Market Multiple Levels: S&P 500 Chart

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

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?

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

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

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

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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Tom Essaye Quoted in Barron’s on August 4, 2021

GM Drops, Under Armour Rises, and Stocks Are Falling After Weak Jobs Data

Markets look ahead to key economic data in the…wrote Tom Essaye, founder of Sevens Report Research before the jobs report hit the wires. Click here to read the full article.

Tom Essaye Quoted in on June 15, 2021

Macro Fireworks: Stock Market Soars to New ATH While Bitcoin Awaits the Breach of An Important Level

In order for Bitcoin to resume that rally, I think you’re going to need to see more widespread…said Tom Essaye, a former Merrill Lynch trader. Click here to read the full article.

Tom Essaye Quoted in KITV News on June 7, 2021

Dollar doldrums are back as inflation worries heat up

The market still views the Fed as the ‘most dovish’ global central bank, and as long as that’s the case, the dollar will have…said Tom Essaye, the founder and president of Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Bloomberg on March 3, 2021

“We’ve seen a rollover in a lot of the momentum plays in the market — not just Bitcoin, but Tesla…” Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, said by phone. Click here to read the full article.