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Market Multiple Levels Chart (October Edition)

Market Multiple Levels Chart (October Edition): Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Market Multiple Levels Chart (October Edition)

Futures are modestly lower following mixed economic data and as the Israel and Hamas war appeared set to escalate.

Economically, E.U. Industrial Production beat while Chinese CPI was flat y/y, increasing deflation concerns.

Israel warned more than one million residents to evacuate southern Gaza in the next 24 hours as it readies for a potential invasion and oil is rallying 3% as a result.

Earnings season starts today and there are several large banks that are reporting results.  In addition to the earnings, markets will want to hear positive commentary on consumer spending on the earnings calls.  Important reports today include:  JPM ($3.89), UNH ($ 6.33), BLK ($8.52), C ($1.26), WFC ($1.25).

Economically, the only notable report today is Consumer Sentiment (E: 67.5) and it would take a spike in inflation expectations for that to move markets.

Market Multiple Table - October Edition


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CPI Preview: Good, Bad, and Ugly

CPI Preview: Good, Bad, and Ugly – Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • CPI Preview: Good, Bad, & Ugly
  • “Soft Components” of the NFIB Small Business Optimism Index Fall to GFC Lows
  • Chart – Equal-Weighted S&P 500 Index (RSP) Remains in Steep Downtrend, Underscoring Thin Market Breadth

U.S. equity futures are modestly higher this morning despite escalating tensions in the Middle East overnight as investors embrace a continued pullback in global bond yields after steady inflation data in the EU overnight.

Economically, German CPI was unchanged from August, coming in at 4.5% y/y in September, meeting estimates. The inline inflation print is helping bonds continue to stabilize and supporting modest risk-on money flows this morning.

Today, focus will be on economic data early with PPI (E: 0.3% m/m. 1.2% y/y) and Core PPI (E: 0.2% m/m, 2.1% y/y) due out ahead of the bell.

From there focus will turn to the Fed with multiple officials scheduled to speak: Waller, Bostic, Collins. Additionally, the latest FOMC meeting minutes will come at 2:00 p.m. ET.

Bottom line, if PPI is more or less inline with estimates and the FOMC minutes and Fed chatter over the course of the day continue to support the less-hawkish narrative of recent. Then this week’s rally can continue, however and reversal back higher in yields will pressure stocks and other risk assets.

CPI Preview: Good, Bad, & Ugly


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Rising Geopolitical Tensions

Rising Geopolitical Tensions: Tom Essaye Quoted in Morningstar


Dow, S&P 500 flip positive to start week after Hamas attacks Israel

The attack by Hamas on Israel raised fears of a broader conflict, sending crude prices jumping. And spurring haven-related support for gold, the dollar and U.S. Treasury futures. The cash Treasury market is closed for the Columbus Day and Indigenous Peoples Day holiday.

“The human tragedy and geopolitical implications aside, from a market standpoint the attack matters because rising geopolitical tensions mean higher oil prices and the higher oil goes, the stronger the additional headwind on stocks and bonds,” said Tom Essaye, founder of Sevens Report Research, in a Monday note.

Also, click here to view the full Morningstar article published on October 9th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Is There an Opportunity in Defensive Sectors?

Is There an Opportunity in Defensive Sectors? Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Why Have Defensive Sectors Traded So Poorly and Is There an Opportunity There?
  • Chart: 10-Yr Treasury Note Futures Imply Potential Reversal Lower in Benchmark Yields

U.S. stock futures are tracking global equity markets higher this morning. As investors welcome a sizeable drop in bond yields and new stimulus plans by China.

Bloomberg reported overnight that China may issue 1T yuan in debt to be used for infrastructure projects in order to help the economy meet the government’s annual growth targets. The news is alleviating some lingering concerns about the health of the world’s second-largest economy.

There are no economic reports today which will leave the market focused on more Fed speakers: Bostic, Waller, Kashkari, and Daly, and the subsequent reaction from bond markets.

Additionally, the Treasury will hold auctions for 3 and 6-month Bills at 11:30 a.m. ET and 3-Yr Notes at 1:00 p.m. ET that could impact yields.

Bottom line, the rise in Treasury futures (implying lower yields) yesterday when bond markets were closed for Columbus Day was a major factor supporting the rally in stocks, and how yields move today as fixed income markets open for the week will likely dictate the price action in stocks.

Is There an Opportunity in Defensive Sectors?


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Why Did Stocks Rally After the Jobs Report?

Why Did Stocks Rally After the Jobs Report? Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Why Did Stocks Rally After the Jobs Report?
  • What to Make of This Market (Updated Near and Medium-Term Outlook)
  • Weekly Economic Cheat Sheet:  Inflation in Focus This Week (CPI Thursday is Very Important)
  • Weekly Market Preview:  Will Rising Oil Prices Become Another Headwind?

Futures are moderately lower on rising geo-political tensions following the Hamas attack on Israel over the weekend.

The human tragedy and geo-political implications aside, from a market standpoint the attack matters because rising geo-political tensions mean higher oil prices (up 3% currently) and the higher oil goes, the stronger the additional headwind on stocks and bonds.

Today there are no notable economic reports but there are several Fed speakers, including Logan, Barr, and Jefferson, although they shouldn’t move markets.  So, oil will likely be the driver of asset prices today and the higher oil goes, the stronger the headwind on stocks.

Why Did Stocks Rally After the Jobs Report?


Sevens Report Quarterly Letter

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