Posts

What Makes This Stop? (Key Indicators to Watch)

/in , /by

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.

Join thousands 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.

We started the landing a couple months ago

/in , /by

We started the landing a couple months ago: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Market Is Finally Paying Attention to Slowing Growth. That Doesn’t Mean We’re Headed for a Recession.

Sevens Report Research’s Tom Essaye argues the latest data doesn’t rule out a soft landing, though some market participants had until recently ruled out a hard landing.

“We started the landing a couple months ago,” Essaye says. “It’s no different than when you’re on an actual plane. Sometimes the plane descends more quickly than other times, but that doesn’t mean that you’re crashing.”

Essaye argues summer jobs numbers are generally volatile, so he doesn’t expect the Fed to start panicking. He also notes other economic metrics like retail sales and durable goods, while slowing, are not showing extreme weakness. On the flip side, he thinks a market that had been oblivious to slowing growth could show signs of weakness in the coming weeks.

“The data was not that bad,” Essaye says. “The fact that the S&P 500 is down two and a half percent is more a function of the market’s complacency toward this risk, rather than it is the risk actually becoming substantially greater.”

Also, click here to view the full Barron’s article published on August 2nd, 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.

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

/in , /by

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.

We’re staring at big catalysts

/in , /by

We’re staring at big catalysts: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Tech Stocks Are Sliding Ahead of Key Earnings Reports

“There was not much going on yesterday and there isn’t a ton going on today, either,” Sevens Report Research’s Tom Essaye told Barron’s. “And we’ve had sort of big moves in the market, and we’re staring at big catalysts.”

Reports from Alphabet and Tesla may have lowered the bar for Big Tech, Essaye says. On the flip side, the megacap tech stocks have run up tremendously on high expectations for growth ahead driven by artificial intelligence. That changed in July, when tech stocks started to struggle to keep up as investors rotated from the sector to underperforming small-cap names.

“Investors are kind of more in a ‘show me’ mode now than they have been in a long time with these names,” Essaye says. “They want to see better earnings before they jump back in for fear that this rotation isn’t over.”

Also, click here to view the full Barron’s article published on July 30th, 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.

Oil futures appropriately popped in the wake of the release

/in , /by

 Oil futures appropriately popped in the wake of the release: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices climb as U.S. data show crude supplies down a fourth straight week

Wednesday’s EIA report was “solid and oil futures appropriately popped in the wake of the release,” said Tyler Richey, co-editor at Sevens Report Research.

Still, the “trend of strong consumer demand has faltered in July,” underscored by the fact the four-week moving average of gasoline supplied remains about 30,000 barrels per day off the early July year-to-date highs, he told MarketWatch.

Going forward, the “energy bulls will want to see more evidence of strong and persistent consumer demand in order for oil to hold above key technical support at $76.50 because recession worries are on the rise and volatility is picking up, both of which are typically headwinds for the price of oil,” said Richey.

Also, click here to view the full MarketWatch article published on Morningstar on July 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

Lastly, 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.

Market Impact of Biden’s Decision

/in , /by

Market Impact of Biden’s Decision: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Impact of Biden’s Decision to Drop Out
  • Putting Last Week’s Declines in Proper Context (What Tech Giveth, Tech Taketh Away)
  • Weekly Market Preview:  Does the Changing Political Landscape Pressure Markets?
  • Weekly Economic Cheat Sheet:  The First Big National Report for July Comes This Week

Futures are solidly higher on surprise rate cuts from China and as President Biden dropped out of the Presidential election.

President Biden dropped out of the election this weekend and endorsed VP Harris as the new nominee and this should see a mild tightening of the polls.

Economically, China announced a surprise 10 bps interest rate cut and that’s helping to boost the economic outlook.

This week will be a busy one for earnings and economic data, but it starts slowly as there is just one notable economic report today, Chicago Fed National Activity (E: 0.18) and three notable earnings reports:  NXPI ($3.21),VZ ($1.15) and TFC ($0.78). NXPI is the most important earnings report today and if the semiconductor company can post strong guidance, it’ll help ease chip worries (which will help the tech sector and broader market stabilize).

Join thousands 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.

Economic growth must remain resilient and we cannot have a growth scare

/in , /by

Economic growth must remain resilient and we cannot have a growth scare: Tom Essaye Quoted in MarketWatch

Stock market’s long-awaited Great Rotation needs to overcome this nagging worry

For the rotation to be sustained beyond a few weeks, “economic growth must remain resilient and we cannot have a growth scare,” said Tom Essaye, founder of Sevens Report Research, in a Friday note. “If we do get a growth scare, then cyclical sectors like energy, industrials, materials and financials will likely not do well.”

Investors can act accordingly.

Those that think growth will slow should overweight super-cap tech TDIV and defensive sectors like utilities XLU, healthcare XLV and consumer staples XLP, Essaye wrote. Those that think growth will be resilient should overweight value stocks VTV and the equal-weight S&P 500 RSP.

For his part, Essaye said he’s more concerned about growth than the
consensus, so he won’t be chasing value and cyclical stocks, instead sticking to his preference for defensive sectors and longer term Treasurys that will benefit from a sustained fall in yields alongside moderating growth.

Also, click here to view the full MarketWatch article published on July 13th, 2024. However, to see the Sevens Report’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.

I think this will cause a bit of a correction

/in , /by

I think this will cause a bit of a correction: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

What to Buy if the Stock Market Rotation Is Real

“It was almost sort of getting feverish just how relentlessly these stocks were rising,” Sevens Report Research’s Tom Essaye tells Barron’s. “I think this will cause a bit of a correction, and a bit of a widening. How long it lasts depends on growth.”

Essaye says traders are looking at the prospect of lower rates and noting small caps, utilities, and real estate investment trusts are both cheap and could benefit from lower rates.

Also, click here to view the full Barron’s article published on July 11th, 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.

The Fed needs a few more ‘good’ reports on inflation

/in , /by

The Fed needs a few more ‘good’ reports on inflation: Tom Essaye Quoted in MarketWatch

Here’s what it would take for June CPI reading to send stocks lower

“Stepping back, the Fed needs a few more ‘good’ reports on inflation to cut rates in September. This can be one of those needed ‘good’ reports and keep the rally rolling (although it won’t be a new, positive catalyst as markets already assume ongoing disinflation),” said Tom Essaye, founder of Sevens Report Research, in a note.

On the other hand, if the CPI report delivers a higher-than-expected number, particularly for the core, “then a quick, sharp drop in stocks shouldn’t be surprising, because again it’s widely expected and priced into stocks that 1) Inflation is falling and 2) The Fed will cut in September,” he wrote.

A “bad” CPI report would see a core reading at 3.4% year over year with a headline figure of 3.2% to 3.3%, Essaye said, likely sparking a modestly negative reaction. An “ugly” report, with a core reading of more than 3.4% year over year and a headline figure higher than 3.3%, would likely spark a major selloff because it would challenge expectations for disinflation and a September cut, he said.

Also, click here to view the full MarketWatch article published on July 11th, 2024. However, to see the Sevens Report’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.

Hard Landing vs. Soft Landing Scoreboard

/in , /by

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.

Join thousands 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.