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How Nervous Are Investors Right Now?

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How Nervous Are Investors Right Now? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment Update – How Nervous Are Investors Right Now?
  • A Timely Chart: NVDA Falls to Target From Last Thursday’s Report

U.S. equity futures are tracking global markets higher after European economic data came in better than expected and traders optimistically look ahead to big-tech earnings.

The EU’s April PMI Composite Flash rose 1.1 points to 51.4 vs. (E) 50.8 thanks to a solid 52.9 Services sub-index print. The strong data is helping ease worries of stagflation and a weakening consumer which have been simmering so far in 2024.

Today, focus will be on economic data early with the PMI Composite Flash (E:51.9) release and New Home Sales (E: 670K) report due out this morning.

There are no Fed speakers today but the Treasury will hold a 2-Yr Note auction at 1:00 p.m. ET which could offer insight into any changes in Fed policy expectations (the risk to stocks is an auction with weak demand that sends the 2-Yr yield to-or-through 5%).

Earnings season also continues to pick up today with UPS ($1.33), GM ($2.06), LMT ($5.80), GE ($0.67), PEP ($1.52), and SHW ($2.25) reporting before the bell while TSLA ($0.49) and V ($2.43) will release results after the close.

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Nvidia Has Been The ‘Poster Child’ Of AI Enthusiasm

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Nvidia Has Been The ‘Poster Child’ Of AI Enthusiasm: Tom Essaye Quoted in Bloomberg Featured on Yahoo Finance

Tech Up in Late Hours on Nvidia’s Bullish Outlook: Markets Wrap

“Nvidia has been the ‘poster child’ of AI enthusiasm because NVDA makes the type of semiconductor chips that power generative AI and demand for those chips has gone through the roof,” said Tom Essaye, founder of The Sevens Report. “The AI-driven rally in the ‘Mag Seven’ is largely justified by the fact that they’re making a lot more money than they were previously.”

While Nvidia is the proverbial “picks and shovels” of the “AI gold rush”, other big-tech companies such as Microsoft Corp., Meta Platforms Inc., Alphabet Inc., Amazon.com Inc. and Apple Inc. have also seen large stock rallies as investors expect these companies to harness the power of generative AI to boost profits, Essaye noted.

“Has the AI mania gone too far and are we looking at a bubble situation?” Essaye said. “Based on what most of us think about typical bubbles, the answer is ‘no’ they are not in a bubble.”

Also, click here to view the full Bloomberg article featured on Yahoo Finance published on February 21st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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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.

Tech Stocks Pulled Bacl – Tom Essaye Quoted In Barron’s

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Hedging Up Ahead Of The Results: Tom Essaye Quoted in Barron’s

Tech Stocks Pulled Back. The Nasdaq Fell 0.9%.

“You’ve got arguably the most important stock in the whole market producing earnings tomorrow, so I think that you’re just seeing some people reduce a little bit of exposure into that earnings print on the chance that perhaps it isn’t as fantastic as everybody expects it to be,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview.

Essaye said that last Friday’s selling flowed through to today as traders expressed worries that inflation isn’t going to come down as fast as they were previously pricing in.

“I don’t think it means a lot to be honest,” Essaye says. “Because if Nvidia posts good earnings tomorrow, all this is going to be undone relatively quickly.”

Also, click here to view the full Barron’s article published on February 21st, 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 Rally

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 Blowout NVDA Earnings Mean for Markets

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What Blowout NVDA Earnings Mean for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Blowout NVDA Earnings Mean for Markets

Futures are sharply higher thanks to stronger than expected NVDA earnings (stock up 14% pre-market) as Nasdaq futures surge by more than 2%.

NVDA results beat on revenue, earnings and guidance and global markets are higher on renewed AI enthusiasm.

Economically, EU and UK flash PMIs were very slightly better than expected but aren’t moving markets.

Today focus will shift back to economic data and the notable reports today are Jobless Claims (E: 216K), February Flash PMIs (E: 51.4) and Existing Home Sales (E: 3.98 M).  The more Goldilocks the data, the better for markets and the key remains Treasury yields.  If yields rise in response to the data, look for a headwind on stocks to push back on the NVDA led rally.

There are also multiple Fed speakers today including Jefferson, Harker, Kashkari, Cook & Waller but barring a major surprise, they shouldn’t move markets (Fed messaging has been very consistent lately:  Inflation is receding, but they need more proof before cutting rates which means a June cut is most likely at this point).

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Why Didn’t NVDA Earnings Spark A Rally?

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What’s in Today’s Report:

  • Why Didn’t NVDA Earnings Spark A Rally?

Futures are bouncing modestly following a quiet night of news and as investors look ahead to Powell’s speech later this morning.

EU economic data was soft again overnight, as German IFO Business Expectations missed estimates (82.6 vs. (E) 83.6) and added to the list of disappointing economic reports this week.

Today focus will be on Powell’s speech (10:00 a.m. ET) and if Powell’s tone implies “higher for longer” on rates, that will boost Treasury yields and pressure stocks.  Conversely, if he talks about being “patient” with the 2% inflation target, that will be seen as dovish.

Away from Powell, the only notable reports are Consumer Sentiment (E: 71.2) and the One-Year Inflation Expectations (E: 3.3%) and Five-year Inflation Expectations (E: 2.9%).   If inflation expectations are solidly under estimates, that’ll be a mild positive for markets.

Is Bad Economic Data Good For Stocks Now?

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What’s in Today’s Report:

  • Is Bad Economic Data Good For Stocks Now?  No.
  • EIA Analysis and Oil Market Update

S&P 500 futures are solidly higher thanks to strength in tech following very strong NVDA earnings.

NVDA beat earnings estimates and raised guidance on strong AI chip demand and the stock is up 8% pre-market and boosting Nasdaq and S&P 500 futures.

However, the “non-tech” parts of the market are flat to down as investors digest Wednesday’s disappointing economic data.

Today another AI driven rally in tech, following the NVDA earnings, should help support markets.  But, away from tech, markets will be focused on Jobless Claims (242K) and Durable Goods (E: -4.0%), and again the key here is stability, in that the data doesn’t show a sudden deterioration in activity (so spike in claims, drop in Durable Goods) or extreme strength (which would undo yesterday’s Treasury yield decline and weigh on the markets).

Economic Breaker Panel: August Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – August Update
  • A Surprising Warning from Macy’s
  • NVDA Earnings Could Trigger a Huge Move In the Stock: Chart

Stock futures are solidly higher this morning ahead of the widely anticipated release of NVDA earnings after the close today while Treasuries yields are retreating on the back of weak economic data overseas.

The Eurozone PMI Composite Flash indicated the economy fell deeper into contraction territory this month (47.0 vs. E: 48.4) led by an unexpected drop off in service sector activity which is weighing on bond yields this morning and easing some concerns about continued aggressive policy by central banks.

This morning, focus will be on economic data with the U.S. PMI Flash data due out just after the open at 9:45 a.m. ET. The Manufacturing Flash is expected to come in at 48.8 while the Services Flash is expected to hold expansion territory at 52.0).

The market is looking for stabilization in the manufacturing sector and moderation, but not contraction, in the service sector. Material weakness in either headline will rekindle worries about a hard-landing while data that is much better than expected would raise Fed rate hike expectations. So, a “Goldilocks” release will be important for both stock and bond markets to stabilize today.

New Home Sales (E: 702K) will also be released at 10:00 a.m. ET but should have a limited impact on markets.

From there, focus will turn to earnings with NVDA reporting after the close (Earnings Estimate: $2.18, Revenue Estimate: $11.09B). Investors have very high hopes for NVDA’s quarterly performance as well as their forward guidance, so any meaningful disappointment is likely to weigh heavily on the stock, the tech complex, and the markets more broadly in after hours trade.

What Is “R Star” and Why Is It Important?

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What’s in Today’s Report:

  • What is “R*” and Why Is It Important?
  • Palo Alto Shares Rip Higher by 15%, Sparking Tech Rally – Chart

Stock futures are higher this morning with mega-cap tech shares extending this week’s strong advance following news that SoftBank’s Arm semiconductor unit has filed for the largest U.S. IPO in 2 years after the close yesterday while traders await NVDA earnings tomorrow.

Overseas, the PBOC set the strongest yuan fixing on record overnight which has helped the currency stabilize and that is contributing to risk-on money flows this morning.

There were no other market moving headlines overnight and no notable economic reports were released.

Looking into today’s session, there is one economic report due out in the U.S. this morning: Existing Home Sales (E: 4.160 million) but it is unlikely to impact markets with traders primarily focused on tech so far this week.

There are two Fed speakers today: Barkin (7:15 a.m. ET) and Goolsbee (2:30 p.m. ET) and their commentary could move markets as markets look ahead to Fed Chair Powell’s remarks from Jackson Hole on Friday. Anything that sparks a further rise in Treasury yields could pour cold water on this week’s tech rally which is basically entirely responsible for the week-to-date gains in the broader equity markets.

Tom Essaye Quoted in Yahoo Finance on May 31st, 2023

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Stock Rally Loses Steam After AI-Fueled Euphoria: Markets Wrap

Yes, AI does have great potential and it does appear to be the ‘next big thing’. But I don’t see how that promise can offset the reality of higher interest rates and more pressure on the economy, at least not for a sustainable period…wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. Click here to read the full article.

Tom Essaye Quoted in Swissinfo.ch on May 30th, 2023

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“Yes, AI does have great potential and it does appear to be the ‘next big thing’,” wrote Tom Essaye, a former Merrill Lynch trader who founded The Sevens Report newsletter. “But I don’t see how that promise can offset the reality of higher interest rates and more pressure on the economy, at least not for a sustainable period.” Click here to read the full article.

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