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A market that remains firmly anchored by two key beliefs

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A market that remains firmly anchored by two key beliefs: Sevens Report Analysts Quoted in Investing.com

Why don’t stocks drop on bad news?

As per analysts at Sevens Report, this resilience reflects a market that remains firmly anchored by two key beliefs: economic growth will remain stable, and the Federal Reserve will cut interest rates—conditions that continue to support bullish sentiment despite growing risks.

Additionally, jobless claims surged to summer highs, suggesting some softening in the labor market. “However, that number was inflated by the Boeing strike and by unemployment related to the damage from Hurricane Helene in Florida and North Carolina,” the analysts said.

Sevens Report argues that part of the reason stocks haven’t wavered is that the risks, while real, haven’t yet materialized in ways that challenge the underlying narrative of a soft landing.

“The ‘burden of proof’ remained squarely on the bears,” the analysts said, no single negative development has been powerful enough to shift market sentiment away from expectations for stable growth and falling rates.

Also, click here to view the full article featured on Investing.com published on October 19th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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.

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A soft landing remains, by far, the most likely outcome for the economy

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A soft landing remains, by far, the most likely outcome for the economy: Sevens Report Analysts Quoted in Courthousenews.com

Dow Jones, S&P hit fresh highs in wake of good retail data

“A soft landing remains, by far, the most likely outcome for the economy as important economic data strengthened across multiple fronts over the past month,” Tom Essaye of the Sevens Report wrote in an investor’s note on Friday morning.

“Now, to be clear, this doesn’t mean that a hard landing can’t happen (or won’t happen), but it is not happening right now and there are few conclusive signals that it’s going to happen, at least at this point,” he continued.

Also, click here to view the full article on Courthousenews.com published on October 18th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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.

Semiconductor stocks have cycle-leading characteristics

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Semiconductor stocks have cycle-leading characteristics: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Tech’s Moment of Truth Has Arrived

As Sevens Report President Tom Essaye notes, “semiconductor stocks have cycle-leading characteristics,” given their volatility and risky balance sheets, meaning they “begin to roll over before most of the rest of the market as traders rotate away to lower-beta, more value-oriented names during times of uncertainty, including economic downturns (but admittedly also “growth scares” such as 2022). So, as we continue to navigate an uncertain market landscape in the second half, the SOX are offering us a ‘canary in the market coal mine’ right now that could, and likely will, offer fair warning before a more meaningful decline in the broader market indexes, such as the S&P 500 , eventually begins to take shape.

Also, click here to view the full Barron’s article published on October 18th, 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 RallyIf 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.

Where SOX Go, Stocks Go: A Cyclical Canary to Watch in the Market Coal Mine

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Where SOX Go, Stocks Go: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Where SOX Go, Stocks Go: A Cyclical Canary to Watch in the Market Coal Mine

Futures are modestly higher thanks to solid earnings and ahead of important central bank decisions and economic data later today.

Taiwan Semiconductor (TSM) beat earnings and is rallying 8% pre-market and that’s boosting tech and futures.

Today will be a busy day on the economic and earnings front, starting with the ECB rate decision, where the ECB is expected to cut rates 25 bps and signal an openness (but not a guarantee) of another rate cut in December.

Economically, there are several potentially important reports today including, in order of importance, Retail Sales (E: 0.3%), Jobless Claims (E: 260K), Philly Fed (E: 3.0) and Industrial Production (E: -0.1%).  With all of today’s data, Goldilocks readings around expectations are the best case for markets.

Finally, earnings season continues to roll along and NFLX (E: $5.09) after the close is the big report today.

Join thousands 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.

Earnings Offer Mixed Economic Signals

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Earnings Offer Mixed Economic Signals: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Earnings Giving a More Mixed Economic View (Although It’s Still Early)
  • Empire State Manufacturing Index Takeaways
  • Insight from Oil’s Early Week Collapse

U.S. futures are steady as yesterday’s pullback is digested while overseas markets were mostly lower overnight after ASML’s downbeat guidance weighed on global tech shares and LVMH earnings rekindled concerns about consumers.

Economically, UK Core CPI favorably fell 0.4% to 3.2% vs. (E) 3.5% in September, bolstering BoE rate cut bets.

Today, there is one second-tiered inflation report to watch: Import & Export Prices (E: -0.3%, -0.4%), but barring a big surprise one way or another it is not likely to move markets.

Additionally, there is a 4-Month Treasury Bill auction at 11:30 a.m. ET. A strong auction would be received as dovish and help stocks and other risk assets stabilize in the midst of increasingly hawkish Fed policy expectations in recent weeks.

There are no Fed officials scheduled to speak today but earnings season continues to pick up with results being released by several big financials: MS ($1.57), CFG ($0.79), SYF ($1.77), DFS ($3.29) and a few more economically-sensitive companies PPG ($2.15), CSX ($0.48).

Join thousands 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.

Is China the Next Japan?

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Is China the Next Japan?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is China the Next Japan?

Futures and EU shares are lower as cautious retailer earnings guidance and heavy trade in China overnight are offsetting easing geopolitical tensions following reports that Israel would not strike Iranian oil/energy infrastructure (oil futures are down nearly 5%).

Economically, EU Industrial Production met expectations overnight while a German Economic Sentiment gauge topped estimates, but neither report is materially moving markets this morning.

Today, there is one important economic report to watch: The Empire State Manufacturing Index (E: 0.0), and two Fed officials are scheduled to speak: Daly late morning (11:30 a.m. ET) and Kugler in the early afternoon (1:05 p.m. ET).

Additionally, there are two typically lesser-followed Treasury auctions for 3-Month and 6-Month T-Bills at 11:30 a.m. ET that could shed fresh light on market expectations for Fed policy rates between now and Q2’25 which have swung sharply hawkish over the last two weeks. Strong auction would have dovish implications for the market and be well received by equity investors today.

Finally, earnings season is getting into full swing with several more big banks reporting quarterly results today: BAC ($0.78), C ($1.34), and GS ($6.85) while two members of the Dow Jones Transportation Average: UAL ($3.10) and JBHT ($1.43) are also due to report today.

Bottom line, equity markets have rallied solidly over the last week amid a combination of earnings optimism and soft-landing hopes. If any of the economic data, Fed chatter, or earnings results damage either of those narratives, expect some mild profit taking in equities today, otherwise the path of least resistance is still higher for stocks right now.

Join thousands 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.

Why Don’t Stocks Drop On Bad News?

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Why Don’t Stocks Drop On Bad News?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Don’t Stocks Drop On Bad News
  • Weekly Market Preview:  Earnings Are the Key This Week
  • Weekly Economic Cheat Sheet:  Important Growth Data on Thursday

Futures are slightly higher following a quiet weekend of news as investors look ahead to the first busy week of Q3 earnings and more important economic data.

Economically, Chinese exports missed expectations and the latest stimulus announcement underwhelmed, but none of it was bad enough to reverse any more of the recent rally.

This week is full of potentially market moving events from earnings and economic data but they all come later in the week and today should be mostly quiet given it’s the Columbus Day holiday (banks and bond markets closed) and there are no notable economic reports.  We do get a few Fed speakers, however (Kashkari (9:00 a.m. ET & 5:00 p.m. ET), Waller (3:00 p.m. ET)), but they shouldn’t move markets.

Join thousands 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.

Sevens Report’s Tom Essaye also sees technical indicators flashing red

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Sevens Report’s Tom Essaye also sees technical indicators flashing red: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Is Rising, but So Are the Risks. What to Do Now.

Sevens Report’s Tom Essaye also sees technical indicators flashing red. The Relative Strength Index, or RSI, a momentum indicator used to identify overbought or oversold conditions, has been diverging from the S&P 500 for about six months, turning lower even as the index keeps pushing higher.

“That is a concern because it is a bearish divergence that we have repeatedly seen when lasting market tops are being established, including the early 2022 highs,” Essaye writes. “This same divergence occurred before the market peaks in 2000, 2007, and even the short-lived bear market of 2020. Bottom line, the divergence between the outright price action of the S&P 500 (hitting higher highs) and its weekly RSI indicator (establishing lower highs) is a concerning technical dynamic that warrants attention as it suggests the risks of a more pronounced pullback in the stock market is statistically elevated right now.”

Also, click here to view the full Barron’s article published on October 9th, 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 RallyIf 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.

Tom Essaye, president of Sevens Report Research, quoted in BNN Bloomberg

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I think the Fed will be a bigger influence over markets between now and year-end: Tom Essaye Interviewed on BNN Bloomberg

S&P’s $8 Trillion Rally Will Be Tested by Tricky Earnings Season

“Unless earnings are a major disappointment, I think the Fed will be a bigger influence over markets between now and year-end simply because earnings have been pretty consistent,” said Tom Essaye, founder and president of Sevens Report Research. “Investors expect that to continue.” 

Also, click here to view the full BNN Bloomberg article published on October 6th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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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.

Why Yesterday’s Economic Data Wasn’t That Bad

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Why Yesterday’s Economic Data Wasn’t That Bad: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Yesterday’s Economic Data Wasn’t That Bad

Futures are slightly weaker this morning as Tesla’s “Cyber Cab” event underwhelmed while investors look ahead to the start of earnings season.

Economically, German CPI and UK monthly GDP both met estimates and didn’t provide any negative surprises.

Today investors will be focused on more inflation data via PPI (E: 0.2% m/m, 1.6% y/y) and Core PPI (E: 0.2% m/m, 2.7% y/y) while there are also several Fed speakers including Goolsbee (9:45 a.m. ET), Logan (10:45 a.m. ET) and Bowman (1:10 p.m. ET).  But, barring any major surprises from PPI or those Fed officials, they shouldn’t move markets.

Additionally, focus will now turn towards earnings and that will be one of the dominant forces on markets for the next three weeks.  Key reports today include: JPM ($4.02), BLK ($10.42), WFC ($1.27), FAST ($0.52).

Join thousands 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.