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Fed Preview

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Fed Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview: Hawkish-If vs. Dovish-If
  • 10-Yr Treasury Note Yield Hits 2024 High: Chart

U.S. equity futures are giving back some of yesterday’s tech-led rally as there was a modest “sell the news” reaction to NVDA’s new AI chip (Blackwell) release while central bank decisions overnight favored policy doves.

Overnight, the BOJ delivered a dovish hike and the RBA signaled an end to rate hikes which sent both currencies lower and bolstered the dollar as this week’s Fed decision comes into focus.

Today, there is just one economic report to watch: Housing Starts (E: 1.449 million) and the Treasury will hold a 20-Yr Bond auction at 1:00 p.m. ET. Neither should meaningfully move markets ahead of the Fed, but if the housing data is hot or there is weak demand for the Bonds (sending yields higher) we could see a hawkish/risk-off move in markets today.

The March FOMC meeting begins today and barring any material “tape bombs” the markets should fall into a familiar positioning churn ahead of tomorrow’s policy announcement and Powell’s press conference.

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Tom Essaye’s breakdown of how markets could react to the February jobs data.

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How markets could react to the February jobs data: Tom Essaye Quoted in MarketWatch

How markets might react to Friday’s jobs report: three scenarios.

Tom Essaye, publisher of Sevens Report Research, has provided a breakdown of how markets could react to the February jobs data.

“Just Right” (Expectation for a June Rate Cut Stay Near 90%) 50k-250k Job adds, UE Rate ≥ 3.7%, Wages: ≤ 4.3%. A number in this range would solidify expectations for June rate cuts and the best-case scenario for markets is a slightly underwhelming number, as that will 1) Keep a June rate cut full expected and 2) Not imply the labor market is suddenly losing momentum.

“Too Hot” (A June Rate Cut Probability Drops Below 50%) > 250k Jobs Adds, UE Rate ≤ 3.6%, Wages > 4.4% yoy. 

“Too Cold” (Hard Landing Concerns Grow) <50k Job adds. In the immediate reaction, a very soft number will pressure Treasury yields further and could result in a knee-jerk rally in stocks (i.e. bad data is good for stocks because it makes the Fed more likely to cut). 

Also, click here to view the full MarketWatch article published on March 8th, 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.

CPI Preview: Good, Bad, Ugly

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CPI Preview: Good, Bad, Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Bottom Line – Growth Concerns, Not Fears
  • CPI Preview: Good, Bad, Ugly
  • VIX Chart – A Key Level to Watch Today.

Futures are cautiously higher thanks to market-friendly economic data overnight as traders await the U.S. CPI report.

Economically, German CPI met estimates in February (+0.4% m/m) while the U.K. jobs report showed an uptick in unemployment and easing wage pressures which is incrementally helping ease higher-for-longer policy rate fears.

Domestically, the NFIB Small Business Optimism Index was slightly disappointing as the headline edged down to 89.4 vs. (E: 89.9) but markets are largely overlooking the pre-market release ahead of the CPI data.

Today, all eyes will be on the 8:30 a.m. (ET) release of the February CPI report (E: 0.4% m/m, 3.1% y/y), Core CPI (E: 0.3% m/m, 3.7% y/y). The release has the potential to materially move markets as options data shows traders are bracing for a 1%+ move in either direction today (and it could be even more if the data surprises meaningfully either way).

Beyond the pre-market inflation data, there are no Fed officials scheduled to speak which will likely leave markets digesting the CPI release for much of the morning. In the early afternoon, there is a 10-Treasury Note auction at 1:00 p.m. ET, and the outcome of that auction could move yields and ultimately impact stocks into the close.

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Jobs Report Preview (Will June Cuts Still Be Expected?)

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Jobs Report Preview: Is There a Disconnect? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (Will June Cuts Still Be Expected?)
  • EIA Analysis and Oil Market Update

Futures are slightly higher following a generally quiet night of news as markets look ahead to tomorrow’s jobs report.

Economically, the only notable number overnight was German Manufacturers’ Orders and it badly missed expectations (-11.3% vs. (E ) -6.0%) but it isn’t impacting markets.

Japanese stocks fell sharply (Nikkei down more than 1%) as “chatter” grew louder the BOJ may hike rates in March.

Today is a relatively busy day of events but it’ll take some significant surprises to move markets ahead of tomorrow’s jobs report.

The key events today, in order of importance, are:   ECB Rate Decision (No change is expected but will Lagarde point to June cuts?), Jobless Claims (E: 215K, will they keep rising?), Unit Labor Costs (E: 0.7%), Powell’s Senate testimony (10:00 a.m. ET) and Cleveland Fed President Mester (11:30 a.m. ET).

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 Tech Sector Is Like a Modern Day Gold Rush

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Why the Tech Sector Is Like a Modern Day Gold Rush: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Tech Sector Is Like a Modern Day Gold Rush
  • Chart: Rising Market-Based Inflation Expectations Bolster Gold Prices

U.S. futures are modestly lower this morning as Chinese economic concerns are offsetting a cool EU inflation print.

A sizeable new wave of Chinese stimulus actions failed to soothe investor worries about the economy overnight, underwhelming investors as China’s Service PMI unexpectedly fell to 52.5 vs. (E) 52.9 in February.

In Europe, financial news flow was better as the EU Composite PMI rose to 49.2 vs. (E) 48.9 while PPI fell a steep -0.9% vs. (E) -0.1% helping to ease some recent worries about a resurgence in price pressures.

Looking into today’s session there are three domestic economic reports to watch: Composite PMI (E: 51.4), Factory Orders (E: -3.0%), and the ISM Services Index (E: 53.0). The ISM print will be the most important as investors will be looking for continued strength in consumer spending but steady or easing price indices to underscore disinflation has not stalled/reversed.

There are no Fed officials scheduled to speak today and with Powell’s testimony looming tomorrow a slow churn in markets or modest continuation lower could play out today as short term traders book profits from the most recent run to record highs.

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.

Is This A Teflon Market? (No. Here’s Why)

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Is This A Teflon Market? (No. Here’s Why): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is This A Teflon Market? (No. Here’s Why)
  • Weekly Market Preview:  Can Data and Fed Speak Extend the Rally?
  • Weekly Economic Cheat Sheet:  All About Employment (Jobs Report Friday among others).

Futures are slightly lower following quiet weekend of news as markets digest Friday’s rally.

Geopolitically, hope is growing for a six-week ceasefire in Gaza that could be announced in the coming days and that’s modestly weighing on oil prices.

The S&P 500 will become even more “AI” sensitive as SMCI  (Super Microcomputer) will in added to the S&P 500, incrementally increasing tech exposure to the index.

This will be a potentially busy week of catalysts but it starts slowly today as there are no economic reports and just one Fed speaker, Harker at 11:00 a.m. ET.  So, absent any surprises, expect yields to drive stocks.  If the 10-year Treasury yield drifts lower, don’t be surprised if stocks recoup these early losses.

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.

How might a second Trump term impact stocks?

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How might a second Trump term impact stocks? Tom Essaye Quoted in Morningstar

A second Trump term may benefit these stock-market sectors most

Therefore, it’s worth asking: How might a second Trump term impact stocks? Tom Essaye, publisher of Sevens Report Research, recently shared his expectations for which corners of the stock market might outperform, and which might struggle, if Trump triumphs in an expected election rematch with President Joe Biden.

“Obviously, those policies would be negative for Chinese shares and emerging markets more broadly, as they would increase trade tensions,” Essaye said.

As a result, investors can expect Chinese stocks, and emerging-markets more broadly, to struggle, like they did during Trump’s first term and like they have, relative to the U.S., for much of the past 15 years.

Also, click here to view the full MarketWatch article published on Morningstar on February 27th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

Lastly, 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.

“It doesn’t mean the economy’s rolling over”

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Tom Essaye Interviewed by Barron’s

Stocks Are in a Holding Pattern. It’s All About Inflation Data.

Sevens Report Research’s Tom Essaye told Barron’s in a phone interview that recent economic data, including durable goods and retail sales, have come in softer than expected.

“It doesn’t mean the economy’s rolling over,” he says. “But for a market that is priced for zero slowdown whatsoever, that is the risk that I think people need to watch. About the most surprising thing that I feel could happen to this market right now is that growth suddenly slows.”

“They’re behaving for now, but if you start seeing the 10-year climb far above 4.25%, I think that begins to become a headwind on the market,” Essaye says. “Until we get that inflation data, you kind of got markets in a bit of a holding pattern.”

Also, click here to view the full Barron’s article published on February 27th, 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.

What Number Would Make Core PCE Negative for Stocks?

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What Number Would Make Core PCE Negative for Stocks? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Number Would Make Core PCE Negative for Stocks?
  • EIA and Oil Market Analysis

Futures are modestly lower as EU inflation data disappointed overnight while tech earnings underwhelmed.

Economically, French and Spanish CPIs showed on going disinflation but it was slower than expected (mirroring what we’ve seen recently in the U.S.).

On earnings, CRM and SNOW posted underwhelming earnings and that’s modestly weighting on tech shares.

Today focus will be on the Core PCE Price Index (E: 0.4% m/m, 2.8% y/y) as that’s the most important report of the week.  Risk/reward into this number is skewed slightly positive as inflation concerns are already elevated and partially priced in, so it should take a solidly hot number to weigh on markets, while just an “in-line” reading would be welcomed.

Other data notable data today includes Jobless Claims (E: 210K) and Pending Home Sales (E: 0.8%) and we have three Fed speakers, Bostic (10:50 a.m.), Goolsbee (11:00 a.m.) and Mester (1:15 p.m. ET) although barring a major surprise from those reports/speakers, they shouldn’t move markets.

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.

Hard vs. Soft Landing Scoreboard: More Signs of Slowing Growth

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Hard vs. Soft Landing Scoreboard: More Signs of Slowing Growth: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing vs. Soft Landing Scoreboard: Still a Soft Landing But More Signs of Slowing Growth
  • Chart: Consumer Confidence Data Points to Slowing Growth

Futures are lower as traders continue to reposition following last week’s sprint to record highs while focus shifts ahead to tomorrow’s critical inflation data.

Economically, the headline of the Eurozone Economic Sentiment report fell to 95.4 vs. (E) 96.7 which didn’t help risk assets in pre-market trade.

Today, traders will be watching the release of Q4 GDP (E: 3.3%) and International Trade in Goods (E: -$88.1B) ahead of the bell. Any data that is not Goldilocks (or “Platinumlocks”) will likely keep stocks under pressure ahead of tomorrow’s PCE Price Index report.

Later in the day, there are several Fed speakers: Bostic (12:00 p.m. ET), Collins (12:15 p.m. ET), and Williams (12:45 p.m. ET). Bostic and Williams are on the FOMC, so their comments have the potential to move markets with tomorrow’s inflation data coming into view.

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.