Posts

Is Housing Starting to Roll Over?

/in , /by

What’s in Today’s Report:

  • Is Housing Starting to Roll Over?
  • Oil Update and EIA Analysis

Futures are moderately higher as earnings continue to come in better than expected.

TSLA and UAL both posted better than expected earnings and UAL was very upbeat on travel spending and investors are viewing that as a positive macro-economic signal.

EU HICP (their CPI) slightly missed expectations (7.4% vs. (E ) 7.5% yoy), again hinting that inflation may be peaking.

Today will be a busy day with important Fed speak, economic data and earnings.  The key event (potentially) is Fed Chair Powell speaking this morning and while he’s not likely to drop any surprises, it’s always possible.  Economically, the key report today is the Philly Fed Manufacturing Index (E: 20.5) and markets will want to see stability in the data.  We also get Jobless Claims (E: 175K) and Fed President Bullard (1:00 p.m) but they shouldn’t move markets.

On the earnings front, notable reports today include:  T ($0.78), AAL (-$2.48), FCX ($0.88), PM ($1.48), UNP ($2.55), SNAP ($0.01), PPG ($1.13).

Sevens Report Co-Editor Tyler Richey Quoted in Market Watch on April 13th, 2022

/in , /by

Oil prices settle at a 2-week high, with global markets set to lose more Russian oil

The crude supply rise was partially explained by a steep and unexpected drop in the refinery utilization rate and contributed to a drawdown in gasoline and distillate stocks…Tyler Richey, co-editor at Sevens Report Research, told MarketWatch. Click here to read the full article.

Earnings Season Preview

/in , /by

What’s in Today’s Report:

  • Earnings Season Preview
  • EIA Analysis and Oil Market Update

Futures are little changed following a quiet night of news and ahead of the long weekend.

There were no notable economic reports overnight. Geopolitically, the Russia/Ukraine war raged on as fighting intensifies in eastern Ukraine (as has been expected).

Earnings overnight were net positive as Taiwan Semiconductor (TSM) provided solid guidance and that’s helping to relieve some ongoing semiconductor supply anxiety.

Today will be a busy day, with the first potentially big event being the ECB Decision at 7:45 a.m. ET.  No change is expected to rates or QE, but if Lagarde is hawkish in her commentary it could hit stocks.

Economically, we’ll have multiple reports today including, in order of importance, Retails Sales (E: 0.6%), Consumer Sentiment (E: 58.8), and Jobless Claims (E: 175K).  As has been the case, markets will want to see continued stability in the data.

Finally, we have two Fed speakers, Mester (2:30 p.m. ET) and Harker (6:00 p.m. ET), but they shouldn’t move markets.

Staying Focused on What Really Causes Bear Markets

/in , /by

What’s in Today’s Report:

  • Staying Focused on What Really Causes Bear Markets
  • Weekly Market Preview:  Can Oil Further Stabilize?
  • Weekly Economic Cheat Sheet:  Fed Minutes (Wednesday) Are the Key Report

Futures are slightly higher following a generally quiet weekend of news.

Geopolitically,  there are calls for more sanctions on Russia as the international community is now accusing Russia of war crimes following the discovery of a mass grave outside of Kiev. Oil, which is the key proxy for additional sanctions, is only slightly higher, however, implying the market isn’t expecting significant additional sanctions in the near term.

Economic data was sparse as the only notable report was German exports which rose solidly (up 6.4%).

Today there are no notable economic reports and no Fed speakers, so the focus will be on geopolitics, and again any hints of progress towards a ceasefire will help extend the recent rally.

Jobs Report Preview

/in , /by

What’s in Today’s Report:

  • Jobs Report Preview
  • EIA Analysis/Oil Market Update

Futures are slightly higher as oil drops sharply on reports the U.S. is considering a massive oil release from the Strategic Petroleum Reserve.

Reports hit overnight that the U.S. is considering releasing 180 million barrels of oil from the SPR over the coming six months, and oil is down 6% as a result.

Economic data was slightly underwhelming as the March Chinese manufacturing PMI dropped below 50 to 49.5.

Today focus will be on inflation, as we get the Fed’s preferred measure of inflation via the Core PCE Price Index (E: 0.4%, 5.5%).  If these numbers slightly underwhelm vs. expectations, that could lead to more hope inflation pressures are finally peaking, and we could see a rally as a result.  Today we also get Jobless Claims (E: 195K) and have one Fed speaker, Williams at 9:00 a.m. ET.

Yield Curves and Real Rates

/in , /by

What’s in Today’s Report:

  • Yield Curves and Real Rates

Markets are trading risk-on this morning after reported progress in ceasefire talks between Russia and Ukraine.

Russian officials said that the “primary objectives” of the latest round of peace talks with Ukraine have been completed and a deal may be announced in the coming hours which is driving stocks higher globally.

Looking into today’s session, there are a few economic reports due to be released: Case-Shiller Home Price Index (E: 1.0%), Consumer Confidence (E: 107.0), and JOLTS (E: 11.10M) while several Fed officials are scheduled to speak: Williams (9:00 a.m. ET), Harker (10:45 a.m. ET), and Bostic (6:30 p.m. ET).

There is also a 7-Yr Treasury Note auction at 1:00 p.m. ET that could move yields and more specifically impact the 10s-2s yield curve spread which has compressed down to single digits this morning.

Bottom line, the market’s primary focus is on Russia-Ukraine peace talks today and any meaningful progress towards a ceasefire will continue to support risk-on money flows while investors will watch economic data and Fed speak for any further signs that shift to a more aggressive policy stance is beginning to hurt growth.

 

Sevens Report Q1’22 Quarterly Letter Coming April 1st

The Q1 2022 Quarterly Letter will be delivered to advisor subscribers on Friday, April 1.

With several key macro issues coming to a head over the next three months, we believe the second quarter could be just as volatile as the first quarter.

We deliver the letter on the first business day of the new quarter because we want you to be able to send your quarterly letter before your competition (and with little to no work from you).

You can view our Q4 ’21 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

Tom Essaye Quoted in Barron’s on March 24, 2022

/in , /by

The Dow Rose, Uber Climbed—and What Else Happened in the Stock Market Today

Implying the Russia/Ukraine war wasn’t materially slowing growth…wrote Tom Essaye, founder of Sevens Report Research.  Click here to read the full article.

Have the Real Headwinds on Stocks Even Started Yet?

/in , /by

What’s in Today’s Report:

  • Have the Real Headwinds on Stocks Even Started Yet?
  • Weekly Market Preview:  Is Economic Growth Stable?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday

Futures are little changed following a quiet weekend of news as investors await key economic data later this week.

Geo-politically, in-person peace talks between Russia and Ukraine will resume on Tuesday in Turkey and there remains some cautious optimism for progress towards a cease-fire.

Economically there were no notable reports overnight, although Shanghai is entering a two-phased COVID lockdown that weighed on oil and Chinese shares overnight (as that’s negative for economic growth and oil demand).

Today there are no notable economic reports and no scheduled Fed speakers, so focus will remain on oil (do the early declines continue?) and geo-politics, as any more hints of a cease fire will put a tailwind on stocks.

What’s Driving Stocks

/in , /by

What’s in Today’s Report:

  • What’s Driving Stocks
  • Natural Gas Update (New Highs Ahead?)

Futures are slightly higher following a generally quiet night of news as oil declined modestly and there was no further escalation in the Russia/Ukraine war.

Economic data disappointed overnight as UK Retail Sales missed estimates (-.3% vs. (E) 0.7%), while German IFO Business Expectations plunged to 85.1 vs. (E) 92.4, reflecting uncertainty related to the Russia/Ukraine war.

Today’s focus will be on the Consumer Sentiment Report (E: 59.7) and specifically the Inflation Expectations index, and if five-year inflation expectations move meaningfully above 3%, that will put a headwind on stocks.   Pending Home Sales (E: 0.9%) is the other notable report today, but it shouldn’t move markets.

From the Fed we have multiple speakers, including Williams (10:00 a.m. ET), Daly (11:00 a.m. ET), Barkin (11:30 a.m. ET) and Waller (12:00 p.m. ET) but as long as they stick to the current “script” of being open to a 50 bps hike at the May meeting (but not calling for even more) then they shouldn’t move markets.

Is the 10’s-2’s Spread Outdated?

/in , /by

What’s in Today’s Report:

  • Is the 10’s-2’s Spread Outdated?
  • EIA Analysis and Oil Market Update (Prices Back Near the Recent Highs)

Futures are modestly higher following good economic data and as oil didn’t continue Wednesday’s rally (at least not overnight).

Economic data was solid as both the March EU Flash Composite PMI (54.5 vs. (E) 54.1.) and the UK Flash Composite PMI (59.7 vs. (E) 58.7) beat estimates, implying the Russia/Ukraine war wasn’t materially slowing growth.

Today focus will be on economic data, specifically the March Flash PMIs (E: 56.7).  With inflation still high and the Fed threatening a 50 bps hike in May, the PMIs need to give markets a “goldilocks” number to extend the early rally, as a “Too Hot” number will invite even more Fed tightening, while a “Too Cold” number will increase stagflation risks.  Outside of the PMIs, we also get Jobless Claims (210K) and Durable Goods (E: -0.5%) although they shouldn’t move markets.

From the Fed today we get Kashkari (8:30 a.m. ET), Waller (9:10 a.m. ET) and Bostic (11:00 a.m. ET) and of the three, Waller is the most important (he’s Fed leadership and if he hints at a 50 bp hike expect that to mildly weigh on stocks).