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Tom Essaye Quoted in Barron’s on August 28th, 2023
/in Investing, Reports/by Customer ServiceStocks Open Higher Ahead of Busy Week for Economic Data
“This week will be more important than it appeared it would when we started August because of last week’s surprisingly soft flash PMIs, as there is a lot of important economic data this week,” argued Tom Essaye, president of Sevens Report Research. If it confirms that the economy is losing momentum and a hard landing is more likely than previously thought, it will pressure stocks,” he added.
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Why Could CPI Be Poised to Drop Further?
/in Investing, Reports/by Tom EssayeWhat’s in Today’s Report:
- Why Could CPI Be Poised to Drop Further?
- Chart: Zillow Observable Rent Index
U.S. stock futures are slightly higher this morning, tracking modest gains in global shares thanks to news that China is considering deeper rate cuts on deposits and mortgages while important economic data due later in the week remains in focus.
Economically, the German GfK Consumer Climate Index for September fell to -25.5 vs. (E) -24.3 underscoring widely held concerns about the future of the Eurozone economy.
Looking into today’s session, there are three economic reports due out this morning: Case-Shiller Home Price Index (E: 1.1%), Consumer Confidence (E: 116.5), JOLTS (E: 9.559M).
Markets will be looking for easing, but still healthy consumer confidence readings and a declining, but not collapsing JOLTS figure to support the thesis that the economy is slowing at a pace consistent with a soft landing. Data that is too strong or too weak will likely weigh on equities.
Additionally, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET and if the outcome is weak pushing rates higher, that will create a headwind on risk assets.
Finally, there is one Fed official scheduled to speak today: Barr (3:00 p.m. ET). Considered a centrist, his comments will be closely scrutinized for any clues of a shift in policy expectations following Powell’s Jackson Hole speech Friday.
Why Have Markets Become Volatile?
/in Investing, Reports/by Tom EssayeWhat’s in Today’s Report:
- Why Have Markets Become Volatile?
- Weekly Market Preview: Are the Three Pillars of the Rally Under Attack?
- Weekly Economic Cheat Sheet: Key Growth and Jobs Data This Week
Futures are slightly higher following more small stimulus steps from Chinese authorities, as investors look ahead to an important week of economic data.
Chinese authorities reduced the stamp tax on stock investment, providing a small economic tailwind and boost to Chinese stock prices.
Economically, the only notable number was the EU Money Supply (M3) and the number was bad as M3 declined –0.4% vs. (E) 0.6%.
Today there are no notable economic reports so markets will focus on the tech sector to see if it can continue to stabilize after last Thursday’s ugly reversal.
Tom Essaye Quoted in Yahoo Finance on August 22nd, 2023
/in Investing/by Customer ServiceStocks Fail to Catch a Bid Before Nvidia’s Results: Markets Wrap
The surge in US yields has been the primary reason stocks have declined over the past several weeks, with investors “pushing out” the date of expected rate cuts as they begin to accept the Fed may keep rates “higher for longer,” according to Tom Essaye, founder of “The Sevens Report” newsletter. “It’s not the height of rates that matters as much as how long they stay high,” Essaye noted. “If we see Powell hint at higher for longer on Friday, we will need to brace for more equity market volatility.”
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Economic Breaker Panel: August Update
/in Investing, Reports/by Tom EssayeWhat’s in Today’s Report:
- Sevens Report Economic Breaker Panel – August Update
- A Surprising Warning from Macy’s
- NVDA Earnings Could Trigger a Huge Move In the Stock: Chart
Stock futures are solidly higher this morning ahead of the widely anticipated release of NVDA earnings after the close today while Treasuries yields are retreating on the back of weak economic data overseas.
The Eurozone PMI Composite Flash indicated the economy fell deeper into contraction territory this month (47.0 vs. E: 48.4) led by an unexpected drop off in service sector activity which is weighing on bond yields this morning and easing some concerns about continued aggressive policy by central banks.
This morning, focus will be on economic data with the U.S. PMI Flash data due out just after the open at 9:45 a.m. ET. The Manufacturing Flash is expected to come in at 48.8 while the Services Flash is expected to hold expansion territory at 52.0).
The market is looking for stabilization in the manufacturing sector and moderation, but not contraction, in the service sector. Material weakness in either headline will rekindle worries about a hard-landing while data that is much better than expected would raise Fed rate hike expectations. So, a “Goldilocks” release will be important for both stock and bond markets to stabilize today.
New Home Sales (E: 702K) will also be released at 10:00 a.m. ET but should have a limited impact on markets.
From there, focus will turn to earnings with NVDA reporting after the close (Earnings Estimate: $2.18, Revenue Estimate: $11.09B). Investors have very high hopes for NVDA’s quarterly performance as well as their forward guidance, so any meaningful disappointment is likely to weigh heavily on the stock, the tech complex, and the markets more broadly in after hours trade.
Tom Essaye Quoted in Business Insider on August 22nd, 2023
/in Investing, Reports/by Customer ServiceWall Street is declaring victory too early — the US is still headed for a recession
Tom Essaye, the founder of Sevens Report Research, which counts some of the biggest institutions on Wall Street among its clients, said while inflation on a year-over-year basis has come down significantly, the cumulative price increases we’ve seen since the start of the pandemic will eventually force consumers to cut back on spending.
“People get very excited about CPI and say, ‘Hey, CPI went up only 0.1% over the past month and it’s only up 3% over the past year,'” Essaye said. “Well, think about that in practical terms. If I go to buy my kids a bag of Skittles, in 2019 it cost $0.75. Now it costs $1.50. Am I supposed to get excited because next year it costs $1.55?”
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Sevens Report Analysts Quoted in Investing.com on August 21st, 2023
/in Investing, Reports/by Customer ServiceDow Jones, Nasdaq, S&P 500 weekly preview: All eyes on Nvidia and Powell
Sevens Report analysts: “The market of 2023 is being defined almost by hyperbolic extremes. We started 2023 with investors fearing a catastrophic recession, 1970s- style inflation and 1970s-style rate hikes. That hasn’t happened. But just because that didn’t happen, it doesn’t mean that: No economic slowdown will occur, inflation will magically crash to late 20-teens levels, and the Fed will suddenly turn dovish (as markets priced in at 4,600). The truth is in the middle, and that’s where we are now.”
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Sevens Report Analysts Quoted in MarketWatch on August 21st, 2023
/in Investing, Reports/by Customer ServiceOil prices settle lower to extend last week’s losses
Meanwhile, a consistent run of strong U.S. economic data has raised fears the Federal Reserve may need to push interest rates higher than previously expected and hold them there for longer than previously anticipated, while weekly government data last week showed a pullback in consumer fuel demand and a post-pandemic high in U.S. crude production, analysts at Sevens Report Research said in a note.
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How to Explain the Current Pullback to Clients & Prospects
/in Investing, Reports/by Tom EssayeWhat’s in Today’s Report:
- How to Explain the Current Pullback to Clients & Prospects
- Weekly Market Preview: Will Treasury Yields Stabilize? (That’s the Key to Ending This Pullback)
- Weekly Economic Cheat Sheet: Important Growth Updates and Powell Speech on Friday
Futures are modestly higher thanks to more evidence of global disinflation and despite another round of underwhelming Chinese stimulus.
German PPI declined -6.0% y/y vs. (E) -5.1% y/y and that’s serving as a reminder that inflation is still falling globally.
In China, officials cut the Loan Prime Rate less than expected (-10 bps vs. (E) -15 bps) and while that will provide stimulus, it’s not alleviating concerns that the Chinese economy will be a headwind on global growth.
Today there are no economic reports and no Fed speakers (the Jackson Hole Fed conference is this week, so speakers will increase throughout the week culminating with Powell on Friday). As such, Treasury yields will remain a short-term influence on stocks. Yields and futures are higher this morning but if yields extend the rally throughout the day, don’t be surprised if stocks give back these early gains.
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