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Is This Rally Sustainable?

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What’s in Today’s Report:

  • Is This Rally Sustainable? It Depends on What You Think About Growth.
  • Chart – The Latest Chicago PMI Points to a Loss of Economic Momentum

Futures are lower, led by TSLA shares and big tech after the latest social-media rift between President Trump and Elon Musk offsets mostly upbeat economic data from overnight while the strong Q2’25 gains are digested.

Economically, China’s Caixin Manufacturing PMI rose from 48.3 to 50.4 vs. (E) 49.0 in June while the EU’s final manufacturing PMI edged up from 49.4 to 49.5 vs. (E) 49.4. On the inflation front, the Eurozone HICP Flash (CPI equivalent) rose 0.1% to 2.0% as expected.

Looking into today’s session, there are three noteworthy economic reports to watch: The ISM Manufacturing PMI (E: 48.8), Construction Spending (E: 0.1%), and May JOLTS (E: 7.3 million). Investors will be looking for further evidence of resilience in growth metrics amid tame inflation pressures in order to short up rally-supporting soft landing hopes.

Finally, Fed Chair Powell will speak as part of a panel at an ECB Economic Forum in Portugal at 9:30 a.m. ET and any while he is unlikely to stray from the narrative that the FOMC is in “wait-and-see” mode, any insight on the future policy path could move markets today.

 

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Tech Leads the Rally, But Breadth Signals Are Flashing | Sevens Report Weighs In

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Tom Essaye says the rally looks healthy—but it’s not without warning signs

Tech stocks are powering this record-setting rally on Wall Street – but how long can it last?

RECORD HIGHS GET SUPPORT FROM NYSE BREADTH, BUT 200-DAY INDICATORS TELL A DIFFERENT STORY

Wall Street’s rally to new highs continues to be led by tech stocks, but according to Tom Essaye, founder of Sevens Report Research, the strength may be broader than it looks—though not without its risks.

“The recent advance is broad-based… historically healthy and likely sustainable.”
— Tom Essaye, Sevens Report

Essaye pointed to new highs in the NYSE Advance/Decline (A/D) line, a key signal that the rally has expanded beyond just megacap names.

But there’s a catch: only about 50% of S&P 500 stocks are trading above their 200-day moving averages, according to Sevens Report data—well below May’s 55% high.

“The divergence… is a source of concern,” Essaye wrote. “Some areas show real strength, while others may just be staging bear-market rallies.”

For bulls, Essaye says confirmation would come from more S&P names clearing their 200-DMAs—surpassing the May threshold of 55% would help validate the rally’s staying power.

Also, click here to view the full article published in MarketWatch on June 28th, 2025. 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.

If inflation surprises to the upside then that will pressure yields and stocks

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Markets are counting on inflation to stay subdued: Sevens Report President, Tom Essaye Quoted in MarketWatch

What’s up with inflation? PCE likely to show a small rise in prices despite tariffs.

“Markets are counting on inflation to stay subdued to keep expectations for two rates cuts in 2025 intact,” wrote Tom Essaye of Sevens Report Research. “If inflation surprises to the upside — which is unlikely given CPI and PPI were light — then that will push yields higher and pressure stocks.”

Also, click here to view the full MarketWatch article, published on June 26th, 2025. 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.

Two Analogies to Explain Tariffs to Clients

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What’s in Today’s Report:

  • Two Analogies to Explain Tariffs to Clients
  • Weekly Market Preview:  How Does Iran Respond? (And Does That Increase Worries About the Conflict Spreading?)
  • Weekly Economic Cheat Sheet:  More Important Growth Data This Week

Futures are slightly higher despite an increase in geopolitical tensions over the weekend.

The U.S. attacked and destroyed three Iranian nuclear facilities over the weekend. But, despite ominous headlines, we are not seeing an increase in oil prices or geopolitical tensions in the markets as fears of the conflict spreading remain low.

Today focus will remain on geopolitics and specifically how Iran responds to the direct U.S. attack.  Despite the headlines about this event, from a market standpoint, unless investors fear the conflict will spread and engulf the entire region and dramatically reduce oil supplies, then rising geopolitical tensions won’t be a material negative on this market.

Economically, there are two notable reports today: Flash Manufacturing PMI (E: 51.1) and the Flash Services PMI (E: 52.9) and markets will want to see stability in both to push back on slowdown fears. On the Fed front, there are multiple speakers today including Bowman (10:00 a.m. ET), Goolsbee (1:10 p.m. ET), Kugler & Williams (2:30 p.m. ET). But, with Powell’s testimony before Congress starting tomorrow, these speakers shouldn’t move markets.

What is the Shadow Fed?

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What’s in Today’s Report:

  • What is the Shadow Fed?

Futures are modestly lower as geopolitical concerns offset more strong tech earnings.

Geo-politically, multiple news outlets reported that Israel is preparing for a strike on Iranian nuclear facilities, which is boosting gold prices and weighing on global markets.

Oracle (ORCL) beat earnings on continued robust demand for AI infrastructure (the stock is up 7% pre-market).

Today focus will be on economic data via Jobless Claims (E: 243K) and PPI (E: 0.2% m/m, 2.6% y/y).  Claims have ticked higher in the last few weeks and if that continues, it will slightly increase economic anxiety and (slightly) pressure stocks.  On inflation, PPI is viewed as a loose leading indicator of CPI so if PPI can remain subdued, it’ll boost confidence inflation remains under control.

Finally, notable tech earnings continue today with ADBE ($4.01).

June Market Multiple Table (All About TACO)

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What’s in Today’s Report:

  • June Market Multiple Table Update – All About “TACO”

Futures are slightly higher this morning as traders remain optimistic about progress in the ongoing U.S.-China trade talks ahead of the May CPI release tomorrow.

Economically, the NFIB Small Business Optimism Index rose 3 points to 98.8 in May, topping estimates of 95.9 which is supporting modest gains in U.S. equity futures.

There are no additional economic reports today and no Fed officials are scheduled to speak which limits potential catalysts to today’s Treasury auctions which include 6-Week and 52-Week Bill auctions at 11:30 a.m. ET and a (more important) 3-Yr Note auction at 1:30 p.m. ET.

Late season earnings continue to trickle in as well with: ASO ($0.84), SJM ($2.25), UNFI ($0.24), GME ($0.08), and PLAY ($0.96) all due to report Q1 results today.

Bottom line, today is lining up to be fairly quiet as far as scheduled catalysts are concerned. However, any materially positive or negative trade talk headlines out of London where U.S. and Chinese negotiations remain underway, could meaningfully move markets today before focus turns to tomorrow’s critical May CPI release.

Jobs Day

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What’s in Today’s Report:

  • Jobs Report Preview (Abbreviated)
  • Jobless Claims Show Potential Cracks Emerging in Labor Market
  • Productivity and Costs Point to Sticky Wage Inflation
  • Collapsing Trade Deficit Reveals Significant Tariff Impact on Trade

Futures are modestly higher this morning as TSLA shares (+4%) are recovering some of yesterday’s heavy losses amid prospects of a Trump-Musk call today while economic data was solid overnight ahead of today’s jobs report.

Economically, Eurozone GDP rose +1.5% y/y in Q1 vs. (E) +1.3% while Retail Sales rose +2.3% vs. (E) +1.0% y/y. Both data points support the case for ongoing resilience and bolster prospects for a soft economic landing in the EU.

Market will be primarily focused on the May BLS Employment Situation Report this morning at 8:30 a.m. ET (E: 129K Job-Adds, 4.2% Unemployment Rate, 3.7% Wage Growth).

From there focus will shift to the financial news headlines as traders look for additional insight on trade negotiations, particularly talks between the U.S. and both Europe and China, however there is a “second tiered” economic release in the afternoon with Consumer Credit (E: $10.2B) due out at 3:00 p.m. ET.

Finally, two late season earnings releases to watch today are ABM ($0.87) and MANU ($-0.33) but neither is likely to meaningfully move markets with the focus on the May jobs report.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • ADP Employment and ISM Services PMI Takeaways
  • Oil Update – Prices Resilient Despite Three Bearish Catalysts

Futures are little changed as global traders digest yesterday’s soft U.S. economic data after a mostly quiet night of news.

Economically, China’s Services PMI rose from 50.7 to 51.1, meeting estimates while Eurozone PPI favorably cooled to 0.7% from 1.9%.

Looking into today’s session, there are several economic reports to watch including International Trade in Goods (E: $-118.1B), Jobless Claims (E: 235K), and Productivity & Costs (E: -0.8%, 5.7%). However, with the May Jobs Report looming large tomorrow, it will take a significant surprise in one of these reports to materially move markets.

There are also multiple Fed speakers again today including Kugler (12:00 p.m. ET), Harker (1:30 p.m. ET), and Schmid (1:30 p.m. ET). Any dovish commentary regarding yesterday’s soft economic data is likely to be well received, supporting both stocks and bonds.

Finally, there are a handful of late-season earnings releases this afternoon: AVGO ($1.35), LULU ($2.59), DOCU ($0.25), BF.B ($0.36), and WOOF ($-0.05). AVGO is particularly in focus as an increasingly important semiconductor manufacturer and its quarterly results could move the broader tech space on a material beat/miss.

Understanding the New Bullish Argument

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What’s in Today’s Report:

  • Understanding the New Bullish Argument

Futures are moderately weaker on digestion of the recent rally following a mostly quiet night of news.

There were no notable trade headlines overnight but President Trump did say they were “close” to a nuclear deal with Iran and that is pressuring oil (down 3%). Today there is a lot of potentially important economic data including, in order of importance:   Retail Sales (E: 0.1%), Jobless Claims (E: 229K), PPI (E: 0.2% m/m, 2.4% y/y), Philly Fed (E: -10.0) and Empire Manufacturing (-7.5).  Put simply, the stronger the growth data the better for stocks (pushes back against recession fears) and the lower the PPI reading, the better for stocks (pushes back against inflation fears).

There are two Fed speakers today including Powell (8:40 a.m. ET) and Barr (2:05 p.m. ET) but they commentary is expected to focus on regulation so it shouldn’t move markets.

Finally, there are some notable retail earnings to watch today: WMT ($0.57), BABA ($1.48), DE ($5.68).

May MMT Chart

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What’s in Today’s Report:

  • May MMT Chart
  • CPI Takeaways

Futures are flat after a mostly quiet night of news that included benign inflation data overseas while traders digest the fastest recovery from YTD losses since the 1980s.

Economically, April inflation data was mixed overnight as Japanese PPI fell to 4.0% vs. (E) 3.8% y/y while German CPI met estimates at 2.1% y/y last month.

There are no notable economic reports today but two Fed officials are scheduled to speak: Jefferson (9:10 a.m. ET) and Daly (5:40 p.m. ET). Neither are likely to move markets, however Fed policy expectations have shifted more hawkish in recent weeks so any dovish leaning comments could support a continued move higher in equities today.

On that same vein, there is a 4-Month Treasury Bill auction at 11:30 a.m. ET. Those Bills will mature around the time of the September Fed meeting, so strong demand would be dovish for markets while weak demand could spark hawkish money flows and result in some profit taking in risk assets.

Finally, there are a few more late season earnings releases due out today including SONY ($0.12) and CSCO ($0.75) but given optimism for new AI-chip deals overseas, neither report should be able to derail this week’s rally.