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Does March vs. May Really Matter?

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Does March vs. May Really Matter? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Does March vs. May Really Matter?
  • Weekly Economic Cheat Sheet – Retail Sales Data in Focus

U.S. futures are tracking European shares lower this morning. This is amid rising bond yields and a stronger dollar following some hawkish central banker commentary this weekend.

Economically, the German ZEW’s Economic Sentiment rose to 15.2 vs. (E) 11.7 in January. Both eased recession concerns but also weighed on the prospects for imminent Fed and ECB rate cuts in the coming months.

This weekend, several ECB officials pushed back on expectations for rate cuts in H1’24. This is resulting in more of the late 2023 dovish money flows being unwound.

Looking into today’s session, there is one economic report to watch: Empire State Manufacturing Index (E: -4.0) and one Fed official scheduled to speak: Waller (11:00 a.m. ET).

Earnings season also continues to pick up with several big banks due to report today: GS ($3.47), MS ($1.07), PNC ($2.99), IBKR ($1.54).

Bottom line, investors will be looking for more Goldilocks economic data in the NY Fed release and a less-hawkish tone from Waller and no bad news out of the banks reporting earnings today in order to stabilize. Otherwise the premarket weakness is likely to continue into the primary session this morning.

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Market Multiple Table: January Update

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Market Multiple Table: January Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table – January Update
  • Manheim Used Vehicle Index Drops 7% in December – Chart

U.S. futures are tracking European shares lower this morning as yesterday’s squeezy, tech-led rally is digested amid a rebound in global bond yields with the 10-Yr above 4%.

Economic data was mixed overnight as German Industrial Production fell -0.7% vs. (E) 0.0% while Eurozone Unemployment fell to 6.4% vs. (E) 6.6%. Domestically, the NFIB Small Business Optimism Index rose to 91.9 vs. (E) 90.6.

Looking into today’s session, there is one more economic report on the calendar: International Trade in Goods (E: -$64.8B) but the release typically does not materially move markets and that is unlikely to change today.

There is one Fed speaker: Barr (12:00 p.m. ET) but the most notable potential catalyst for the session is a 3-Yr Treasury Note auction at 1:00 p.m. ET. If demand metrics are strong, and yields pullback, expect stocks to attempt to hold Monday’s big gains. However, a move further to the upside in yields will further pressure stocks.

 

Sevens Report Quarterly Letter

Our Q4 ’23 Quarterly Letter was delivered to subscribers last Tuesday, complete with compliance backup and citations.

We’re already receiving feedback about how it is saving advisors time and helping them communicate with their clients in this volatile environment!

You can view our Q3 ’23 Quarterly Letter here. To learn more about the product (including price) please click this link.

If you’re interested in subscribing, please email info@sevensreport.com.

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Why Did Stocks and Bonds Drop to Start 2024?

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Why Did Stocks and Bonds Drop to Start 2024? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks and Bonds Drop to Start 2024?
  • Weekly Market Preview:  Can Data Meet Market Expectations For Growth and Rate Cuts?
  • Weekly Economic Cheat Sheet:  Inflation In Focus (CPI on Thursday)

Futures are slightly lower following some disappointing EU economic data and on hawkish Fed commentary.

Economically, German Manufacturers’ Orders and Euro Zone retail sales both missed estimates, reminding investors of recession risks in Europe.

This weekend, Dallas Fed President Logan warned that financial conditions have eased materially recently and that may prevent the Fed from cutting rates anytime soon.

Today there are two notable market events including the NY Fed Inflation Expectations (E: 3.4%) and comments by Atlanta Fed President Bostic (12:00 p.m. ET).  If either event pushes back on the idea of imminent rate cuts (via inflation expectations being higher than estimates or Bostic sounding hawkish) expect more modest pressure on stocks and bonds.

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2024 Technical Outlook: Key Levels to Watch in Q1

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2024 Technical Outlook: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • 2024 Technical Outlook:  Key Levels to Watch in 2024
  • Jobs Day

Futures are modestly lower following more evidence of a bounce back in inflation in the EU and ahead of today’s jobs report.

The EU December HICP (their CPI) rose less than expected (2.9% vs. 3.0% y/y) but still increased from the 2.4% Nov. reading and that’s further reducing ECB rate cut expectations and weighing on global markets.

Today focus will be on economic data and there are two potentially market moving reports:  The jobs report and the ISM Services PMI.

Regarding the jobs report, expectations are as follows:  Job Adds: 158K, UE Rate: 3.8%,  Avg Hourly Earnings: 0.3% m/m, 3.9% y/y.  The key here is moderation in the data and a job adds number above 200k or Avg. Hourly Earnings much above 4.0% will further push back on rate cut expectations and likely weigh on stocks.

Looking at the ISM Services PMI (E: 52.7), the key here is that the number stays solidly above 50 (which it should).  A drop below 50 will increase slowdown worries (and weigh on stocks).  Finally, there is one Fed speaker today, Barkin at 1:30 p.m. ET, but he shouldn’t move markets.

Sevens Report Quarterly Letter 

Our Q4 ’23 Quarterly Letter was delivered to subscribers on Tuesday, complete with compliance backup and citations. We’re already receiving feedback about how it is saving advisors time and helping them communicate with their clients in this volatile environment!

You can view our Q3 ‘23 Quarterly Letter here.

To learn more about the product (including price) please click this link.

If you’re interested in subscribing, please email info@sevensreport.com.

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.

Sevens Report Analysts Quoted in Investing.com

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Very Lofty Valuations: Sevens Report Analysts Quoted in Investing.com

These five market assumptions are ‘aggressively optimistic’ – Sevens Report

Sevens Research said the S&P 500 is starting 2024 trading at “a very lofty” 19.5X valuation. While they don’t believe the valuation is unjustified, they do believe it makes several key, positive assumptions about critical market influences in the coming year.

Sevens argues that while the market assumptions “aren’t necessarily wrong,” the “assumptions are aggressively optimistic, and it is how events unfold versus these expectations and not on an absolute scale that will determine how stocks and bonds trade to start the year.”

Also, click here to view the full Investing.com article published on January 2nd, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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.

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The S&P 500 Is Starting 2024 Trading At A Very Lofty 19.5x Valuation

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The S&P 500’s Lofty Valuation: Tom Essaye Quoted in Blockworks

Bitcoin is trading on ETF news, but analysts caution on macro headwinds

“The S&P 500 is starting 2024 trading at a very lofty 19.5x valuation and while I’m not going to say that valuation is unjustified, I will say that valuation makes several key, positive assumptions about critical market influences in the coming year,” said Tom Essaye, founder of Sevens Report Research.

“And how reality matches up with those assumptions will determine whether stocks extend the rally (and the S&P 500 hits new highs and makes a run at 5,000) or gives back much of the Q4 Santa Claus rally.”

Also, click here to view the full Blockworks article published on January 2nd, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up 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

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

What’s in Today’s Report:

  • Jobs Report Preview

Futures are rebounding very slightly following better than expected global service PMIs.

The December Chinese Service PMI handily beat estimates (52.9 vs. (E) 51.6) offering an encouraging signal on Chinese growth while the EU and UK services PMIs also slightly best estimates.

On inflation, data was more mixed as French CPI met estimates at 3.7% but rose slightly from last month challenging the disinflation narrative.

Today focus will be on economic data and specifically the labor market via Jobless Claims (E: 218K) and the ADP Employment Report (E: 115K) and the key here remains Goldilocks data that isn’t so strong it reduces rate cut expectations nor so bad it stirs worries about the economy.  Also, we get the December PMI Composite Index (E: 51.0) but barring a major surprise that shouldn’t move markets.

Jobs Report

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The Market Is “Sitting On Big Gains”

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The Market Is “Sitting On Big Gains”: Tom Essaye Quoted on BNN Bloomberg

Markets today: AI mania driving Nasdaq 100’s best run since 1999

The market is “sitting on big gains” and most participants just want the year to end to register those gains, according to Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter.

“But I’ve been in this industry long enough to know that when everyone seems to be leaning on one side of the proverbial canoe, it pays to move to the middle.”

Warnings about a market that’s flashing overbought signals have been raising concern about a pullback, with some market observers saying that traders have gone too far, too fast in pricing in a dovish Fed pivot.

Also, click here to view the full BNN Bloomberg article published on December 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

To strengthen your market knowledge take a free trial of The Sevens Report.

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Markets Have Priced In The Dovish Pivot

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Markets Have Priced In The Dovish Pivot: Tom Essaye Quoted on BNN Bloomberg

S&P 500 rally flashes signs of fatigue near record

“Markets have priced in the dovish pivot and stocks never discount the same news twice,” said Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “As we start 2024, markets will need to see new, positive catalysts to send the S&P 500 to new all-time highs.”

Also, click here to view the full BNN Bloomberg article published on December 26th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up 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.

Two Differences In 2024 That Could Be Negative For Equity Markets

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2 Differences In 2024: Sevens Report Analysts Quoted in Investing.com

Sevens Research sees 2 differences in 2024 that could be negative for equity markets

In its latest daily note, Sevens Report Research said there are two important differences for investors to consider in 2024.

“The market has priced in six Fed rate cuts and year-end 2024 fed funds below 4%,” analysts said.

“If we see the 10-year Treasury yield continue to fall to the low 3% or sub 3% range, that’s not going to be a major tailwind for stocks. Because that won’t be forecasting a dovish Fed, it’ll be forecasting slowing growth,” analysts explained. “And those falling yields will then become a harbinger of a potential economic slowdown and not the welcomed signal of a Fed that’s finally turning dovish.”

The second difference is that earnings results won’t have low expectations to excuse poor performance.

“Consensus S&P 500 earnings growth is nearly 10% year over year. Well above the longer-term averages of around 5%-ish annual growth. And keep in mind, at 4,800 the S&P 500 is trading over 19.5X that $245 earnings estimate, which means there’s little room for disappointment from a valuation perspective,” analysts explained. “Bottom line, ‘ok’ earnings won’t be good enough and we got a preview of that in the Q3 numbers.”

Also, click here to view the full Investing.com article published on December 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

 

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.