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The market may react with a “sell the fact” scenario

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The market may react with a “sell the fact” scenario: Tom Essaye Quoted in GuruFocus

Trade Uncertainty Looms Over S&P 500 Despite Recent Gains

Tom Essaye, founder of Sevens Report Research, noted that the Trump administration has significantly weakened the April 2 tariff statement, delaying implementation and exempting key import categories such as chips, electronics, pharmaceuticals, and automobiles. Although the market has recovered losses post “Liberation Day,” the S&P 500 is still down 3.9% for the year despite a nine-day rally, the longest since November 2004.

Essaye warns that when a trade agreement is finally announced, the market may react with a “sell the fact” scenario. Although trade tensions appear to be easing, new tariffs remain higher than January levels, posing growth headwinds.

Essaye suggests shifting to defensive sectors like utilities, consumer staples, and healthcare for risk mitigation. He also recommends diversified investments through the Invesco S&P 500 Equal Weight ETF (RSP) and favors low volatility funds like iShares MSCI USA Min Vol Factor ETF (USMV) and high-quality stock funds (QUAL).

Also, click here to view the full article featured on MSN GuruFocus, published on May 5th, 2025. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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March Market Multiple Table Update

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What’s in Today’s Report:

  • Market Multiple Table (March Update)
  • NY Fed Consumer Inflation Expectations Takeaways

Futures are trading with tentative gains as markets attempt to stabilize from the S&P 500’s ~6% early-March pullback after a mostly quiet night of macroeconomic and geopolitical news.

Economic data was mostly disappointing overnight as Japanese Household Spending fell -4.5% vs. (E) -1.5% m/m in January while the February NFIB Small Business Optimism Index fell from 102.8 to 100.7 vs. (E) of 101.0, but neither data point is materially moving markets.

Today, we will get one economic report on the labor market: JOLTS (E: 7.5 million), but it is a lagging data point and therefor will only move markets if there is a meaningful deviation from expectations.

Moving into the afternoon, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET, and if demand is weak (yields move higher) then stocks could come for sale amid hawkish money flows.

Finally, there are a few noteworthy retailer earnings releases due out today that could shed light on consumer spending trends, including: KSS ($0.72), DKS ( $3.49). The better the corporate commentary, the better the prospects of a relief rally taking shape.

Where Do We Stand With Tariffs (Updated)

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What’s in Today’s Report:

  • Where Do We Stand With Tariffs? (Updated 3/5/25)

Futures are higher amid risk-on global money flows after U.S. Commerce Secretary Lutnick said tariffs on Mexico and Canada could be scaled back as soon as today while the Ukraine-U.S. minerals deal is also seeing progress which is easing geopolitical worries.

Economically, the Eurozone Composite PMI met estimates at 50.2 while EU PPI jumped up to 1.8% vs. (E) 1.4% in January, rekindling still simmering inflation worries.

This morning is lining up to be a busy one as there are several noteworthy and potentially market-moving economic reports due to be released beginning with the February ADP Employment Report (E: 162K). Then, shortly after the open, both Factory Orders (E: 1.4%), and the February ISM Services PMI (E: 53.0) will be released.

There are no Fed speakers today, however there is a 4-Month T-Bill auction at 11:30 a.m. ET and demand for the short-duration securities could shed light on the latest shifts in Fed policy expectations.

Finally, earnings season continues with notable reports due to be released from ANF ($3.48), MRVL ($0.59), and VSCO ($2.30).

Jobs Day

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

What’s in Today’s Report:

  • Jobs Day
  • Why Wednesday’s Weak Economic Data Is Increasing Growth Concerns

Futures are little changed following the U.S. holiday as the last 24 didn’t provide any substantial market surprises while focus turns towards today’s jobs report.

The Labour Party won a landslide election victory in the UK, as expected, but that victory isn’t altering the outlook for growth or inflation (so it’s not impacting markets).

U.S. growth worries are creeping slightly higher following Wednesday’s surprisingly soft economic data.

Today focus will be on the jobs report and expectations are as follows: 189K Job-Adds, 4.0% Unemployment Rate, 0.3% m/m & 3.9% y/y Wage Growth.  Markets are still in a “bad is good” mode for data so the biggest risk to markets today is for a “Too Hot” number.  But, that said, Wednesday’s economic data was outright bad and for those paying attention, there are now a lot of signs that the U.S. economy may be losing more momentum than expected.  So, if there is a surprisingly weak jobs report (possible but unlikely) it will increase growth concerns and that’s a future risk to this rally.

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Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart (Unbranded PDF Available)
  • Why Did Small Caps Surge?

Stock futures are little changed in premarket trade indicating this week’s digestive churn sideways could continue today following mixed economic data overnight.

Chinese exports dropped -7.5% vs. (E) +1.0% year-over-year in May adding to worries about the health of the recovery in the world’s second largest economy.

Conversely, in Europe, German Industrial Production jumped 1.8% vs. (E) 1.4% y/y helping ease some worries about the health of the EU economy.

Looking into today’s session, the list of potential catalysts remains light as there are just two economic reports to watch: International Trade in Goods and Services (E: -$76.0B) and Consumer Credit (E: $21.0B) while there are no Fed officials scheduled to speak.

That will leave focus on market internals and whether or not the early June money flows into cyclicals and small cap stocks can continue. If so, the improving breadth in the market with the S&P 500 sitting just under YTD highs will add to the case that the 2023 rally is sustainable.

Why A Soft Landing Is Still Good for Stocks

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What’s in Today’s Report:

  • Why A Soft Landing Is Still Good for Stocks
  • EIA Analysis and Oil Market Update

S&P 500 futures are solidly higher while Nasdaq futures surge 2% thanks to blow out NVDA earnings.

NVDA beat on revenue and EPS and raised guidance on strong AI chip demand, and the stock surged more than 20% after hours.

Fitch put the U.S. on “credit watch negative” as the potential “X” date for the debt ceiling is less than a week away.

Today focus will be on any debt ceiling progress (although none is expected with the looming holiday weekend) and on economic data, and the most important report is Jobless Claims (E: 248K) and markets will want to see that number flat or just slightly higher (another big jump would increase hard landing worries).

Other data today includes Revised Q1 GDP (E: 1.1%) and Pending Home Sales (E: 1.1%), but neither number should move markets.  On the Fed, we have two speakers today, Barkin (9:50 a.m. ET) and Collins (10:30 a.m. ET), but neither should move markets.

What Happens If There’s No Debt Ceiling Deal?

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What’s in Today’s Report:

  • What Happens If There’s No Debt Ceiling Deal?
  • Why CPI Was Positive for Stocks and Bonds Yesterday
  • EIA Analysis and Oil Market Update

Futures are modestly higher mostly on momentum from Wednesday’s rally and following a quiet night of news.

China’s CPI rose 0.1% vs. (E) 0.3% and that’s combining with recently underwhelming Chinese economic data to raise doubts about the economic recovery.

There was no notable news on the debt ceiling, although another round of high level meetings will occur tomorrow.

Today focus will first be on the Bank of England Rate Decision (E: 25 bps hike) and then on economic data, specifically Jobless Claims (E: 245K) and PPI (E: 0.3% m/m, 2.5% y/y).  Stocks have benefitted from mostly “goldilocks” data over the past week, and if we get more of the same via in-line claims and PPI, stocks should be able to extend the rally.  Finally, there’s one Fed speaker, Waller (10:15 a.m. ET), but he shouldn’t move markets.

Market Multiple Chart: S&P 500

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What’s in Today’s Report:

  • Market Multiple Table Chart: S&P 500 (Separate PDF Available on Request)
  • CPI Preview – Will the Data Contradict Fed “Pause” Expectations

Futures are down modestly this morning, tracking global shares lower after soft earnings while focus turns to today’s CPI data.

ABNB shares are down 14% in premarket trade after the company offered disappointing revenue guidance after the close yesterday and that is weighing modestly on equities this morning.

Economically, German CPI was unchanged at 7.2% y/y in April, meeting analysts’ estimates, but importantly, the headline remains very elevated and much beyond policy makers’ 2.0% target which will support further tightening in the months ahead.

Looking into today’s session, U.S. inflation data will be in focus with CPI (E: 0.4% m/m, 5.0% y/y) due at 8:30 a.m. ET, but the more important figure to watch is Core CPI (E: 0.4% m/m, 5.5% y/y) as a print above 5.5% will raise concerns that price pressures are sticky and not declining which will warrant a continued, aggressive stance by the Fed.

There are no Fed officials scheduled to speak today but there is a 10-Yr Treasury Note auction at 1:00 p.m. ET that could move markets, especially in the wake of the CPI data as investors look for insight as to how the “smart market” is digesting the latest look at inflation.

Finally, earnings season is winding down but there are a few notably companies reporting today: TM ($2.83) before the open, and DIS ($0.89) after the close.

Tom Essaye Quoted in CNBC on August 9, 2021

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Crude falls on surging Covid cases, following worst week since October for oil

The oil market is likely to remain rangebound here as the physical market is poised to…said Tom Essaye, editor of the Sevens Report. Click here to read the full article.

Tom Essaye Quoted in Market Watch on August 5, 2021

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Treasury yields end higher as jobless claims fall

The 10-year yield bounced off the 1.13% level (which seems to be support) and clearly the 10-year can react…Tom Essaye, founder of the Sevens Report Research, said in a note. Click here to read the full article.

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