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Recent data have traders worried that the economy is slowing

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Recent data have traders worried that the economy is slowing: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Are Slipping. The Market Can’t Find Middle Ground.

Recent data have traders worried that the economy is slowing more than people think, Sevens Report Research’s Tom Essaye tells Barron’s. He notes that if the economy slows too much, the question becomes whether rate cuts in September and December would be enough to turn things around.

“The market can’t ever find the middle,” Essaye says.

He says that sentiment has bounced back and forth between worries about hot inflation to worries that the Federal Reserve won’t be able to navigate a slowing economy. Essaye thinks the pullback in stocks can be chalked up to already-high valuations.

“It’s not that things have suddenly turned bad,” says Essaye. “It’s that we’re priced for a very still-perfect environment, and the data is implying it’s maybe not so perfect.”

Also, click here to view the full Barron’s article published on June 5th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf 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.

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The data is starting to show a potential soft landing

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The data is starting to show a potential soft landing: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Only Two S&P 500 Sectors Are Rising

Sevens Report Research’s Tom Essaye told Barron’s the data is starting to show a potential soft landing, though where it goes from here is anyone’s guess.

“A soft landing was always a slowing of growth that sort of didn’t get too bad,” Essaye says. “So it appears we are kind of arriving at that point. Now, the issue is that every hard landing started with a soft landing. You don’t just jump from growth to contraction.”

Also, click here to view the full Barron’s article published on June 5th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf 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 bearish-leaning reality that OPEC+

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A  bearish-leaning reality that OPEC+: Sevens Report co-editor Tyler Richey Quoted in MarketWatch

Oil futures settle at lowest since early February

The market’s bullish hopes for some degree of commitment to ‘price stability’ via the potential for further production cuts were dashed, and instead met with a bearish-leaning reality that OPEC+ does not seem willing to cut production any further than they already have despite ongoing recession risks that would cripple demand,” said Tyler Richey, co-editor at Sevens Report Research.

Also, click here to view the full MarketWatch article published on June 3rd, 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.

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.

Jobs Report Preview (Too Hot, Too Cold, and Just Right)

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Jobs Report Preview (Too Hot, Too Cold, and Just Right): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview: Too Hot, Too Cold, and Just Right Scenarios
  • ISM Services Index Takeaways – A “Warm” Report
  • EIA Data Takeaways and Oil Update

Equity markets are mixed in the pre-market as tech-heavy Nasdaq 100 futures are extending gains to new record highs while small-cap Russell 2000 futures are lower ahead of the ECB decision and more U.S. economic data. NVDA notably rose as much as 2% overnight.

Economically, Taiwan’s May CPI rose from 1.95% to 2.24% while German Manufacturing Orders were down -0.2% vs. (E) +0.5% and EU Retail Sales fell -0.5% vs. (E) -0.2%. The market is “ok” with the soft European data ahead of the widely anticipated ECB rate cut this morning.

Looking into today’s session, trader focus will be on the ECB Decision early (8:15 a.m. ET) and as mentioned, rate cuts to benchmark interest rates are expected which will leave commentary from Lagarde and any forward guidance provided critical to the market’s reaction.

In the U.S., there are no Fed speakers or notable Treasury auctions today so focus will shift to the several U.S. economic reports due to be released including: Jobless Claims (E: 216K), International Trade (E: -$75.2B), and potentially most importantly, Productivity & Costs (E: 0.2%, 4.7%).

Bottom line, any “cold” or stagflationary data has the potential to put this week’s rally on pause ahead of tomorrow’s all important jobs report.

Join thousands 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 Concerning Divergence in Bond Markets

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A Concerning Divergence in Bond Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Is the Smart Market Telling Us? (Part II)
  • JOLTS Data Takeaways – Normalizing or Rolling Over?
  • Chart: JOLTS Fall Below Pre-Pandemic Trend Path

Futures are tracking European markets higher this morning on the back of “goldilocks” growth and inflation data overnight ahead of more key domestic economic data today.

Economically, China’s May Composite PMI handily beat estimates at 54.1 vs. (E) 52.7 which was a welcomed print as Chinese data has been underwhelming recently.

In Europe, the Eurozone Composite PMI rose to 52.2 vs. (E) 52.3 while April PPI fell -1.0% m/m vs. (E) -0.5%. Stabilizing growth numbers and evidence of further disinflation are exactly what the ECB want to see ahead of their first rate cut as it helps shore up the soft-landing argument.

Looking into today’s session, there are no Fed officials scheduled to speak but two important economic reports on the calendar. First, the May ADP Employment Report (E: 173K) will be released pre-market and second, the ISM Services Index (E: 50.7) is due out a half hour after the opening bell.

Investors will want to see a labor market print that is close to estimates. A number too strong will push back on the recent dovish money flows while a weak number will add to recession worries. With the ISM, a steady number above 50 with cooling price indices would be the best case scenario for risk assets leading into the jobs report Friday.

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Growing Economic Concerns

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Growing Economic Concerns: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why I am Getting More Concerned About an Economic Slowdown
  • Weekly Economic Preview – A Critical Week of Data

Futures are higher on momentum from Friday’s late-day rally while news wires were mostly quiet this weekend.

Economically, the Eurozone Manufacturing PMI rose from 45.7 to 47.3 vs. (E) 47.4 in May while the UK’s Manufacturing PMI headline rose from 49.1 to 51.2 vs. (E) 51.3. The as-expected data is having a limited impact on markets, leaving stocks to extend Friday’s rally.

Today, focus will be on the ISM Manufacturing Index (E: 49.8) early with a report on Construction Spending (E: 0.2%) also due out after the open. There are no Fed officials scheduled to speak today which leaves the ISM data the key catalysts of the session. A report that is “too hot” or “too cold” could see volatility pick up while a “Goldilocks” number would likely allow Friday’s relief rally to continue.

Finally, the Treasury will hold 3-Month and 6-Month Bill auctions at 11:30 a.m. ET, and while these auctions don’t typically move markets, we are within 6-months of the first expected rate cuts from the Fed so any surprises could impact yields and in-turn move equities.

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Is Bad Economic Data Starting to Pressure Earnings?

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Is Bad Economic Data Starting to Pressure Earnings? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Bad Economic Data Starting to Pressure Earnings?
  • EIA Analysis and Oil Market Update

Futures are modestly lower again following more disappointing earnings and another hot global inflation print.

DELL (down 15% pre-market) became the latest non-AI tech company to post disappointing results and that’s weighing on futures.

Economically, the EU flash HICP (their CPI) rose more than expected at 2.9% vs. (E) 2.7% y/y and that’s pushing back on expectations for multiple ECB rate cuts this year.

Today brings the biggest economic report of the week, the Core PCE Price Index (E: 0.2% m/m, 2.8% y/y).  Markets will want to see a number at, or ideally below, expectations to further ease inflation anxiety and pressure Treasury yields. If investors get that number this morning, expect a solid bounce back rally in stocks and bonds.  The other notable number today is the Chicago PMI (E: 40.8) but barring a major surprise that shouldn’t move markets.

Regarding the Trump guilty verdict, as we covered in Thursday’s Report, this could result in some temporary volatility in select sectors (oil and gas, industrials, financials) but we do not view this event as a material influence on markets.

Finally, there is one Fed speaker today, Bostic at 6:15 p.m. ET but he shouldn’t move markets.

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Will the Trump Verdict Impact Markets?

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Will the Trump Verdict Impact Markets? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Will the Trump Verdict Impact Markets?
  • When Will Higher Yields Pressure Stocks?

Futures are moderately lower again following more disappointing tech earnings and another hot inflation print.

Salesforce (CRM) missed earnings and joined a growing list of non-AI tech companies to post disappointing result (WDAY last week) and that’s weighing on futures.

Economically, Spanish CPI was hotter than expected as it rose 3.8% y/y vs. (E) 3.7%, up from last month’s 3.4%

Today includes some potentially important economic data as we get the Revised Q1 GDP report (E: 1.5%) and focus will be on the headline as well as any revisions to the PCE Price Data (if it’s revised higher, that’s a negative).  Other notable data today includes Jobless Claims (E: 217K) and Pending Home Sales (E: 0.3%) and as has been the case all year, “hot” data will be negative for stocks and bond.

There are also two Fed speakers today, Williams (12:05 p.m. ET) and Logan (5:00 p.m. ET), although unless they talk about rate hikes, they comments shouldn’t move markets.

Join thousands 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.

The market just seems like it can’t find the middle

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The market just seems like it can’t find the middle: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Keeps Going Back and Forth on Interest Rates. How to Play It.

“The market just seems like it can’t find the middle,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview.

Essaye says he can make the case that the economy is slowing, or not, based on a wide swath of data that’s available. That’s why every individual release has so much sway on the market’s day-to-day. Stocks were mixed on Tuesday, aside from tech, after Minneapolis Fed President Neel Kashkari said the Federal Reserve hasn’t formally taken rate hikes off the table and is prepared to keep rates steady until inflation hits the central bank’s 2% target.

“This is the world we’re in for now, until economic data gives us a clear direction as to where we’re going,” Essaye says. “I think we just sort of have to brace ourselves for this kind of back and forth. I think the net result for investors is that there’s just going to be more elevated volatility.”

Also, click here to view the full Barron’s article published on May 28th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

It’ll be Very Hard for This Market to RallyIf 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.

One Emerging Market Winner (Regardless of the Election Outcome)

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One Emerging Market Winner: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Politics in Focus: One Emerging Market Winner (Regardless of the President)

Stock futures are moderately lower this morning as the rally in mega-cap tech stocks is taking a breather amid a 10 basis point rise in the 10-Yr yield so far this week.

Economically, regional German CPI figures have come in mixed so far this morning ahead of the official German estimate due to be released at 8:00 a.m. ET while Germany’s GfK Consumer Climate Index rose to -20.9 vs. (E) -24.0.

Today, there is one lesser-followed Fed survey due to be released: The Richmond Fed Manufacturing Index (E: -6.0) but survey data has moved markets recently so if the release is a surprise (hot or cold) it could move markets today.

There are also two Fed speakers on the calendar for this afternoon and evening: Williams (1:45 p.m. ET) and Bostic (7:00 p.m. ET).

However, after yesterday’s Treasury auctions sent yields spiking higher and ultimately weighed heavily on stocks in the afternoon, the Treasury’s 7-Yr Note auction at 1:00 p.m. ET will likely be the most important catalyst for markets today. Another soft auction outcome will further pressure stocks while strong demand for the Notes could help stocks stabilize from this pre-market weakness.

Join thousands 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.