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What Caused Thursday’s Reversal?

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What’s in Today’s Report:

  • What Caused Thursday’s Reversal?
  • How Economic Data Was “Too Hot” Yesterday

Futures are modestly higher despite a slightly hawkish surprise from the Bank of Japan.

In a move that was telegraphed in trading on Thursday, the BOJ made a slightly hawkish shift and allowed the yield on 10-year Japanese bonds to move above the previous cap of 0.50%.  Technically, this is a hawkish move, although it’s a very small one.

Today focus will be on inflation, as we get two of the bigger inflation reports in the Core PCE Price index (E: 0.2% m/m, 4.2% y/y) and Employment Cost Index (E: 1.1%).  Markets will want to see continued signs of disinflation (so numbers at or below estimates) while readings that are higher then expected will push Treasury yields higher, and that will be a headwind on stocks (as we saw yesterday).

Earnings also continue and some notable reports we’re watching include:  XOM ($2.00), PG ($1.32), CVX ($2.95), CL ($0.75).

What the Fed Decision Means for Markets

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What’s in Today’s Report:

  • What the Fed Decision Means for Markets
  • EIA Analysis and Oil Market Update

Futures are moderately higher mostly on momentum as yesterday’s FOMC decision reinforced market expectations that rate hikes are over, while markets anticipate a dovish hike from the ECB later this morning.

There was no market moving economic data overnight.

Today is a busy day on both the economics and earnings front.  The key event is the ECB Rate Decision (E: 25 bps hike) and markets will want to see if Lagarde implies the next rate hike (likely in September) will be the last one (if so, that’ll be a positive for markets).

Economically, there are several important reports today including, in order of importance: Jobless Claims (E: 235K), Durable Goods (E: 0.5%), Advanced Q2 GDP (E: 1.5% y/y) and Pending Home Sales (E: 0.3%).  As has been the case for much of 2023, the more “Goldilocks” the data, the better for stocks (especially cyclicals).

Finally, on the earnings front, there are numerous notable reports today including: RCL ($1.58), MCD ($2.77), LUV ($1.08), MA ($2.84), HON ($2.20), F ($0.51) and INTC (-$0.04) and investors will remain focused on margins and guidance (they want to see positive commentary on both).

Could A Recession Just Be Delayed (And Not Avoided?)

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What’s in Today’s Report:

  • Could A Recession Just Be Delayed? (And Not Avoided)
  • Weekly Market Preview:  Fed/ECB/BOE Decisions This Week and Key Earnings Reports
  • Weekly Economic Cheat Sheet:  Fed Decisions and Inflation Readings In Focus This Week

Futures are modestly higher despite underwhelming economic data as markets look ahead to a busy week of central bank decisions, earnings and economic data.

Economically, data was not Goldilocks as the Euro Zone and UK flash PMIs missed estimates, falling to 48.9 vs. (E) 49.6 and 50.7 vs. (E) 52.2 respectively, and they reminded investors rate hikes can still slow growth.

Today focus will be on the July Flash Composite PMI (E: 53.1), as this is the first “big” number of July, and markets will want to see stability in the data to keep the Goldilocks rally going.

The major earnings reports occur later in the week but results we’ll be watching today include:  DPZ ($3.04), NXPI ($3.29), WHT ($3.80), LOGI ($0.45) and we’ll be looking for any signs of margin compression due to on going disinflation.

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).

Market Multiple Table (July Update)

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What’s in Today’s Report:

  • Market Multiple Table (July Update)
  • Why the Empire Manufacturing Survey was “Goldilocks” enough to push stocks higher.

Futures are little changed following a generally quiet night of news as markets look ahead to important economic data and the start of a deluge of earnings results this week.

Economically, there was no data overnight while there was more vague talk of Chinese stimulus, but nothing concrete.

Today the calendar is full of notable economic reports and earnings.  Starting with economic data, Retail Sales (E: -0.3% mm, 1.6% y/y) is the key report today and markets will want to see stability in the data to further the “Golidlocks” narrative of falling inflation and stable growth.  So, no big disappointments.  We also get Industrial Production (E: 0.0% m/m, 1.10% y/y) and the U.S. Housing Market Index (E: 56.0) and again stability is the key word for both reports.

On earnings, most of the results today will be focused on banks/financials, but the bottom line is markets want to hear solid guidance and economic commentary to further dispel hard landing worries.  Important reports today include:  BAC ($0.84), SCHW ($0.72), MS ($1.14), LMT ($6.43), PNC ($3.31), WAL ($ 1.98) and JBHT ($1.97).

What Pushes Stocks Higher from Here?

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What’s in Today’s Report:

  • What Pushes Stocks Higher from Here?
  • Weekly Market Preview:  Earnings Take Center Stage
  • Weekly Economic Cheat Sheet:  Growth Data in Focus this Week

Futures are slightly lower following mixed Chinese economic data and a potential further escalation of the Russia/Ukraine war.

Chinese economic data was mixed as GDP and Retail Sales both missed estimates, while Industrial Production beat, and the data will keep markets  wanting more stimulus.

Possibility of further escalation of the Russia/Ukraine war increased after Ukraine claimed responsibility for the destruction of a bridge linking Crimea and Russia.

Today focus will be on the first data point for July, the Empire Manufacturing Index (E: -4.3).  Markets will want to see this number be stronger than expectations and ideally turn positive, furthering the “Golidlocks” market narrative of falling inflation but stable growth.

PPI and Jobless Claims Strengthen the “Goldilocks” Narrative

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What’s in Today’s Report:

  • PPI and Jobless Claims Strengthen the “Goldilocks” Narrative

Futures are little changed following a quiet night of news as markets digest the Wed/Thurs rally and focus turns to the start of the Q2 earnings season.

Economically, there was more evidence of global disinflation (or deflation) as German Wholesale Prices (think their PPI) declined –2.9% y/y vs. (-1.2%) y/y.

Today focus will be on earnings, as we get several major bank earnings results:  JPM ($5.92), C ($1.31), WFC ($1.15), and BLK ($8.47) as well as UNH ($5.92).  These large cap companies usually don’t provide too many surprises in their earnings reports, but markets will want to hear positive commentary on the overall environment to further support this latest rally in stocks.

There are also two notable inflation linked economic reports today, Import & Export Prices (E: -0.2%, -0.4%), Consumer Sentiment (E: 65.0), but barring any major surprises they shouldn’t move markets.

CPI Preview: Good, Bad, and Ugly

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What’s in Today’s Report:

  • CPI Preview – Good, Bad, & Ugly
  • Chart: Is Disinflation Accelerating?

U.S. stock futures are extending this week’s gains ahead of the all-important CPI report this morning following a mostly quiet night of news.

There were no economic reports overnight but the Reserve Bank of New Zealand did notably pause their rate hiking cycle leaving their policy rate unchanged at 5.50% (however this was expected and did not meaningfully move markets).

Looking into today’s session the big catalyst is the CPI report due out before the open. On the headline, CPI is expected to come in at 0.3% m/m and 3.1% y/y while the Core figure is seen rising 0.3% m/m and 5.0% y/y.

From there, focus will turn to Fed speakers with Kashkari speaking shortly after the open (9:45 a.m. ET) and Mester at the close (4:00 p.m. ET).

Finally, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET and the outcome could shed light on the bond market’s outlook for the economy and Fed policy expectations in the wake of the CPI data release, so there is potential this auction moves markets in the early afternoon.

Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar on June 29th, 2023

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Oil futures finish higher, contributing to the month’s gain

Oil stabilized at support near the 2023 lows following Wednesday’s weekly Energy Information Administration report, which showed a “massive draw” in commercial crude-oil stockpiles, said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted in Barron’s on June 23rd, 2023

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S&P 500 Opens Lower, Heads for First Losing Week in More Than a Month

If the data meaningfully disappoints, especially in the service sector, expect more risk off money flows amid growing recession worries today, wrote Tom Essaye, president of Sevens Report Research. Click here to read the full article.