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Jobs Day

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What’s in Today’s Report:

  • How the Two-Year Yield Caused Yesterday’s Drop in Stocks
  • EIA Analysis and Oil Market Update

Futures are slightly lower following a mostly quiet night of news as investors wait for this morning’s jobs report.

Economic data underwhelmed as Japanese Household Spending (-1.1% vs. (E) 0.5%) and German Industrial Production (-0.2% vs. (E) -0.1%) both missed expectations.

Taiwan exports also fell more than expected, down 23.4%, and that’s adding to general anxiety about future global growth.

Today the only major event is the June jobs report and expectations are as follows:  213K job adds, 3.7% UE Rate, 0.3% wage increase m/m and 4.2% y/y.  As we saw from yesterday’s ADP report, a “Too Hot” number will spike yields and further pressure stocks, as the rise in yields is now getting high enough to be a headwind on the market.  Conversely, a “Too Cold” number will increase stagflation worries.

A job adds number in the 100k range coupled with an increase in the unemployment rate and a drop in wages remains the best outcome for stocks, and if we get that number don’t be surprised if the S&P 500 recoups all of yesterday’s losses.

Sevens Report Analysts Quoted in MSN on June 30th, 2023

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Oil futures climb, with global prices registering the first monthly gain of the year but a 4th straight quarterly decline

Like most assets, right now oil is beholden to the economy, analysts at Sevens Report Research wrote in Friday’s newsletter. Click here to read the full article.

Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar on June 29th, 2023

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Oil futures finish higher, contributing to the month’s gain

Oil stabilized at support near the 2023 lows following Wednesday’s weekly Energy Information Administration report, which showed a “massive draw” in commercial crude-oil stockpiles, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar on June 29th, 2023

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Oil prices notch back-to-back gains a day after data reveal a hefty drop in U.S. crude supplies

The EIA’s report showed the four-week moving average of gasoline supplied, a proxy for demand, rising to the highest level since November 2021. That strong consumer demand trend is one of the reasons why WTI oil hasn’t dropped to new 2023 lows in recent weeks said Richey. Click here to read the full article.

Why Economic Data Will Decide if the Rally Continues in 2H ’23

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What’s in Today’s Report:

  • Why Economic Data Will Decide if the Rally Continues in 2H ‘23
  • Weekly Market Preview:  Does Economic Data This Week Reinforce “No Landing” Expectations?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday, ISM PMIs Monday and Thursday.

Futures are flat to start the second half of 2023 following a quiet weekend of news.

Economic data was mixed overnight as the EU Manufacturing PMI slightly missed estimates (43.4 vs. (E) 43.6) while the UK reading slightly beat expectations (46.5 vs. (E) 46.2), but neither number is moving markets.

Saudi Arabia and Russia made separate announcements about further reducing oil supply in the coming months, although they aren’t causing a material rally.

Today focus will be on the ISM Manufacturing PMI (E: 47.2) and at this point, and with yields this high, markets need to see solid data and that means the ISM Manufacturing PMI moving closer towards 50 and beating expectations.

As a reminder, the stock market will close at 1:00 p.m. today ahead of the July 4th holiday.

 

Sevens Report Quarterly Letter Delivered Today

Our Q2 ’23 Quarterly Letter will be released today.

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

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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 Analysts Quoted in MarketWatch on June 23rd, 2023

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Oil prices see weekly fall as central banks stoke recession worries

This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish, noted analysts at Sevens Report Research, in a Friday note. Click here to read the full article.

Sevens Report Analysts Quoted in Seeking Alpha on June 23rd, 2023

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Recession fears, central bank rate hikes sent crude oil reeling this week

WTI futures have dropped below $70/bbl four times this year with increasing frequency, but each time technical support has held at $67-$69, Sevens Report Research said, also noting each subsequent price bounce has run out of steam at a lower price point. Click here to read the full article.

Sevens Report Analysts Quoted in MarketWatch on June 23rd, 2023

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‘Heavy’ price action signals crude-oil futures near ‘tipping point’: analysts

This heavy price action with repetitive tests of the same support and continuously weaker recoveries suggests the oil market is approaching a tipping point; poised to either break down to new 2023 lows or finally move beyond the $72-$73 area, triggering a squeeze as sentiment and positioning in the energy markets is very bearish, noted analysts at Sevens Report Research, in a Friday note. Click here to read the full article.

What Russian Political Turmoil Means for Markets

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What’s in Today’s Report:

  • What Russian Political Turmoil Means for Markets
  • More Signs the Market is Starting to Believe the Fed
  • Weekly Economic Cheat Sheet:  Core PCE Price Index and Jobless Claims are the Key Reports this Week
  • Weekly Market Preview:  Will Hard Landing Fears Keep Rising?

Futures are slightly lower as markets digest the political volatility in Russia and underwhelming economic data.

A short-lived rebellion by the Wagner private army against the Russian government dominated headlines this weekend, but from a market standpoint this only matters via its impact on oil prices, and they are little changed.

Economically, German IFO Business Expectations fell to 83.6 vs. (E) 88.0, which is the second weak German economic number in the past two trading days.

Today focus will remain on the Russian political situation, so watch oil to cut through the headline noise.  If oil rises sharply, the situation is deteriorating and that would weigh on markets.