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Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar on May 23rd, 2023

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Natural-gas prices have dropped by nearly half this year, despite output risks and higher demand prospects

The natural-gas market is reaching a historically pivotal phase of the year, with the price swings typically occurring in the summer and winter months, said Tyler Richey, co-editor at Sevens Report Research. Natural gas is the largest source of electricity in the U.S., at roughly 40%, so when temperatures heat up in the summertime, demand for power to run air conditioning units rises in lockstep. Click here to read the full article.

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.

Why Home Depot Earnings Point to a Soft Landing

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What’s in Today’s Report:

  • Why Home Depot Earnings Point to a Soft Landing
  • Retail Sales Data Takeaways
  • Debt Ceiling Barometer: 1-Month T-Bill Yield Steadies

Stock futures are rebounding modestly from yesterday’s declines this morning as traders await more clarity on the debt ceiling negotiations (1-Month yield is down 2 bp to 5.56%) and digest in-line European inflation data.

Economically, Eurozone HICP (their CPI equivalent) met estimates at 7.0% y/y with the Narrow Core reading falling 0.1% to 5.6%, also as expected but still well above target.

There is just one economic report this morning: Housing Starts & Permits (E: 1.405M, 1.430M) and no Fed officials are scheduled to speak.

Retailer earnings continue this morning with TGT ($1.74) reporting ahead of the bell and investors will be looking for more signs of “soft landing” spending trends as we saw with HD yesterday.

As far as other potential catalysts go, there is a 20-Yr. Treasury Bond auction at 1:00 p.m. ET today and any big move in yields could impact stocks (too weak would indicate inflation worries, too strong would underscore growing debt ceiling fears).

Tom Essaye Quoted in Forbes on March 30th, 2023

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Dow Jumps 200 Points As Lack Of ‘Drama’ Spurs Gains

“To say a lot has transpired in the markets over the past three weeks would be an understatement,” Sevens Report analyst Tom Essaye wrote in a Thursday note to clients. Click here to read the full article.

Tom Essaye Quoted in Forbes on March 6th, 2023

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Stocks Poised For Rally—But Don’t Expect It To Last, Noted Morgan Stanley Bear Wilson Says

“Don’t confuse the market’s ability to withstand last year’s headwind with an invincibility towards what could be this year’s headwind” of slumping economic growth, Sevens Report analyst Tom Essaye wrote in a Monday note. Click here to read the full article.

Economic Breaker Panel: February Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – February Update
  • January Durable Goods Orders Takeaways
  • Breakout in Natural Gas Futures

Stocks futures are trading with modest gains this morning while Treasury yields are tracking European bond yields higher following stubbornly high inflation data overnight.

Economically, both Spanish and French CPI headlines were hotter than expected, above 6%, which saw European rates markets price in a 4% terminal ECB rate for the first time. Government bond yields across the Eurozone notably rose to multi-year highs.

Looking into today’s session, there are several economic reports to watch including: International Trade (E: -$91.0B), Case-Shiller Home Price Index (-0.5%), FHFA House Price Index (E: -0.3%), and Consumer Confidence (E: 108.5).

Traders will be looking for less signs of stagflation in the data as elevated inflation figures and weakening growth metrics were a headwind for equities last week.

Finally, the Chicago Fed’s Goolsbee (who just succeeded Evans) has his first speaking engagement since taking over the role at 2:30 p.m. ET, and as a voting member of the FOMC, his comments will be closely watched for any new clues about Fed policy plans in the months ahead. A notably hawkish tone, could easily cause another bout of volatility in risk assets this afternoon.

What the CPI Data Means for Markets

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What’s in Today’s Report:

  • What the CPI Means for Markets
  • CPI Data Takeaways
  • How Will Russia’s Production Cut and the New SPR Release Impact Oil Markets?

U.S. equity futures are lower despite a stable Treasury market and better-than-feared inflation data overseas as investors continued to assess post-CPI Fed policy expectations.

U.K. CPI fell to 10.1% vs. (E) 10.3% in January down from 10.5% in December which sent the pound lower. Despite the bigger than expected drop, however, inflation remains far too high in the U.K. and more aggressive policy will be warranted to get price pressures back down towards the BOE’s target over time.

Today, focus will be on economic data as there are several important reports due to be released including: Retail Sales (E: 1.7%), Empire State Manufacturing Index (E: -18.5), Industrial Production (E: 0.5%), and the Housing Market Index (E: 37).

As has been the case lately, investors will be looking for signs of moderation in growth metrics (but not an all out collapse) and faster declining price readings to keep the hopes of a soft/no landing alive. Otherwise, it will be difficult for stocks to resume their 2023 advance.

There are no Fed officials scheduled to speak today but there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET and if demand is weak and yields begin to add to yesterday’s upward moves, stocks could come for sale.

Tom Essaye Quoted in Blockworks on February 9th, 2023

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Analysts Warn Investors to Taper Expectations for 2023 Returns

Markets should be poised for a higher open, as they want to see claims begin to rise over the coming weeks, otherwise it’ll imply the labor market remains much, much too tight, Tom Essaye, founder of Sevens Report Research, said. Click here to read the full article.

Tom Essaye Quoted in Yahoo via Bloomberg on December 29th, 2022

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Stocks Post Month’s Best Day as Rate Surge Fades: Markets Wrap

“Markets enter 2023 at important transition points. One path is paved with continued disinflation, resilient earnings, moderating growth, a balanced labor market, and higher stock and bond prices. The other path is paved with sticky inflation, slowing growth, a continued tight labor market and lower stock and bond prices. Data points at the start of the year will offer important clues as to which path the markets are taking.” Said Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.

Why Not Much Changed in Markets Last Week (Despite the Declines)

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What’s in Today’s Report:

  • Bottom Line:  Why Not Much Changed In The Markets Last Week (Despite the Declines)
  • Weekly Economic Cheat Sheet:  FOMC Minutes (Wed) is the Key Report this Week.
  • Weekly Market Preview:  Will Investors Get Ukraine and Fed Clarity?

Futures are moderately lower following a quiet weekend of actual news, as futures are being pulled lower by international markets as there was no progress on the Russia/Ukraine standoff.

The Russia/Ukraine situation was unchanged over the weekend and a Russian invasion could occur at any moment and that is acting as a short term headwind on markets.

There was no notable economic or inflation data overnight.

Today Ukraine headlines will drive trading and any headlines that imply the start of a conflict will be a headwind, while any that imply a delay in hostilities will be a tailwind.  We also get one Fed speaker, Bullard (8:30 a.m. ET on CNBC) and he obviously moved markets last week with this 50 bps March hike and 100 bps of tightening by June calls, so we’ll be watching closely to see if he further clarifies or doubles down on those comments (any dovish clarification would provide a small tailwind for stocks).