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Does March vs. May Really Matter?

Does March vs. May Really Matter? Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Does March vs. May Really Matter?
  • Weekly Economic Cheat Sheet – Retail Sales Data in Focus

U.S. futures are tracking European shares lower this morning. This is amid rising bond yields and a stronger dollar following some hawkish central banker commentary this weekend.

Economically, the German ZEW’s Economic Sentiment rose to 15.2 vs. (E) 11.7 in January. Both eased recession concerns but also weighed on the prospects for imminent Fed and ECB rate cuts in the coming months.

This weekend, several ECB officials pushed back on expectations for rate cuts in H1’24. This is resulting in more of the late 2023 dovish money flows being unwound.

Looking into today’s session, there is one economic report to watch: Empire State Manufacturing Index (E: -4.0) and one Fed official scheduled to speak: Waller (11:00 a.m. ET).

Earnings season also continues to pick up with several big banks due to report today: GS ($3.47), MS ($1.07), PNC ($2.99), IBKR ($1.54).

Bottom line, investors will be looking for more Goldilocks economic data in the NY Fed release and a less-hawkish tone from Waller and no bad news out of the banks reporting earnings today in order to stabilize. Otherwise the premarket weakness is likely to continue into the primary session this morning.


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Why This Isn’t A Risk-Less Market (Despite The Fed Being Dovish)

Why This Isn’t A Risk-Less Market: Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Why This Isn’t A Risk-Less Market (Despite The Fed Being Dovish)
  • Understanding Why the Dollar Is Plunging

Futures are modestly higher following mixed global economic data and as investors continued to digest Wednesday’s dovish Fed decision.

Global data was mixed, but not bad, and as such isn’t increasing global slowdown fears.  In Europe, the EU flash composite PMI missed estimates (47.0 vs. (E) 48.0) while the UK reading beat (51.7 vs. (E )51.0).  In China,

Retail Sales and Industrial Production were better than feared.

Today focus will be on economic data as we get the first look at December activity and for the rally to continue, the data needs to be Goldilocks (so close to expectations).  The key reports today are, in order of importance:    Dec. Flash Manufacturing PMI (E: 49.2), Dec. Flash Service PMI (E: 50.6), Nov. Industrial Production (E: 0.3%), Dec. Empire Manufacturing Index (E: 3.7).

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Bull vs. Bear Case: Part II

Bull vs. Bear Case: Part II: Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • The Bull Case vs. The Bear Case – Part II
  • Chart – Gold Breaks Out to the Upside
  • Consumer Confidence Data Points to Soft Landing

Stock futures are tracking European equities higher this morning while the 10-Yr Note yield is below 4.30% at two month lows following less-hawkish ECB commentary and more evidence of disinflation in the Eurozone.

Economically, Spanish CPI fell to 3.2% vs. (E) 3.7% y/y while multiple regional German inflation prints suggest headline German CPI will come in well below the 3.5% estimate later this morning.

The ECB’s Stournaras notably said in commentary early this morning that rate cuts could come as soon as the middle of next year which saw more policy easing priced into rates futures markets in Europe and invited new bids into the bond markets.

Looking into today’s session, there are two domestic economic reports to watch this morning: GDP (E: 4.9%) and International Trade in Goods (E: -$86.7B) while there is just one Fed speaker in the afternoon: Mester (1:45 p.m. ET).

Bottom line, the early bid in the U.S. equity futures market and new lows in bond yields are being driven by cooler-than-expected inflation data in the EU, so it will be critical for the German CPI report to come in below estimates of 3.5% when the data is released at 8:00 a.m. ET. If so, expect the dovish rally to extend into Wall Street trading today.

Bull vs. Bear Case: Part II


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Was the CPI a Bullish Gamechanger?

Was the CPI a Bullish Gamechanger? Start a free trial of The Sevens Report.


What’s in Today’s Report:

  • Was the CPI Report a Bullish Gamechanger?
  • CPI Data Analysis and Takeaways

Stock futures are extending the November gains this morning and Treasuries are steady after more cool inflation readings in Europe and stabilizing economic data in China.

Economically, Chinese FAI and Industrial Production figures met estimates while Retail Sales importantly accelerated to 7.6% vs. (E) 7.0% in October up from 5.5% in September.

In Europe, CPI data from the U.K., France, and Italy all met estimates or came in “cooler” than expected. This bolsters the view that global central banks are done with rate hikes, fueling risk-on money flows today.

Today, there are several economic reports to watch early: PPI (E: 0.1% m/m, 2.0% y/y), Empire State Manufacturing Index (E: -3.0), and Retail Sales (E: -0.3%). The market will be looking for more signs of cooling inflation in the PPI release. And no major surprises either way in the Empire and Retail Sales releases as the market is still vulnerable to data that is “too hot” (risks of more Fed tightening) or “too cold” (risks of a “hard landing”).

There are also two Fed speakers today: Barr (9:30 a.m. ET) and Barkin (3:30 p.m. ET) but neither are expected to move markets.

Was the CPI Report a Bullish Gamechanger?


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Why Didn’t NVDA Earnings Spark A Rally?

What’s in Today’s Report:

  • Why Didn’t NVDA Earnings Spark A Rally?

Futures are bouncing modestly following a quiet night of news and as investors look ahead to Powell’s speech later this morning.

EU economic data was soft again overnight, as German IFO Business Expectations missed estimates (82.6 vs. (E) 83.6) and added to the list of disappointing economic reports this week.

Today focus will be on Powell’s speech (10:00 a.m. ET) and if Powell’s tone implies “higher for longer” on rates, that will boost Treasury yields and pressure stocks.  Conversely, if he talks about being “patient” with the 2% inflation target, that will be seen as dovish.

Away from Powell, the only notable reports are Consumer Sentiment (E: 71.2) and the One-Year Inflation Expectations (E: 3.3%) and Five-year Inflation Expectations (E: 2.9%).   If inflation expectations are solidly under estimates, that’ll be a mild positive for markets.

Tom Essaye Quoted in Swissinfo.ch on June 26th, 2023

Tech Stocks Slide as Traders Rein in Rate Cut Bets: Markets Wrap

Tom Essaye, a former Merrill Lynch trader who founded “The Sevens Report” newsletter, wrote that the political strife in Russia is likely to have little market impact. Looking forward, obviously this injects more geopolitical uncertainty into the world, but as long as commodity prices don’t spike higher, the markets will largely ignore Russian political volatility, he wrote. Click here to read the full article.

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What the Fed Pause Means for Markets

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.

Tom Essaye Joined BNN Bloomberg To Discuss The Markets on April 13th, 2023

If the U.S. Fed doesn’t make good on rate cut expectations, the market rally will be undone: Analyst

Tom Essaye, president of Sevens Report Research, joins BNN Bloomberg to discuss the disparity of the market’s rate cut expectations, and central bank pushback. Click here to watch the full interview.

How Positive is the Restart of Disinflation?

What’s in Today’s Report:

  • How Positive is the Restart of Disinflation?
  • Weekly Market Preview:  Regional Bank Earnings This Week (Do They Ease Contagion Concerns?)
  • Weekly Economic Cheat Sheet:  First Look at April Economic Activity

Futures are little changed following a quiet weekend of news as investors await key regional bank earnings this week.

The only notable economic report this morning was Italian CPI, which fell –0.4% vs. (E) -0.3% and further implied that global disinflation has restarted (which is a positive).

Today we get the first look at April economic activity via the Empire Manufacturing Survey (E: -18.3) and markets will want to see stability (so not a continued steep drop).  We also get the latest look at housing via the Housing Market Index (E: 45).

Additionally, regional bank earnings start and their commentary on deposits and “Held to Maturity” securities will be especially important.  Some reports we’re watching today include: SCHW ($0.90), GNTY ($0.69), MTB ($3.98), JBHT ($2.05).

Why Stocks Rallied on Thursday

What’s in Today’s Report:

  • Why Stocks Rallied on Thursday
  • Policy Spread Update (Rate Cuts Imminent?)

Futures are slightly lower on digestion of Thursday’s rally and as markets await bank earnings this morning.

Fed balance sheet news overnight was mixed, as total usage of the Discount Window and BTFP dropped to $139 bln from $149 bln, but that’s still very elevated and it underscores there’s still stress in the regional banks.

Focus today will be on economic data and earnings, and the key here remains stability in both sets of reports (so no major disappointments).  Important economic reports today include, in order of importance, Retail Sales (E: -0.4%), Industrial Production (E: 0.3%) and Consumer Sentiment (E: 62.7).

Earnings season starts today and key reports we’re watching include: JPM ($3.41), C ($1.66), WFC ($1.15), PNC ($3.60), BLK ($7.73), UNH ($6.24).

Finally, there’s one Fed speaker, Waller at 8:45 a.m. ET but he shouldn’t move markets (the Fed message is very consistent right now).