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The market doesn’t believe Trump will follow through with them

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Doesn’t believe Trump will follow through: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

A Santa Rally Could Lead to a Sober January. Be Cautious—Not Bearish.

That is certainly the case when it comes to tariffs. So far the market has been largely ignoring their potential impact, as it “simply…doesn’t believe Trump will follow through with them,” to quote Sevens Report President Tom Essaye.

Also, click here to view the full Barron’s article published on December 2nd, 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.

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Why There’s A Clear Path for the Santa Rally

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Why There’s A Clear Path for the Santa Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why There’s A Clear Path for the Santa Rally
  • Weekly Market Preview:  Do inflation metrics make a December rate cut guaranteed?
  • Weekly Economic Cheat Sheet:  CPI on Wednesday is the key report

Futures are slightly lower as geo-political unrest is slightly outweighing more stimulus promises from China.

Geopolitically, rebels overthrew the Assad regime in Syria over the weekend.  While this is a major geo-political event, the impact on markets is likely small given Syria isn’t a major oil exporter.

China’s officials promised an easier monetary policy bias and more fiscal stimulus over the weekend, boosting Chinese shares.

Today there are no notable economic reports nor any Fed speakers so focus will on be geo-politics and oil prices.  As long as the turmoil in Syria doesn’t push oil prices higher, it shouldn’t impact stocks.

 

Annual Discounts on Sevens Report, Alpha, Quarterly Letter and Technicals

We’ve continued to be contacted by advisor subscribers who wanted to use the remainder of their 2024 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free) or add a new product (Alpha, Quarterly Letter, Technicals).

If you have unused pre-tax research dollars, we offer month-free discounts on all our products.

If you want to extend current subscriptions or save money by upgrading to an annual subscription (across any Sevens Report product), please email  info@sevensreport.com.

Join thousands 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 Day

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

What’s in Today’s Report:

  • Jobs Day
  • Updated VIX Analysis

Futures are slightly lower following a mostly quiet night of news and ahead of today’s jobs report.

Economically, German Industrial Production missed expectations (-1.0% vs. (E) 1.5%) and became the latest underwhelming EU economic report.

Today focus will be on the jobs report and expectations are as follows:  200K Job-Adds, 4.2% Unemployment Rate, 3.9% y/y Wage Growth.  A “Goldilocks” job adds number is something around the 200k expectation or lower, as long as it’s not close to zero.  Anything in that range (with mostly in-line unemployment and wages) should “green light” a Fed rate cut in December and help fuel a Santa Rally.

Speaking of the Fed, there are numerous speakers today including Bowman (9:15 a.m. ET), Goolsbee (10:30 a.m. ET), Hammack (12:00 p.m. ET) and Daly (1:00 p.m. ET).  However, most of them have spoken recently and their message has been consistent:  A December rate cut is possible but not guaranteed and rates will come down over time.  As long as that’s the message from them today, they shouldn’t impact markets.

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Sentiment Divergence Between Advisors and Investors

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Sentiment Divergence Between Advisors and Investors: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment: Divergence Appearing Between Investors and Advisors
  • ISM Manufacturing PMI Takeaways

Futures are little changed amid escalating U.S.-China trade tensions and ongoing political turmoil in Europe.

Overnight, China announced an export ban of specific rare minerals with military applications to the U.S. in the latest escalation of trade tensions between the two countries.

EU shares edged higher ahead of the French government’s “vote of no confidence” (tomorrow) linked to ongoing budget turmoil.

Looking into today’s session, there are two economic reports to watch: JOLTS (E: 7.49 million) and Motor Vehicle Sales (E: 16.0 million). Investors will want to see more “Goldilocks” data to support post-election growth optimism.

Additionally, there are two Fed speakers to watch: Kugler (12:35 p.m. ET) and Goolsbee (1:30 p.m. ET and 3:45 p.m. ET), and as long as they do not offer any hawkish surprises, stocks should be able to extend gains to new record highs today.

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One Last Hurdle for the Santa Rally

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One Last Hurdle for the Santa Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • One Last Hurdle for the Santa Rally
  • Weekly Market Preview: Can Goldilocks Data Offset Political Volatility?
  • Weekly Economic Cheat Sheet: The Last Big Week of 2024

Futures are slightly lower on political volatility as Trump issued more tariff threats and made another unorthodox cabinet appointment while President Biden pardoned his son Hunter.

Trump threatened 100% tariffs on BRICs countries (Brazil, Russia, India, China) if they abandon the U.S. dollar. In addition, Trump made another unorthodox cabinet pick with Kash Patel as FBI Director.

Finally, President Biden reversed course and gave an unconditional pardon to his son Hunter, sparking bi-partisan criticism.

Today focus will turn from politics to actual economic data and the key report today is the ISM Manufacturing PMI (E: 47.6).  As has been the case, an in-line to slightly soft number would be the best case for stocks as it wouldn’t signal any further deterioration in the manufacturing sector and, at the same time, keep a Fed rate cut more likely than not.

We also have two Fed speakers today, Waller (3:15 p.m. ET) and Williams (4:30 p.m. ET) and any commentary that makes a December rate cut more likely will be a positive for markets.

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Data Check: Hard Landing or Soft Landing?

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Data Check: Hard Landing or Soft Landing?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing vs. Soft Landing Scoreboard
  • Chart: NVDA Earnings Loom Large – Key Technical Support in Focus

Futures are slightly higher but well off session highs as “warm” EU inflation data pushed yields higher overnight with the U.S. 10-Yr pushing back beyond 4.40%.

Economically, inflation data in Europe was “warm” as U.K. Core CPI rose 3.3% y/y vs. (E) 3.2% in October while German PPI unexpectedly rose 0.2% m/m last month following a sizeable 0.5% drop in September.

There are no notable economic reports today but there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could move markets depending on demand measures for the longer duration government bonds (higher yields would weigh on stocks again).

Additionally, there are two Fed speakers today Cook (11:30 a.m. ET) and Bowman (12:15 p.m. ET), but unless they are materially hawkish, their comments should not move markets.

Finally, earnings season has largely wound down however there are some notables reporting quarterly results today including: TGT ($2.29), TJX ($1.09), NVDA ($0.74), PANW ($1.48), SQM ($0.64).

Interestingly, Barclays analysts noted earlier this week that options markets suggest today’s report from NVDA will be the biggest catalyst remaining in 2024, underscoring the importance of investor sentiment towards the AI-darling’s growth prospects, leaving the chip-maker’s earnings report a potential make-or-break event for markets this afternoon.

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Why Did Stocks Drop Last Week?

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Why Did Stocks Drop Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop Last Week?
  • Weekly Market Preview:  Focus on Treasury Secretary, NVDA earnings and economic growth (Thursday/Friday).
  • Weekly Economic Cheat Sheet:  Important Growth Data Late This Week

Futures are little changed following a quiet weekend of news as markets continue to digest last week’s rise in Treasury yields, and the return of political surprises (via Trump’s cabinet announcements).

There were no notable economic reports overnight.

Politically, the major remaining cabinet pick from Trump is Treasury Secretary and it should come early this week (and another unorthodox choice would further roil markets).

Today the calendar is quiet as there is just one economic report, Housing Market Index (E: 43), and one Fed speaker, Goolsbee (10:00 a.m. ET).  So, focus will be on Trump’s cabinet (again, the more traditional choice for Treasury, the better for markets) and on the 10-year yield.  If it keeps rising, that will be a continued headwind on stocks.

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Equities surged as a Republican sweep is the likely election outcome

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Equities surged as a Republican sweep is the likely election outcome: Tom Essaye Quoted in Morningstar

Dow soars as these areas are ‘likely market winners’ of potential Republican sweep

Equities surged as “a Republican sweep is the likely election outcome,” Tom Essaye, the founder and president of Sevens Report Research, said in a note Wednesday. “This likely ‘green lights’ a solid year-end rally as long as growth and the Fed perform as expected.”

The note described the Republican agenda as favoring “pro-growth policies,” citing tax cuts, deregulation, “a focus on domestic industries and negotiating better trade relationships.”

Essaye pointed to several exchange-traded funds as “the likely market winners from this policy stance,” including the Vanguard Value ETF VTV, which invests in large-cap value stocks in the U.S., and the small-cap equities-focused iShares Russell 2000 ETF IWM.

Also, click here to view the full MarketWatch article published in Morningstar on November 6th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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.

Why the Bullish Thesis Got Stronger

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Why the Bullish Thesis Got Stronger: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Bullish Thesis Got Stronger
  • Weekly Market Preview: Does the S&P 500 Breakthrough 6,000?
  • Weekly Economic Cheat Sheet: CPI on Wednesday, Important Growth Data on Thursday

Futures are modestly higher on post-election momentum and following a very quiet weekend of news.

Parts of the Trump administration are starting to come into view, most notably that Scott Bessent is looking most likely to become Treasury Secretary and the market views that as bullish.

Economically, there were no notable reports overnight.

Today is Veteran’s Day so trading should be quiet as there are no economic reports or Fed speakers, while the bond market is closed.  However, there are important updates this week on inflation (CPI on Wednesday) and growth (numerous reports on Thursday/Friday) so the week will get busier.

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Earnings across the board were disappointing

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Earnings across the board were disappointing : Tom Essaye Quoted in Blockworks

Major earnings week weighs on tech stocks

Tom Essaye, founder of Sevens Report Research, said it wasn’t just Big Tech weighing on equities Thursday. Earnings across the board were disappointing (looking at you, Uber, Ebay and Intercontinental Exchange), plus economic data looks like we may see higher rates for a more sustained period of time.

Also, click here to view the full Blockwork article published on November 1st, 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.