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Jobs Report Preview

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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 Excellent Explanation of the Economic Cycle
  • Oil Update (How Far Could It Fall?)

Futures are little changed despite hawkish commentary from the BOJ and more underwhelming economic data.

BOJ commentary overnight was hawkish and markets now expect a rate hike at the December meeting. And that expectation is pushing global yields slightly higher.

European economic data was again soft as German Industrial Production declined –0.4% vs. (E) 0.5%. This adds to the recent string of soft EU economic reports.

Today focus will remain on economic data and specifically weekly Jobless Claims (E: 222K) and Continuing Claims (1.91 million).  These numbers have been drifting higher lately and Continuing Claims just hit a two-year high.  If we see further upside in these readings today that will add to the growing list of readings that implies the economy is losing momentum and while that may not cause a drop in stocks today, a slowing economy will likely become a headwind in early 2024.

Jobs Report Preview

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Is It Time to Buy Gold

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Is It Time to Buy Gold? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is It Time to Buy Gold? Bull Case vs. Bear Case
  • ISM Services Index Takeaways – Still Healthy Readings But Cracks Emerge
  • JOLTS Plunge Below Pre-Pandemic Trend

U.S. equity futures are tracking global stocks higher this morning. More underwhelming economic data overseas is helping bolster the case for rate cuts from the world’s biggest central banks in the first quarter of 2024.

Economically, German Manufacturer’s Orders fell -3.7% vs. (E) +0.5% in October. Eurozone Retail Sales edged up just +0.1% vs. (E) +0.3%. This is helping drive a bid in bond markets amid dovish money flows across asset classes today.

Looking into today’s session, focus will be on economic data early. The ADP Employment Report (E: 123K), International Trade in Goods and Services (E: -$64.1B) and Productivity and Costs (E: +4.8%, -0.9%) data will release before the bell.

Finally, there are no Fed officials scheduled to speak today. So the market will be looking for a still healthy but not “hot” ADP print, steady trade data, and a continued decline in unit labor costs (wage inflation) to help support soft-landing hopes and extend the November rally.

Is It Time to Buy Gold

Annual Discounts on Sevens Report, Alpha, Quarterly Letter, and Technicals.

We’ve been contacted by advisor subscribers who wanted to use the remainder of their 2023 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free) or add a new product (Alpha, Quarterly Letter, Technicals).

If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you would like to extend current subscriptions or save money by upgrading to an annual subscription, please email info@sevensreport.com.

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Expect General Digestion of Last Week’s Rally

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Expect General Digestion of Last Week’s Rally: Tom Essaye Quoted in Barron’s

Stock Futures Slip as Investors Look Ahead to Jobs Report

“It’d take a major beat or miss to move markets, so we should expect continued general digestion of last week’s rally,” said Tom Essaye, founder of Sevens Report Research.

Investors will want to see signs that the economy is no longer running hot—inflation and growth moderating sufficiently to support the lowering of borrowing costs.

But markets also don’t want to see signs of undue weakness, which could suggest that the economy is slowing to a worrying degree.

Also, click here to view the full Barron’s article published on December 4th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Expect General Digestion of Last Week’s Rally

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Sevens Report Research’s Tom Essaye Quoted in Barron’s

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One Potential Catalyst That Could Shake Up Markets: Tom Essaye Quoted in Barron’s

Stocks Close Lower, Pausing November Rally

Sevens Report Research’s Tom Essaye told Barron’s it looked like a “wait and see day” ahead of the personal consumption expenditures price index on Thursday, among other data points ahead.

“More times than not, if you’re wondering what’s driving markets right now, it’s usually yields,” Essaye said.

As the end of the year approaches, Essaye thinks it will take a major surprise from the upcoming data releases to send stocks tumbling.

“The bar to get people to heavily sell stocks is pretty high, considering if we can just kind of hold on right for the next five weeks, then we put in the books a pretty good year,” he said.

He said that will change once the calendar flips to 2024, when the market will have to live up to high expectations priced in by traders.

Also, click here to view the full Barron’s article published on November 27th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Sevens Report Research’s

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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What Are GLP-1 Drugs and Why Do They Matter to Markets?

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What Are GLP-1 Drugs and Why Do They Matter to Markets? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Are GLP-1 Drugs and Why Do They Matter to Markets?

U.S. equity futures are trading lower this morning as a credit downgrade of China’s debt is overshadowing mostly good Composite PMI data overseas.

Overnight, Moody’s cut their outlook for Chinese debt to negative. This weighed on Asian shares and EM stocks, as well as domestic equity futures.

Economically, China’s Composite PMI favorably rose to 51.6 vs. (E) 50.1 in November. While the Eurozone Composite PMI remained in contraction, but notably firmed to 47.6 vs. (E) 47.1 last month.

Two key economic reports to watch today: JOLTS (E: 9.4 million job openings) and the ISM Services Index (E: 52.4). Investors will want to see more evidence that supports a soft landing in the data.

Finally, there is one Fed economist speaking today: Gibson (10:00 a.m. ET) but his comments should not materially move markets.

What Are GLP-1 Drugs and Why Do They Matter to Markets?

Annual Discounts on Sevens Report, Alpha, Quarterly Letter, and Technicals.

We’ve recently been contacted by advisor subscribers who wanted to use the remainder of their 2023 pre-tax research budgets to extend their current subscriptions, upgrade to an annual (and get a month free) or add a new product (Alpha, Quarterly Letter, Technicals).

If you have unused pre-tax research dollars, we offer month-free discounts on all our products. If you would like to extend current subscriptions or save money by upgrading to an annual subscription (across any Sevens Report product), please email info@sevensreport.com.

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.

Separating Short Term vs. Longer Term in this Market

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Separating Short Term vs. Longer Term: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Separating Short Term vs. Longer Term in this Market
  • Important Context for Economic Data Going Forward
  • Weekly Market Preview:  How Much Higher Can Markets Rally in 2023?
  • Weekly Economic Cheat Sheet:  Does Data Start to Roll Over?

Futures are modestly lower following a generally quiet weekend as markets further digested last week’s stock and bond rally.

On inflation, Swiss CPI rose less than expected (1.4% y/y vs. (E) 1.7%) continuing last week’s trend of smaller than expected increases in inflation in the EU region.

On growth, German exports underwhelmed (-0.2% vs. (E) 1.1%) continuing the recent trend of both lower inflation and slowing growth.

Today the only notable economic report is Factory Orders (E: -2.6%) and it’d take a major beat or miss to move markets, so we should expect continued general digestion of last week’s rally.

Please email info@sevensreport.com if you have any trouble downloading today’s Report or need to contact us.

Separating Short Term vs. Longer Term in this Market

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Bull Case vs. Bear Case: What’s It Mean Mean for Markets?

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Bull Case vs. Bear Case: What’s It Mean for Markets? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Bull Case vs. Bear Case:  What’s It Mean for Markets?
  • What Should Outperform in Q1/H1
  • OPEC+ Decision Takeaways

Futures are little changed as global manufacturing PMIs were better than expected, but looming commentary from Fed Chair Powell is keeping futures little changed.

Economically, Euro Zone (44.2 vs. (E) 43.8) and UK (47.2 vs. (E) 46.2) manufacturing PMIs beat estimates, reducing concerns about regional economic slowdowns.

Today focus will be on Fed speak and economic data.  Fed Chair Powell speaks twice today at 11:00 a.m. and 2:00 p.m. ET. Markets will want to see if Powell repeats the “policy is appropriate” message we received from Fed Governor Waller earlier this week.  If he does, stocks can rally.

On the economic front, we get one of the “big three” monthly economic reports today via the November ISM Manufacturing PMI (E: 47.5). So the markets will want to see more Goldilocks data (activity that meets estimates with declines in price indices).  Beyond Powell, we also get two other Fed speakers, Goolsbee (10:00 a.m. ET) and Cook (2:00 p.m. ET), but they shouldn’t move markets.

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Bullish or Bearish? My Analysis

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Bullish or Bearish? My Analysis.: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Bullish or Bearish?  My Analysis.
  • EIA and OPEC Analysis

Futures are slightly higher following more encouraging inflation readings and despite underwhelming Chinese economic data.

EU HICP (their CPI) rose less than expected (3.6% vs. (E) 3.9%) furthering the idea the ECB is done with rate hikes.

Economically, Chinese Nov. PMIs disappointed as both the manufacturing and composite PMIs missed estimates.

Focus now turns to economic data as today and tomorrow contain the week’s most important economic reports.  Today, the Core PCE Price Index (E: 0.2%, 3.5%) is the key report and anything that shows a greater than expected decline in inflation will likely spur a rally.

Other notable data today includes Jobless Claims (E: 219K) and Pending Home Sales Index (E: -2.0%) and we also have one Fed speaker: Williams (9:15 p.m. ET).  Again, data that is “Goldilocks” on growth combined with commentary from Fed officials that imply rate hikes are done should continue to support stocks.

Bullish or Bearish?  My Analysis.

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Bull vs. Bear Case: Part II

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Bull vs. Bear Case: Part II: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Bull Case vs. The Bear Case – Part II
  • Chart – Gold Breaks Out to the Upside
  • Consumer Confidence Data Points to Soft Landing

Stock futures are tracking European equities higher this morning while the 10-Yr Note yield is below 4.30% at two month lows following less-hawkish ECB commentary and more evidence of disinflation in the Eurozone.

Economically, Spanish CPI fell to 3.2% vs. (E) 3.7% y/y while multiple regional German inflation prints suggest headline German CPI will come in well below the 3.5% estimate later this morning.

The ECB’s Stournaras notably said in commentary early this morning that rate cuts could come as soon as the middle of next year which saw more policy easing priced into rates futures markets in Europe and invited new bids into the bond markets.

Looking into today’s session, there are two domestic economic reports to watch this morning: GDP (E: 4.9%) and International Trade in Goods (E: -$86.7B) while there is just one Fed speaker in the afternoon: Mester (1:45 p.m. ET).

Bottom line, the early bid in the U.S. equity futures market and new lows in bond yields are being driven by cooler-than-expected inflation data in the EU, so it will be critical for the German CPI report to come in below estimates of 3.5% when the data is released at 8:00 a.m. ET. If so, expect the dovish rally to extend into Wall Street trading today.

Bull vs. Bear Case: Part II

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Bull vs. Bear Case (Part 1 of 3)

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Bull vs. Bear Case (Part 1 of 3): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Bull vs. Bear Case – What the Bulls Think Will Happen

Futures are flat with the 10-Yr yield hovering near 4.40% as traders await a slew of Fed speak and fresh economic data.

Economic data overnight was mildly disappointing. As Australian Retail Sales, the German GfK Consumer Climate report and Eurozone M3 Money Supply all missed estimates.

Looking into the U.S. session, there are a few second-tiered economic reports to watch today: Case-Shiller Home Price Index (E: 0.7%), FHFA House Price Index (E: 0.4%), and Consumer Confidence (E: 101.5), but none are likely to move markets ahead of the key inflation data due out Thursday.

Additionally, there are several Fed officials scheduled to speak today: Goolsbee, Waller, Bowman, and Barr. If any of them strike a materially hawkish tone or stray from the “soft landing” outlook narrative, it could weigh on stocks today.

Finally, there is a 7-Yr Treasury Note Auction at 1:00 p.m. ET. If the results are weak and yields move higher, expect that to be a headwind for equities today. Conversely, a strong auction could push rates to new lows and power stocks higher into the end of the month.

Bull vs. Bear Case

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