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An Exciting Announcement Today

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What’s in Today’s Report:

  • We Are Excited to Announce a New Service Launching This Monday, May 8th – Sevens Report Technicals (Details Below)
  • FOMC Preview – Will the Fed Signal a Pause Tomorrow?
  • ISM Manufacturing Index Takeaways: Stagflation Risks Rising?

Stock futures are slightly lower as investors digest an unexpected rate hike by the RBA and mixed economic data overnight.

The RBA raised rates 25 bp to 3.85% overnight (E: no change) citing stubbornly high inflation which triggered a hawkish reaction in markets in overnight trading.

Economically, European Manufacturing PMI data was largely in line with estimates although the readings remained deep in contraction territory while the “Narrow Core” HICP Flash reading for April was 5.6% vs. (E) 5.7%, the first decline in the reading in 10 months. On balance, the European data eased some of the hawkish concerns weighing on risk assets in pre-market trading.

Today, there are a few economic releases to watch: Motor Vehicle Sales (E: 14.8 million), Factory Orders (E: 1.3%), and JOLTS (E: 9.650 million) and investors will want to see signs of a continued but steady slowdown in growth and easing price pressures in order to keep soft landing hopes alive.

Earnings season continues today with UBER (-$0.10), PFE ($1.00), BP ($1.33), MPC ($5.75), and SYY ($0.92) reporting before the bell, and AMD ($0.56), F ($0.39), and SBUX ($0.64) after the close.

 

Introducing Sevens Report Technicals – A New Timely Report Dedicated to Technical Analysis

I’ve always wanted to do more to help advisors grow their businesses, and the incredibly enthusiastic response to last week’s special technical report confirmed to me that there is a need for more technical research.

So, today I’m very proud to announce the creation of a new research solution to complement the daily Sevens Report:  Sevens Report Technicals.

Sevens Report Technicals will provide in-depth technical analysis of all of the asset classes, investment styles, and market sectors that we cover in the daily Sevens Report. I’ve long believed we need both fundamental and technical analysis to best navigate markets, so we created Sevens Report Technicals to be the perfect complement to the fundamentally driven Sevens Report.

Ten-year Sevens Report veteran Tyler Richey, CMT, will be the lead analyst on Sevens Report Technicals.

Sevens Report Technicals will be delivered at the start of each trading week, and will be similar in appearance and coverage to last week’s popular special technical report. The first issue will be delivered this coming Monday, May 8th.

Sevens Report Research is a retention-driven business, so like all our research products, pricing for Sevens Report Technicals will be among the lowest in the industry for the quality and depth of analysis provided at just $225/quarter or $825 per year (a savings of $75).  We are also extending a one month “Grace Period” where you can choose to cancel and receive a full refund—so there is literally no risk to try Sevens Report Technicals and see if it’s right for your business!

Additionally, we are offering even more savings to existing Sevens Report Research subscribers by extending a special, limited-time offer of one additional month free on a quarterly or annual subscription. That means quarterly subscribers get four months but only pay for three (a $75 dollar savings) while annual subscribers get 13 months but only pay for 11 (a $150 savings!).

To start your risk-free trial of Sevens Report Technicals and claim your additional one-month free offer, please send an email to info@sevensreport.com and we’ll handle the rest.

To see last week’s special edition technical report, click here.

To learn more about Sevens Report Technicals, including the inspiration behind it, please click this link.

Why Stocks Won’t Drop Part II: The Economy

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What’s in Today’s Report:

  • Why Won’t Stocks Drop Part II: The Economy
  • VIX Falls to 52-Week Lows – Chart

Hawkish money flows are dominating markets this morning with stock futures falling, yields rising and oil and gold both testing support after hot inflation data overnight.

Economically, U.K. CPI was 10.1% vs. (E) 9.8% y/y in March while the Eurozone Narrow Core HICP reading rose 0.1% to 5.7% meeting estimates. The two inflation prints are causing a hawkish shift in central bank policy expectations this morning, which is in turn rekindling hard landing fears.

Looking into today’s session, there are no notable economic reports today however there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could impact both bond and equity markets.

As far as the Fed goes there are two speakers today, but both are after the close: Goolsbee (5:30 p.m. ET) and Williams (7:00 p.m. ET).

That will leave investor focus on earnings early with more big banks and notable consumer financial companies reporting ahead of the bell including: MS ($1.67), CFG ($2.15), SYF ($1.49), ALLY ($0.88), USB ($1.13), and TRV ($3.64), while TSLA ($0.85) and IBM ($1.27) will release results after the close.

Bottom line, the 2-Yr Treasury yield is testing a more than one-month high this morning and stocks are coming for sale broadly which underscores deteriorating sentient among investors with the S&P 500 trading well above 4,100 this week. And if earnings news is not encouraging today, and yields continue to move higher over the course of the session, the selling pressure on equities is likely to continue and liable to accelerate.

Tom Essaye Joined BNN Bloomberg To Discuss The Markets on April 13th, 2023

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If the U.S. Fed doesn’t make good on rate cut expectations, the market rally will be undone: Analyst

Tom Essaye, president of Sevens Report Research, joins BNN Bloomberg to discuss the disparity of the market’s rate cut expectations, and central bank pushback. Click here to watch the full interview.

Why Stocks Rallied on Thursday

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What’s in Today’s Report:

  • Why Stocks Rallied on Thursday
  • Policy Spread Update (Rate Cuts Imminent?)

Futures are slightly lower on digestion of Thursday’s rally and as markets await bank earnings this morning.

Fed balance sheet news overnight was mixed, as total usage of the Discount Window and BTFP dropped to $139 bln from $149 bln, but that’s still very elevated and it underscores there’s still stress in the regional banks.

Focus today will be on economic data and earnings, and the key here remains stability in both sets of reports (so no major disappointments).  Important economic reports today include, in order of importance, Retail Sales (E: -0.4%), Industrial Production (E: 0.3%) and Consumer Sentiment (E: 62.7).

Earnings season starts today and key reports we’re watching include: JPM ($3.41), C ($1.66), WFC ($1.15), PNC ($3.60), BLK ($7.73), UNH ($6.24).

Finally, there’s one Fed speaker, Waller at 8:45 a.m. ET but he shouldn’t move markets (the Fed message is very consistent right now).

Tom Essaye Interviewed on Yahoo Finance Live on April 11th, 2023

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‘The Fed will be more hawkish than the market is currently expecting,’ Sevens Report Research President says

Sevens Report Research President Tom Essaye joins Yahoo Finance Live to discuss U.S. inflation, Fed policy, economic uncertainty, and the outlook for markets. “I think the Fed will be more hawkish than the market is currently expecting. We have to remember something. If we look at year-end Fed Funds estimates, it’s 4% to 4 and 1/4%. So the market is pricing in numerous rate cuts, not hikes, rate cuts before year end”…said Tom Essaye. Click here to watch the full interview.

Sevens Report – Market Multiple Table Chart

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What’s in Today’s Report:

  • Market Multiple Table Chart
  • What CPI Means for Markets
  • EIA Analysis and Oil Update

Futures are slightly higher following better than expected economic data.

Chinese exports handily beat expectations in March rising 14.8% vs. (E) -7.0%, in what is the latest signal that the global economy remains resilient.

On inflation, German CPI met expectations rising 0.8% m/m and 7.4% y/y, numbers that are still too high in aggregate, but won’t make the ECB incrementally hawkish.

Today focus will remain on inflation and the labor market via PPI (E: 0.0% m/m, 3.0% y/y), Core PPI (E: 0.3% m/m, 3.4% y/y) and Jobless Claims (E: 233k).  PPI is expected to show moderation and importantly PPI is viewed as a quasi-leading indicator to CPI, so if numbers come in under expectations that’ll increase hopes inflation is truly easing.  For jobless claims, the higher the better as it implies normalization in the labor market, something the Fed wants to see before it can pause.

Market Multiple Table: April Update

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What’s in Today’s Report:

  • Market Multiple Table: April Update
  • S&P 500 Chart – Cautious Trade Ahead of Today’s CPI Report

Equity futures are slightly higher while the policy-sensitive 2-Yr Treasury yield is pushing further beyond 4% in pre-market trade as focus is exclusively on today’s CPI report.

Economically, Japanese PPI came in at 0.0% vs. (E) 0.1% which is adding a slight tailwind to risk assets this morning.

Looking into today’s session, all eyes will be on inflation data ahead of the open: CPI (E: 0.3% m/m, 5.2% y/y), Core CPI (E: 0.4% m/m, 5.6% y/y).

From there, focus will shift to the Fed as Barkin speaks ahead of the bell (9:10 a.m. ET) and Daly speaks mid-day (12:00 p.m. ET), before the latest FOMC meeting minutes will be released at 2:00 p.m. ET. Any hawkish commentary or verbiage within the minutes will likely weigh on stocks and push yields higher.

Bottom line, the CPI data will be the main catalyst today and to recap yesterday’s “CPI Preview” the “good scenario” is a headline below 5.2% with Core below 5.5%, the “bad scenario” is a headline between 5.2% and 6.0% with Core at 5.6%, and the “ugly scenario” is a headline above 6.0% with Core above 5.6%.

CPI Preview: Good, Bad, & Ugly

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What’s in Today’s Report:

  • CPI Preview: Good, Bad, & Ugly
  • WTI Crude Oil Chart – Futures Pinned In Tight Range at $80/bbl

Stock futures are rising in sympathy with overseas markets on the back of dovish commentary by new BOJ Governor Kazuo Ueda and favorable economic data overnight that is easing “hard landing” worries.

Economically, Chinese CPI rose just 0.7% vs. (E) 1.1% and PPI dropped -2.5% vs. (E) -2.3% while Eurozone Retail Sales fell -3.0% vs. (E) -3.5%. In the U.S., the NFIB Small Business Optimism Index came in at 90.1 vs. (E) 89.0. The mostly better than expected data is helping rekindle hopes that a soft landing may be achieved.

There are no other notable economic reports today which will leave focus on a 10-Yr Treasury Note auction at 1:00 p.m. ET and the sole Fed speaker today: Goolsbee (1:30 p.m. ET) as traders are largely looking ahead to tomorrow’s CPI report.

Tom Essaye Quoted in Forbes on April 7th, 2023

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Labor Market Adds 236,000 Jobs In March—Lowest Since 2020—As Economists Worry Recession May Be ‘Underway Now’

The revisions fueled recession concerns that intensified this week, with “every major data point”—including jobless claims, manufacturing activity and construction spending—signaling the economy is slowing down and pushing some experts to worry it may be slowing down too quickly, says Sevens Report founder Tom Essaye. Click here to read the full article.

Tom Essaye Quoted in Yahoo Finance on April 6th, 2023

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Why speculative AI stocks like C3.ai and BigBear.ai are seeing monster volatility

“Basically I think there’s some regulation concerns, not so much in the governmental sense yet, but perhaps industry regulations. That’s just injecting some fundamental uncertainty into the whole space, and given the valuations and popularity of the AI names, it’s resulting in some wild gyrations!” Sevens Report Research founder Tom Essaye says. Click here to read the full article.