Sevens Report Analysts Quoted in Morningstar on June 27th, 2023

Oil prices slump, shaking off Russia mutiny

Looking ahead, the turmoil within Russia is unlikely to have a material impact on oil markets unless we see it affect production or exports of oil. Looking ahead, the turmoil within Russia is unlikely to have a material impact on oil markets unless we see it affect production or exports of oil, said analysts at Sevens Report Research, in a note. Click here to read the full article.

Sevens Report Co-Editor, Tyler Richey, Quoted in MarketWatch on March 23rd, 2023

Oil futures end lower on recession worries

“However, the banks are the main driver of oil, and really all risk assets, as fading confidence in the financial system is reigniting fears that another crisis may be looming, after we saw some of the biggest bank failures since 2008 in early March,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

Market Multiple Table Chart

What’s in Today’s Report:

  • Market Multiple Table Chart
  • EIA Analysis and Oil Market Update

Futures are little changed as overnight economic data was in-line with expectations while investors look ahead to this morning’s CPI Report.

Economically, Chinese CPI was the only notable number and it largely met expectations at 1.8% y/y (vs. (E) 1.9%).  That reading will keep Chinese authorities actively stimulating the Chinese economy, which is a positive for the global economy.

Today focus will clearly be on the CPI report (E: 0.0, 6.6%), but remember the Core CPI report is the more important number (E: 0.3%, 5.7%).  Markets need to see continued declines in CPI to underwrite recent gains in stocks and bonds.

Away from CPI, we get the latest Jobless Claims reading (E: 215K) and this number needs to move higher to reflect a better balance in the labor market.  Finally, there are multiple Fed speakers today including Harker (7:30 a.m. ET), Bullard (11:30 a.m. ET), and Barkin (12:40 p.m. ET) and while we should expect typically hawkish rhetoric, they shouldn’t reveal anything new (and as such shouldn’t move markets).

What Fed Tapering Means for Markets

What’s in Today’s Report:

  • What Fed Tapering Means for Markets (Short Term Positive, Medium Term Uncertainty)
  • EIA and Oil Market Update

Futures are slightly higher following a generally quiet night of news as markets digest Wednesday’s Fed decision.

Economic data was sparse and the only notable report was German Manufacturers’ Orders which missed estimates, falling –1.8% vs. (E ) –1.3%.

There was no progress on the Democrat’s spending bill overnight as Manchin remains a holdout, but a deal is ultimately expected in the coming days or weeks.

Today focus will be on economic data and we get two notable reports:  Jobless Claims (E: 277K) and Productivity and Costs (E: -1.5%, 5.3%) and one Fed speaker, Quarles at 1:50 p.m. ET.  But, unless there’s a major surprise from the data, focus will turn back to Congress and the fate of the Democrat spending bill, and any headlines that imply quick passage without any material tax hikes will be a short-term tailwind on stocks.

What’s Happening With the Yield Curve (Updated)

What’s in Today’s Report:

  • What’s Happening With the Yield Curve (Updated)
  • Oil Market Update and EIA Analysis

Futures are marginally higher on solid earnings, supply chain optimism, and dovish central bank commentary.

Ford (F) posted solid earnings and importantly made positive comments about semi-conductor supply (which has been echoed by numerous companies this quarter).  If we see semiconductor supply improve that will be a large positive for the entire supply chain and take some pressure off inflation.

The Bank of Japan made dovish commentary and reminded markets that not all central banks are getting less dovish (and we may hear that sentiment echoed from the ECB later this morning).

Today the key macro event is the ECB Decision (7:45 a.m. ET) and while the market does not expect any changes to QE or rates, it does expect President Lagarde to reinforce the ECB isn’t going to tighten policy anytime soon.  We also get some notable economic data including Advanced Q3 GDP (E: 2.7%), Jobless Claims (E: 290K), and Pending Home Sales (E: 1.7%) although unless there is a major surprise those reports shouldn’t move markets.

Finally, on the earnings front, today is arguably the single most important day of earnings season as we have two of the biggest stocks in the market, AAPL ($1.24), AMZN ($9.10), reporting after the close.  Other reports we’re watching include: MA ($2.18), CAT ($2.26), MRK ($1.54), SBUX ($1.00), and X ($4.85).

Why the Fed Could Hike Rates Sooner than Expected

What’s in Today’s Report:

  • Economic Breaker Panel – Why The Fed Could Hike Rates Sooner than Expected
  • Oil Market Update and EIA Analysis

Futures are modestly lower as markets digest the recent bounce following disappointing earnings overnight.

Earnings overnight were negative on balance as IBM missed on revenues while TSLA, LVS, and PPG also posted disappointing results and saw selling afterhours.

Today focus will be on economic data and earnings.  On the data front, the key reports will be Jobless Claims (E: 300K), Philly Fed Manufacturing Index (E: 25.0), and Existing Home Sales (E: 6.030M), and markets will want to see stability in the data (so not too hot and not too cold).  We also get two Fed speakers, Waller (9:00 a.m. ET) and Williams (9:00 p.m. ET).

On the earnings front, results have become more mixed lately so markets will continue to focus closely on earnings.  Some reports we’re watching today include: T ($0.78), AAL (-$1.04), FCX ($0.78), LUV (-$0.27), SNAP ($0.08), INTC ($1.11) and WHR ($6.16).  As has been the case, strong margins amid rising costs will be the key metric in the results.

The Real Risk to Stocks

What’s in Today’s Report:

  • The Real Risk to Stocks
  • EIA Analysis and Oil Market Update

Futures are higher following news a government shutdown will be avoided and despite mixed economic data.

Senate Majority Leader Schumer announced a deal to fund the government and avoid a shutdown tomorrow, although this was always expected (and this does not address the Debt Ceiling).

Economic data was mixed as the Chinese manufacturing PMI fell below 50 (49.6 vs. (E) 50.1) while UK GDP handily beat estimates at 5.5% vs. (E) 4.8%, but the data isn’t moving markets.

Today the key report will be Jobless Claims (E: 335K) and markets will want to see them drop back towards 300k.  We also get the Final Q2 GDP (E: 6.7%) but at this point, that’s a very “old” number. There are also numerous Fed speakers today including more Powell/Yellen testimony along with Williams (10:00 a.m. ET), Bostic (11:00 a.m. ET), Harker (11:30 a.m. ET), Evans (12:30 p.m. ET), Bullard (1:05 p.m. ET), and Daly (2:30 p.m. ET).

Finally, today is the last trading day of the month and quarter so some additional volatility on month/quarter-end positioning shouldn’t be a surprise.

End of the (Mild) Pullback?

What’s in Today’s Report:

  • End of the (Mild) Pullback?
  • EIA Update and Oil Market Update (Breakout)

Futures are modestly lower as markets digest Wednesday’s rally following a quiet night of news.

Economically, the only notable report was Euro Zone exports, which beat expectations (1.0% vs. (E) -0.8%).

Politics remained in focus as centrist Democrats stopped the progress of a drug price control bill, highlighting the division in the party (this is an incremental positive as markets would prefer there are no policy changes at all this year).

Today focus will be on economic data, as markets will want to see stability in two reports, Jobless Claims (E: 315K) and Philadelphia Fed Manufacturing Index (E: 19.2), and not too big of a decline in August Retail Sales (E: -0.8%).  If we get another round of better than expected macro data, then stocks can extend yesterday’s gains.

Was the Fed Decision Negative for the Market?

What’s in Today’s Report:

  • Was Yesterday’s FOMC Decision A Negative for the Market?
  • Why Did Stocks Fall After the Fed?
  • Oil Market Update and Outlook (Back above $40/bbl).

Futures are moderately lower on momentum from Wednesday’s post-Fed fade in stocks.

Economically, EU HICP (their CPI) was the only notable release, and it met expectations (core HICP rose 0.2% y/y).

On the stimulus front, “chatter” is turning a bit more positive as Trump and Pelosi both made slightly positive comments on the process yesterday, but a stimulus bill before the election remains very unlikely.

Today the key number is Jobless Claims (E: 850K) and markets will want to see a solid number near the expectation of 850k.  If claims tick back towards 1MM, that should add downside pressure to stocks as worries will begin to rise about another “Pause” in the economic recovery.  We also get Housing Starts (E: 1.486M) and  Philadelphia Fed Manufacturing Index (E: 15.5), although they’d have to be big misses to move markets.

Time to Buy Cyclicals?

What’s in Today’s Report:

  • Time to Buy Cyclicals?
  • Do I Believe in the Breakout?  (No)
  • EIA & Oil Market Update
  • Abbreviated Jobs Report Preview

Futures are marginally higher mostly on momentum from yesterday’s rally, although a small reserve rate cut in China is also helping global stocks rally.

Economic data continued to underwhelm, as Japanese Household Spending (0.8% vs. (E) 1.0%) and German Industrial Production (-0.6% vs. (E) 0.4%) both missed estimates.

Today focus will be on two key events, the Jobs Report (E:  Jobs: 160K, Unemployment: 3.7%, Wages: 0.3%) and a speech by Fed Chair Powell (12:30 p.m. ET).  Short term momentum in the markets is clearly higher right now, so to extend this week’s rally, both events just need to be “Goldilocks” in so much as the job number hits our “Just Right” range, while Powell simply leaves the door open to more accommodation in September, and beyond.