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FOMC Preview (All About the Dots)

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FOMC Preview (All About the Dots): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • FOMC Preview (All About the Dots)

Futures are slightly higher following more solid tech earnings and despite some stagflationary economic data.

ORCL earnings beat estimates and the stock is up 9% pre-market, helping to support stock futures.

Economically, Chinese inflation ran slightly hot while UK Industrial Production badly missed estimates.

Today brings the two key events of the week via CPI and the Fed Decision.  For CPI, estimates are:  E: 0.1% m/m, 3.4% y/y, Core CPI (0.3% m/m, 3.5% y/y).  The key here is that core CPI is flat or declines from last month.  If we see a bounce back above 3.6% that will likely be a material surprise negative.

For the Fed, there is no change expected to rates and focus at 2:00 will be on the dots (and how much they changed since March).  Anything from the Fed (dots or Powell commentary) that makes a September rate cut more likely will help stocks, while anything that makes it less likely will be a headwind.

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The fall in gasoline supplied last week suggests a near-term peak in demand

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The fall in gasoline supplied last week suggests a near-term peak in demand: Sevens Report Research Analysts, Quoted in Morningstar

Oil prices post back-to-back gains as worries about economic outlook fade

The fall in gasoline supplied last week below the four-week average suggests a near-term peak in demand, analysts at Sevens Report Research said in a note.

Encouragingly, the four-week average did rise by 37,000 barrels a day to 9.07 million barrels a day, so there’s hope that demand could still be a source of fundamental support, they said, though last week wasn’t a step in that direction, based on the data.

Oil rose Wednesday not so much because of the EIA data, but rather because economic data eased worries about recession, added to expectations the Federal Reserve will cut interest rates in the fall and boosted hopes for a soft economic landing in the U.S., they wrote.

“The stabilization in oil should be considered fragile, however, as the oil market does not like sources of uncertainty like OPEC+ delivered with last weekend’s production policy decision,” the analysts said.

Also, click here to view the full MarketWatch article published on Morningstar on June 6th, 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 bearish-leaning reality that OPEC+

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A  bearish-leaning reality that OPEC+: Sevens Report co-editor Tyler Richey Quoted in MarketWatch

Oil futures settle at lowest since early February

The market’s bullish hopes for some degree of commitment to ‘price stability’ via the potential for further production cuts were dashed, and instead met with a bearish-leaning reality that OPEC+ does not seem willing to cut production any further than they already have despite ongoing recession risks that would cripple demand,” said Tyler Richey, co-editor at Sevens Report Research.

Also, click here to view the full MarketWatch article published on June 3rd, 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.

Traders will be keenly focused on the EIA data

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Traders will be keenly focused on the EIA data: Sevens Report Analysts Quoted in MarketWatch

Gasoline demand in focus as oil futures slip

Traders will be keenly focused on the EIA data, particularly its measure of implied gasoline demand, said analysts at Sevens Report Research, in a note.

The data “could either reinforce the thesis that U.S. demand for fuel at the pump is rebounding into the summer driving season, a trend in line with those from 2021 and 2023 that both matched annual trends of pre-Covid years when demand would peak in the summer, or if we are going to see demand destruction’ due to inflation and elevated prices at the pump like we did in 2022,” they wrote.

Also, click here to view the full MarketWatch article published on May 30th, 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.

A Concerning Divergence in Bond Markets

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A Concerning Divergence in Bond Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Is the Smart Market Telling Us? (Part II)
  • JOLTS Data Takeaways – Normalizing or Rolling Over?
  • Chart: JOLTS Fall Below Pre-Pandemic Trend Path

Futures are tracking European markets higher this morning on the back of “goldilocks” growth and inflation data overnight ahead of more key domestic economic data today.

Economically, China’s May Composite PMI handily beat estimates at 54.1 vs. (E) 52.7 which was a welcomed print as Chinese data has been underwhelming recently.

In Europe, the Eurozone Composite PMI rose to 52.2 vs. (E) 52.3 while April PPI fell -1.0% m/m vs. (E) -0.5%. Stabilizing growth numbers and evidence of further disinflation are exactly what the ECB want to see ahead of their first rate cut as it helps shore up the soft-landing argument.

Looking into today’s session, there are no Fed officials scheduled to speak but two important economic reports on the calendar. First, the May ADP Employment Report (E: 173K) will be released pre-market and second, the ISM Services Index (E: 50.7) is due out a half hour after the opening bell.

Investors will want to see a labor market print that is close to estimates. A number too strong will push back on the recent dovish money flows while a weak number will add to recession worries. With the ISM, a steady number above 50 with cooling price indices would be the best case scenario for risk assets leading into the jobs report Friday.

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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

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.

Short vs. Long Term Market Outlook (Is Falling Inflation & Slowing Growth Good for Stocks?)

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Short vs. Long Term Market Outlook: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Short vs. Long Term Market Outlook (Is Falling Inflation & Slowing Growth Good for Stocks?)
  • EIA Update and Oil Market Analysis

Futures are little changed as market digest Wednesday’s new high amidst more dovish global data.

Japanese GDP (-0.5% vs. (E) -0.4%), Aussie Unemployment (4.1% vs. (E) 3.9%) and Italian HICP (their CPI, 0.9% vs. (E) 1.0% y/y) all pointed towards falling inflation and slowing global growth, which investors welcome (for now).

Today is a busy day full of data and Fed speak.  Broadly speaking, if the data/Fed speak is dovish and Treasury yields drop, it’ll extend the rally.

Notable economic data today includes (in order of importance):  Jobless Claims (E: 219K), Philly Fed (E: 7.8), Industrial Production (E: 0.1%) and Housing Starts (E: 1.435MM).

On the Fed, there are numerous speakers including:  Barr (10:00 a.m. ET), Barkin (10:00 a.m. ET), Harker (10:30 a.m. ET), Mester (12:00 p.m. ET), Bostic (3:50 p.m. ET).  But, unless they all start talking about rate hikes (very unlikely), their commentary shouldn’t move markets.

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Earnings in those tech companies are really important

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Earnings in those tech companies are really important: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Magnificent Seven Stocks Largely Dip Before Amazon Earnings Release

“I can tell you with a lot of confidence that if Google [parent Alphabet] and Microsoft did not post strong earnings last week, we would be below 5000 in the S&P 500 because, really, nothing else was that positive,” Sevens Report Research’s Tom Essaye told Barron’s. “Earnings in those tech companies are really important. And if you see Amazon whiff and you see Apple whiff, that’s just going to add to the negativity.”

Also, click here to view the full Barron’s article published on April 30th, 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.

To strengthen your market knowledge take a free trial of The Sevens Report.

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Why the Outlook For Stocks Got Worse Last Week (Not Better)

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Why the Outlook For Stocks Got Worse Last Week (Not Better): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Outlook For Stocks Got Worse Last Week (Not Better)
  • Weekly Market Preview:  Will Fed Officials and the BOE Increase Rate Cut Hopes?
  • Weekly Economic Cheat Sheet:  A Quiet Week but Friday’s Inflation Expectations Will Be Important

Futures are extending the gains from Friday’s Goldilocks jobs report despite a potential increase in geo-political tensions this week.

Oil prices are rallying moderately following the breakdown of Israel/Hamas cease fire talks and an Israeli military operation in Rafah is likely.

Economically, the Euro Zone services PMI beat estimates at 53.5 vs. (E) 52.9, pushing back on EU recession risks.

Today there are no notable economic reports but there are two Fed speakers, Barkin (12:50 p.m. ET) and Williams (1:00 p.m. ET).  If either of them sound more open to rate hikes than Powell did last week, it’ll likely push yields higher and take back some of last week’s post-Fed rally.

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Tom Essaye Quoted in Swissinfo.ch on August 28th, 2023

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Stocks Grind Higher at Start of Busy Economic Week: Markets Wrap

“This week is important because it has the chance to either reinforce the ‘soft/no landing’ and ‘disinflation’ pillars of the rally, or potentially undermine them,” said Tom Essaye, founder of The Sevens Report newsletter. “The former will likely result in a reflex rally, while the latter could open up a sharp drop in stocks. We’ll be watching closely.” 

Click here to read the full article.