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Sevens Report Co-Editor, Tyler Richey, Quoted in Market Watch on March 2nd, 2023

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Demand optimism lifts oil futures to their highest finish in 2 weeks

“Optimism surrounding China’s economic recovery are offsetting more hot inflation data in Europe and the U.S.,” which sparked further hawkish money flows early Thursday, said Tyler Richey, co-editor at Sevens Report Research. The Chinese government is “simultaneously raising their growth outlook for 2023, and considerably so,” he told MarketWatch. That’s “being seen as a balancing factor for any economic slowdown the West.” Click here to read the full article.

Tom Essaye Quoted in Forbes on March 1, 2023

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These U.S.-Listed Stocks Surge—Alibaba, Baidu And More—After China’s Economic Rebound

The unexpected gain indicates that China’s post-pandemic recovery, which has long been marred by ongoing Covid lockdowns that ushered in the economy’s second-worst showing since 1976 last year, is gaining momentum, says Sevens Report analyst Tom Essaye, who notes the data helped fuel optimism across global markets on Wednesday. Click here to read the full article.

What’s Making Stocks So Resilient?

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What’s in Today’s Report:

  • What’s Making Stocks So Resilient (And Is It A Bullish Signal?)
  • Weekly Market Preview:  Will Powell be hawkish and will jobs data stay hot?
  • Weekly Economic Cheat Sheet:  All about employment (JOLTS, ADP and Jobs Report on Friday).

Futures are little changed following a quiet weekend and as investors look ahead to an important week of catalysts (Powell speeches and employment reports).

China released updated growth expectations for 2023 of “around 5%” and that’s slightly under estimates and was a mild disappointment.

Economic data was solid overnight as Euro Zone Retail Sales (1.0% vs. (E) 0.3%) and UK Construction PMI (54.6 vs. (E) 49.1) both beat estimates.

Today expect digestion of last week’s rally as there are no material economic reports or Fed speak, as markets look ahead to Powell’s testimony tomorrow.

Why Fed Rate Hike Expectations Are Still Rising

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What’s in Today’s Report:

  • Why Fed Rate Hike Expectations Are Still Rising
  • Did Yesterday’s Economic Data Signal Stagflation?
  • EIA Analysis and Oil Market Update

Futures are extending Wednesday’s declines and are moderately lower as more global inflation data came in hotter than expected.

Euro Zone HICP rose 8.5% vs. (E) 8.2% y/y and joined French, Spanish and German CPIs as signaling a bounce back in inflation.  That’s pushing global yields higher and weighing on futures (just like it weighed on stocks on Wednesday).

Today focus will remain on economic data and the key report is Unit Labor Costs (E: 1.4%).  Wages are a major source of inflation the Fed is trying to bring down, so if Unit Labor Costs are lower than expected, that will likely cause a bounce in stocks and bonds.  Other notable events today include Jobless Claims (E: 200K) and two Fed speakers, Waller (4:00 p.m. ET) and Kashkari (6:00 p.m. ET), although they shouldn’t move markets.

Disinflation On, Disinflation Off

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What’s in Today’s Report:

  • Disinflation On, Disinflation Off (Scenario Table with Asset Performance Guide)
  • Chart – 2 Yr. Note Futures Approach Multiyear Lows
  • Chart – “Another Bull Trap” Update

U.S. stock futures are tracking global shares higher this morning as investors cheer better than expected economic data out of China.

Economically, China’s Manufacturing PMI jumped to 51.6 vs. (E) 49.9 in February, up from 49.2 in January, indicating the recovery process is gaining momentum. The Eurozone Manufacturing PMI, meanwhile, met estimates at 48.5.

Today, investor focus will be on economic data early beginning in Europe with the German CPI release at 8:00 a.m. ET (E: 8.7%). So far this week, European yields have led global yields higher on hot inflation data and if the German print is above estimates, expect that trend to continue and stocks to remain under pressure.

In the U.S. we will get the February ISM Manufacturing Index (E: 48.0) as well as the lesser followed Construction Spending report (E: 0.2%). Investors will want to see improving, but not overly strong growth metrics and fading price pressures to see some of the recent hawkish money flows ease.

Finally, there is one Fed speaker today: Kashkari (E: 9:00 a.m. ET), and as a voting member of the FOMC, his comments will be closely watched for any new hints at the Fed’s policy plans.

Economic Breaker Panel: February Update

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What’s in Today’s Report:

  • Sevens Report Economic Breaker Panel – February Update
  • January Durable Goods Orders Takeaways
  • Breakout in Natural Gas Futures

Stocks futures are trading with modest gains this morning while Treasury yields are tracking European bond yields higher following stubbornly high inflation data overnight.

Economically, both Spanish and French CPI headlines were hotter than expected, above 6%, which saw European rates markets price in a 4% terminal ECB rate for the first time. Government bond yields across the Eurozone notably rose to multi-year highs.

Looking into today’s session, there are several economic reports to watch including: International Trade (E: -$91.0B), Case-Shiller Home Price Index (-0.5%), FHFA House Price Index (E: -0.3%), and Consumer Confidence (E: 108.5).

Traders will be looking for less signs of stagflation in the data as elevated inflation figures and weakening growth metrics were a headwind for equities last week.

Finally, the Chicago Fed’s Goolsbee (who just succeeded Evans) has his first speaking engagement since taking over the role at 2:30 p.m. ET, and as a voting member of the FOMC, his comments will be closely watched for any new clues about Fed policy plans in the months ahead. A notably hawkish tone, could easily cause another bout of volatility in risk assets this afternoon.

Tom Essaye Quoted in Blockworks on February 24th, 2023

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Risk-Off Is Back: Crypto, Equities Slide on Persistent Inflation

“To be clear, the report won’t be enough to change the Fed’s thinking (this is very old data at this point) nor was it enough to move bonds or currencies, but for a market that’s concerned about stagflation, this report won’t do anything to ease those concerns.” Tom Essaye added. Click here to read the full article.

Tom Essaye Joins BNN Bloomberg to Discus the FAANGs on February 23rd, 2023

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We could be approaching the death of the FAANGs: Tom Essaye

Tom Essaye, founder and president of Sevens Report Research, joins BNN Bloomberg to recap earnings from big tech this week. Essaye says that Meta’s earnings were the worst from a business standpoint and says that Amazon and Apple are most attractive to him out of the group. He cautions watchers not to buy these dips and talks on other sectors he finds more attractive.
Click here to watch the full interview.

Tom Essaye Quoted in Forbes on February 21st, 2023

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‘Damage Is Done’: Stock Market Likely Set For Another Plunge As Economic Warning Signs Abound, JPMorgan Cautions

“Markets are admitting the Fed may not be close to done,” Sevens Report strategist Tom Essaye wrote in a Tuesday note, as stocks sank following worse-than-expected retail earnings. Click here to read the full article.

Tom Essaye Joins Yahoo Finance To Discuss The Economy on February 21st, 2023

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‘The economy is stronger than everybody thought,’ Sevens Report Research Founder says

Sevens Report Research Founder and President Tom Essaye to discuss the expectations for the Fed’s upcoming FOMC minutes meeting, the future of Fed policy pathway, why investors should remain on recession watch in 2023, and the outlook for markets. Click here to watch the full discussion.