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Five Bullish Market Assumptions Updated

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Five Bullish Market Assumptions Updated: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Five Bullish Market Assumptions Updated (Are They Still True?)
  • Weekly Market Preview:  Important Updates on Fed Rate Cuts and Economic Growth
  • Weekly Economic Cheat Sheet:  Fed Meeting Wednesday, ISM and Jobs Report Friday

Futures are little changed following an increase in geo-political tensions over the weekend and ahead of the first really busy week of 2024.

Three U.S. soldiers were killed in an attack in Jordan by Iranian backed militants and that’s further escalating tensions in the region and oil rallied in response.

There were no economic reports overnight.

This is the first truly busy week of 2024 as we have a Fed decision on Wednesday and a jobs report on Friday and it’s the most important week of earnings season.  But, the week starts slowly as there are no economic reports today and minimal earnings.  So, focus will remain on geo-politics and 1) Any additional attacks on U.S. soldiers in the region or 2) Information about a U.S. retaliatory strike could push oil higher and weigh on stocks.

Earnings Today:  WHR ($ 3.64), SOFI (E: $0.00), CLF ($-0.07).

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Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch on July 5th, 2023

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Oil prices end at a 2-week high on reports Saudi Arabia said OPEC+ will do ‘whatever necessary’ to support oil

The whatever it takes’ mentality and display of unity by OPEC+ can help support oil prices in the near term” and the $70-a-barrel mark is looking to offer initial support again, Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

Four Events that Could Cause a Correction

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What’s in Today’s Report:

  • Four Events that Could Cause a Correction

Futures are drifting cautiously higher this morning while international markets rallied overnight thanks to more upbeat economic data amid a static geopolitical backdrop.

There were no material developments regarding tensions between the U.S. and Iran overnight.

Economically, a Eurozone inflation reading (HICP) met expectations for the month of December while EU Retail Sales rose 1.0% in November, topping estimates of 0.6%.

Today, there are three economic reports to watch: International Trade (E: -$43.9B), Factory Orders (E: -0.7%), and the ISM Non-Manufacturing Index (E: 54.5). No Fed officials are scheduled to speak.

As far as other catalysts go, the Treasury will hold a 3-Yr. Note Auction at 1:00 p.m. ET and the results could move bond yields and have an impact on the yield curve. And if the curve compresses further (it has narrowed by more than 10 basis points over the last week), it could begin to pressure stocks.

Lastly, tensions between the U.S. and Iran remain a major market focus right now and further escalation could also weigh on risk assets, however, no news is good news regarding the situation right now, so if things continue to calm down in the Middle East, stocks could continue to drift back towards all-time highs.

What Rising Geo-Political Tensions Mean for Markets

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What’s in Today’s Report:

  • What the Spike In Geo-Political Tensions Means for Markets
  • What’s the Worst Case Geo-Political Scenario With Iran?

Futures are sharply lower following a spike in geopolitical tensions after a U.S. military strike killed a high ranking Iranian general.

A U.S. missile strike killed Iranian general Suleimani, who was the head of the Iranian military and arguably the second (and definitely the third) most important man in Iran.  Iran has vowed a response and oil spiked 4% on the news.

Today focus will be on any Iranian military response, and obviously a further escalation in tensions will be negative for markets.

Away from geopolitics, we also get an important economic report, the ISM Manufacturing PMI (E: 49.1) and several Fed speakers including Barkin (11:05 a.m. ET), Brainard & Evans (1:15 p.m. ET), Kaplan (3:30 p.m. ET) and the FOMC Minutes (2:00 p.m. ET).