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Oil has recovered from its early June pullback to test seven-week highs

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Oil has recovered from its early June pullback to test seven-week highs: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices settle at highest since April on brighter demand prospects

Oil has recovered from its early June pullback to test seven-week highs on “price-supportive rhetoric” from the Organization of the Petroleum Exporting Countries and its allies, said Tyler Richey, co-editor at Sevens Report Research.

The initial “knee-jerk selloff” reaction to the June 2 decision by OPEC+ to phase out voluntary oil-production cuts after the third quarter was “largely reversed and seen as overdone,” Richey told MarketWatch. OPEC+ leadership “confirmed that they will remain flexible and only reduce their voluntary output cuts if market conditions warranted, and clarified increasing production is not necessarily a base-case expectation right now,” he said.

“Evidence of strong domestic demand at the start of the U.S. summer driving season, rising geopolitical tensions overseas and renewed hopes for a perfectly executed [economic] soft landing” by the Federal Reserve have also contributed to oil’s price rebound, Richey said.

Also, click here to view the full MarketWatch article published on Morningstar on June 18th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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Market Multiple Table: Pushing Justifiable Valuations

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Market Multiple Table: Pushing Justifiable Valuations: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • June Market Multiple Table – Pushing the Edge of Justifiable Valuations
  • Empire State Manufacturing Survey Takeaways
  • Chart – NVDA Tests Near-Term Uptrend

Futures are little changed as ongoing strength in technology shares offsets weakness in small caps in pre-market trade after mixed economic data overnight.

Economically, the German ZEW Survey missed estimates while the EU’s Narrow Core HICP (Core CPI equivalent) was inline with the May Flash of 2.9%, which was up from 2.7% in April.

Today, focus will be on economic data early with Retail Sales (E: 0.3%) and Industrial Production (E: 0.3%) both due to be released. Investors will be looking for signs of healthy consumer spending but not a figure that is “too hot” (hawkish policy concerns) or “too cold” (growth worries) while steady factory sector data would be welcomed but not as impactful for markets today.

There is also a long list of Fed speakers today. In chronological order, we will hear from: Barkin (10:00 a.m. ET), Collins (11:40 a.m. ET), Musalem (1:00 p.m. ET), Logan (1:00 p.m. ET) and Goolsbee (2:00 p.m. ET).

Finally, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET and weak demand could send yields higher and weigh on equities in afternoon trade.

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Is Disinflation Still Good for Markets? (The Answer May Surprise You)

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Is Disinflation Still Good for Markets? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Disinflation Still Good for Markets? (The Answer May Surprise You)
  • Weekly Market Preview:  Are Hard Landing Chances Rising?
  • Weekly Economic Cheat Sheet:  A holiday-shortened week, but still one with important growth updates.

Futures are slightly lower on mixed Chinese economic data and following a quiet summer weekend of news.

Chinese Fixed Asset Investment (4.0% vs. (E) 4.2%) and Industrial Production (5.6% vs. (E) 6.2%) both missed estimates while Retail Sales beat (3.7% vs. (E) 3.0%) leaving the outlook for Chinese growth still mixed (at best).

There were no notable political or geo-political updates over the weekend.

The focus of the data this week will be on economic growth and today we get the first look as June activity via the June Empire Manufacturing Index (E: -12.50).  Given recent worries about growth, the stronger this number, the better for the broader markets.

We also have three Fed speakers today, Williams (12:00 p.m. ET), Harker (1:0 p.m. ET) and Cook (11:00 p.m. ET) but again, given last week’s Fed meeting, they shouldn’t move markets.

Finally, markets are closed on Wednesday for observance of Juneteenth (this is a recently new Federal holiday so I just want to make sure everyone was aware of the closure).

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Evidence That Investors Are Starting to Worry About Growth

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Evidence That Investors Are Starting to Worry About Growth: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Evidence That Investors Are Starting to Worry About Growth

Futures are moderately lower despite a slightly dovish Bank of Japan decision and more strong tech earnings (ADBE), as growing political anxiety in Europe weighed on markets.

French stocks dropped another 1% (down 5% on the week) on growing political uncertainty and that’s weighing on European markets and U.S. futures.

Today focus will remain on economic data and the notable report is the University of Michigan Consumer Sentiment Index (E: 73.0).  But, more important than the consumer sentiment reading will be the inflation data in that report (1-Year Inflation Expectations E: 3.2%, Five-Year Inflation Expectations E: 3.0%) and markets will want to see stable consumer sentiment and better than expected inflation readings to rally.

We also have two Fed speakers today, Goolsbee (2:00 p.m. ET) and Cook (7:00 p.m. ET)., but they shouldn’t move markets.

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What the Good CPI and Mixed Fed Message Means for Markets

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What the Good CPI and Mixed Fed Message Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Yesterday’s Good CPI and Mixed Fed Messaging Means for Markets

Futures are little changed despite more positive tech earnings as markets digest Wednesday’s CPI driven rally.

Broadcom (AVGO) became the latest AI-linked tech company (after AAPL and ORCL) to post strong earnings as the stock is up 14% pre-market.

Economically, it was a mostly quiet night as EU Industrial Production slightly missed estimates (-0.1% vs. (E) 0.1%) but that isn’t moving markets.

Today focus will remain on economic data and the two notable reports are Jobless Claims (222k) and PPI (E: 0.1% m/m, 2.5% y/y).  Of the two, PPI is more important and if it is lower than expected that’ll strengthen the belief in disinflation and increase September rate cut expectations, and stocks should extend yesterday’s rally.

Additionally, we do get one Fed speaker today, Williams at 12:00 p.m. ET, and he is part of leadership so his commentary on rate cuts could move markets.

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FOMC Preview (All About the Dots)

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FOMC Preview (All About the Dots): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview (All About the Dots)

Futures are slightly higher following more solid tech earnings and despite some stagflationary economic data.

ORCL earnings beat estimates and the stock is up 9% pre-market, helping to support stock futures.

Economically, Chinese inflation ran slightly hot while UK Industrial Production badly missed estimates.

Today brings the two key events of the week via CPI and the Fed Decision.  For CPI, estimates are:  E: 0.1% m/m, 3.4% y/y, Core CPI (0.3% m/m, 3.5% y/y).  The key here is that core CPI is flat or declines from last month.  If we see a bounce back above 3.6% that will likely be a material surprise negative.

For the Fed, there is no change expected to rates and focus at 2:00 will be on the dots (and how much they changed since March).  Anything from the Fed (dots or Powell commentary) that makes a September rate cut more likely will help stocks, while anything that makes it less likely will be a headwind.

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Tom Essaye has proposed two unlikely scenarios for Friday’s jobs report

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Two unlikely scenarios for Friday’s jobs report: Tom Essaye Quoted in MarketWatch

Two ‘wildcard’ scenarios for Friday’s jobs report

Tom Essaye, founder of Sevens Report Research, has proposed two unlikely scenarios for Friday’s jobs report that are nevertheless worth considering.

In a report shared with MarketWatch early Friday, Essaye outlined his two “wildcard” scenarios — one where jobs growth surprises to the upside, but wage growth slows, and another that is essentially the inverse.

  • “The first potential wildcard to watch today is a jobs report that supports the case for a “no landing” or already-achieved soft-landing, which would be characterized by an as-expected or better-than-anticipated job adds headline, steady or falling unemployment rate, and significant drop in wage growth to suggest suddenly easing inflation pressures.”
  • “The second wildcard to watch is data that suggests the economy is falling into a rut of stagflation with a sharp slowdown in growth that is on the brink of contraction but with still sticky and elevated inflation pressures. A very underwhelming job adds headline, a spike in the unemployment rate, and an unforeseen jump in wage growth would fit the criteria of a stagflationary release.”

Also, click here to view the full MarketWatch article published on June 7th, 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’s in Today’s Report: When Does Bad Economic Data Become Bad for Stocks?

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Jobs Day Technical Preview & Wildcards to Watch: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • When Does Bad Economic Data Become Bad for Stocks?
  • Weekly Market Preview:  An Important Week:  Fed Decision (Including the Dots), CPI and AI Updates.
  • Weekly Economic Cheat Sheet:  Do We See Real Movement in Rate Cut Expectations?

Futures are modestly lower as global bond yields rise following surprise political news over the weekend.

Far right political parties outperformed expectations in EU elections while French President Macron called for surprise snap elections.  The results are pushing French and German bond yields higher, which are pulling Treasury yields up in sympathy and weighing slightly on futures.

Outside of the political results, it was a mostly quiet weekend of news as investors look ahead to an important week of AI catalysts, the FOMC decision and the latest CPI report.

This is a busy and important week for markets as it will either confirm current (positive) expectations on Fed rate cuts and inflation or challenge them and increase volatility.  That said, the week starts quietly as there are no notable economic reports today and the key event is likely to be AAPL’s Worldwide Developer Conference keynote announcement, which is focused on AI.  If it’s underwhelming, tech could lag and slightly weigh on markets.

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The data is starting to show a potential soft landing

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The data is starting to show a potential soft landing: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Only Two S&P 500 Sectors Are Rising

Sevens Report Research’s Tom Essaye told Barron’s the data is starting to show a potential soft landing, though where it goes from here is anyone’s guess.

“A soft landing was always a slowing of growth that sort of didn’t get too bad,” Essaye says. “So it appears we are kind of arriving at that point. Now, the issue is that every hard landing started with a soft landing. You don’t just jump from growth to contraction.”

Also, click here to view the full Barron’s article published on June 5th, 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.

A bearish-leaning reality that OPEC+

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A  bearish-leaning reality that OPEC+: Sevens Report co-editor Tyler Richey Quoted in MarketWatch

Oil futures settle at lowest since early February

The market’s bullish hopes for some degree of commitment to ‘price stability’ via the potential for further production cuts were dashed, and instead met with a bearish-leaning reality that OPEC+ does not seem willing to cut production any further than they already have despite ongoing recession risks that would cripple demand,” said Tyler Richey, co-editor at Sevens Report Research.

Also, click here to view the full MarketWatch article published on June 3rd, 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.