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What the Fed Pause Means for Markets

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What’s in Today’s Report:

  • What the Fed Pause Means for Markets
  • EIA Analysis and Oil Market Update

Futures are slightly lower following more regional bank turmoil and disappointing earnings.

Pac West (PACW) announced overnight that it’s seeking “strategic alternatives” and the stock dropped more than 30% pre-market and is weighing on other regional banks.

On earnings, EL and QCOM both missed estimates and that’s also weighing on sentiment.

Today focus will initially be on the ECB Rate Decision (E: 25 bps hike) and economic data via Jobless Claims (E: 238K) and Unit Labor Costs (E: 3.9%).  Markets will want to see 1) A not too hawkish ECB (so no 50 bps hike), 2) A mild uptick in jobless claims (signaling more balance in the labor market) and 3) A drop in Unit Labor Costs (implying wage pressures are easing).  If we get the opposite of those events, expect more declines today.

After the close we get what’s likely the most important earnings report of the season, AAPL ($1.44), and a solid number there would help sentiment.

Why Did Banks Drop Yesterday?

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What’s in Today’s Report:

  • Why Did Banks Drop Yesterday?
  • Technical Update: Two S&P 500 Charts to Watch

Futures are slightly higher despite more pain in regional bank shares in the pre-market and soft tech earnings from late yesterday as focus shifts to today’s Fed decision.

AMD is down 7%+ after a disappointing sales forecast late yesterday while shares of PACW and WAL (which fell sharply yesterday and weighed on the broader banking complex) are both down 7% to 12% in pre-market trade this morning.

Economically, Australian Retail Sales were better than expected while the Eurozone Unemployment Rate dipped which saw bond yields move off the overnight lows.

Looking into today’s session there are two important economic reports to watch as they could alter Fed policy expectations depending on how they come in. The ADP Employment Report (E: 143K) is due out before the bell while the ISM Services Index (E: 51.7) will be released at the top of the 10:00 a.m. hour ET.

From there focus will turn to the Fed with the FOMC Decision at 2:00 p.m. ET (E: +25 bp) and Fed Chair Powell’s press conference at 2:30 p.m. ET. How the Fed handles forward guidance in the statement and any insights Powell provides in the presser will be the key factors in determining whether stocks extend yesterday’s declines or stabilize and recover to test the YTD highs.

 

Sevens Report Technicals – A New Timely Report Dedicated to Technical Analysis

Response to our announcement of Sevens Report Technicals was tremendous yesterday, and we are very excited to produce the first issue this coming Monday (May 8th) and deliver compelling value!

Sevens Report Technicals will be similar in appearance to last week’s special technical report, which you can view here.

During this launch phase we continue to offer an additional month free on any quarterly (savings of $75 dollars) or annual (savings of $150 dollars) subscription.

With a one month “Grace Period” during which you can receive a full refund for any reason, you take no risk trying Sevens Report Technicals to see if it’s a complement to your business or investment process.

To start your risk-free trial subscription, please send an email to info@sevensreport.com. To learn more about Sevens Report Technicals, click this link.

An Exciting Announcement Today

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What’s in Today’s Report:

  • We Are Excited to Announce a New Service Launching This Monday, May 8th – Sevens Report Technicals (Details Below)
  • FOMC Preview – Will the Fed Signal a Pause Tomorrow?
  • ISM Manufacturing Index Takeaways: Stagflation Risks Rising?

Stock futures are slightly lower as investors digest an unexpected rate hike by the RBA and mixed economic data overnight.

The RBA raised rates 25 bp to 3.85% overnight (E: no change) citing stubbornly high inflation which triggered a hawkish reaction in markets in overnight trading.

Economically, European Manufacturing PMI data was largely in line with estimates although the readings remained deep in contraction territory while the “Narrow Core” HICP Flash reading for April was 5.6% vs. (E) 5.7%, the first decline in the reading in 10 months. On balance, the European data eased some of the hawkish concerns weighing on risk assets in pre-market trading.

Today, there are a few economic releases to watch: Motor Vehicle Sales (E: 14.8 million), Factory Orders (E: 1.3%), and JOLTS (E: 9.650 million) and investors will want to see signs of a continued but steady slowdown in growth and easing price pressures in order to keep soft landing hopes alive.

Earnings season continues today with UBER (-$0.10), PFE ($1.00), BP ($1.33), MPC ($5.75), and SYY ($0.92) reporting before the bell, and AMD ($0.56), F ($0.39), and SBUX ($0.64) after the close.

 

Introducing Sevens Report Technicals – A New Timely Report Dedicated to Technical Analysis

I’ve always wanted to do more to help advisors grow their businesses, and the incredibly enthusiastic response to last week’s special technical report confirmed to me that there is a need for more technical research.

So, today I’m very proud to announce the creation of a new research solution to complement the daily Sevens Report:  Sevens Report Technicals.

Sevens Report Technicals will provide in-depth technical analysis of all of the asset classes, investment styles, and market sectors that we cover in the daily Sevens Report. I’ve long believed we need both fundamental and technical analysis to best navigate markets, so we created Sevens Report Technicals to be the perfect complement to the fundamentally driven Sevens Report.

Ten-year Sevens Report veteran Tyler Richey, CMT, will be the lead analyst on Sevens Report Technicals.

Sevens Report Technicals will be delivered at the start of each trading week, and will be similar in appearance and coverage to last week’s popular special technical report. The first issue will be delivered this coming Monday, May 8th.

Sevens Report Research is a retention-driven business, so like all our research products, pricing for Sevens Report Technicals will be among the lowest in the industry for the quality and depth of analysis provided at just $225/quarter or $825 per year (a savings of $75).  We are also extending a one month “Grace Period” where you can choose to cancel and receive a full refund—so there is literally no risk to try Sevens Report Technicals and see if it’s right for your business!

Additionally, we are offering even more savings to existing Sevens Report Research subscribers by extending a special, limited-time offer of one additional month free on a quarterly or annual subscription. That means quarterly subscribers get four months but only pay for three (a $75 dollar savings) while annual subscribers get 13 months but only pay for 11 (a $150 savings!).

To start your risk-free trial of Sevens Report Technicals and claim your additional one-month free offer, please send an email to info@sevensreport.com and we’ll handle the rest.

To see last week’s special edition technical report, click here.

To learn more about Sevens Report Technicals, including the inspiration behind it, please click this link.

Moment of Truth: Does the Fed Signal a Pause?

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What’s in Today’s Report:

  • Moment of Truth:  Does the Fed Signal a Pause?
  • Weekly Market Preview:  Important New Insight into the Hard vs. Soft Landing Debate
  • Weekly Economic Cheat Sheet:  ISM Manufacturing Today, Services Wednesday, Jobs Report Friday (It’s a Very Busy and Important Week)

Futures are little changed as markets digest the FRC seizure and asset sale to JPM and look ahead to this week’s FOMC decision and important economic data.

First Republic (FRC) failed over the weekend and was seized by the FDIC.  Assets were then sold to JPM who will effectively absorb the bank.  FRC’s failure was widely expected, and as such it’s not a new negative on markets.

Economically, the Chinese April manufacturing PMI missed expectations and fell back below 50 (49.2 vs. (E) 51.4.).

Today there is only one notable economic report, the April ISM Manufacturing PMI (E: 46.8), and markets will want to see stability in the data (so no further declines).

On the banks, again FRC’s failure was priced in last week, so it’s not a new negative on markets.  The key now is seeing if any other regional banks with large uninsured deposits come under pressure, so as we said last week, we’ll be watching WAL, CMA and ZION over the coming days.

Special Technical Analysis Report

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What’s in Today’s Technical Report:

  • Near and Medium-Term Trends and Risks in the S&P 500
  • A Look at Current Dynamics in the Major U.S. Equity Indices
  • Dow Theory Update
  • Key Levels to Watch in the Dollar and Commodity Markets
  • Equity Sector Dashboard (Bullish – Bearish – Neutral)
  • Treasury Market Trend Analysis: Have Rates Peaked for the Cycle?
  • What to Watch in the VIX

S&P 500 futures are little changed to start the week this morning. Last week’s pullback paused at a longer standing, multi-week uptrend line leaving the broader equity at a tipping point. How the market trades today will very likely decide if the S&P will continue to bleed lower or break last week’s downtrend and retest the recent highs.

The Nasdaq has been a notable outperformer this year but there are cracks emerging in the rally and we outline key levels to watch this week within the Report.

Among the sectors, we view five sectors as trending higher, four as market neutral, and two as trending lower.

In the currency and bond markets, both the dollar and multiple benchmark Treasury Notes have pulled back to critical price support zones and whether those levels hold or not will have a varying impact on all asset classes.

Commodities as an asset class have been fluctuating in a tight range in 2023 with gold outperforming and oil underperforming, but there are signs that oil is poised to take the lead in the complex and gold may be losing upside momentum.

Finally, the VIX is still deeply under pressure which is confusing many investors but we dive into the specific reasons for the movement in the index and what to look for in the weeks and months ahead as we continue to navigate this historically difficult market backdrop amid very uncertain macroeconomic dynamics.

Sevens Report – Is Conflicting Data Signaling a Shift in the Economy?

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What’s in Today’s Report:

  • Is Conflicting Data Signaling a Shift in the Economy?
  • Weekly Market Preview:  Earnings Take Center Stage (Lots of Key Reports This Week)
  • Weekly Economic Cheat Sheet:  Is Disinflation Continuing? (Key Inflation Stats on Friday)

Futures are sightly lower following a quiet weekend of news as markets look ahead to key earnings reports and economic data this week.

Economically, the only notable report was German IFO Business Expectations, which slightly beat estimates.

Debt ceiling headlines will increase this week as Republicans try to pass a debt ceiling bill, and if it fails to pass that will increase debt ceiling anxiety in the markets.

Today there is only one economic report, Chicago Fed National Activity Index (E: -0.02), and barring a major surprise that shouldn’t move markets.

Focus then will be on earnings, and especially the First Republic results after the close (estimates are $0.72/share).  Markets will want to see stability from what’s viewed as one of the most vulnerable regional banks.  Other notable earnings today also include KO ($0.65) and WHR ($2.44) which will give us insight into consumer spending.

 

Special Technical Market Update Delivered Today

The special technical report will be delivered via email later this morning.

Due to increased demand for more detailed technical insights from our subscribers, we have prepared a separate, special market update that provides detailed analysis of the current technical state of this market, including:

  • Major stock indices
  • Stock sectors
  • Investment styles (growth vs. value) and
  • Major trends in Treasury, commodity, and currency markets.

As the economy (and possibly markets) approach a tipping point and the Fed readies for the likely final rate hike, we can expect more volatility and conflicting fundamental economic data. Having high quality, plain-English technical analysis can help us better navigate this market.

Tyler Richey, Sevens Report CMT, has been the lead analyst on this special report, and we are all excited to deliver this value-add research to subscribers today.

How the Debt Ceiling is Starting to Impact Markets

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What’s in Today’s Report:

  • How the Debt Ceiling is Starting to Impact Markets

Futures are slightly lower despite solid economic data overnight, as markets await this morning flash PMIs.

EU and UK flash composite PMIs were better than expected at 54.4. vs. (E) 54.0 for the Euro Zone and 53.9 vs. (E) 52.4 for the UK, and both numbers are pushing back on the global recession narrative.

Today the focus will be on the April Flash Composite PMI (E: 50.7) and after yesterday’s soft Philly data, markets will absolutely want to see solid numbers. If that happens, we should expect a rebound from yesterday’s declines.

We also get another Fed speaker, Cook at 4:35 p.m. ET and some additional earnings: PG ($1.32), HCA ($3.99), SLB ($0.61), FCX ($0.46), RF ($0.65), SAP ($1.25).

Tom Essaye Quoted in MarketWatch on April 19th, 2023

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Why is the stock market so resilient? Blame the ‘pain trade’.

The stock market’s resilience so far in 2023 is an example of a well-worn but sometimes useful market concept known as the “pain trade.” Tom Essaye, founder of Sevens Report Research, defined it succinctly in a Tuesday note: “The goal of the market is to extract the most amount of pain from the greatest number of people.” Click here to read the full article.

Sevens Report Analysts Quoted in ZeroHedge on April 18th, 2023

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WTI Rises After Bigger Than Expected Crude Draw

Looking ahead, economic data will be in focus as a “strong economic recovery in China and the avoidance of hard landings in Europe and the U.S. are both priced into the market with WTI trading with an $80 handle,” said analysts at Sevens Report Research in Tuesday’s newsletter. Click here to read the full article.

Special Technical Report Coming Monday

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What’s in Today’s Report:

  • Special Technical Report Coming Monday
  • Why Did the VIX Just Hit 52 Week Lows?
  • EIA Analysis and Oil Market Update
  • Two Notable Observations from a Quiet Trading Day

Futures are moderately weaker following a disappointing night of earnings.

TSLA, NOK, FFIV and TSMC all missed earnings and provided cautious commentary or guidance, and that’s increasing concerns about an economic slowdown.

Today there are numerous potential catalysts including important economic reports, lots of Fed speak and more earnings reports.

Starting with the data, the key report today is Philly Fed (E: -19.4) and markets will want to see if it confirms the rebound we saw in Empire (if it does, expect some stock weakness as Fed expectations become slightly more hawkish).  We also get Jobless Claims (E: 242K) and any move closer to 300k will be welcomed as it signals a slightly more normal labor market.

Turning to the Fed, there are multiple speakers today including Waller (12:00 p.m. ET), Mester (12:20 p.m. ET), Logan (3:00 p.m. ET) and Bostic (5:00 p.m. ET) and it will be notable to see if they all push back on the rate cut expectations in the markets.

Finally, on earnings, results lately have been underwhelming so these reports are becoming more important.  Earnings we’re watching today include: T ($0.58), TSM ($1.21), AXP ($2.63), UNP ($2.57), PPG ($1.55), CSX ($0.43), STX ($0.18).