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What Happens After Inflation Peaks?

What’s in Today’s Report:

  • What Happens After Inflation Peaks?
  • Weekly Market Preview:  Fed Decision Wednesday
  • Weekly Economic Cheat Sheet:  Q2 GDP and Inflation Stats are the Highlights

Futures are modestly higher as markets bounce from Friday’s declines, following a quiet weekend and as investors look forward to numerous important catalysts this week.

Chinese authorities are considering some restrictions on movement in Shanghai as COVID cases rise, but are still resisting broad lockdowns (for now).

Economically, German Ifo Business Expectations declined further (80.3 vs. (E) 83.3).

Today there’s only one notable economic report, the Chicago Fed National Activity Index (E: 0.05), and markets will want to see stability here following last week’s disappointing data.  If this number is surprisingly weak (like the PMIs last Thursday/Friday) then that will likely weigh on stocks as recession fears grow.

Earnings season continues and this will be a very busy and important week for results.  Some earnings we’ll be watching today include:  WHR ($5.22), NXPI ($3.39), and LOGI ($3.39).

Technical Update: What Would Make This Bounce Sustainable?

What’s in Today’s Report:

  • Technical Update:  What Would Make This Bounce Sustainable?
  • EIA Analysis and Oil Update

Futures are slightly lower following a busy night of mixed earnings reports and ahead of today’s ECB decision.

Politically, Italian PM Draghi formally resigned and there will be elections in Italy this fall, which is adding to general macro-economic uncertainty.

Earnings overnight were mixed although TSLA posted solid results and the stock rallied 3% after hours.

Today will be a busy day for economic data and earnings and the key event is the ECB Decision.  A 25 bps hike is expected although a 50 bps hike is very possible.  From a stock standpoint, markets will be hoping for a 50 bps hike because that will boost the euro and weigh on the dollar (the dollar being this high is a problem for U.S. corporate earnings).  Outside of the ECB we also get Jobless Claims (E: 240K) and Philadelphia Fed (E: -3.3).

On the earnings front, results continue to roll in and so far this season they are decidedly mixed (not good, but not materially worse than feared, either).  Some results we’re watching today include:  T ($0.59), FCX ($0.80), UNP ($2.38), COF ($5.09).

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on July 19th, 2022

Oil futures finish higher, with U.S. prices holding above $100 as supply concerns resurface

Biden’s visit to Saudi Arabia last week has “already become old news as traders refocus on the major influences on the oil market right now: the Russia-Ukraine war, OPEC+ policy outlook, and recession concerns linked to high inflation, COVID lockdowns in China, and aggressive central bank policy around the globe…Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

Sevens Report Co-Editor, Tyler Richey Quoted in Hellenic Shipping News on July 11th, 2022

Why crude released from U.S. oil reserves may have ended up being exported overseas

The nation’s refineries simply don’t have the ability to absorb those new barrels of oil suddenly hitting the market and therefore, physical refined product markets remain tight and prices are still elevated…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on July 7th, 2022

Why crude released from U.S. oil reserves may have ended up being exported overseas

The nation’s refineries simply don’t have the ability to absorb those new barrels [of oil] suddenly hitting the market and therefore, physical refined product markets remain tight and prices are still elevated…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on July 7th, 2022

U.S. oil prices settle back above $100 a barrel; natural-gas futures rise over 14%

The Energy Information Administration data showed a healthy rebound in gasoline demand, easing some recent concerns about demand destruction in gasoline markets…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Why Stocks Rallied Yesterday

What’s in Today’s Report:

  • Why Stocks Rallied
  • Jobs Report Preview (Redux)
  • Is the VIX Fixed? (Chart)
  • Oil Update: Demand Rebound Helps Energy Markets Stabilize

Stock futures are trading modestly lower with EU markets this morning as traders digest yesterday’s gains ahead of today’s June jobs report.

Sadly, former PM of Japan, Shinzo Abe, has died after an assassination attempt at a campaign stop overnight.

Economically, Japanese Household Spending fell -1.9% vs. (E) +1.2%  in May, rekindling concerns about the health of global growth.

Looking into today’s session, the focus will be almost entirely on the June Employment Situation report from the BLS (E: Job Adds 270K, Unemployment Rate 3.6%, Wages 5.0% y/y) which is due out at 8:30 a.m. ET. There is also one Fed official speaking this morning: Williams (8:30 a.m. and 11:00 a.m. ET).

Bottom line, the market will want to see jobs data that meets our “Just Right” scenario from our Jobs Report Preview which would suggest we are seeing slowing growth in the labor market, yet not a full-on collapse, and increase hopes we are close to or beyond “peak hawkishness” from the Fed. That would open the door to a continued relief rally, however, a report that is either too strong or overly disappointing could send stock falling sharply today.

Have Bond Yields Peaked?

What’s in Today’s Report:

  • Are Stocks Starting to Signal Bond Yields Have Peaked?
  • Growth Is Beginning to Outperform Value; Will It Last?
  • Oil Tumbles Through Technical Trend Support: Chart

Futures are flat while international markets were mixed overnight as investors continue to weigh recession fears against a slightly less hawkish shift in monetary policy expectations.

The 10s-2s yield curve spread notably inverted overnight as the odds of a recession in the quarters ahead continue to rise.

Economically, Eurozone Retail Sales edged up just 0.2% vs. (E) 0.4% in May which was the latest data point to show a slowdown in consumer spending amid high inflation, further compounding worries about global growth.

Looking into today’s session, there is one Fed speaker ahead of the bell (Williams at 9:00 a.m. ET) and the focus will be on economic data with the ISM Services Index (E: 54.8) and JOLTS (E: 11.250M) both due out shortly after the open.

The market will want to see a continued moderation in growth to show the Fed’s policy actions are working to slow demand, but not too weak to suggest we are quickly fading into a recession.

From there, the focus will shift to the release of the June FOMC Meeting Minutes at 2:00 p.m. ET as investors look for new insight into the Fed’s view of the economy and potential clues as to whether we have reached “peak hawkishness” yet, or not. If there is evidence peak hawkishness is behind us, yesterday’s risk-on money flows could continue today.

Are Stocks Pricing in an Economic Contraction?

What’s in Today’s Report:

  • Bottom Line – Are Stocks Pricing in an Economic Contraction?
  • Weekly Economic Cheat Sheet – Is Stagflation Imminent?

Stock futures are trading modestly lower with European markets this morning as recession fears continue to weigh on sentiment.

Economically, global Composite PMI data was better than feared but broader concerns of a slowdown remain.

Today, investor focus will be on economic data early with Motor Vehicle Sales (E: 13.5M) and Factory Orders (E: 0.5%) both due out before the opening bell.

There are no Fed officials scheduled to speak today but the Treasury will hold auctions for 3-Month and 6-Month Bills at 11:30 a.m. ET which may move bond markets and ultimately move equities.

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on June 27th, 2022

Oil prices end higher for a second session as better-than-expected U.S. economic data ease demand worries

Economic data last week was pretty dismal and weighed on energy products and commodities broadly, but Monday’s numbers came in better than expected — providing support for oil…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.