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Stock Futures Are Bouncing

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Improvement in Chinese Economic Data: Sevens Report Analysts Quoted in Barron’s

Stock Futures Rebound After Selloff

“Stock futures are bouncing back modestly and bonds are stable this morning amid improvement in Chinese economic data,” said Tom Essaye, the founder of Sevens Report Research.

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

Stock Futures Are Bouncing

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What’s the VIX Saying About This Market?

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What’s the VIX Saying About This Market? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What’s the VIX Saying About This Market?

Futures are solidly higher as Thursday’s bounce extended overnight following additional reminders that global disinflation is still on going.

The EU Flash HICP (their CPI) rose 4.3% vs. (E) 4.6% and Core HICP increased 4.5% vs. (E) 4.8%, sending an important reminder that disinflation is still on going.

There was no material progress in avoiding a government shutdown overnight (which at this point is likely).

Today focus will be on the Core PCE Price Index (E: 0.2% m/m, 3.9% y/y) and put simply, if that number meets or is below expectations, then this bounce back rally should continue.  If the Core PCE Price Index is higher than expectations, don’t be shocked if stocks give back these early gains.  Finally, there is one Fed speaker today, Williams at 12:45 p.m. ET, but he shouldn’t move markets.

What's the VIX Saying

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Why Did Stocks Drop Yesterday?

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Why Did Stocks Drop Yesterday? Start a free trial of The Sevens Report.

What’s in Today’s Report:

    • Bottom Line – Why Did Stocks Drop Yesterday?
    • Chart: S&P 500 Tests Key Support
    • Economic Takeaways: Case-Shiller Home Price Index & Consumer Confidence
    • Philadelphia Fed Service PMI Turns Negative, Price Readings Elevated (Stagflation)

    Stock futures are bouncing back modestly and bonds are stable this morning. This is amid improvement in Chinese economic data while data in Europe was less encouraging.

    Economically, Chinese Industrial Profits were down -11.7% y/y in August. But that was up from -15.5% y/y in July suggesting government stimulus efforts may be stabilizing the economy. The property development sector remains a major source of uncertainty.

    Meanwhile, in Europe, Eurozone M3 Money Supply declined more than expected, down -1.3% vs. (E) -1.0%. Which underscores tightening financial conditions in the EU amid aggressive policy measures by the ECB.

    Today, the calendar is fairly light as there is just one economic report to watch this morning: Durable Goods Orders (E: -0.3%) and no Fed officials are scheduled to speak.

    In the afternoon there is a 5-Yr Treasury Note auction at 1:00 p.m.. ET, and as usual, if there is any meaningful move in yields, it could impact equity markets (stable or easing yields would be welcomed by equity bulls, new highs would pressure stocks and other risk assets).

Sevens Report Q3 ’23 Quarterly Letter Coming October 2nd.

The Q3 2023 Quarterly Letter will be delivered to advisor subscribers on Monday, October 2nd.

The S&P 500 just hit the lowest level since March amid concerns about Fed rate hikes, a rebound in inflation and a possible recession.

Now is the perfect time to provide a value-add market update for clients and ensure they have the right expectations heading into the fourth quarter.

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You can view our Q2 ’23 Quarterly Letter here.

To learn more about the product (including price) please click this link. To subscribe please email: info@sevensreport.com.

Why stocks dropped yesterday

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Why Did Stocks Drop on Friday?

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Why Did Stocks Drop on Friday? Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop on Friday?
  • Weekly Market Preview:  Will the Fed Confirm Market Expectations?
  • Weekly Economic Cheat Sheet:  Important Growth Data Throughout the Week (Could Confirm or Undermine Soft/No Landing Hopes)

Futures are slightly higher as markets bounce following Friday’s declines and after a quiet weekend of news.

The various strikes occurring across the country (writers, UAW) contributed to Friday’s market decline. There was little positive progress over the weekend on resolving either work stoppage.

Geopolitically, President Biden’s National Security Advisor met with China’s foreign minister. The meeting is raising hopes the U.S./China relationship could improve.

Today the only notable economic report is the Housing Market Index (E: 50.0) and that shouldn’t move markets as long as it doesn’t provide a major positive or negative surprise. Barring that, we’d expect pre-Fed positioning to generally drive trading today.

Why Did Stocks Drop

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Economic Data Fueled the Rally

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Why Economic Data Fueled the Rally: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Yesterday’s Economic Data Fueled the Rally
  • An Important Chart (On Page One)

Futures are slightly higher on more Chinese economic optimism as data was better than expected while Chinese officials announced more stimulus.

Chinese Retail Sales (4.6% vs. (E) 3.9%) and Industrial Production (4.5% vs. (E) 3.9%) beat expectations while authorities injected 120 billion yuan into a lending facility.

Today’s focus will be on economic data and if data is “Goldilocks” like we saw on Thursday, expect a continuation of yesterday’s rally.  Conversely, if the data shows inflation hot or growth slowing, the markets could give back most of yesterday’s rally.

Also, the important reports to watch today include:  Empire State Manufacturing Index (E: -10.0), Import and Export Prices (E: 0.3%, 0.4%), Industrial Production (E: 0.1%), and Consumer Sentiment (E: 69.2).

Finally, today is quadruple witching options expiration so don’t be surprised by big volumes and increased volatility during the final hour of trading.

Economic Data

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CPI Impacts Two of The Three Pillars of The Rally

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CPI impacts two of the three pillars of the rally: Tom Essaye Quoted in The Spokesman-Review

Wall Street takes risk off table before CPI report

CPI is key because if it halts its downward trend, markets will have to price in a more hawkish Fed. That would be a headwind on stocks, said Tom Essaye, who founded The Sevens Report newsletter.

“Put in a more familiar way, CPI impacts two of the three pillars of the rally: disinflation and expectation the Fed is done with rate hikes,” Essaye noted. “If CPI is too hot, both will be damaged.”

Also, click here to view the full Spokesman-Review article published on September 12th, 2023. However, to see Tom’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.

Will the Restart of Student Loan Payments Hurt the Economy?

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Will the Restart of Student Loan Payments Hurt the Economy: Strengthen your market knowledge with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Will the Restart of Student Loan Payments Hurt the Economy?

Stock futures are lower with European shares after some hawkish ECB chatter and more bad EU economic data overnight.

The ECB’s Klass Knot noted overnight that a September rate hike is being “underestimated” by markets. This is weighing on risk assets modestly this morning.

Economically, German Manufacturers’ Orders collapsed by -11.7% vs. (E) -4.0% in July while Eurozone Retail Sales in July met estimates with a monthly decline of -0.2%. The data offered fresh evidence that the European economy is threatening to fall into recession despite ongoing calls for a global soft landing.

Today’s focus will be on economic data this morning with International Trade in Goods and Services (E: -$68.0B) and the ISM Services Index (E: 52.4) due to be released. The market is looking for signs of slowing demand but not a sharp downturn in growth.

The ISM will be the more important report to watch.  If we get a number that is “too hot” or “too cold” will likely see yesterday’s stock market declines extended, while a Goldilocks print will help markets stabilize.

There is also one Fed speaker today: Collins (8:30 a.m. ET). If she pushes back on the peak rate narrative or rate cuts in 2024, that will add another headwind to stocks and other risk assets today.

Economy

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Tom Essaye Quoted in Swissinfo.ch on August 28th, 2023

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Stocks Grind Higher at Start of Busy Economic Week: Markets Wrap

“This week is important because it has the chance to either reinforce the ‘soft/no landing’ and ‘disinflation’ pillars of the rally, or potentially undermine them,” said Tom Essaye, founder of The Sevens Report newsletter. “The former will likely result in a reflex rally, while the latter could open up a sharp drop in stocks. We’ll be watching closely.” 

Click here to read the full article.

 

Tom Essaye Quoted in Morningstar on August 13th, 2023

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A stumbling stock market faces a crucial summer test. Here’s what will decide the bull’s fate.

“This scenario would essentially undermine the three pillars of the rally, and as such investors should expect a substantial decline in stocks, even considering the recent pullback,” Tom Essaye said in a note last week. “In fact, a decline of much more than 10% would be likely in this scenario, as it would undermine most of the rationale for the gains in stocks since June (and perhaps all of 2023).”

Click here to read the full article.

Current Market Glossary (For Clients & Prospects)

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What’s in Today’s Report:

  • Current Market Glossary (For Clients & Prospects)

Futures are slightly lower following a night of disappointing tech earnings.

NFLX, TSLA and TSM all posted disappointing earnings results (stocks down 3% – 6% pre-market) and that’s weighing on Nasdaq and S&P 500 futures.

There was no notable economic data overnight.

Today will be another busy day of data and earnings results.  On the economic front, the two key reports are Weekly Jobless Claims (E: 250k) and Philly Fed (E: -10.0), and as you can guess (and especially at these stretched valuations) markets will want to see more Goldilocks data (so stable claims and Philly and falling prices).  We also get Existing Home Sales (E: 4.23M) but, barring a big miss, that shouldn’t move markets.

Turning to earnings, focus today is on industrials and consumer/healthcare names, and some important results to watch include:  AAL ($1.58), TSM ($1.07), JNJ ($2.61), PM ($1.48), COF ($3.31), CSX ($0.49), and PPG ($2.14).