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Navigating Market Signals: Tom Essaye’s Insight on Growth and Demand

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Market Growth and Demand Signals – Tom Essaye Quoted in Barron’s: Strengthen your market knowledge with a free trial of The Sevens Report.

U.S. Stock Futures Slip as Higher Oil Prices Renew Inflation Fears

Economic data on tap includes the ISM services index for August, the trade balance for July, and the release of the Fed’s Beige Book, an anecdotal report of current economic conditions published eight times a year.

“As has been the case lately, the market is looking for signs of slowing demand but not a sharp downturn in growth,” said Tom Essaye, the founder of Sevens Report Research.

“The ISM will be the more important report to watch so a number that is ‘too hot’ or ‘too cold’ will likely see yesterday’s stock market declines extended, while a Goldilocks print will help markets stabilize.”

Also, click here to view the full Barron’s article published on September 7th, 2023. However, to see Tom’s full comments on market growth and demand signals sign up here.

Market Growth and Demand Signals

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Sevens Report Analysts Quoted in Investing.com on August 21st, 2023

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Dow Jones, Nasdaq, S&P 500 weekly preview: All eyes on Nvidia and Powell

Sevens Report analysts: “The market of 2023 is being defined almost by hyperbolic extremes. We started 2023 with investors fearing a catastrophic recession, 1970s- style inflation and 1970s-style rate hikes. That hasn’t happened. But just because that didn’t happen, it doesn’t mean that: No economic slowdown will occur, inflation will magically crash to late 20-teens levels, and the Fed will suddenly turn dovish (as markets priced in at 4,600). The truth is in the middle, and that’s where we are now.”

Click here to read the full article.

Sevens Report Quoted in Investing.com on July 31st, 2023

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Dow Jones, Nasdaq, S&P 500 weekly preview: Citi boosts SPX target

Sevens Report: “We and others said at the start of the year that economic data would drive this market in 2023, and that’s what’s happened. The data has been Goldilocks, inflation has fallen, and the Fed isn’t worse than feared. But just like those were positive surprises YTD, they can also turn into negative surprises, as anyone who was in this business in ’99-’00 and ’07-’08 can tell you.” 

Click here to read the full article.

Sevens Report Co-Editor, Tyler Richey, Quoted in Market Watch on July 31st, 2023

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Stocks could sink into a bear-market recession, says technician. Here are five signals on when it likely starts.

“We continue to respect the rally and acknowledge the trend in equities is still higher, but we remain ‘patient bears’ with regard to stocks given the deeply inverted yield curve,” Tyler Richey, co-editor at Sevens Report Research wrote in a Monday report.

“We view the fact that most Treasury spreads have inverted to levels not seen since the early 1980s as a clear warning sign that the more than 500 basis points of Fed rate hikes in less than 18 months was way too much for the economy to weather,” noted Richey. 

Click here to read the full article.

How to Explain Any Pullbacks to Clients

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What’s in Today’s Report:

  • How to Explain Any Pullbacks to Clients (Why Too Hot or Too Cold Data Is a Negative for Markets)
  • Weekly Market Preview:  Can Goldilocks Data Continue to Support Stocks?
  • Weekly Economic Cheat Sheet:  All About Jobs (Jobs Report Friday, Claims Thursday, ADP Wednesday, JOLTS Tomorrow)

Futures are little changed following mixed global economic and inflation readings.

In China, the July PMIs were mixed as manufacturing was slightly better (49.3 vs. (E) 49.2) while services were worse (51.5 vs. (E) 52.9) and the result is markets will still want more stimulus from Chinese officials.

On inflation, EU flash core HICP (their CPI) rose 5.5% y/y vs. (E) 5.4% y/y, hinting at stickier than expected inflation.

This will be a busy week of data and earnings, but it starts slowly as there’s just one notable economic report today, the Chicago PMI (E: 43.5) and only a few notable earnings: ANET ($1.43), ZI ($0.23), WDC ($-2.01).  So, barring any major negative earnings announcements, we’d expect generally quiet trading ahead of an increase in activity starting tomorrow.

Tom Esaye Quoted in Market Watch on July 17th, 2023

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As the Dow hits 2023 high, one of the oldest stock-market forecasting tools is making a comeback

Despite numerous warning signals from cross asset analysis, including the still deeply inverted yield curve, Dow Theory, which is one of the most historically accurate strategies to identify the primary trend in the stock market, is now saying the path of least resistance is higher for the first time since April of 2022, said Tom Essaye, founder of Sevens Report Research and a former Merrill Lynch trader, in a Monday note to clients. Click here to read the full article.

Sevens Report Analysts Quoted on Investing.com on July 17th, 2023

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Dow Jones, Nasdaq, S&P 500 weekly preview: Big Tech takes the stage

Sevens Report analysts: “At current levels, the S&P 500 has priced in 1) No hard landing, 2) Falling inflation and 3) A Fed that won’t be raising rates much longer (and possibly cutting soon after). That’s basically the best outcome anyone could have hoped for at the start of the year, and that means the gains in stocks are legitimate, but also likely exhausted in the near term and it’ll take something else to push stocks materially higher from here.” Click here to read the full article.

Current Market Glossary (For Clients & Prospects)

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What’s in Today’s Report:

  • Current Market Glossary (For Clients & Prospects)

Futures are slightly lower following a night of disappointing tech earnings.

NFLX, TSLA and TSM all posted disappointing earnings results (stocks down 3% – 6% pre-market) and that’s weighing on Nasdaq and S&P 500 futures.

There was no notable economic data overnight.

Today will be another busy day of data and earnings results.  On the economic front, the two key reports are Weekly Jobless Claims (E: 250k) and Philly Fed (E: -10.0), and as you can guess (and especially at these stretched valuations) markets will want to see more Goldilocks data (so stable claims and Philly and falling prices).  We also get Existing Home Sales (E: 4.23M) but, barring a big miss, that shouldn’t move markets.

Turning to earnings, focus today is on industrials and consumer/healthcare names, and some important results to watch include:  AAL ($1.58), TSM ($1.07), JNJ ($2.61), PM ($1.48), COF ($3.31), CSX ($0.49), and PPG ($2.14).

What Pushes Stocks Higher from Here?

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What’s in Today’s Report:

  • What Pushes Stocks Higher from Here?
  • Weekly Market Preview:  Earnings Take Center Stage
  • Weekly Economic Cheat Sheet:  Growth Data in Focus this Week

Futures are slightly lower following mixed Chinese economic data and a potential further escalation of the Russia/Ukraine war.

Chinese economic data was mixed as GDP and Retail Sales both missed estimates, while Industrial Production beat, and the data will keep markets  wanting more stimulus.

Possibility of further escalation of the Russia/Ukraine war increased after Ukraine claimed responsibility for the destruction of a bridge linking Crimea and Russia.

Today focus will be on the first data point for July, the Empire Manufacturing Index (E: -4.3).  Markets will want to see this number be stronger than expectations and ideally turn positive, furthering the “Golidlocks” market narrative of falling inflation but stable growth.

CPI Preview: Good, Bad, and Ugly

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What’s in Today’s Report:

  • CPI Preview – Good, Bad, & Ugly
  • Chart: Is Disinflation Accelerating?

U.S. stock futures are extending this week’s gains ahead of the all-important CPI report this morning following a mostly quiet night of news.

There were no economic reports overnight but the Reserve Bank of New Zealand did notably pause their rate hiking cycle leaving their policy rate unchanged at 5.50% (however this was expected and did not meaningfully move markets).

Looking into today’s session the big catalyst is the CPI report due out before the open. On the headline, CPI is expected to come in at 0.3% m/m and 3.1% y/y while the Core figure is seen rising 0.3% m/m and 5.0% y/y.

From there, focus will turn to Fed speakers with Kashkari speaking shortly after the open (9:45 a.m. ET) and Mester at the close (4:00 p.m. ET).

Finally, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET and the outcome could shed light on the bond market’s outlook for the economy and Fed policy expectations in the wake of the CPI data release, so there is potential this auction moves markets in the early afternoon.