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Why the Bullish Thesis Got Stronger

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Why the Bullish Thesis Got Stronger: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Bullish Thesis Got Stronger
  • Weekly Market Preview: Does the S&P 500 Breakthrough 6,000?
  • Weekly Economic Cheat Sheet: CPI on Wednesday, Important Growth Data on Thursday

Futures are modestly higher on post-election momentum and following a very quiet weekend of news.

Parts of the Trump administration are starting to come into view, most notably that Scott Bessent is looking most likely to become Treasury Secretary and the market views that as bullish.

Economically, there were no notable reports overnight.

Today is Veteran’s Day so trading should be quiet as there are no economic reports or Fed speakers, while the bond market is closed.  However, there are important updates this week on inflation (CPI on Wednesday) and growth (numerous reports on Thursday/Friday) so the week will get busier.

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What Yesterday’s Rate Cut Means for Markets

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What Yesterday’s Rate Cut Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Yesterday’s Rate Cut Means for Markets

Futures are slightly lower mostly on digestion of the week’s news and after Chinese stimulus only met expectations.

China announced a 1.4 trillion-yuan fiscal stimulus program (so government spending) although that only met expectations and is seeing a mild “sell the news” reaction.

Today the calendar is relatively quiet (especially considering what a busy week it’s been already) but there is still one notable economic release, the University of Michigan Consumer Sentiment (E: 70.8) and, contained in that report, the One-Year Inflation Expectations (E: 2.7%).  Markets will want to see both numbers hit expectations and not be “Too Hot” (especially for inflation expectations).

We also have two Fed speakers today, Bowman (11:00 a.m. ET) and Musalem (2:30 p.m. ET), but given the Fed decision yesterday they shouldn’t move markets.

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FOMC Preview

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

What’s in Today’s Report:

  • FOMC Preview
  • EIA Data Takeaways – Oil Market Fundamentals Continue to Deteriorate

Futures are slightly higher this morning as markets are largely holding yesterday’s sizeable post-election gains with trader focus shifting to today’s Fed decision.

Economically, data was mostly solid overnight as Chinese exports jumped +12.7% y/y in October (+2.4% in September) while EU Retail Sales were inline with estimates, up 0.5% last month.

Today is lining up to be a critical day for markets as traders assess the big week-to-date gains. Early focus will be on economic data with two notable releases due before the open: Jobless Claims (E: 221K) and Productivity & Costs (E: 2.5%, 1.0%).

From there, markets are likely to turn sideways as traders position into the afternoon Fed events beginning with the FOMC Announcement at 2:00 p.m. ET, followed up by Fed Chair Powell’s press conference 2:30 p.m. ET. Anything other than the expected 25 basis point rate cut and steady forward guidance will almost certainly move markets today.

Finally, there are no big tech or major industrial earnings today but there are a few noteworthy companies due to report quarterly results today including: GOLD ($0.33), WBD ($-0.05), HAL ($0.75), SQ ($0.87), and ABNB ($2.17). However, to be clear, the Fed is the catalyst to watch today.

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Earnings across the board were disappointing

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Earnings across the board were disappointing : Tom Essaye Quoted in Blockworks

Major earnings week weighs on tech stocks

Tom Essaye, founder of Sevens Report Research, said it wasn’t just Big Tech weighing on equities Thursday. Earnings across the board were disappointing (looking at you, Uber, Ebay and Intercontinental Exchange), plus economic data looks like we may see higher rates for a more sustained period of time.

Also, click here to view the full Blockwork article published on November 1st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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The biggest risk for the market would be if the data come in strong anyway

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The biggest risk for the market would be if the data come in strong anyway: Tom Essaye Quoted in Market Watch

The stakes for the October jobs report are high — here’s what to expect: Sevens Report

The stakes for the latest reading from the main U.S. employment barometer are high. Although not in the way many investors might think, according to Tom Essaye, founder and president of Sevens Report Research.

Fallout from hurricanes that hit Florida, Georgia and North Carolina, coupled with the ongoing Boeing strike, are expected to push up the unemployment rate. Because of this, investors are already expecting a weak report, Essaye said in commentary shared with MarketWatch on Thursday.

It also means that the biggest risk for the market would be if the data come in strong anyway. Signs of a still-resilient labor market could pressure the Federal Reserve to leave its policy interest-rate target on hold next week, Essaye added.

A too-hot number could push stocks lower and Treasury yields higher as traders account for a greater likelihood of a “no landing” scenario.

“A second straight monthly jobs report above 200k and the unemployment rate dropping back below 4% will bolster the no landing expectation and push back hard on another rate cut quickly following the cut in September,” Essaye said.

Also, click here to view the full MarketWatch article published on October 31st, 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.

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The fundamental backdrop of the oil market

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The fundamental backdrop of the oil market: Tyler Richey Quoted in Morningstar

Oil prices end higher on surprise fall in U.S. crude supply, rise in gasoline demand

“The fundamental backdrop of the oil market has become less bearish this week, but it would be a stretch to say that market dynamics are beginning to favor the bulls on any time horizon beyond a few days,” said Tyler Richey, co-editor at Sevens Report Research.

“Concerns about a surplus emerging in the global oil market have been dialed back given the improving consumer-demand figures in [Wednesday’s] EIA report and news that OPEC+ leadership is considering postponing output cuts currently planned for December,” he told MarketWatch.

Also, click here to view the full MarketWatch article published on Morningstar on October 30th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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Election Roadmap

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Election Roadmap: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Election Roadmap
  • Detailing our Four-Part Election Coverage
  • Weekly Market Preview:  Election and Fed Decision
  • Weekly Economic Cheat Sheet:  All About the Fed.

Futures are slightly higher despite a tightening election and a spike in oil prices.

Politically, the race tightened over the weekend as the Des Moines Register’s final Presidential poll shockingly had Harris up three points in the state, underscoring that the election will be closer than current market expectations.

Oil is 3% higher after OPEC+ delayed a production increase by one month (although it’s not seen as a material policy shift).

Today there are no notable economic reports nor any Fed speakers so last-minute election outlook changes will be the driver of markets, although with the race so close it’s likely markets mostly chop sideways ahead of the election results on Wednesday (hopefully).

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Why Stocks Dropped (Two Main Reasons)

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Why Stocks Dropped (Two Main Reasons): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Stocks Dropped (Two Main Reasons)
  • Jobs Day (Abbreviated Jobs Report Preview)

Futures are modestly higher following “ok” earnings from major tech firms overnight and ahead of the jobs report.

AMZN and INTC posted solid earnings while AAPL results were only mildly disappointing and the cumulative reports are boosting futures this morning.

Economically, the UK manufacturing PMI dropped to 49.9 vs. (E) 50.3, keeping BOE rate cut expectations elevated.

Today focus will be on economic data, starting with the jobs report and expectations are as follows:  106K Job-Adds, 4.1% UE Rate, 4.0% y/y Wage Growth.  The jobs report isn’t the only important report today, however, as we also get the October ISM Manufacturing PMI (E: 47.6).

Bottom line, both numbers need to come in close to expectations to help stocks extend this morning’s early bounce.  Data this week has been a bit “hot” and it’s pushed Treasury yields higher and Fed rate cut expectations lower and that’s weighed on stocks.  In-line reports this morning would be Goldilocks and would reverse that trend (and further fuel this morning’s bounce).

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Jobs Report Preview (Will It Decide Rate Cuts?)

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Jobs Report Preview (Will It Decide Rate Cuts?): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (Will It Decide Rate Cuts?)

Futures are moderately lower following disappointing earnings from MSFT and META overnight.

META and MSFT are both lower by around 3% following disappointing earnings results (META) and guidance (MSFT) and that’s weighing on futures.

Economically, EU inflation was a bit hotter than expected as EU HICP (their CPI) rose 2.7% y/y vs. (E) 2.6% y/y.

Today will be a busy day of economic data and earnings.  On the economy, the two key reports are Jobless Claims (E: 235K) and the Core PCE Price Index (E: 0.3% m/m, 2.6% y/y) and markets will want in-line readings on both to reinforce recent Goldilocks growth and inflation data.

On earnings, there are three major reports after the close:  AAPL ($1.49), AMZN ($1.14) and INTC ($-0.02).

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One of the more important lessons I’ve learned

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One of the more important lessons I’ve learned: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

High Yield Bonds May Be Sending an Ominous Message, Says One Analyst

One of the more important lessons I’ve learned in my two-plus decades of watching markets is that bond markets can (and often do) lead stock markets. That’s why we watch bonds so closely. A recent technical breakdown in the high-yield ETF JNK [SPDR Bloomberg High Yield Bond ETF] has caught our attention.

Also, click here to view the full Barron’s article published on October 25th, 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.