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Why Didn’t Stocks Rally Last Week? (Despite Good News)

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Why Didn’t Stocks Rally Last Week? (Despite Good News): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Didn’t Stocks Rally Last Week (Despite Good News)
  • Weekly Market Preview:  Is the Tech Rally Finally Exhausted?
  • Weekly Economic Cheat Sheet:  Focus on Inflation This Week

Futures are slightly lower mostly on momentum from Friday’s declines following a very quiet weekend of news.

Economically, the only notable number over the weekend was Chinese CPI, which rose more than expected (0.7% vs. (E) 0.3%) and that’s being seen as a positive as deflation was a growing risk in the Chinese economy.

Focus this week will remain on economic data (both inflation and growth) and tomorrow’s CPI report is the key report for the week.

Today, however, the calendar is sparse as the only notable economic report is New York Fed Inflation Expectations (E: 3.00%) and barring a major overshoot, this number shouldn’t move markets.

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Jobs Report Preview (Higher “Too Hot” Limits)

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Jobs Report Preview (Higher “Too Hot” Limits): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview (Higher “Too Hot” Limits)

Futures are little changed ahead of the jobs report and following a mostly quiet night of news.

Tech earnings were mixed as semi-conductor/AI linked stocks AVGO and MRVL earnings underwhelmed and both stocks are lower pre-market (-2% and -5% respectively).

Economically, ECB member Francois de-Villeroy said a rate cut in April or June is “very likely” further reinforcing expectations for summer rate cuts from global central banks.

Today focus will be on the jobs report and expectations are as follows:  190K Job Adds, 3.7% Unemployment Rate, 0.3%/4.3% Wage Growth.  Powell and other Fed members sound committed to rate cuts barring a bounce back in inflation so for the jobs number to be “Too Hot” we’ll need to see strong job adds, wage gains and low unemployment.  Barring “hot” numbers across those metrics, the jobs report likely won’t materially reduce June rate cut expectations.  If it does, however, expect a real uptick in volatility.

Finally, there’s one Fed speaker today, Williams at 7:00 a.m. ET, but he shouldn’t move markets.

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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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This will be a potentially busy week of catalysts

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This will be a potentially busy week of catalysts: Tom Essaye Quoted in Barron’s

Stocks Open Lower as Bond Yields Rise

“This will be a potentially busy week of catalysts but it starts slowly today as there are no economic reports and just one Fed speaker,” writes Sevens Report Research’s Tom Essaye. “So, absent any surprises, expect yields to drive stocks. If the 10-year Treasury yield drifts lower, don’t be surprised if stocks recoup these early losses.”

“We think Powell will hold his ground and not try to give anything away,” writes Andrew Brenner, head of international fixed income at NatAlliance Securities. “He won’t be that hawkish or show signs of dovishness, although we see Powell as a dove in wolf’s clothing.”

Also, click here to view the full Barron’s article published on March 4th, 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 Rally

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Today focus will be on the ISM Manufacturing PMI

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Today focus will be on the ISM Manufacturing PMI: Tom Essaye Quoted in Barron’s

Stocks Waver After S&P, Nasdaq End February at Record Levels

Today focus will be on the ISM Manufacturing PMI (E: 49.5) not just because of the headline reading (can it break above 50?) but also because of the price index,” writes Sevens Report Research’s Tom Essaye. “The price index jumped to the highest level since April last month and if that increase continues, it’ll likely be modestly positive for yields and negative for stocks.”

Also, click here to view the full Barron’s article published on March 1st, 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 Rally

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.

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More Aggressive Rate Cuts Will Provide Temporary Relief…

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More Aggressive Rate Cuts Will Provide Temporary Relief, It Won’t Stop A Decline In Stocks: Tom Essaye Quoted in Blockworks

Bitcoin jumps above $60k for first time in 27 months

A hard landing and resulting economic slowdown could be enough to erase the stock gains traders have enjoyed since October, according to Tom Essaye, founder of Sevens Report Research.

“The reason a hard landing would be so damaging to markets in the near term is the Fed can’t really help the market out because it’s already dovishly pivoted and the market already expects aggressive rate cuts,” Essaye said. “So, while more aggressive rate cuts will provide temporary relief, it won’t stop a decline in stocks because the economic benefit of rate cuts will take too long to hit the economy to prevent a slowdown.”

Also, click here to view the full Blockwork article published on February 28th, 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.

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.

The market is mostly in a holding pattern to start the week

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The market is mostly in a holding pattern to start the week: Tom Essaye Quoted in Barron’s

Nasdaq Snaps 2-Day Losing Streak

“The market is mostly in a holding pattern to start the week,” Sevens Report Research’s Tom Essaye told Barron’s in a phone interview. “The big numbers come on Thursday, with all these inflation updates.

It is not just in the U.S. with core PCE, but also in Europe. Depending on what happens there will dictate whether or not this market can grind higher.”

Also, click here to view the full Barron’s article published on February 27th, 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 Rally

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.

U.S. Defense Contractors May Benefit From Depletion of Hardware and Munitions

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U.S. Defense Contractors May Benefit From Depletion of Hardware and Munitions: Tom Essaye Quoted in Morningstar

These defense stocks may fare best whether Biden or Trump wins in November

One of the industry groups whose stocks Tom Essaye, publisher of Sevens Report Research, said he would expect to perform well during a second Trump term is defense.

Trump’s return to the White House could benefit these stock-market sectors – while undercutting others

Of course, regardless of who wins the November election, U.S. defense contractors may benefit from the depletion of hardware and munitions resulting from U.S. and other NATO countries’ support for Ukraine’s defense against Russia’s invasion, along with renewed efforts to bolster the conventional defenses of Western European countries.

Also, click here to view the full MarketWatch article published on Morningstar on February 28th, 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.

Money Supply and Stocks: Is There a Disconnect?

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Money Supply and Stocks: Is There a Disconnect? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Money Supply and Stocks: Is There a Disconnect?
  • ISM Services Index Takeaways (Slightly Dovish)

Futures are rebounding with global shares amid positive stimulus news out of China and mostly better-than-feared economic data overseas ahead of several important catalysts today.

Overnight, China’s State Planner and the head of the PBOC both reiterated their commitment to achieving 5% growth in 2024 which is supporting a rebound in risk assets as investors gain confidence in the prospects of a stabilizing Chinese economy.

Eurozone Retail Sales fell -1.0% vs. (E) -1.4% helping ease concerns of a sharp slowdown in the EU economy which is adding to the risk-on money flows this morning.

Looking into the U.S. session, focus will be on economic data early today starting with the: ADP Employment Report (E: +150K job adds) followed by the JOLTS release (E: 8.9 million job openings).

From there attention will turn to Capitol Hill where Fed Chair Powell will begin his semi-annual testimony at 10:00 a.m. ET. The Fed’s Daly (12:00 p.m. ET) and Kashkari (4:15 p.m. ET) will also speak today but Powell will be firmly in the spotlight as investors look for clues as to whether the FOMC plans to begin rate cuts in the second quarter (market positive) or wait until H2’24 (market negative).

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.