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What Is the “Smart Market” Telling Us? (Part I)

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What Is the “Smart Market” Telling Us? (Part I) : Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Is the Smart Market Telling Us? (Part I)
  • May ISM Manufacturing Index Takeaways
  • OPEC+ Decision Takeaways – Focus Shifts to Demand

Markets are trading with a risk-off tone globally as U.S. stock futures are tracking overseas equities lower while Treasuries maintain a strong safe-haven bid amid worries about global growth ahead of more key economic data today.

Overnight, Korean CPI fell to 2.7% vs. (E) 2.8% and Swiss CPI was unchanged at 1.4% vs. (E) 1.6%. German Unemployment was also steady at 5.9%, meeting estimates. The lack of positive response to the easing inflation data underscores increasing growth concerns.

Looking into today’s session focus will be on economic data early with JOLTS (E: 8.4 million), Factory Orders (E: 0.7%), and Motor Vehicle Sales (E: 15.8 million) all due to be released.

There are no Fed speakers or major Treasury auctions today, leaving the economic data releases the main potential market catalysts. If the data disappoints, growth worries could see the early risk-off money flows accelerate, however, “goldilocks” data could help stocks continue to stabilize after last week’s spike in volatility.

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The market just seems like it can’t find the middle

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The market just seems like it can’t find the middle: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Keeps Going Back and Forth on Interest Rates. How to Play It.

“The market just seems like it can’t find the middle,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview.

Essaye says he can make the case that the economy is slowing, or not, based on a wide swath of data that’s available. That’s why every individual release has so much sway on the market’s day-to-day. Stocks were mixed on Tuesday, aside from tech, after Minneapolis Fed President Neel Kashkari said the Federal Reserve hasn’t formally taken rate hikes off the table and is prepared to keep rates steady until inflation hits the central bank’s 2% target.

“This is the world we’re in for now, until economic data gives us a clear direction as to where we’re going,” Essaye says. “I think we just sort of have to brace ourselves for this kind of back and forth. I think the net result for investors is that there’s just going to be more elevated volatility.”

Also, click here to view the full Barron’s article published on May 28th, 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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Gasoline supplied was the most important figure in the release

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Gasoline supplied was the most important figure in the release: Tyler Richey, co-editor of Sevens Report Research, Quoted in MarketWatch

Oil futures trade lower as U.S. crude supplies unexpectedly rise

Gasoline supplied was “the most important figure in the release as it is a key, high-frequency proxy for consumer gasoline demand and ultimately consumer sentiment and a gauge on general willingness to spend discretionary money,” said Tyler Richey, co-editor at Sevens Report Research. The EIA reported that gasoline supplied surged by 439,000 barrels per day to 9.315 million bpd last week, a fresh year-to-date high and the highest reading since early November of last year, he said.

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

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No relation to the recent geopolitical tensions

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No relation to the recent geopolitical tensions: Sevens Report Research Analysts, Quoted in Morningstar

Oil prices settle lower as traders fret over the outlook for demand

Analysts at Sevens Report Research wrote in Tuesday’s newsletter that the crash was deemed to be “an accident and had no relation to the recent geopolitical tensions between Iran and Israel, which allowed for some of the fear bids added on Friday ahead of the weekend to come unwound” at the start of Monday’s trading.

Also, click here to view the full MarketWatch article published on Morningstar on May 21st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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A near-term technical signal of potential exhaustion in the latest leg higher in stocks.

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A near-term technical signal: Tom Essaye, publisher of Sevens Report Research, Quoted in MarketWatch

Dow’s ‘lack of conviction’ at 40K is a troubling sign for stocks

Ultimately, they finished near their lows of the day. Tom Essaye, publisher of Sevens Report Research, described this turnaround as “a near-term technical signal of potential exhaustion in the latest leg higher in stocks.”

Also, click here to view the full MarketWatch article published on May 17th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Even after the revisions, the data was really mostly in line.

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Even after the revisions, the data was really mostly in line: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Market Is in a Trance. Wednesday’s Inflation Data Could Break It.

But Sevens Report Research’s Tom Essaye told Barron’s in a phone interview that even after the revisions, the data was really mostly in line.

“The markets could be entering an extension of the sweet spot that they were in earlier in the year,” Essaye says. “If you’re looking out, there are definitely some things you want to pay attention to, because some of this data is starting to point in a not-great direction. But it’s not necessarily a reason to sell now.”

“We were in the bullish trance, and now Powell has kind of put us back into it by saying, ‘Well, no, we’re not going to hike rates. Probably going to cut rates once or twice’ or whatever,” Essaye says. “That kind of got us back into it. So it’s going to take a hot data point.”

Also, click here to view the full Barron’s article published on May 14th, 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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“Good, bad and ugly” outcomes for the April consumer-price index reading.

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“Good, bad and ugly” outcomes for the April consumer-price index reading: Tom Essaye, founder of Sevens Report Research, Quoted in Morningstar

Stock market could suffer ‘ugly’ day if April CPI comes in above this level

Tom Essaye, founder of Sevens Report Research, took a look Tuesday at potential “good, bad and ugly” outcomes for the April consumer-price index reading.

So what would provoke an ugly reaction? Essaye puts the threshold at 3.9%.

A core reading at or above that threshold would be likely to spark a “solid selloff,” further entrenching the idea that inflation remains sticky and rates will be higher for longer, Essaye wrote. That has the potential of undoing much of the rally seen over the last two weeks, as investors would likely scale back rate-cut expectations, penciling in just one cut in December.

Also, click here to view the full MarketWatch article published on Morningstar on May 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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.

Even a small bout of stagflation would result in a 10%-20% decline in stocks

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Even a small bout of stagflation would result in a 10%-20% decline in stocks: Tom Essaye Quoted in MarketWatch

The economy could be heading toward 1970s-style stagflation. What it means for the stock market.

 “Stagflation doesn’t have to be as bad as it was in the 1970s, but for a stock market that’s trading above 21 times earnings, the truth is that even a small bout of stagflation would result in a 10%-20% decline in stocks,” said Tom Essaye, founder of Sevens Report Research, in a Monday note.

“Of course, comparing this period to the 1970s, where GDP growth was flat or negative and CPI was running more than 10%, [Powell’s] absolutely right [that] there is no stagflation,” said Essaye. But he added that it’s somewhat “dismissive” to say that just because things aren’t as bad as they were in the 1970s, any talk of stagflation is unwarranted.

“In an absolute sense,” economic growth is not at levels that would imply stagflation — but data releases are becoming “more conclusive that economic momentum is slowing,” Essaye said. “While stagnation isn’t here yet, the data is showing a greater chance of it occurring than any time in the last year and a half.”

Also, click here to view the full MarketWatch article published on May 13th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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The latest data point to offer a whiff of stagflation

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The latest data point to offer a whiff of stagflation: Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch

Oil prices head lower, paring gains for the week

The U.S. consumer sentiment report was the latest data point to “offer a whiff of stagflation,” said Tyler Richey, co-editor at Sevens Report Research. “Risk assets didn’t like that,” and oil prices moved down toward session lows shortly after the data’s release.

“The geopolitical fear bid has largely gone stale since the realized impact of the ongoing Israel-Hamas war has been nominal compared to the implied threat to global oil supply when the conflict began last fall,” he told MarketWatch.

Also, click here to view the full MarketWatch article published on May 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.

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A high-frequency proxy for consumer spending

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A high-frequency proxy for consumer spending: Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch

Recession-wary investors are watching gasoline demand for clues to consumer health

“Gasoline demand is being closely watched as a high-frequency proxy for consumer spending,” said Tyler Richey, co-editor at Sevens Report Research.

“Keeping an eye on the weekly gasoline supplied figure as a proxy for consumer demand for gasoline will be critical, especially relative to its four-week moving average to gauge the underlying trend in fuel demand, and compared with prior year’s levels for the corresponding reporting week,” Richey said.

Also, click here to view the full MarketWatch article published on May 9th, 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.

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