Posts

What the Fed Pause Means for Markets

/in , /by

What’s in Today’s Report:

  • What the Fed Pause Means for Markets
  • EIA Analysis and Oil Market Update

Futures are slightly lower following more regional bank turmoil and disappointing earnings.

Pac West (PACW) announced overnight that it’s seeking “strategic alternatives” and the stock dropped more than 30% pre-market and is weighing on other regional banks.

On earnings, EL and QCOM both missed estimates and that’s also weighing on sentiment.

Today focus will initially be on the ECB Rate Decision (E: 25 bps hike) and economic data via Jobless Claims (E: 238K) and Unit Labor Costs (E: 3.9%).  Markets will want to see 1) A not too hawkish ECB (so no 50 bps hike), 2) A mild uptick in jobless claims (signaling more balance in the labor market) and 3) A drop in Unit Labor Costs (implying wage pressures are easing).  If we get the opposite of those events, expect more declines today.

After the close we get what’s likely the most important earnings report of the season, AAPL ($1.44), and a solid number there would help sentiment.

An Exciting Announcement Today

/in , /by

What’s in Today’s Report:

  • We Are Excited to Announce a New Service Launching This Monday, May 8th – Sevens Report Technicals (Details Below)
  • FOMC Preview – Will the Fed Signal a Pause Tomorrow?
  • ISM Manufacturing Index Takeaways: Stagflation Risks Rising?

Stock futures are slightly lower as investors digest an unexpected rate hike by the RBA and mixed economic data overnight.

The RBA raised rates 25 bp to 3.85% overnight (E: no change) citing stubbornly high inflation which triggered a hawkish reaction in markets in overnight trading.

Economically, European Manufacturing PMI data was largely in line with estimates although the readings remained deep in contraction territory while the “Narrow Core” HICP Flash reading for April was 5.6% vs. (E) 5.7%, the first decline in the reading in 10 months. On balance, the European data eased some of the hawkish concerns weighing on risk assets in pre-market trading.

Today, there are a few economic releases to watch: Motor Vehicle Sales (E: 14.8 million), Factory Orders (E: 1.3%), and JOLTS (E: 9.650 million) and investors will want to see signs of a continued but steady slowdown in growth and easing price pressures in order to keep soft landing hopes alive.

Earnings season continues today with UBER (-$0.10), PFE ($1.00), BP ($1.33), MPC ($5.75), and SYY ($0.92) reporting before the bell, and AMD ($0.56), F ($0.39), and SBUX ($0.64) after the close.

 

Introducing Sevens Report Technicals – A New Timely Report Dedicated to Technical Analysis

I’ve always wanted to do more to help advisors grow their businesses, and the incredibly enthusiastic response to last week’s special technical report confirmed to me that there is a need for more technical research.

So, today I’m very proud to announce the creation of a new research solution to complement the daily Sevens Report:  Sevens Report Technicals.

Sevens Report Technicals will provide in-depth technical analysis of all of the asset classes, investment styles, and market sectors that we cover in the daily Sevens Report. I’ve long believed we need both fundamental and technical analysis to best navigate markets, so we created Sevens Report Technicals to be the perfect complement to the fundamentally driven Sevens Report.

Ten-year Sevens Report veteran Tyler Richey, CMT, will be the lead analyst on Sevens Report Technicals.

Sevens Report Technicals will be delivered at the start of each trading week, and will be similar in appearance and coverage to last week’s popular special technical report. The first issue will be delivered this coming Monday, May 8th.

Sevens Report Research is a retention-driven business, so like all our research products, pricing for Sevens Report Technicals will be among the lowest in the industry for the quality and depth of analysis provided at just $225/quarter or $825 per year (a savings of $75).  We are also extending a one month “Grace Period” where you can choose to cancel and receive a full refund—so there is literally no risk to try Sevens Report Technicals and see if it’s right for your business!

Additionally, we are offering even more savings to existing Sevens Report Research subscribers by extending a special, limited-time offer of one additional month free on a quarterly or annual subscription. That means quarterly subscribers get four months but only pay for three (a $75 dollar savings) while annual subscribers get 13 months but only pay for 11 (a $150 savings!).

To start your risk-free trial of Sevens Report Technicals and claim your additional one-month free offer, please send an email to info@sevensreport.com and we’ll handle the rest.

To see last week’s special edition technical report, click here.

To learn more about Sevens Report Technicals, including the inspiration behind it, please click this link.

Moment of Truth: Does the Fed Signal a Pause?

/in , /by

What’s in Today’s Report:

  • Moment of Truth:  Does the Fed Signal a Pause?
  • Weekly Market Preview:  Important New Insight into the Hard vs. Soft Landing Debate
  • Weekly Economic Cheat Sheet:  ISM Manufacturing Today, Services Wednesday, Jobs Report Friday (It’s a Very Busy and Important Week)

Futures are little changed as markets digest the FRC seizure and asset sale to JPM and look ahead to this week’s FOMC decision and important economic data.

First Republic (FRC) failed over the weekend and was seized by the FDIC.  Assets were then sold to JPM who will effectively absorb the bank.  FRC’s failure was widely expected, and as such it’s not a new negative on markets.

Economically, the Chinese April manufacturing PMI missed expectations and fell back below 50 (49.2 vs. (E) 51.4.).

Today there is only one notable economic report, the April ISM Manufacturing PMI (E: 46.8), and markets will want to see stability in the data (so no further declines).

On the banks, again FRC’s failure was priced in last week, so it’s not a new negative on markets.  The key now is seeing if any other regional banks with large uninsured deposits come under pressure, so as we said last week, we’ll be watching WAL, CMA and ZION over the coming days.

Tom Essaye Quoted in Barron’s on April 25th, 2023

/in , /by

Stocks Plunge as UPS, First Republic Earnings Shake Investors

The lower than expected deposit levels rekindled worries about the health of the banking system and financials are dragging the broader market lower this morning, writes Tom Essaye, founder of the Sevens Report. Click here to read the full article.

Tom Essaye Interviewed on BNN Bloomberg on April 25th, 2023

/in , /by

These earnings aren’t enough to push markets materially higher: Sevens Report Research’s president

Tom Essaye, president of Sevens Report Research, joins BNN Bloomberg to run through his take on prominent companies reporting earnings this week. Click here to watch the full interview.

Tom Essaye Quoted in Barron’s on April 21st, 2023

/in , /by

Stocks Gain on Signs of Economic Distress

“Since April 3, we’ve seen the yield on the 1-month Treasury bill fall from 4.7% to 3.9%, as investors have shunned near-term Treasury bills that might get caught up in the debt ceiling fight. Conversely, the 3-month Treasury bill yield has risen from 4.9% to 5.2% since April 3, as investors have sold that debt as it will be subject to potential increased volatility as the debt ceiling fight comes to a head,” Tom Essaye, founder of the Sevens Report, wrote Friday. Click here to read the full article.

 

What the New Low in FRC Means for Markets

/in , /by

What’s in Today’s Report:

  • What the New Low in FRC Means for Markets
  • Chart Update:  Possible Head and Shoulders
  • The Most Consistent Market Indicator Right Now (It’s in Bonds)

Futures are modestly higher thanks to more solid tech earnings overnight and some small political progress.

Meta (FB) joined MSFT and GOOGL in posting strong earnings and the stock was up more than 10% overnight.

Politically, House Republicans (barely) passed their debt ceiling bill and now more substantial negotiations can begin with the White House.

Today focus will remain on data and earnings.  Economically, the key report today is Jobless Claims (E: 249K), although the financial media will focus more on Q1 GDP (E: 2.0%).  But, Q1 GDP is a stale number at this point (it covers Jan-Mar) compared to jobless claims, which will tell us if we’re seeing more deterioration in the labor market.  Any move towards, or modestly above, 250k would further hint at labor market deterioration (which would be a mild positive for markets).

Turning to earnings, this remains the busiest week for results and key reports we’re watching today include:  AMZN (E: $0.21), INTC ($0.16), CAT ($3.79), AAL ($0.04), MA ($2.71), MRK ($1.34) and MO ($1.19).

Hard Landing vs. Soft Landing Scoreboard

/in , /by

What’s in Today’s Report:

  • Hard Landing vs. Soft Landing Scoreboard (Table Included)

Stock futures are tracking global equity markets lower while bonds rally thanks to disappointing bank earnings.

FRC, which has been in focus since the banking turmoil began in March, is trading lower by more than 20% in the premarket after reporting that deposits fell more than 40% in Q1 to just $104.5B vs. (E) $145B while the bank plans to cut as much as 25% of staff in Q2. The lower than expected deposit levels rekindled worries about the health of the banking system and financials are dragging the broader market lower this morning.

Today, there are a few economic releases to watch: Case-Shiller Home Price Index (E: -0.4%), Consumer Confidence (E: 104.2), and New Home Sales (E: 635K) but unless there are any material surprises, investors will remain focused on earnings as we will begin to get some of the big tech companies’ results after the close today.

On the earnings front we will hear from UPS ($2.19), VZ ($1.19), GM ($1.58), MCD ($2.30), GE ($0.13), PEP $1.37), and MMM ($1.60) before the open, and MSFT ($2.22), GOOGL ($1.07), V ($1.97), and TXN ($1.76) after the close. Investors will be looking for good top and bottom line results but potentially more importantly, solid guidance given the uncertain market backdrop right now.

Tom Essaye Quoted in Blockworks on April 20th, 2023

/in , /by

Bitcoin, Ether Hover Below Key Levels While Volatility Dips

“The VIX is trading at the lowest levels since the S&P 500 hit its standing all-time high in the early days of 2022,” Tom Essaye, founder of Sevens Report Research, said. “It will be hard to believe the market is poised to casually cruise towards new record highs from here,” he added. “I.e., the bottom of the bear market is not in.” Click here to read the full article.

Special Technical Analysis Report

/in , /by

What’s in Today’s Technical Report:

  • Near and Medium-Term Trends and Risks in the S&P 500
  • A Look at Current Dynamics in the Major U.S. Equity Indices
  • Dow Theory Update
  • Key Levels to Watch in the Dollar and Commodity Markets
  • Equity Sector Dashboard (Bullish – Bearish – Neutral)
  • Treasury Market Trend Analysis: Have Rates Peaked for the Cycle?
  • What to Watch in the VIX

S&P 500 futures are little changed to start the week this morning. Last week’s pullback paused at a longer standing, multi-week uptrend line leaving the broader equity at a tipping point. How the market trades today will very likely decide if the S&P will continue to bleed lower or break last week’s downtrend and retest the recent highs.

The Nasdaq has been a notable outperformer this year but there are cracks emerging in the rally and we outline key levels to watch this week within the Report.

Among the sectors, we view five sectors as trending higher, four as market neutral, and two as trending lower.

In the currency and bond markets, both the dollar and multiple benchmark Treasury Notes have pulled back to critical price support zones and whether those levels hold or not will have a varying impact on all asset classes.

Commodities as an asset class have been fluctuating in a tight range in 2023 with gold outperforming and oil underperforming, but there are signs that oil is poised to take the lead in the complex and gold may be losing upside momentum.

Finally, the VIX is still deeply under pressure which is confusing many investors but we dive into the specific reasons for the movement in the index and what to look for in the weeks and months ahead as we continue to navigate this historically difficult market backdrop amid very uncertain macroeconomic dynamics.