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.
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’s in Today’s Report:
Futures are flat as investors digest a disappointing earnings forecast by FDX (down 3% premarket) and a hotter than expected inflation print overseas as focus turns to Powell’s testimony on Capitol Hill today.
U.K. CPI held steady at 8.7% vs. (E) 8.4% y/y in May which saw the odds of a 50 bp BOE hike tomorrow jump to 50% which is weighing modestly on bonds this morning.
There are no notable economic reports in the U.S. today which will leave investors focused on Powell’s semiannual testimony before Congress which begins at 10:00 a.m. ET. Investors will be looking for any clarity on the Fed’s future policy plans as the markets currently do not believe the FOMC’s dot plot showing two more rate hikes before year end.
Outside of the D.C., there are several other Fed speakers to watch including: Cook (10:00 a.m. ET), Jefferson (10:00 a.m. ET), Goolsbee (12:25 p.m. ET), and Mester (E: 4:00 p.m. ET). Again markets will be looking for any clarity on rate hiking plans following the June “skip.”
Finally, there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could impact yields and if we see yields move meaningfully higher, that will weigh on the high valuation sectors that have led the market higher this year.
Tyler Richey, co-editor at Sevens Report Research, pointed out that the EIA showed that the four-week moving average of gasoline supplied, a proxy for consumer fuel demand, rose to a new 18-month high of 9.24 million barrels a day. That suggests that the trend in gasoline demand is “one that is increasing, and that is a good thing for the time being,” he said. Click here to read the full article.
What’s in Today’s Report:
U.S. equity futures are lower as the Fed decision continues to be digested while global economic data largely missed expectations overnight.
Economically, Chinese data was universally disappointing with Industrial Production and Retail Sales both missing estimates while EU trade data showed that imports and exports both declined by more than anticipated. China’s central bank cut rates further overnight, however, which saw risk assets in Asia recover to end with gains.
Looking into today’s session, the ECB decision will be in focus this morning (E: +25bp hike) followed by President Lagarde’s press conference. If the ECB is seen as hawkish, it will likely weigh on stocks and other risk assets as it will show central bankers are not yet satisfied with the trends in inflation and more aggressive policy is likely in the months ahead.
In the U.S., there is a slew of economic data due to be released including: Jobless Claims (E: 250K), Retail Sales (E: 0.0%), Philadelphia Fed Manufacturing Index (E: -13.2), Empire State Manufacturing Index (E: -15.1), Import & Export Prices (E: -0.6%, -0.5%), and Industrial Production (E: 0.1%).
And with the Fed leaving future policy plans largely “open” and dependent on economic data, the market will want to see more “Goldilocks” trends with slowing growth and a more rapid decline in price readings.
Sevens Report Alpha: Artificial Intelligence Issue
This week’s Alpha issue focused on a very popular market topic: Artificial Intelligence.
This issue was an update to a March 7th Alpha issue on AI, and the three ETFs we profiled in that report have risen 20%, 17%, and 14%, respectively in just three months!
This week’s AI issue updated and expanded that research as we:
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What’s in Today’s Report:
Futures are modestly higher following a quiet night of news as markets look ahead to the FOMC decision and expected pause in rate hikes.
Economic data was mixed overnight as UK Industrial Production missed estimates (-0.3% vs. (E) -0.1% in manufacturing) while Euro Zone IP slightly beat (1.0% vs. (E) 0.9%), but neither number is moving markets.
Today focus will be on the FOMC Decision and the consensus expectation is that the Fed will pause. But, it’s not clear how many additional 2023 rate hikes the “dots” will show, and that will determine if the Fed decision is hawkish or dovish (more on that inside).
Away from the Fed we also get the May PPI (E: -0.1% m/m, 1.6% y/y) and Core PPI (E: 0.2% m/m, 2.9% y/y) and if this metric comes in under expectations that’ll boost the “Immaculate Disinflation” expectation and should help cyclical sectors extend the rally.
Prices had started the week moving higher after Saudi Arabia said it would cut output by an additional 1 million barrels per day in July. However, “traders faded the move,” as the Saudi cut would only remove one-third of a single day’s worth of global oil production over the course of July, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.
“Not only is demand an issue, but also we have Russia basically pumping as much oil as they possibly can, whatever their quotas are supposed to say, to try to fund their war,” Tom Essaye, Sevens Report Research founder told Yahoo Finance Live. Click here to watch or read the full article.
Oil prices are on the rise after a pledge from Saudi Arabia to cut production into 2024. Ben Laidler, eToro Global Markets Strategist and Tom Essaye, Sevens Report Research Founder and President discuss the impact of this decision upon the global energy market. Click here to watch the full video.
What’s in Today’s Report:
Futures are slightly lower as markets digest Thursday’s rally following a very quiet night of news.
Economically, the only notable report overnight was Chinese PPI, which feel –4.6% vs. (E) -4.2% and provided the latest sign that global disinflation is potentially accelerating.
Politically, former President Trump was federally indicted for illegally retaining classified documents, although that shouldn’t impact markets.
Today there are no economic reports and no Fed speakers, so near term technicals should drive trading with all eyes focused in whether the S&P 500 can break above 4,300 for the first time in over a year.