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Are H-1B Visas the Reason for this Pullback?

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Are H-1B Visas the Reason for this Pullback?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are H-1B Visas the Reason for this Pullback?

U.S. equity futures are bouncing back from yesterday’s losses in light holiday trading as investors square books into year-end and digest mixed Chinese economic data.

China’s Composite PMI rose 1.4 points to 52.2 in December thanks to the Services PMI rising to 52.2 vs. (E) 50.2 but the Manufacturing PMI unexpectedly fell to 50.1 vs. (E) 50.3.

There are two housing market reports today: Case-Shiller Home Price Index (E: 4.3%) and FHFA House Price Index (E: 0.5%) but neither release should materially move markets and there are no Fed officials scheduled to speak today.

The limited list of catalysts should make for a quiet session to end what has been a strong year of gains in the stock market as portfolio rebalancing and year-end book-squaring are likely to be the primary drivers of money flows today.

As a reminder, stocks will trade for a full, normal session through 4:00 p.m. ET but the bond market closes early today (2:00 p.m. ET).

 

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Throughout December, we’ve been 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.

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A Higher Bar for the Bulls in 2025

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A Higher Bar for the Bulls in 2025: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Higher Bar for the Bulls in 2025
  • Weekly Market Preview: Focus on Politics (Does Johnson Get Re-elected as Speaker?)
  • Weekly Economic Cheat Sheet: Another Slow Week But Important Reports Thursday and Friday

Futures are slightly weaker following a mostly quiet weekend of news and ahead of another holiday shortened trading week.

Economically, the only notable report was Spanish CPI, which came in hotter than expected at 2.8% y/y vs. (E) 2.6% y/y, reinforcing some fears of sticky inflation.

Politically, the first major event for the new U.S. Congress comes this Friday via the Speaker of the House election (markets will want to see current Speaker Johson re-elected).

Given the mid-week holiday this week is another relatively quiet one on the data front but there are some notable reports to watch today including Chicago PMI (E: 42.7), Pending Home Sales (E: 0.7%).  As is the case for the foreseeable future, anything Goldilocks (so in-line to slightly softer) is the preferred outcome for markets.

 

Sevens Report Q4 ’24 Quarterly Letter Coming Thursday. 

We can help you improve your client communication with little-to-no effort from you!

I am currently finishing the Q4 2024 Sevens Report Quarterly Letter and it will be delivered Thursday, January 2nd.

2024 was a great year, but there is a lot of uncertainty looming for markets in 2025, from politics, the Fed, economic growth and earnings.

Don’t let your clients get blindsided by negative events!

You can view our Q3 ’24 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

Futures are modestly lower, again in quiet trading, on disappointing Chinese economic data.

Chinese industrial profits declined –7.3%, contracting for the fourth consecutive month and reminding investors that while there’s been a lot of stimulus from Chinese officials, it will take time to impact the economy.

In Japan, economic data was better than expected as retail sales and industrial production beat estimates.

Today there are no notable economic reports and trading should be quiet.  That said, the 10-year yield will remain an influence on stocks.  The higher the yield goes, the more it’ll pressure stocks.

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Hard-Landing/Soft-Landing Scoreboard

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Hard-Landing/Soft-Landing Scoreboard: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard-Landing/Soft-Landing Scoreboard
  • Durable Goods Orders Takeaways

Futures are slightly higher with global markets as traders continue to digest last week’s volatile post-Fed selloff amid quiet news wires and low holiday-week trading volumes.

Overnight, Reuters reported that the Chinese government is planning to sell 3 trillion yuan worth of “special bonds” in 2025, up from 1 trillion in 2024, which supported a moderate risk-on rally in Asian markets.

Today should be a relatively quiet day in the markets as there is only one lesser followed Fed survey release: the Richmond Fed Manufacturing Index (E: -8.0) and no Fed officials are scheduled to speak.

There is a 5-Yr Treasury Note auction at 11:30 a.m. ET which could have an impact on the bond markets, and ultimately stocks (higher yields would put renewed pressure on stocks), however with light attendance and already low volumes, a sizeable move today is unlikely.

Finally, today is a holiday shortened session with the NYSE set to close at 1:00 p.m. ET.

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Why Has the Trump Trade Stalled? (Part One)

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Why Has the Trump Trade Stalled? (Part One): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Has the Trump Trade Stalled? (Part One)
  • Economic Takeaways – November Retail Sales

Stock futures are recovering some of yesterday’s losses as cooler-than-feared inflation data in the EU is driving modestly dovish money flows ahead of the Fed decision.

Economically, inflation data out of Europe was “cooler” than feared with U.K. Core CPI rising to 3.5% vs. (E) 3.6% while Eurozone HICP rose to 2.2% vs. (E) 2.3%. The “cooler” data saw rates traders price in more policy rate cuts from the ECB in 2025.

Today, there is one economic report due to be released mid-morning: Housing Starts and Permits (1.340M & 1.430M) but the primary market focus will be the Fed decision at 2:00 p.m. ET and likely more importantly, Fed Chair Powell’s press conference at 2:30 p.m. ET.

While the Fed will almost certainly be the primary catalyst for markets today, there is some micro-news that could influence sectors and sub-sectors of the equity markets as we will get late season earnings from GIS ($1.22), JBL ($1.88), MU ($1.75), and LEN ($4.18).

Bottom line, investors are looking for the Fed to reiterate their view that the economy is tracking for a soft-landing and that the FOMC is not overly concerned with the latest uptick in inflation data that could signal a sustained “pause” in rate cuts. A hawkish tone in the announcement or Powell’s press conference would likely trigger renewed selling pressure in equity markets and higher bond yields.

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What the CPI Report Means for Markets

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What the CPI Report Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the CPI Report Means for Markets

Futures are modestly lower on a surprise central bank rate hike and after ADBE posted disappointing guidance.

Brazil’s Central Bank hiked rates 100 bps (more than expected) and promised more rate hikes in the future, reflecting some mild fraying of the global rate cut cycle.

ADBE guidance missed investor expectations and it’s the second underwhelming tech report this week (after ORCL).

Today focus will be on rate cuts and economic data.  First, we get the ECB Rate Decision and markets expect a 25 bps cut (if there’s no cut, that’d be a surprise negative).  Economically, the key report today is Jobless Claims (E: 220K) and markets will want to see another Goldilocks reading (so around the 220k level).  We also get the latest PPI report (E: 0.3% m/m, 2.6% y/y) but barring a big jump, it shouldn’t move markets.

Finally, on the earnings front, the key report today is AVGO ($1.39) and markets will want to see a solid tech report to stop this mini-trend of underwhelming guidance (from ORCL and ADBE this week).

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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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Market Multiple Table: December Update

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Market Multiple Table: December Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table: A New Influence That Could Increase Volatility in 2025
  • Unbranded, Shareable MMT PDF Upon Request

Stock futures are stabilizing after Monday’s modest pullback as trader focus shifts ahead to tomorrow’s CPI report. Small caps are leading in pre-market trade thanks to a surprisingly solid NFIB report released earlier this morning.

Economically, the NFIB Small Business Optimism Index surged 8 points to 101.7 in November, handily topping estimates of 94.5 to hit the highest level since June 2021. Overseas, German CPI met estimates at 2.2% y/y, another Goldilocks inflation report.

Today, there is one economic report to watch: Productivity & Costs (E: 2.2%, 1.9%). The data has an inflation component (specifically the “Costs” part) that could move yields today and influence stocks (higher yields will weigh on equities).

Additionally, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and a few late-season earnings reports due out including AZO ($4.30), ASO ($1.25), and GME ($0.00).

The Treasury auction is another catalyst that could move yields and impact equities, but tomorrow’s CPI report is becoming the primary focus on the market as we progress through the week so market moves should be limited by trader positioning today.

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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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