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The oil market began the week with a thud

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The oil market began the week with a thud: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices finish lower, holding ground at lowest since mid-June

“The oil market began the week with a thud [Monday], failing to stabilize after the sharp losses in the back half of last week,” said Tyler Richey, co-editor at Sevens Report Research.

Richey said last week’s significant drop in implied gasoline demand reported by the Energy Information Administration remains a “major bearish influence on the market.”

Also, from a supply standpoint, improved prospects for a victory by former President Donald Trump in the 2024 election are “price-negative for oil,” given his plans to “support production increases to increase energy independence and lower prices,” said Richey.

Also, click here to view the full MarketWatch article published on Morningstar on July 22nd, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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Price-negative for oil

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Price-negative for oil: Tyler Richey Quoted in MarketWatch

Oil futures settle at lowest since mid-June

The improved prospects of a Donald Trump victory in the 2024 election are “price-negative for oil as he has said he plans to support production increases to increase energy independence and lower prices,” said Tyler Richey, co-editor at Sevens Report Research.

Also, click here to view the full MarketWatch article published on July 22nd, 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.

Olympic Style Ideas (Finding A Common Topic With Clients)

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Olympic Style Ideas (Finding A Common Topic With Clients): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Olympic Style Ideas (Finding A Common Topic With Clients)

Futures are little changed following a night of mixed earnings as NFLX results were in-line while industrial PPG warned of a difficult macro-economic environment.

Economically, the only notable report was UK Retail Sales and they were worse than expected (-1.2% vs. (E) -0.4%) and that will push back slightly against the growing idea that the BOE won’t cut rates in September.

Today there are no notable economic reports, but we do get two Fed speakers, Williams (10:40 a.m. ET) and Bostic (12:45 p.m.).  Of the two, Williams is more important because he’s part of Fed leadership and if he again points towards a September rate cut (by saying the Fed is close to cutting rates) that should help boost stocks.

Earnings, meanwhile, continue to roll on and results so far are mixed.  Important reports today include AXP ($3.22), SLB ($0.83) and TRV ($2.35).

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History suggests the answer is probably no

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History suggests the answer is probably no: Tom Essaye Quoted in MarketWatch

This major Treasury market shift could signal serious pain ahead for stocks

History suggests the answer is probably no. More often, the reversal of a yield-curve inversion has signaled that the wheels are about to come off the economy and the stock market with it, according to Tom Essaye, a former Merrill Lynch trader and founder of Sevens Report Research.

Since 1998, the spread between the 2-year and 10-year Treasury yields has inverted six times, including this latest episode, which began in July 2022. The others started in June 1998, February 2000, January 2006, June 2006 and August 2019. Only three of these episodes, including the current one, saw the yield curve remain inverted for a substantial amount of time. The others began in February 2000 and June 2006.

In both cases, the un-inversion of the yield curve preceded a turbulent stretch for stocks. When the 2s10s spread returned to positive territory on Dec. 29, 2000, the S&P 500 was trading at around 1,320. The S&P 500 declined for the next 22 months, bottoming out around 785 in October 2002, Essaye said.

According to Essaye, the logic behind why such a shift in the yield curve doesn’t bode well for the economy is fairly straightforward.

“When [2s10s] turns back positive, it’s usually because the 2-year Treasury yield is falling quickly as investors price in aggressive rate cuts. Rate cuts usually occur because the Fed is worried about economic growth,” Essaye said. “That’s happening right now, as the market prices in 100% chances for a September and December rate cuts and a growing chance for a third cut this year.”

Also, click here to view the full MarketWatch article published on July 17th, 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.

 

What Caused This Rotation From Growth to Value (And How Long Can It Last?)

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What Caused This Rotation From Growth to Value: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Caused This Rotation From Growth to Value?
  • How Long Can It Last?

Futures are slightly higher as tech stocks bounce modestly following better than expected earnings overnight.

Taiwan Semiconductor (TSM) posted solid earnings and the stock is modestly higher pre-market and that’s helping the tech sector to bounce and support futures.

Economically there were no important reports overnight.

Today is a busy day of economic data and central bank speak.  First, on the data front, the most important report is the July Philly Fed Survey (E: 3.0) followed closely by Jobless Claims (E: 230k).  Economic data so far this week has been Goldilocks and that’s helped stocks and markets will welcome more Goldilocks reports today, while “Too Cold” data will increase growth worries.

Looking at central banks, there’s an ECB Rate Decision later this morning but they aren’t cutting rates (the only question is how forcefully they telegraph a September cut and the more forcefully, the better for stocks).  Looking at the Fed, we have three speakers today, Logan (1:45 p.m. ET), Daly (6:05 p.m. ET) and Bowman (7:30 p.m. ET) and if they echo recent sentiment that it’s “almost time” to cut rates that should also help support stocks.

Finally, on the earnings front, we get some notable reports today including TSM ($1.37), NFLX ($4.70) and PPG ($2.48).

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The Yield Curve May Un-Invert Soon. Why That’s Not Good (Historically)

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The Yield Curve May Un-Invert Soon. Why That’s Not Good (Historically): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Yield Curve May Un-Invert Soon. Why That’s Not Good (Historically)
  • How the Post CPI “Rest of the Market” Rally Is Accelerating

Futures are moderately lower thanks to significant weakness in tech stocks.

Semi-conductor chip stocks are lower this morning on a trifecta of negative news including soft ASML guidance, reports of tighter chip restrictions with China and bellicose rhetoric from Trump on Taiwan in a recent interview.

Focus will remain on economic data today and the most important report is Industrial Production (E: 0.3%) while we also get Housing Starts (1.305M).  As Tuesday showed, markets still want Goldilocks economic reports, meaning they aren’t too strong but don’t point to economic weakness, either.  We also have two Fed speakers, Barkin (9:00 a.m. ET) and Waller (9:35 a.m. ET), but unless one of them floats the possibility of a third rate cut in 2024, they shouldn’t move markets.

Finally, earnings season continues to roll on and some notable reports today include: ASML ($3.87), JNJ ($2.82), and UAL ($3.97).

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Economic growth must remain resilient and we cannot have a growth scare

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Economic growth must remain resilient and we cannot have a growth scare: Tom Essaye Quoted in MarketWatch

Stock market’s long-awaited Great Rotation needs to overcome this nagging worry

For the rotation to be sustained beyond a few weeks, “economic growth must remain resilient and we cannot have a growth scare,” said Tom Essaye, founder of Sevens Report Research, in a Friday note. “If we do get a growth scare, then cyclical sectors like energy, industrials, materials and financials will likely not do well.”

Investors can act accordingly.

Those that think growth will slow should overweight super-cap tech TDIV and defensive sectors like utilities XLU, healthcare XLV and consumer staples XLP, Essaye wrote. Those that think growth will be resilient should overweight value stocks VTV and the equal-weight S&P 500 RSP.

For his part, Essaye said he’s more concerned about growth than the
consensus, so he won’t be chasing value and cyclical stocks, instead sticking to his preference for defensive sectors and longer term Treasurys that will benefit from a sustained fall in yields alongside moderating growth.

Also, click here to view the full MarketWatch article published on July 13th, 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.

The performance gap between tech and the rest of the market

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The performance gap between tech and the rest of the market: Tom Essaye Quoted in Forbes

Why A Magnificent 7 Breather Could Be A Good Thing For The Stock Market

“The performance gap between tech and the rest of the market is so wide that it’s reasonable to expect continued closing of that gap as markets more fully embrace the idea of the start of a rate cutting cycle,” summarized Sevens Report founder Tom Essaye, noting in the “near term” non-tech sectors may mount a catchup rally. Essaye is referring to Thursday’s strong inflation data which bolstered calls for the Federal Reserve to soon lower interest rates, which broadly help most equities but tend to favor certain rate-sensitive sectors like real estate.

Also, click here to view the full Forbes article published on July 12th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Lastly, 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.

The Fed needs a few more ‘good’ reports on inflation

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The Fed needs a few more ‘good’ reports on inflation: Tom Essaye Quoted in MarketWatch

Here’s what it would take for June CPI reading to send stocks lower

“Stepping back, the Fed needs a few more ‘good’ reports on inflation to cut rates in September. This can be one of those needed ‘good’ reports and keep the rally rolling (although it won’t be a new, positive catalyst as markets already assume ongoing disinflation),” said Tom Essaye, founder of Sevens Report Research, in a note.

On the other hand, if the CPI report delivers a higher-than-expected number, particularly for the core, “then a quick, sharp drop in stocks shouldn’t be surprising, because again it’s widely expected and priced into stocks that 1) Inflation is falling and 2) The Fed will cut in September,” he wrote.

A “bad” CPI report would see a core reading at 3.4% year over year with a headline figure of 3.2% to 3.3%, Essaye said, likely sparking a modestly negative reaction. An “ugly” report, with a core reading of more than 3.4% year over year and a headline figure higher than 3.3%, would likely spark a major selloff because it would challenge expectations for disinflation and a September cut, he said.

Also, click here to view the full MarketWatch article published on July 11th, 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.

Consumer demand remains rather strong

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Consumer demand remains rather strong: Tyler Richey, Sevens Report Co-Editor, Quoted in MarketWatch on MSN

Oil prices log first gain in 4 sessions with crude supply down a second straight week

Consumer demand remains rather strong “despite higher prices at the pump this year and simmering concerns about the health of the economy,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

‘An added tailwind for oil is the largely dovish tone from [Federal Reserve Chairman Jerome] Powell this week helping to shore up expectations of a soft economic landing and fading concerns about a demand-crippling hard landing in 2024.’ — Tyler Richey, Sevens Report Research

“An added tailwind for oil is the largely dovish tone from [Federal Reserve Chairman Jerome] Powell this week helping to shore up expectations of a soft economic landing and fading concerns about a demand-crippling hard landing in 2024,” he said.

Also, click here to view the full MarketWatch article published by MSN on July 10th, 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.