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Could A Recession Just Be Delayed (And Not Avoided?)

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What’s in Today’s Report:

  • Could A Recession Just Be Delayed? (And Not Avoided)
  • Weekly Market Preview:  Fed/ECB/BOE Decisions This Week and Key Earnings Reports
  • Weekly Economic Cheat Sheet:  Fed Decisions and Inflation Readings In Focus This Week

Futures are modestly higher despite underwhelming economic data as markets look ahead to a busy week of central bank decisions, earnings and economic data.

Economically, data was not Goldilocks as the Euro Zone and UK flash PMIs missed estimates, falling to 48.9 vs. (E) 49.6 and 50.7 vs. (E) 52.2 respectively, and they reminded investors rate hikes can still slow growth.

Today focus will be on the July Flash Composite PMI (E: 53.1), as this is the first “big” number of July, and markets will want to see stability in the data to keep the Goldilocks rally going.

The major earnings reports occur later in the week but results we’ll be watching today include:  DPZ ($3.04), NXPI ($3.29), WHT ($3.80), LOGI ($0.45) and we’ll be looking for any signs of margin compression due to on going disinflation.

Tom Essaye Quoted in Market Watch on July 17th, 2023

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Why U.S. stock-market investors shouldn’t expect positive economic data to push S&P 500 materially higher

While it’s undeniable that fears of a hard landing, inflation and hawkish Fed have not materialized, the reality is that the current level of the S&P 500 largely factors all of that in, so last week’s CPI and PPI reports didn’t provide the market with a new positive catalyst, but instead just reinforced what was already widely assumed,” Tom Essaye, founder of Sevens Report Research, wrote in a Monday note. Click here to read the full article.

Tom Essaye Quoted in Barron’s on July 17th, 2023

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4 ETFs to Play a Stock Market That Keeps Rallying

However, last week’s readings point toward falling inflation and stable economic growth—a goldilocks scenario, or Immaculate Disinflation, as Sevens Reports’ founder Tom Essaye writes. However, last week’s readings point toward falling inflation and stable economic growth—a goldilocks scenario, or Immaculate Disinflation, as Sevens Reports’ founder Tom Essaye writes. Click here to read the full article.

How Disinflation Can Be Negative for Stocks

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What’s in Today’s Report:

  • How Disinflation Can Be Negative for Stocks

Futures are modestly higher on more Goldilocks global economic data and after there were no major earnings disappointments overnight.

Economically,  Japanese CPI met expectations (up 3.3% y/y) while UK Retail Sales were better than expected (0.7% vs. (E) 0.1%).

On earnings, transports CSX and KMX both missed estimates, but it’s not impacting the broader markets as results were expected to be soft and the companies offered some positive commentary.

Today there are no notable economic reports so focus will be on earnings, and the highlight today is AXP ($2.80), as markets will want to hear insight into the state of more affluent spenders.  Other notable results today include AN ($5.83) and CMA ($1.89).

Current Market Glossary (For Clients & Prospects)

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What’s in Today’s Report:

  • Current Market Glossary (For Clients & Prospects)

Futures are slightly lower following a night of disappointing tech earnings.

NFLX, TSLA and TSM all posted disappointing earnings results (stocks down 3% – 6% pre-market) and that’s weighing on Nasdaq and S&P 500 futures.

There was no notable economic data overnight.

Today will be another busy day of data and earnings results.  On the economic front, the two key reports are Weekly Jobless Claims (E: 250k) and Philly Fed (E: -10.0), and as you can guess (and especially at these stretched valuations) markets will want to see more Goldilocks data (so stable claims and Philly and falling prices).  We also get Existing Home Sales (E: 4.23M) but, barring a big miss, that shouldn’t move markets.

Turning to earnings, focus today is on industrials and consumer/healthcare names, and some important results to watch include:  AAL ($1.58), TSM ($1.07), JNJ ($2.61), PM ($1.48), COF ($3.31), CSX ($0.49), and PPG ($2.14).

Market Multiple Table Chart (July Update)

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What’s in Today’s Report:

  • Market Multiple Table Chart (July Update)
  • Why More Goldilocks Data Sent Stocks Higher Again Tuesday

Futures are little changed ahead of a busy day of earnings and despite more encouraging news on global disinflation.

UK CPI rose less than expected, gaining 0.1% vs. (E) 0.4% m/m and 7.9% vs. (E) 8.2% y/y, providing bullish investors more evidence that inflation is declining globally, although that good news was partially offset by a very slightly higher final look at EU HICP (up 5.5% y/y vs. 5.4%).

Today focus will turn to earnings and the key reports to watch are: TSLA ($ 0.82), NFLX ($2.83) and GS ($3.25), as those results will help set the tone for the start of earnings season (results from companies up to today have been fine, although it’s very, very early).    Other notable earnings include:  ASML ($4.97), USB ($1.13), UAL ($3.99), and IBM ($2.00).

Economically, the only notable number today is Housing Starts (E: 1.48M) but barring a shocking miss, that shouldn’t move the broader markets.

Market Multiple Table (July Update)

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What’s in Today’s Report:

  • Market Multiple Table (July Update)
  • Why the Empire Manufacturing Survey was “Goldilocks” enough to push stocks higher.

Futures are little changed following a generally quiet night of news as markets look ahead to important economic data and the start of a deluge of earnings results this week.

Economically, there was no data overnight while there was more vague talk of Chinese stimulus, but nothing concrete.

Today the calendar is full of notable economic reports and earnings.  Starting with economic data, Retail Sales (E: -0.3% mm, 1.6% y/y) is the key report today and markets will want to see stability in the data to further the “Golidlocks” narrative of falling inflation and stable growth.  So, no big disappointments.  We also get Industrial Production (E: 0.0% m/m, 1.10% y/y) and the U.S. Housing Market Index (E: 56.0) and again stability is the key word for both reports.

On earnings, most of the results today will be focused on banks/financials, but the bottom line is markets want to hear solid guidance and economic commentary to further dispel hard landing worries.  Important reports today include:  BAC ($0.84), SCHW ($0.72), MS ($1.14), LMT ($6.43), PNC ($3.31), WAL ($ 1.98) and JBHT ($1.97).

What Pushes Stocks Higher from Here?

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What’s in Today’s Report:

  • What Pushes Stocks Higher from Here?
  • Weekly Market Preview:  Earnings Take Center Stage
  • Weekly Economic Cheat Sheet:  Growth Data in Focus this Week

Futures are slightly lower following mixed Chinese economic data and a potential further escalation of the Russia/Ukraine war.

Chinese economic data was mixed as GDP and Retail Sales both missed estimates, while Industrial Production beat, and the data will keep markets  wanting more stimulus.

Possibility of further escalation of the Russia/Ukraine war increased after Ukraine claimed responsibility for the destruction of a bridge linking Crimea and Russia.

Today focus will be on the first data point for July, the Empire Manufacturing Index (E: -4.3).  Markets will want to see this number be stronger than expectations and ideally turn positive, furthering the “Golidlocks” market narrative of falling inflation but stable growth.

PPI and Jobless Claims Strengthen the “Goldilocks” Narrative

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What’s in Today’s Report:

  • PPI and Jobless Claims Strengthen the “Goldilocks” Narrative

Futures are little changed following a quiet night of news as markets digest the Wed/Thurs rally and focus turns to the start of the Q2 earnings season.

Economically, there was more evidence of global disinflation (or deflation) as German Wholesale Prices (think their PPI) declined –2.9% y/y vs. (-1.2%) y/y.

Today focus will be on earnings, as we get several major bank earnings results:  JPM ($5.92), C ($1.31), WFC ($1.15), and BLK ($8.47) as well as UNH ($5.92).  These large cap companies usually don’t provide too many surprises in their earnings reports, but markets will want to hear positive commentary on the overall environment to further support this latest rally in stocks.

There are also two notable inflation linked economic reports today, Import & Export Prices (E: -0.2%, -0.4%), Consumer Sentiment (E: 65.0), but barring any major surprises they shouldn’t move markets.

What the CPI Report Means for Markets

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What’s in Today’s Report:

  • What the CPI Report Means for Markets
  • EIA and Oil Market Analysis

It’s “green on the screen” as global indices and U.S. futures extend yesterday’s CPI driven rally.

Economically, UK Industrial Production (IP) was better than feared (down –1.2% vs. (E) -1.5%) while EU IP slightly missed estimates (0.2% vs. (E) 0.5%).

Earnings season officially begins today and the first reports are solid, as PEP and DAL both beat earnings estimates.

Today focus will be on economic data, specifically Jobless Claims (E: 245K) and PPI (E: 0.2% m/m, 0.4% y/y, Core PPI E: 0.2% m/m, 2.8% y/y).  If jobless claims are mostly stable and PPI falls more than expected, markets should extend yesterday’s “Immaculate Disinflation” driven rally. Finally, there is one Fed speaker today, Waller (6:45 p.m. ET), but markets are ignoring hawkish rhetoric right now so he shouldn’t move markets.