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Jobs Report Preview (An Important One)

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Jobs Report Preview: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (An Important One)
  • Is the Short-Vol Trade Starting to Unwind?
  • EIA Analysis and Oil Market Update

Futures are modestly higher as economic data and corporate earnings were slightly better than expected.

Economically, Euro Zone and UK Composite PMIs were above 50 and that’s pushing back on EU recession worries.

On earnings, Levi Strauss (LEVI) posted strong results (stock up 9% pre-market) and that’s helping to counter soft retailer earnings from PVH and ULTA.

Markets are still sensitive to hawkish data or commentary that reduces June rate cut chances, so the focus today will be on Jobless Claims (E: 213K) and on several Fed speakers including Barkin (12:15 p.m. ET), Mester (2:00 p.m. ET) and Kugler (7:30 p.m. ET).  Tomorrow’s jobs report should keep volatility somewhat subdued, but if there are any hawkish surprises from the data or Fed speak, don’t be surprised if there’s more volatility.

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A Four Way Assault on the Bullish Mantra

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A Four Way Assault on the Bullish Mantra: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop and What’s It Mean for Markets? (Four Reasons)
  • JOLTS Data Takeaways – “Solid Enough” for Now
  • Chart: The S&P 500 Violated It’s 2024 Uptrend Yesterday
  • Chart: The “Short-Vol Trade” Is Beginning to Unravel (More to Come)

Stock futures are lower again this morning as the hawkish money flows of early Q2 continue with the 10-Yr yield at YTD highs ahead of Powell’s speech on the economy today.

Economically, China’s Composite PMI met estimates at 52.7 while the EU’s “Narrow Core HICP” (their Core-CPI equivalent) favorably fell from 3.1% to 2.9% vs. (E) 3.0%.

Today, there are two important economic reports due out: The ADP Employment Report (E: 150K) before the open and then the ISM Services Index (E: 52.7). Good economic news has been bad for markets lately, so softening growth numbers and low/falling inflation metrics in today’s data are the best case scenario for stocks today.

Beyond the data this morning, there are several Fed officials scheduled to speak: Bowman (9:45 a.m. ET), Goolsbee (12:00 p.m. ET), Powell (12:10 p.m. ET), and Barr (1:10 p.m. ET).

Powell’s speech at Standford shortly after 12:00 p.m. (ET) will get the most attention as traders look for him to reiterate the key takeaways from the March FOMC meeting (likely summer rate cut, three cuts in 2024 expected). Any hints at “higher for longer” will add to the hawkish money flows that have been weighing on stocks so far in Q2.

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Tom Essaye interviewed by Barron’s

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 Durable-goods number showed stable growth: Tom Essaye Interviewed by Barron’s

Market’s Spirit Isn’t Dampened by Mixed Economic Data

In an interview with Barron’s, Tom Essaye of Sevens Report Research said the durable-goods number showed stable growth while the consumer confidence reading was light.

“Every time the market is reminded that we’ve got stable growth, still falling inflation, a looming rate cut —which was reinforced last week—and positive AI headlines, the default reaction is to rally. And rightly so. And that’s exactly what’s happening today,” he said.

Essaye also called the collapse of Baltimore’s Francis Scott Key Bridge a “tremendous tragedy”and thinks the disaster could trickle into economic reports at a time when the Federal Reserve is watching all numbers closely.

“This is going to cloud some of the economic data, potentially, which has some risk associated with it because the data is really important right now,” Essaye said. “It will probably send some noisiness into the data. We’re just going to have to look through that as best we can over the next couple of months. That’s something to pay attention to.”

Also, click here to view the full Barron’s article published on March 26th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Assessing (and Ranking) Market Risks as We Start Q2

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Assessing (and Ranking) Market Risks as We Start Q2: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Assessing (and Ranking) Market Risks as We Start Q2
  • Weekly Market Preview:  Will Important Data Continue to Point Towards a Soft Landing?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday, ISM Manufacturing and Services Mon/Wed

Futures are solidly higher to start Q2 as expectations for a June rate cut remain high after the Core PCE Price Index met expectations and Powell provided no surprises in his comments (both last Friday).

Friday’s Core PCE Price Index met expectations, rising 2.8% y/y and keeping June rate cut expectations in place.

The Chinese March Manufacturing PMI rose to 50.8 vs. (E) 50.1 increasing hopes for an economic rebound.

Today focus will be on the ISM Manufacturing PMI (E: 48.3) and the key here is stability.  An in-line or better than expected result will further reinforce that growth is resilient and likely support the early rally.   There’s also one Fed speaker,  Cook at 6:50 p.m. ET, but her comments come after the close.

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Is the Baltimore Bridge Collapse a Risk to Inflation?

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Is the Baltimore Bridge Collapse a Risk to Inflation? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Could the Baltimore Bridge Collapse Spark a Rebound in Inflation?
  • Durable Goods Orders Takeaways (More Weak Revisions)
  • Philly Fed Nonmanufacturing Survey (Another Whiff of Stagflation)
  • Consumer Confidence Shows Fading Household Financial Situations – Chart

Stock futures are rebounding from yesterday’s late session selloff as economic data overnight was mostly market-friendly while traders eye continued volatility in the yen.

Economically, Chinese Industrial Profits jumped by 10.2% y/y in the first two months of the year and the Eurozone Economic Sentiment headline rose to 96.3 vs. (E) 95.8. The overseas data helped ease global growth concerns.

The yen is attempting to stabilize this morning after falling to its lowest level against the dollar since 1990 overnight. A short-squeeze in the yen is a threat stocks and other risk assets as it would force traditional carry trades to unwind. The yen warrants close attention into the end of the week here.

There is no economic data today and just one Fed speaker after the close: Waller 6:00 p.m. ET.

There is a 7-Yr Treasury Note auction at 1:00 p.m. ET today. Yesterday’s 5-Yr auction was solid and investors will be looking for more strong demand for Treasuries in the belly of the duration curve today (a rise in yields would weigh on stocks).

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The major question for tomorrow’s meeting is what do the dots say?

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The major question for tomorrow’s meeting: two or three rate hikes? Tom Essaye Quoted in Barron’s

Dow Turns Higher. Tech Stocks Pull Back.

“I think what we’re seeing today is just a little bit of hedging by investors,” Sevens Report Research’s Essaye told Barron’s in a phone interview.

Essaye says that ahead of the Fed meeting, traders may be looking at defensive stocks on the chance that the Federal Open Market Committee’s March meeting sends stocks lower or pushes yields lower.

“The major question for tomorrow’s meeting is what do the dots say: two or three rate hikes?” Essaye says. “That’s really gonna determine how the market reacts to this meeting.”

“AI enthusiasm has been a major factor in this rally, and as long as nothing else is particularly negative, AI enthusiasm can continue to push markets higher,” Essaye says. “That’s what happened yesterday. Today, we don’t have that sort of new shiny object in AI to focus on, and we have the Fed decision tomorrow.”

Also, click here to view the full Barron’s article published on March 19th, 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.

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Easing growth concerns surrounding the world’s second largest economy

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Easing growth concerns surrounding the world’s second largest economy: Tom Essaye Quoted in Barron’s

Asian Stocks Gain Amid Positive Chinese Data, Bank of Japan Expectations

“Chinese retail sales rose 5.5% [versus expectations of 5.2%] and industrial output jumped 7% [versus expectations of 5%] to start 2024, easing some growth concerns surrounding the world’s second largest economy, however property sector woes persist,” said Tom Essaye, the founder of Sevens Report Research.

Also, click here to view the full Barron’s article published on March 18th, 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.

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The fundamentals are positive but they still don’t justify current valuations

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The fundamentals are positive but they still don’t justify current valuations: Tom Essaye Quoted in Bloomberg Featured on Yahoo Finance

Stocks Struggle Near Record Before Inflation Data: Markets Wrap

The current set-up reflects the drivers that have powered stocks higher this year: solid growth, prospects for Fed rate cuts and artificial-intelligence enthusiasm, according to Tom Essaye, founder of the Sevens Report. “While the fundamentals are positive, they still don’t justify current valuations — making the market vulnerable to a negative surprise.”

Also, click here to view the full Bloomberg article featured on Yahoo Finance published on March 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.

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Jobs Report Preview (Will June Cuts Still Be Expected?)

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Jobs Report Preview: Is There a Disconnect? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (Will June Cuts Still Be Expected?)
  • EIA Analysis and Oil Market Update

Futures are slightly higher following a generally quiet night of news as markets look ahead to tomorrow’s jobs report.

Economically, the only notable number overnight was German Manufacturers’ Orders and it badly missed expectations (-11.3% vs. (E ) -6.0%) but it isn’t impacting markets.

Japanese stocks fell sharply (Nikkei down more than 1%) as “chatter” grew louder the BOJ may hike rates in March.

Today is a relatively busy day of events but it’ll take some significant surprises to move markets ahead of tomorrow’s jobs report.

The key events today, in order of importance, are:   ECB Rate Decision (No change is expected but will Lagarde point to June cuts?), Jobless Claims (E: 215K, will they keep rising?), Unit Labor Costs (E: 0.7%), Powell’s Senate testimony (10:00 a.m. ET) and Cleveland Fed President Mester (11:30 a.m. ET).

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The AI Craze Is A Modern Gold Rush

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The AI Craze Is A Modern Gold Rush: Tom Essaye Quoted on BNN Bloomberg

Markets today: tech giants drag down U.S. stocks after torrid rally

“The AI craze is a modern gold rush, and the tech ‘picks and shovels companies’ are seeing earnings explode as companies buy chips and cloud space to fuel the boom,” said Tom Essaye, founder of The Sevens Report. “But if AI doesn’t result in increased profitability for the rest of the S&P 500 over the coming years, then demand for AI chips will evaporate as will AI-related cloud demand.”

Also, click here to view the full BNN Bloomberg article published on March 4th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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