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Optimism regarding a ceasefire between Israel and Hamas had been building

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Optimism regarding a ceasefire between Israel and Hamas had been building: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil pares gains as Hamas reportedly accepts cease-fire plan, Israel warns of Rafah invasion

“Optimism regarding a ceasefire between Israel and Hamas had been building over the last week or so, and that was reflected in last week’s steep drop in oil futures price,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

The reason the oil market didn’t see more of a selloff Monday in the wake of the news that Hamas has accepted the cease-fire proposal is that “it was largely already priced in,” said Richey.

Also, “despite the progress in negotiations, military action is continuing on with reports of 50 Israeli air strikes in Rafah today alone -and that is keeping speculative shorts on their toes as we start the new week,” he said.

Also, click here to view the full MarketWatch article published on Morningstar on May 6th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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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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May MMT Update: Less Bad News Is Not Good

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May MMT Update: Less Bad News Is Not Good: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • May Market Multiple Table Update: Don’t Confuse Less-Bad News for Actual Good News

Futures are little changed this morning as favorable EU economic data and strong bank earnings from UBS and UniCredit offset escalating geopolitical tensions in Gaza.

Geopolitically, Israeli tank units seized a critical Rafah border crossing with Egypt as ceasefire talks reportedly continue, however the market impact is limited this morning with oil futures slightly lower.

Economically, UK’s Construction PMI topped estimates (53.0 vs. E: 51.1) and EU Retail Sales rose 0.8% vs. (E) 0.7% helping ease worries about fading economic growth in Europe.

Looking into today’s session, focus will be on the Fed’s Kashkari who speaks mid-morning (11:30 a.m. ET). The market is looking for more confirmation of sooner-than-later rate hikes in 2024.

Then this afternoon, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET which will be closely watched by bond traders to see how well the larger than expected Q2 bond issuance will be absorbed by the market. A tailing auction that sends yields higher will be negative for stocks.

Finally, there is just one economic report this afternoon: Consumer Credit ($15.5B) and two earnings reports to watch: DIS ($1.11), LYFT ($0.02).

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Earnings in those tech companies are really important

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Earnings in those tech companies are really important: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Magnificent Seven Stocks Largely Dip Before Amazon Earnings Release

“I can tell you with a lot of confidence that if Google [parent Alphabet] and Microsoft did not post strong earnings last week, we would be below 5000 in the S&P 500 because, really, nothing else was that positive,” Sevens Report Research’s Tom Essaye told Barron’s. “Earnings in those tech companies are really important. And if you see Amazon whiff and you see Apple whiff, that’s just going to add to the negativity.”

Also, click here to view the full Barron’s article published on April 30th, 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.

Why the Outlook For Stocks Got Worse Last Week (Not Better)

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Why the Outlook For Stocks Got Worse Last Week (Not Better): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Outlook For Stocks Got Worse Last Week (Not Better)
  • Weekly Market Preview:  Will Fed Officials and the BOE Increase Rate Cut Hopes?
  • Weekly Economic Cheat Sheet:  A Quiet Week but Friday’s Inflation Expectations Will Be Important

Futures are extending the gains from Friday’s Goldilocks jobs report despite a potential increase in geo-political tensions this week.

Oil prices are rallying moderately following the breakdown of Israel/Hamas cease fire talks and an Israeli military operation in Rafah is likely.

Economically, the Euro Zone services PMI beat estimates at 53.5 vs. (E) 52.9, pushing back on EU recession risks.

Today there are no notable economic reports but there are two Fed speakers, Barkin (12:50 p.m. ET) and Williams (1:00 p.m. ET).  If either of them sound more open to rate hikes than Powell did last week, it’ll likely push yields higher and take back some of last week’s post-Fed rally.

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Was the Fed Decision Positive? (No, Not Really)

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Was the Fed Decision Positive? (No, Not Really): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Was the Fed Decision Positive? (No, Not Really)
  • EIA Analysis and Oil Market Update

Futures are solidly higher following a mostly quiet night of news as markets further digested Fed Chair Powell pushing back on the idea of future rate hikes.

Economic data showed more buoyant inflation globally as Swiss CPI rose 1.4% vs. (E) 1.2% while the Euro Zone Manufacturing PMI met estimates.

Today the focus will remain on economic data as we get two notable economic reports, Jobless Claims (E: 211K) and Unit Labor Costs (E: 3.3%). If both are “hot” (and especially if Unit Labor Costs are high) then expect higher yields and more pressure on stocks ahead of tomorrow’s Jobs Report.

Earnings season is winding down but there’s an important report via AAPL (E: $1.51) after the close, while I’ll also be watching SQ ($0.72), COIN (E: $1.20) and BKNG ($14.03) for any insight into the state of the U.S. consumer.

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A Flash of Fear: FOMC Technical Preview

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A Flash of Fear: FOMC Technical Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Technical Preview – A Flash of Fear in the Market (Shareable PDF By Request)
  • More Hot Inflation Data: Employment Cost Index and Case Shiller/FHFA Home Price Indices
  • Chart: Stagflation Concerns Bring Focus Back to the Yield Curve

Futures are lower as stagflation fears continue to weigh on risk assets while earnings were mixed overnight with AMZN reporting strong quarterly cloud sales (the stock is up 2%+) while AMD’s AI-chip demand forecast disappointed (the stock is down 6%+).

Economically, the U.K.’s April Manufacturing PMI was better than feared, rising to 49.1 vs. (E) 48.7 which is helping the FTSE buck the heavy trend across global equity markets this morning.

Looking into today’s session, focus will be on economic data early with the ADP Private Payrolls (E: 175K), ISM Manufacturing Index (E: 50.0), Construction Spending (E: 0.3%), and JOLTS (E: 8.7 million) all due to be released by 10 a.m. ET.

Additionally, the Treasury Refunding Announcement (8:30 a.m. ET) for which estimates sparked some volatility earlier in the week, could move bond markets and subsequently impact equities in the pre-market.

In the afternoon, focus will turn to the Fed with the FOMC Announcement at 2:00 p.m. ET followed by Fed Chair Powell’s Press Conference at 2:30 p.m. ET.

Earnings season takes a breather today before AAPL and other tech companies report tomorrow but there are still a few notables to monitor today including: MA ($3.22), CVS ($1.69), QCOM ($2.31).

Bottom line, there are a lot of potential catalysts for markets today but the key to stocks stabilizing will be economic data that contradicts recent signs of stagflation emerging in the economy and a benign Fed day with an as-expected to dovish announcement and no surprises from Chair Powell. Otherwise, we could easily see a test or breakdown through the April lows in the S&P 500 today.

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Threat of More Rate Hikes? (FOMC Preview)

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Threat of More Rate Hikes? (FOMC Preview): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview – The Fed Could Threaten Rate Hikes
  • Chart – S&P 500: Support, Resistance, and a Downside Target of 4,785
  • BOJ Yen Intervention Update: Not a Market Negative Yet

Futures are lower following mixed international economic data overnight while solid earnings by Samsung Electronics is helping offset negative earnings from European car makers.

In Asia, Chinese PMI data and Australian Retail Sales were net negative, but Eurozone core inflation favorably cooled and GDP firmed easing stagflation worries in Europe.

Today, the busy week of economic data begins with the Employment Cost Index (E: 0.9% q/q), Case-Shiller Home Price Index (E: 0.1%), and Consumer Confidence (E: 104.0) as the Fed meeting gets underway.

Earnings season also remains in full swing with PYPL ($1.24), MCD ($2.70), MMM ($2.08), and KO ($0.69) reporting before the bell and AMZN ($0.81), AMD ($0.61), and SMCI ($5.79) releasing results after the bell.

Bottom line, being the end of the month and the start of the Fed meeting, trader positioning should keep markets relatively quiet today as tomorrow’s FOMC decision looms, but if any of the data comes in “too hot” or “too cold,” expect an uptick in volatility.

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Why Stocks Have Really Pulled Back

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Why Stocks Have Really Pulled Back: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Stocks Have Really Pulled Back
  • Weekly Market Preview:  Will the Fed and Growth Data Make the Pullback Worse This Week?
  • Weekly Economic Cheat Sheet:  A Very Busy Week (Fed Wednesday, Jobs Report Friday)

Futures are slightly higher following a mostly quiet weekend of news as markets digest last week’s gains ahead of a busy and important week of catalysts.

Economically, Spanish Core HICP (their CPI) rose 2.9% vs. (E) 3.3% y/y, offering a positive note on inflation.

Geo-politically, Secretary of State Blinken is in the Mid-East to push for another Gaza ceasefire and oil is down slightly in response.

Looking forward, this is a very busy and important week filled with numerous potential catalysts including Wednesday’s Fed decision and Friday’s jobs report, but the week starts slowly from a data standpoint as there are no notable reports today.

On earnings, we get some important updates from semiconductor companies today and reports we’re watching include: ON ($1.04), NXPI ($3.16), SOFI ($0.01).

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Core PCE Price Index Preview (Next Potential Catalyst)

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Core PCE Price Index Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Core PCE Price Index Preview (Next Potential Catalyst)

Futures are solidly higher following better than expected tech earnings overnight.

GOOGL (up 12% pre-open) and MSFT (up 4% pre-open) posted strong earnings results and that’s leading a rebound in tech stocks and pushing futures higher.

Economically, the Bank of Japan rate decision was slightly dovish as it kept rate unchanged and didn’t reduce QE.

Today focus will be on the Core PCE Price Index (E: 0.3% m/m, 2.6% y/y) and the bottom line is this number needs to be at, or ideally under, expectations to help further fuel the earnings driven bounce in futures.  The other economic report today is the University of Michigan Consumer Sentiment Index (E: 77.9, 1-Yr Inflation Expectations: 3.1%) but barring a jump in inflation expectations, it shouldn’t move markets.

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