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The bond market is now signaling a real chance of a greater-than-expected economic slowdown

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The bond market is now signaling a real chance of a greater-than-expected economic slowdown : Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Traders Seek Refuge in Bonds Amid Market Volatility

“The bond market is now signaling a real chance of a greater-than-expected economic slowdown and falling yields are no longer a positive for markets. Going forward, the sooner Treasury yields can stabilize (ideally with the 10 year close to 4%) the better for markets,” wrote Sevens Report’s Tom Essaye in a note.

Also, click here to view the full Barron’s article published on August 5th, 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.

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What Makes This Stop? (Key Indicators to Watch)

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What Makes This Stop? (Key Indicators to Watch): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Makes This Stop? (Seven Indicators to Watch)
  • Chart – VIX Spikes to Pandemic Highs

There is a sense of stability in global markets this morning as the yen and VIX, two major sources of the recent volatility, are both pulling back amid easing recession fears.

Economically, German Manufacturing Orders rose a solid 3.9% vs. (E) 0.8%, helping to offset EU Retail Sales which fell -0.3% vs. (E) +0.1%.

Today, there is one economic report: International Trade (E: -$72.5B) but the data shouldn’t move markets while there are no Fed officials scheduled to speak.

Looking ahead to mid-day, the Treasury will hold a 52-Week Bill auction at 11:30 a.m. ET and a 3-Yr Note auction at 1:00 p.m. ET. Investors will be watching the auction results closely to gauge Treasury demand, and if the auctions are weak, that could see some of the recession fears from the last few sessions ease further and allow stocks to recover a good portion of the losses.

Finally, earnings season is starting to wind down but there are a few notable companies releasing results today including: UBER (E: $0.31) ahead of the bell and SMCI (E: $8.10) and ABNB (E: $0.92) after the close.

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The biggest question facing investors today remains ‘Is It Different This Time?

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The biggest question facing investors today remains ‘Is It Different This Time?: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Doesn’t Look Like the Dot-Com Bubble. It’s Something Worse.

No, that’s not the real worry. The S&P 500 is. It smacks of 2007 all over again. From last July until now, the index has traded with an 85% correlation to July 2006 though July 2007, according to Sevens Report’s Tom Essaye.

Essaye went so far as to describe the resemblance of this market to the 2007 market as “concerning to say the least.” And he touched on the uncertainty that investors are facing.

“The biggest question facing investors today remains ‘Is It Different This Time?’” he wrote

Also, click here to view the full Barron’s article published on July 31st, 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.

Is the Yen Carry Trade Become A Headwind on Markets?

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Is the Yen Carry Trade Become A Headwind on Markets?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is the Yen Carry Trade Become A Headwind on Markets?

Futures are seeing a solid bounce following a mostly quiet night of news as investors look ahead to (hopefully) another good inflation report.

Earnings remained broadly mixed overnight (some good, some bad) but none of the results are impacting markets.

There was no notable economic data or geo-political events overnight.

Today the focus will be on the Core PCE Price Index (E: 0.1% m/m, 2.5% y/y) and if this number is better than expected (or even dead in-line with expectations) that will remind investors that rate cuts are coming soon (September) and that should help extend this early rebound in stocks and bonds.

Earnings roll on although next week is, by far, the most important week of the season.  Reports we’re watching today include:  BMY (E: $1.64), MMM (E: $1.66) and CNC  (E: $2.42).

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CPI Preview (Good, Bad & Ugly)

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CPI Preview (Good, Bad & Ugly): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Preview (Good, Bad & Ugly)
  • EIA Analysis and Oil Market Update

Futures are slightly lower as investors digest Wednesday’s new highs while earnings this morning underwhelmed.

PEP and DAL both posted disappointing guidance and the stocks are down pre-market, weighing on futures.

Economically, data was good overnight as German CPI was in-line while UK GDP was better than expected.

The most important report of the week comes this morning via the CPI report and expectations are as follows:  CPI (E: 0.1% m/m, 3.1% y/y), Core CPI (E: 0.2% m/m, 3.4% y/y).  To keep things simple, if CPI shows a continued decline in inflation, that will make a September rate cut even more likely and help support stocks.  If inflation bounces back, that’s a real surprise negative and don’t be shocked if the S&P 500 falls 1% or more.

Other notable events today include Jobless Claims (E: 239K) and one Fed speaker, Bostic (11:30 a.m. ET), along with the start of earnings season (notable reports today include PEP ($2.15), DAL ($2.37) and CAG ($0.56)).  Each of these events are important in their own right but the morning will be dominated by CPI and as that goes, so likely goes the market today.

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A lack of market breadth won’t lead to markets reversing

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Lack of market breadth won’t lead to markets reversing: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market’s Breadth Is Improving. Why It Matters.

Though a lack of market breadth won’t lead to markets reversing, Sevens Report Research’s Tom Essaye told Barron’s, it is worth watching.

“The lack of breadth tells you something about the underlying business fundamentals in the economy,” Essaye says. “If everything were as healthy as the S&P 500 would have you believe, breadth would be better.”

He says the index’s performance may be overstating how well things are going for U.S. firms.

“It doesn’t mean the reality is bad—it’s just not as good as that single index is making you think it is,” Essaye says.

Also, click here to view the full Barron’s article published on July 3rd, 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.

Hard Landing vs. Soft Landing Scoreboard

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Hard Landing vs. Soft Landing Scoreboard: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing/Soft Landing Scoreboard
  • Case-Shiller Home Price Index Continues to Rise: Chart
  • Consumer Confidence Report Highlights Uncertain Economic Outlook

U.S. equity futures are mixed as continued strength in tech shares is supporting gains in Nasdaq 100 contracts while both the Dow Industrials and Russell 2000 futures are lower amid higher yields in the wake of hot inflation data overnight.

Economically, Australian CPI came in hot with the headline jumping to 4.0% y/y vs. (E) 3.8%, up from 3.6% previously.

In Europe, Germany’s GFK Consumer Climate Index slipped to -21.8 vs. (E) -20.0 pointing to weakening sentiment.

Looking into today’s session there are no Fed speakers scheduled to speak and just one economic report to watch: New Home Sales (E: 650K).

There is a 5-Yr Treasury Note auction in the early afternoon (1:00 p.m. ET) and investors will want to see strong demand like we saw with yesterday’s 2-Yr auction to keep bond yields stable and near recent lows.

Finally, there is one earnings release worth noting today as Micron Technologies will report quarterly results after the close (E: $0.51) and with a lot of optimism surrounding tech and AI, results will need to meet or exceed expectations to keep the mega-cap tech rally alive.

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Market Multiple Chart: Multiple Expansion Lifts Scenario Targets

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Market Multiple Chart: Multiple Expansion Lifts Scenario Targets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • MMT Chart:  Multiple Expansion Lifts Scenario Targets

Futures are solidly higher thanks to a surprise rate cut from the SNB and despite worsening geo-political tensions.

The Swiss National Bank surprisingly cut rates 25 bps, citing easing inflation pressures, as the global rate cut cycle gets underway.

Geo-politically, the leader of Hezbollah threatened Israel with war, underscoring rising tensions between Israel and Lebanon.

Today will be a moderately busy day of data and news.  First, there is a Bank of England Rate Decision and while no change in rates is expected, the BOE may signal it’s ready to cut rates in the next meeting or two.

Economically, there are two important reports today: Jobless Claims (E: 235K) and Philly Fed (E: 5.2).  Given the recent data showing a loss of momentum in economic growth, investors will want to see better than expected readings (while soft readings will strengthen the narrative for slowing growth).

Finally, the parade of Fed speakers continues this week with Kashkari (8:45 a.m. ET) and Barkin (4:00 p.m. ET) but unless one of them openly discuss rate hikes, they shouldn’t move markets.

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Is Disinflation Still Good for Markets? (The Answer May Surprise You)

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Is Disinflation Still Good for Markets? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Disinflation Still Good for Markets? (The Answer May Surprise You)
  • Weekly Market Preview:  Are Hard Landing Chances Rising?
  • Weekly Economic Cheat Sheet:  A holiday-shortened week, but still one with important growth updates.

Futures are slightly lower on mixed Chinese economic data and following a quiet summer weekend of news.

Chinese Fixed Asset Investment (4.0% vs. (E) 4.2%) and Industrial Production (5.6% vs. (E) 6.2%) both missed estimates while Retail Sales beat (3.7% vs. (E) 3.0%) leaving the outlook for Chinese growth still mixed (at best).

There were no notable political or geo-political updates over the weekend.

The focus of the data this week will be on economic growth and today we get the first look as June activity via the June Empire Manufacturing Index (E: -12.50).  Given recent worries about growth, the stronger this number, the better for the broader markets.

We also have three Fed speakers today, Williams (12:00 p.m. ET), Harker (1:0 p.m. ET) and Cook (11:00 p.m. ET) but again, given last week’s Fed meeting, they shouldn’t move markets.

Finally, markets are closed on Wednesday for observance of Juneteenth (this is a recently new Federal holiday so I just want to make sure everyone was aware of the closure).

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Explaining This Market to Clients (Summer Edition)

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Explaining This Market to Clients (Summer Edition): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Explaining This Market to Clients (Summer Edition)
  • Weekly Economic Preview – All Eyes on Inflation (Friday)

Futures are modestly higher, led by mega-cap tech, as traders return from the long weekend to mixed headlines.

Economically, an ECB survey showed a favorable dip in medium term (3-year) consumer inflation expectations which was well received by equity traders overnight.

Geopolitically, an Egyptian soldier was killed in a fire fight with Israeli forces at the Rafah border over the weekend while, separately, there were dozens of civilian casualties following an Israeli airstrike just north of Rafah leaving Middle East tensions as high as they’ve been in months (oil is up more than 1%).

Looking into today’s session, there are two economic reports to watch: S&P Case-Shiller Home Price Index (E: 0.3%) and Consumer Confidence (E: 95.3) while several Fed officials are scheduled to speak: Kashkari (9:55 a.m. ET), Cook (1:05 p.m. ET), and Daly (1:00 p.m. ET). The market will want to see more “goldilocks” economic data and preferably less-hawkish Fed chatter.

Additionally, there are two key Treasury auctions, the first for 2-Yr Notes at 11:30 a.m. ET, and the second for 5-Yr Notes at 1:00 p.m. ET. With the total amount being auctioned just shy of $150B, demand for the Notes will be closely watched and weak auction outcomes could push yields higher and weigh on stocks with key inflation data looming later in the week.

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