to watch; the ADP Employment Report (E: 150K) and the ISM Services PMI (E: 54.0). investors will once again be looking for Goldilocks data with steady but cooling jobs data and positive but slowing growth in the service sector. Any “hot” numbers will likely weigh on stocks today.

Additionally, there are several Fed officials scheduled to speak today including: Barkin (9:00 a.m. ET), Goolsbee (1:00 p.m. ET), and Bowman (3:00 p.m. ET) while earnings season continues with Q4 reports due out from UBER ($0.50), DIS ($1.44), TM ($4.36), F ($0.34), QCOM ($2.97), and MCK ($8.11).

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Earnings and economic growth are still solid

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Earnings and economic growth are still solid: Sevens Report Analysts Quoted in Investing.com

Are tariffs a gamechanger for the S&P 500?

While the tariffs add another headwind for equities, Sevens Report argues that they do not warrant an immediate reduction in equity exposure.

“Earnings and economic growth (the two most important foundational forces for stocks) are still solid,” the analysts wrote. However, they caution that “the factors that push stocks higher are being weakened or eliminated one-by-one,” while downside risks are mounting.

“These tariffs potentially undermine that positive price action from the ‘rest’ of the market and could weigh on other sectors while DeepSeek weighs on tech,” the analysts noted.

“Most still believe this is all a negotiation and that the tariffs won’t be on for long (and that’s still probably right),” the report states. However, with AI uncertainty and elevated valuations already straining investor sentiment, Sevens Report warns that “the recipe is coming together for a solid and extended pullback.”

Also, click here to view the full article published on February 3rd, 2025. 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.

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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