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European Shares Edged Up On Better Than Feared Retail Sales

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European Shares Edged Up: Tom Essaye Quoted in Barron’s

European Stocks Drift Higher

London’s FTSE 100 gained 0.6%, with the Paris CAC 40 up 0.3%. Frankfurt’s DAX slipped 0.1% into the red, while the pan-European Stoxx 600 rose 0.1%.

“European shares edged up on better than feared Retail Sales and a very strong German Manufacturing Orders Report,” said Tom Essaye, founder of Sevens Report Research.

Also, click here to view the full Barron’s article published on February 6th, 2023. 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 Rally

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The Oil Market Has Seemed Skeptical

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The Oil Market Has Seemed Skeptical: Tyler Richey Quoted in Morningstar

Oil prices finish higher as traders weighs risks tied to U.S. airstrikes

The oil market has “seemed skeptical of the potentially positive demand implications of the recent string of strong economic data,” though prices did move up in the wake of the better-than-expected ISM report, Tyler Richey, co-editor of Sevens Report Research, told MarketWatch.

As far as what to watch for this week, Richey said a rise in consumer demand for refined products metrics in the weekly Energy Information Administration report due out Wednesday would be a bullish development, while a return to record U.S. oil output would be “negative for prices in the near term.”

Also, click here to view the full MarketWatch article published on Morningstar on February 5th, 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.

CPI Preview: Good, Bad, and Ugly

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CPI Preview: Good, Bad, and Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Preview – Good, Bad, and Ugly
  • Middle East Update: Understanding the Situation with Rafah

U.S. equity futures are lower with European shares as investors await today’s critical inflation data ahead of the bell while most Asian markets are closed for holidays.

Economically, the German ZEW Survey was mixed as Current Conditions deteriorated to -81.7 vs. (E) -79.0 but Economic Sentiment Improved to +19.9 vs. (E) +18.0. The headline miss is one more of several recent data points that suggests the German economy is slowing more rapidly than most anticipated.

Domestically, the NFIB Small Business Optimism Index was disappointing as it fell to 89.9 vs. (E) 92.4 underscoring a downbeat and cautious mood among small business owners despite economic data otherwise pointing to continued resilience in the U.S. economy.

Today, focus will be almost exclusively on the CPI report (8:30 a.m. ET) with the headline expected to come in at 0.2% m/m and 3.0% y/y while the Core CPI figure is expected to come in at 0.3% m/m and 3.7% y/y (full scenario analysis in today’s report).

There are no Fed speakers on the calendar or Treasury auction scheduled for today which will leave the session likely dominated by how the market digests the latest inflation data. Market-based Fed policy rate expectations are currently pricing in a 16% chance of a March rate cut and a 56% chance of a May cut. If those two figures decline materially, especially the latter one, expect an extension of yesterday’s intraday pullback.

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Commercial Real Estate Primer Part Two: Risks, Opportunities & Indicators to Watch

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Commercial Real Estate Primer Part Two: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Commercial Real Estate Primer Part Two:  Risks, Opportunities & Indicators to Watch

Futures are slightly higher following better than expected Chinese economic data and in-line inflation readings from Europe.

China’s new yuan loans were stronger than expected (4.92B yuan vs. (E ) 4.5B yuan) providing some anecdotal evidence that stimulus is starting to work.

On inflation, German CPI met expectations at German CPI met expectations, rising 2.9% y/y.

Today the key event is the annual revisions to the CPI data, which hits at 8:30 a.m. ET.  Usually this is a relative non-event, but last year there were substantial upward revisions that resulted in more rate hikes.  Point being, this can change the inflation outlook (positively or negatively) and it has the potential to move markets.  Any downward revision to the 2023 CPI data should be positive for markets (yields lower/stocks higher) while any upward revisions should be negative (yields higher/stocks lower).

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Is NYCB the Canary in the Commercial Real Estate Coal Mine?

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Is NYCB the Canary in the Commercial Real Estate Coal Mine? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is NYCB the Canary in the Commercial Real Estate Coal Mine?
  • EIA Update and Oil Market Analysis

Futures are slightly lower following more disappointing Chinese economic data and on dimming hopes for an Israel/Hamas ceasefire.

Chinese CPI fell more than expected (-0.8% vs. (E –0.5%) and increased deflation concerns for that economy.

Geopolitically, Secretary of State Blinken returned from the Mid-East without a Israel/Hamas cease fire deal and oil is rallying as a result.

Today focus will be on Jobless Claims (E: 222K), which rose to a one-month high last week and if claims move closer towards 250k, it will get people’s attention as a hint the labor market is starting to soften (something that’s not priced into stocks).  We also have one Fed speaker, Barkin (8:30 a.m. and 11:30 a.m. ET), but he shouldn’t move markets.

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Updated Market Multiple Targets: S&P 500 Chart

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Updated Market Multiple Targets: S&P 500 Chart: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • S&P 500 Market Multiple Targets Chart – February Update (Shareable PDF)

Stock futures are little changed amid a stable bond market as investors await another busy day of Fed commentary and another key Treasury auction.

Economically, German Industrial Production was better than feared at -3.1% vs. (E) -3.9% Y/Y in December, but the still negative headline is not helping ongoing concerns for a potential recession in Europe this year.

Looking into the U.S. session today, there are two economic reports on the calendar: International Trade in Goods and Services (E: -$62.2B) and Consumer Credit (E: $16.2B). Neither release should move markets but a meaningful rise in Consumer Credit could stoke concerns about a potential rise in delinquencies and weigh on stocks.

Beyond the data, we have another very busy day of Fed speak with Kugler (11:00 a.m. ET), Collins (11:30 a.m. ET), Barkin (12:00 p.m. ET), and Bowman (2:00 p.m. ET) all due to speak around mid-day. Markets have largely absorbed the hawkish shift in tone of the last week but if there is any more dovish-leaning chatter today, it could support a continued rally in equity markets and further stabilize bonds.

Finally, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET and if demand is as strong as it was in yesterday’s 3-Yr Note auction, that could be another bullish catalyst for both stocks and bonds in the afternoon.

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Market Multiple Table: February Update

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Market Multiple Table: February Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Market Multiple Table – February Update (Shareable PDF)
  • ISM Services PMI Takeaways: Prices Subindex Surges

U.S. equity futures are little changed as Treasuries stabilize following a 30 basis point spike in yields over the last two sessions while global markets were mixed overnight.

Chinese stocks rallied 4% overnight amid government intervention to stem recent losses while European shares edged up on better than feared Retail Sales and a very strong German Manufacturing Orders Report (+ 8.9%).

Looking into today’s session, there are no economic reports but there is a busy afternoon of Fed speak with Mester (12:00 p.m. ET), Kashkari (1:00 p.m. ET), Collins (2:00 p.m. ET), and Harker (7:00 p.m. ET) all scheduled to deliver commentary. The market will want to hear a less hawkish tone than Powell’s from last week and the weekend in order for Treasuries to continue to stabilize and stocks resume the rally.

Additionally, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and the outcome could move bond markets and influence equity market trading this afternoon.

Finally, earnings season is beginning to slowdown but there are a few notable quarterly releases today including: SNAP ($0.06), F ($0.13), and CMG ($9.73).

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Cut Through the Market Noise: The Four Drivers of This Rally

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The Four Drivers of This Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Cut Through the Market Noise:  The Four Drivers of This Rally
  • Why Markets Rallied Despite Friday’s Hot Jobs Report
  • Weekly Market Preview:  Fed Speak, Growth Data and an Important Inflation Update
  • Weekly Economic Cheat Sheet:  Data Focused on Economic Growth and Inflation

Futures are modestly lower as Fed Chair Powell’s 60 Minutes interview is being taken as slightly hawkish.

Powell’s 60 Minutes interview is being framed as hawkish but in reality, Powell didn’t say anything new as this was his main message: Rates cuts are coming sooner than later, but a March cut is unlikely.

Economically, China’s January services PMI missed estimates (52.7 vs. (E) 53.0), reinforcing economic concerns.

Today focus will be on the ISM Services PMI (E: 52.1) and the key here is clear:  This number needs to stay above 50 otherwise we will see growth concerns start to rise.  There is also one Fed speaker today, Bostic (2:00 p.m. ET), but he shouldn’t move markets given Powell’s recent interviews.

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Was the Fed Decision Hawkish? No. Here’s Why.

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Was the Fed Decision Hawkish? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Was the Fed Decision Hawkish?  No.  Here’s Why.
  • Do We Need to Start to Worry About Banks Again?

Futures are bouncing modestly following Wednesday’s declines as investors digest the Fed decision and look ahead to important earnings after the close.

Economically, EU Core HICP (their CPI) rose 3.3% vs. (E) 3.2% and that’s slightly reducing rate cut expectations.

Today is another important day of economic data and arguably the most important day of earnings results for the Q4 reporting season.

The most important events today start with earnings as we get AMZN ($0.81), AAPL ($2.09) and META ($4.82) earnings after the close and obviously investors will want to see solid results.   Economically, the key reports today are the ISM Manufacturing PMI (E: 47.4), Jobless Claims (E: 214K) and Unit Labor Costs (E: 2.1%), and markets will be looking for in-line data to keep hard landing worries low.  Finally, we also get a Bank of England rate decision, but no change to rates is expected.

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Key Technical Levels to Watch on Fed Day

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Key Technical Levels to Watch: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Key Technical Levels to Watch on Fed Day (Shareable PDF Available)
  • Jobs Report Preview

Stock futures are in the red this morning after mega-cap tech earnings failed to meet overly optimistic estimates (but were not that bad, all things considered), Chinese Manufacturing PMI missed estimates, and French CPI was higher than expected.

On the earnings front, AMD (-11%), GOOGL (-6%), and MSFT (-1%) are all lower in the pre-market despite generally healthy quarterly reports with most earnings and revenue figures topping analysts estimates while some corporate guidance was not as strong as hoped.

Today is lining up to be a very busy day full of catalysts. Starting with the economic data, we get the first look at January labor market data with the ADP Employment Report (E: 130K) while Q4 Employment Cost Index (E: 1.0%) will offer a look at wage pressures from late 2023.

The Treasury will release the official Refunding Announcement details before the open (8:30 a.m. ET) before focus will turn to the Fed with the FOMC Decision (2:00 p.m. ET) and Powell’s press conference (2:30 p.m. ET) in the afternoon.

There are no “Mag7” earnings today, but a few notables to watch include: MA ($3.08), QCOM ($2.37), and MET ($1.95).

Bottom line, equities are on edge in pre-market trade this morning with all of today’s catalysts looming, but, if the Treasury Refunding Announcement supports the bond market (keeps a lid on yields) and the Fed doesn’t not offer a hawkish surprise, we should be able to see markets stabilize. Conversely, any disappointments or hawkish reactions will support further volatility into the back half of the week.

Computer chips

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