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Jobs Day

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Jobs Day: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Day
  • Updated VIX Analysis

Futures are slightly lower following a mostly quiet night of news and ahead of today’s jobs report.

Economically, German Industrial Production missed expectations (-1.0% vs. (E) 1.5%) and became the latest underwhelming EU economic report.

Today focus will be on the jobs report and expectations are as follows:  200K Job-Adds, 4.2% Unemployment Rate, 3.9% y/y Wage Growth.  A “Goldilocks” job adds number is something around the 200k expectation or lower, as long as it’s not close to zero.  Anything in that range (with mostly in-line unemployment and wages) should “green light” a Fed rate cut in December and help fuel a Santa Rally.

Speaking of the Fed, there are numerous speakers today including Bowman (9:15 a.m. ET), Goolsbee (10:30 a.m. ET), Hammack (12:00 p.m. ET) and Daly (1:00 p.m. ET).  However, most of them have spoken recently and their message has been consistent:  A December rate cut is possible but not guaranteed and rates will come down over time.  As long as that’s the message from them today, they shouldn’t impact markets.

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Jobs Report Preview

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Jobs Report Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview

Futures are little changed following a mostly quiet night of news and mixed economic data.

European economic data continued to point to lack-luster growth.  German Manufacturers’ Orders (-1.5% vs. (E) -2.0%) and UK Construction PMI (55.2 vs. (E) 54.3) beat while Eurozone Retail Sales (-0.5% vs. (E) 0.0%) missed expectations.

Bitcoin rose above $100k for the first time in overnight trading, hitting a new milestone.

Today the focus will shift to employment ahead of tomorrow’s jobs report as we get Challenger Job Cuts (E: 55k) and Jobless Claims (E: 215K).  The key for both metrics remains Goldilocks readings (generally meeting expectations but not too weak or too strong).  Additionally, there is one Fed speaker today, Barkin (12:15 p.m. ET).

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A Unique ETF Focused on Managing Tax Liabilities

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A Unique ETF Focused on Managing Tax Liabilities : Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Unique ETF Focused on Managing Tax Liabilities
  • JOLTS Data Takeaways – Another Goldilocks Report

Futures are higher with tech shares leading thanks to solid earnings reports after the close yesterday as investors look past political turmoil overseas.

Politically, lawmakers in South Korea moved to impeach President Yoon for implementing martial law yesterday while the French government faces a no-confidence vote today. Neither situation is a material negative for markets but both are weighing on sentiment.

In corporate news, CRM and OKTA (a newer cloud software focused company) both posted solid earnings after the close yesterday which is bolstering the broader tech sector in premarket trade today.

Today, we will get two more important economic reports: The ADP Report (E: 165K) and the ISM Services PMI (E: 55.5). Factory Orders (E: 0.4%) will also be released but is less likely to move markets than the first two data points.

The Fed’s Musalem is scheduled to speak at 8:45 a.m. ET, however the market’s main focus today will be Powell’s commentary (1:45 p.m. ET) as he could shed light on December rate cut plans or the policy rate path in 2025. Any hawkish surprise from the Fed Chair could spur volatility today.

Finally there is one notable earning release today from discount retailer DLTR ($1.07) that could offer insight into consumer spending habits.

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One Last Hurdle for the Santa Rally

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One Last Hurdle for the Santa Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • One Last Hurdle for the Santa Rally
  • Weekly Market Preview: Can Goldilocks Data Offset Political Volatility?
  • Weekly Economic Cheat Sheet: The Last Big Week of 2024

Futures are slightly lower on political volatility as Trump issued more tariff threats and made another unorthodox cabinet appointment while President Biden pardoned his son Hunter.

Trump threatened 100% tariffs on BRICs countries (Brazil, Russia, India, China) if they abandon the U.S. dollar. In addition, Trump made another unorthodox cabinet pick with Kash Patel as FBI Director.

Finally, President Biden reversed course and gave an unconditional pardon to his son Hunter, sparking bi-partisan criticism.

Today focus will turn from politics to actual economic data and the key report today is the ISM Manufacturing PMI (E: 47.6).  As has been the case, an in-line to slightly soft number would be the best case for stocks as it wouldn’t signal any further deterioration in the manufacturing sector and, at the same time, keep a Fed rate cut more likely than not.

We also have two Fed speakers today, Waller (3:15 p.m. ET) and Williams (4:30 p.m. ET) and any commentary that makes a December rate cut more likely will be a positive for markets.

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How Clients Should View Political Headlines

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How Clients Should View Political Headlines: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Clients Should View Political Headlines
  • Weekly Economic Preview: Inflation and Fed Minutes in Focus

Markets are trading with a risk-on tone to start the week with stock futures solidly higher, bond yields falling and the dollar declining as investors digest Trump’s Wall-Street-friendly pick of Scott Bessent for Treasury Secretary.

Economically, Industrial Production in Taiwan (a proxy for global semiconductor demand) slowed from 11.22% to 8.85% in October which could weigh modestly on tech stocks today while a German Business Sentiment gauge saw current and expected conditions deteriorate, rekindling worries about the EU economy.

Looking into today’s session, there is one second-tiered economic report to watch: Dallas Fed Manufacturing Survey (E: -3.9) but it should not meaningfully move markets.

There are no Fed officials scheduled to speak today however there is a 2-Yr Treasury Note auction at 1:00 p.m. ET. A good portion of today’s early rally in stocks futures can be attributed to the pullback in yields this morning, so a soft auction that sends yields back higher is the biggest risk to the early week gains today.

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Who’s Right on the Consumer? WMT (Positive) or TGT (Negative)

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Who’s Right on the Consumer?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Who’s Right on the Consumer?  WMT (Positive) or TGT (Negative)

Futures are little changed on disappointing NVDA earnings and after further escalation in the Russia/Ukraine war.

NVDA beat earnings estimates ($0.81 vs. (E) $0.74) but guidance disappointed at only 6.8% FQ4 revenue growth vs. (E) 11.75% and the stock is down 2% pre-market.

Geo-politically, Russia fired a non-nuclear ICBM into Ukraine for the first time, further escalating the conflict.

Today focus will turn back towards economic data as there are three notable reports (ranked in order or importance):  Jobless Claims (E: 219K), Philly Fed (E: 7.0) and Existing Home Sales (E: 3.90 million).  Given elevated Treasury yields, in-line to slightly soft data will be best for markets, as it reinforces a soft landing and would slightly boost December rate cut expectations.

There are also several Fed officials speaking today, including Hammack (8:45 a.m.), Goolsbee (12:25 p.m. ET) and Barr (4:40 p.m. ET) although they are unlikely to move markets (the Fed outlook is pretty known at this point and the looming jobs report will likely decide if we get a rate cut in December, or not).

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Data Check: Hard Landing or Soft Landing?

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Data Check: Hard Landing or Soft Landing?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing vs. Soft Landing Scoreboard
  • Chart: NVDA Earnings Loom Large – Key Technical Support in Focus

Futures are slightly higher but well off session highs as “warm” EU inflation data pushed yields higher overnight with the U.S. 10-Yr pushing back beyond 4.40%.

Economically, inflation data in Europe was “warm” as U.K. Core CPI rose 3.3% y/y vs. (E) 3.2% in October while German PPI unexpectedly rose 0.2% m/m last month following a sizeable 0.5% drop in September.

There are no notable economic reports today but there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could move markets depending on demand measures for the longer duration government bonds (higher yields would weigh on stocks again).

Additionally, there are two Fed speakers today Cook (11:30 a.m. ET) and Bowman (12:15 p.m. ET), but unless they are materially hawkish, their comments should not move markets.

Finally, earnings season has largely wound down however there are some notables reporting quarterly results today including: TGT ($2.29), TJX ($1.09), NVDA ($0.74), PANW ($1.48), SQM ($0.64).

Interestingly, Barclays analysts noted earlier this week that options markets suggest today’s report from NVDA will be the biggest catalyst remaining in 2024, underscoring the importance of investor sentiment towards the AI-darling’s growth prospects, leaving the chip-maker’s earnings report a potential make-or-break event for markets this afternoon.

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Why Did Stocks Drop Last Week?

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Why Did Stocks Drop Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop Last Week?
  • Weekly Market Preview:  Focus on Treasury Secretary, NVDA earnings and economic growth (Thursday/Friday).
  • Weekly Economic Cheat Sheet:  Important Growth Data Late This Week

Futures are little changed following a quiet weekend of news as markets continue to digest last week’s rise in Treasury yields, and the return of political surprises (via Trump’s cabinet announcements).

There were no notable economic reports overnight.

Politically, the major remaining cabinet pick from Trump is Treasury Secretary and it should come early this week (and another unorthodox choice would further roil markets).

Today the calendar is quiet as there is just one economic report, Housing Market Index (E: 43), and one Fed speaker, Goolsbee (10:00 a.m. ET).  So, focus will be on Trump’s cabinet (again, the more traditional choice for Treasury, the better for markets) and on the 10-year yield.  If it keeps rising, that will be a continued headwind on stocks.

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Where Are We In the Bull Market Cycle? (One Year Later)

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Where Are We In the Bull Market Cycle?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Where Are We In the Bull Market Cycle? (One Year Later)

Futures are moderately lower as markets continue to digest the market implications of the Republican win while economic data was mixed.

The U.S. Dollar at near two-year highs along with the 10-year yield pushing 4.50%, combined with Trump’s recent unorthodox cabinet picks, is causing investors to re-assess the potential impacts of the incoming Republican government.

Focus today will be on economic data and given the less dovish rhetoric from Fed officials this week, markets will want to see in-line to slightly soft reports to keep rate cuts on track.  If the data is hotter than expected, look for yields to rise and stocks to extend the early losses.  The important reports today include Retail Sales (E: 0.3%), Empire Manufacturing (0.0) and Industrial Production (E: -0.3%) and we have one notable Fed speaker, Williams (1:15 p.m. ET).

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The bullish thesis for stocks is stronger now

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The bullish thesis for stocks is stronger now: Tom Essaye Quoted in Market Watch

The market has passed four key tests, newsletter writer says

Tom Essaye, founder and president of the Sevens Report, says the bullish thesis for stocks is stronger now because all of the tests set up two weeks ago were passed.

The major economic reports of the past two weeks were solid, with the payrolls disappointment largely explained by hurricanes and strikes;

The Fed remains committed to cutting rates;

Earnings were more mixed than excellent but still haven’t changed estimates for S&P 500 earnings per share next year very much;

And Republicans have large enough majorities to push through pro-growth legislative changes.

“While the bullish thesis passed the tests of the past two weeks, do not confuse this with a market that cannot go down,” he says. “There are real risks to this rally that we cannot ignore over the medium/longer term, although investors could ignore them unless forced not to between now and year-end.” A move to 6,200 on the S&P 500 before the end of the year is “entirely possible” as he said the market will likely favor value, cyclical sectors and the equal-weight S&P 500 over the market-weighted index.

Also, click here to view the full MarketWatch article published on November 11th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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