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Any surprises could move yields and impact equities

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Any surprises could move yields and impact equities: Tom Essaye Quoted in Barron’s

The Market Kicks Off the Day in the Green

“There are no Fed officials scheduled to speak today but there is a 5-Yr Treasury Note auction at 1:00 p.m. ET,” wrote Sevens Report Research’s Tom Essaye. “With the elevated level of market anxiety surrounding Friday’s Core PCE release (when markets will be closed) any surprises via strong or weak demand in the auction could move yields and impact equities.”

Also, click here to view the full Barron’s article published on March 26th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Assessing (and Ranking) Market Risks as We Start Q2

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Assessing (and Ranking) Market Risks as We Start Q2: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Assessing (and Ranking) Market Risks as We Start Q2
  • Weekly Market Preview:  Will Important Data Continue to Point Towards a Soft Landing?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday, ISM Manufacturing and Services Mon/Wed

Futures are solidly higher to start Q2 as expectations for a June rate cut remain high after the Core PCE Price Index met expectations and Powell provided no surprises in his comments (both last Friday).

Friday’s Core PCE Price Index met expectations, rising 2.8% y/y and keeping June rate cut expectations in place.

The Chinese March Manufacturing PMI rose to 50.8 vs. (E) 50.1 increasing hopes for an economic rebound.

Today focus will be on the ISM Manufacturing PMI (E: 48.3) and the key here is stability.  An in-line or better than expected result will further reinforce that growth is resilient and likely support the early rally.   There’s also one Fed speaker,  Cook at 6:50 p.m. ET, but her comments come after the close.

Sevens Report Quarterly Letter Delivered Today

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How the Baltimore Bridge Collapse Could Impact Markets

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What’s in Today’s Report:

  • Core PCE Price Index Preview
  • How the Baltimore Bridge Collapse Could Impact Markets
  • Sevens Report Q1 ’24 Quarterly Letter Coming Monday

Futures are little changed on the final day of the quarter following a mostly quiet night of news.

Fed Governor Waller stated overnight the Fed should be in “no rush” to cut rates and while that’s being spun as hawkish, his full comments largely point to a June rate cut.

Economic data overnight, including Aussie Retail Sales, UK GDP and German Unemployment, met expectations.

Today is the final day of the quarter and the eve of a long weekend so trading should be mostly quiet, although some quarter-end book squaring could make for some low volume volatility late in the day.

Looking at the calendar, there are some notable economic reports to watch including, in order of importance:  Jobless Claims (E: 213K), Final Q4 GDP (3.2%) and Pending Home Sales (E: 1.3%) but as long as they mostly meet expectations, they shouldn’t move markets.  Additionally, the bond market will have an early close today (2:00 p.m. ET).

Sevens Report Q1 ’24 Quarterly Letter Coming April 1st.

The Q1 2024 Quarterly Letter will be delivered to advisor subscribers on Monday, April 1st.

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We will deliver the letter on Monday, the 1st business day of the new quarter, because we want you to be able to send your quarterly letter before your competition (and with little to no work from you).

You can view our Q4 ’23 Quarterly Letter here.

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The market is mostly in a holding pattern to start the week

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The market is mostly in a holding pattern to start the week: Tom Essaye Quoted in Barron’s

Nasdaq Snaps 2-Day Losing Streak

“The market is mostly in a holding pattern to start the week,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview. “The big numbers come on Thursday, with all these inflation updates.

It is not just in the U.S. with core PCE, but also in Europe. Depending on what happens there will dictate whether or not this market can grind higher.”

Also, click here to view the full Barron’s article published on February 27th, 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 Rally

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What Number Would Make Core PCE Negative for Stocks?

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What’s in Today’s Report:

  • What Number Would Make Core PCE Negative for Stocks?
  • EIA and Oil Market Analysis

Futures are modestly lower as EU inflation data disappointed overnight while tech earnings underwhelmed.

Economically, French and Spanish CPIs showed on going disinflation but it was slower than expected (mirroring what we’ve seen recently in the U.S.).

On earnings, CRM and SNOW posted underwhelming earnings and that’s modestly weighting on tech shares.

Today focus will be on the Core PCE Price Index (E: 0.4% m/m, 2.8% y/y) as that’s the most important report of the week.  Risk/reward into this number is skewed slightly positive as inflation concerns are already elevated and partially priced in, so it should take a solidly hot number to weigh on markets, while just an “in-line” reading would be welcomed.

Other data notable data today includes Jobless Claims (E: 210K) and Pending Home Sales (E: 0.8%) and we have three Fed speakers, Bostic (10:50 a.m.), Goolsbee (11:00 a.m.) and Mester (1:15 p.m. ET) although barring a major surprise from those reports/speakers, they shouldn’t move markets.

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What Earnings Are Saying

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What’s in Today’s Report:

  • What Earnings Are Saying About Current Economic Growth

Futures are modestly lower following a night of underwhelming earnings results.

INTC (stock down 10% premarket) gave soft guidance while V and TMUS (stocks down –3% each) posted underwhelming results.

Economically, German GfK Consumer Climate missed expectations (-29.7 vs. (E) -24.5) but that’s not moving markets.

Today focus will be on the Core PCE Price Index (E: 0.2% M/M, 3.0% Y/Y) and this number needs to meet or be lower than expectations to help support the stock rally.  If Core PCE prints solidly above expectations look for higher yields and lower stock prices.  The other notable economic number today is Pending Home Sales (E: 1.3%) but that shouldn’t move markets.

On the earnings front, the key report today is AXP ($2.65) and specifically we’ll be watching for is their commentary on consumer spending (the more positive, the better for markets).  Other notable earnings include CL ($0.85) and NSC ($2.90).

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Five Measurable Similarities to 2006/2007

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Five Measurable Similarities to 2006/2007: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Five Measurable Similarities to 2006/2007: A Market Cycle Update

Futures are little changed ahead of the holiday weekend as poor Nike (NKE) earnings weigh on sentiment.

Earnings this week haven’t been great and that continued overnight as Nike (NKE) missed on revenues and cut revenue guidance. The stock is down –12% pre-market.

Economically, UK data was mixed as quarterly GDP declined (-0.1% vs. (E) 0.0%) while retail sales were strong.

Otherwise, the focus will remain on economic data and the key report today is the November Core PCE Price Index (E: 0.2% m/m, 3.4% y/y), which is the Fed’s preferred inflation metric.  It is expected to show declines in the pace of headline and core inflation from October and if that happens, it should support stocks and bonds and reinforce rate cut expectations.

Other notable data today includes Durable Goods (E: 2.4%), New Home Sales (E: 690K) and Consumer Sentiment (E: 69.4, 1-Yr inflation: 3.1%). But barring a major surprise from them, they shouldn’t move markets.

Meanwhile the bond market closes at 2:00 p.m. today with the looming holiday weekend. So, we expect activity to quiet considerably in the markets as the trading day goes on.

Finally, from all of us at Sevens Report Research, please have a happy and safe holiday weekend.

Five Measurable Similarities

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Sevens Report Research’s Tom Essaye Quoted in Barron’s

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One Potential Catalyst That Could Shake Up Markets: Tom Essaye Quoted in Barron’s

Stocks Close Lower, Pausing November Rally

Sevens Report Research’s Tom Essaye told Barron’s it looked like a “wait and see day” ahead of the personal consumption expenditures price index on Thursday, among other data points ahead.

“More times than not, if you’re wondering what’s driving markets right now, it’s usually yields,” Essaye said.

As the end of the year approaches, Essaye thinks it will take a major surprise from the upcoming data releases to send stocks tumbling.

“The bar to get people to heavily sell stocks is pretty high, considering if we can just kind of hold on right for the next five weeks, then we put in the books a pretty good year,” he said.

He said that will change once the calendar flips to 2024, when the market will have to live up to high expectations priced in by traders.

Also, click here to view the full Barron’s article published on November 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Sevens Report Research’s

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Why Tech Is Driving This Selloff

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What’s in Today’s Report:

  • Why Tech Is Driving This Selloff
  • S&P 500 Weekly Chart: Not A Setup You Want To See

Futures are moderately higher on solid tech earnings and optimism there won’t be a government shutdown drama.

On earnings, AMZN and INTC both posted solid numbers (up 6% and 7% after hours respectively). And that’s helping the tech sector and broader market bounce.

Politically, Speaker Johnson publicly supported passing a short term spending bill. This possibly avoids another shutdown drama.

Today focus will be on inflation, namely the Core PCE Price Index (E: 0.3% m/m, 3.7% y/y) and the five-year University of Michigan Inflation Expectations (E: 3.0%).  Lower than expected numbers will remind markets that inflation is falling and depress Treasury yields, and that should extend today’s early rally.  Conversely, if the inflation data is higher than expected, don’t be shocked if these early gains are erased as yields rise.

Why Tech Is Driving This Selloff

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Market Multiple Table – October Edition

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Market Multiple Table – October Edition: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table – October Edition
  • Why Didn’t a Hot PPI Report Weigh on Markets?

Futures are modestly higher on more reports of global disinflation combined with additional Chinese stimulus.

Japanese PPI rose less than expected (2.0% vs. (E) 2.5%). And, that added to the recent list of inflation data points that imply ongoing global disinflation.

China’s sovereign wealth fund bought shares in the nation’s largest banks, boosting Asian markets.

Today the focus will be on the CPI report and expectations are as follows: Headline CPI:  0.3% m/m, 3.6% y/y, Core CPI: 0.3% m/m, 4.1% y/y.  Bottom line, a CPI Report under expectations should pressure yields and fuel a continued rally in stocks while a hot CPI should lift yields and likely weigh on stocks.

Away from the CPI report we also get Jobless Claims (E: 209K) and have multiple Fed speakers: Bostic & Collins.

Market Multiple Table - October Edition

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