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Reminder of Market Risks

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What’s in Today’s Report:

  • Reminder of the (Many) Risks

Futures are higher with global equities while overseas bonds are stabilizing amid easing U.S.-EU trade tensions.

President Trump delayed the implementation date of proposed 50% tariffs on the EU, which were first threatened Friday morning, from June 1 to July 9 which is being well received by global investors and supporting broad risk-on money flows across asset classes.

There were no material or market-moving economic reports overnight but there are several key reports to watch in the U.S. today including Durable Goods Orders (E: -8.1%), the Case-Shiller Home Price Index (E: 0.3%), and Consumer Confidence (E: 87.3).

Additionally, there are two Fed speakers to watch: Barkin (9:30 a.m. ET), Williams (8:00 p.m. ET) as well as a 2-Yr Treasury Note auction at 1:00 p.m. ET, all of which could shed light on Fed policy expectations for the months ahead.

Finally, a few more late season earnings releases continue to trickle in with PDD ($2.25), AZO ($36.78), and BNS ($1.14) all reporting today but the market impact should be limited.

Volatility Update

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What’s in Today’s Report:

  • Volatility Update

Futures are slightly lower following a mostly quiet night of news ahead of the holiday weekend.

Politically, the Supreme Court issued a ruling overnight that implies the President does not have the authority to fire the Fed Chair and this is a general positive for markets (it mostly removes Trump firing Powell as a threat).

Economically, data was better than expected as UK retail sales and German GDP both beat estimates.

Today focus will be on New Home Sales (E: 700K) and there is one Fed speaker, Cook (12:00 p.m. ET).  But, given the looming holiday weekend, expect trading to be quiet barring any surprises.

What Is the “Big, Beautiful Bill” and Why Is It Impacting Markets?

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What’s in Today’s Report:

  • What Is the “Big, Beautiful Bill” and Why Is It Impacting Markets?

Futures are slightly higher as markets digest Wednesday’s yield driven selloff.

Economically, EU and UK flash PMIs disappointed.  The EU flash PMI badly missed expectations (49.5 vs. (E) 50.9) while the UK reading was a slight miss (49.4 vs. (E) 49.5).

Today focus will be on economic data as well as political progress.  Economically, the key reports today are the May Flash Manufacturing PMI (E: 49.8) and Flash Services PMI (E: 50.6) as well as Jobless Claims (E: 230K).  As has been the case, the stronger those numbers, the better as they will continue to push back on stagflation fears.  There is also one Fed speaker, Williams at 2:00 p.m. ET, but he’s unlikely to move markets.

Finally, on the political front, the deficit implications of the “Big Beautiful Bill” are pushing Treasury yields higher and if the bill advances out of the House and is viewed as deficit negative, it will send yields higher again and pressure stocks.

The valuation is flawed by earnings per share

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The valuation is flawed by earnings per share: Sevens Report Co-Editor, Tyler Richey Quoted in S&P Global

S&P 500 valuations stumble on tariff uncertainty

While the forward P/E ratio is widely viewed as the best measure of a stock or index’s fair value, the valuation is flawed by earnings per share and assumptions of fair market multiples from Wall Street analysts, portfolio managers and strategists, said Tyler Richey, a co-editor with Sevens Report Research.

“So effectively, both sets of proverbial goal posts are constantly being moved amid earnings estimate revisions and shifting geopolitical and macroeconomic landscapes impacting multiples,” Richey said. “Specifically, when volatility picks up meaningfully, it is very challenging to recalculate multiples based on fluid fundamental changes impacting the markets.”

Also, click here to view the full article featured in S&P Global, published on May 20th, 2025. 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.

Moody’s downgraded U.S. sovereign debt

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Moody’s downgraded U.S. sovereign debt: Sevens Report Analysts Quoted in Investing.com

What the Moody’s downgrade means for markets

According to the latest Sevens Report, the move is unlikely to drive long-term market direction.

“Moody’s downgraded U.S. sovereign debt to Aa1 from Aaa. That downgrade boosted long-term Treasury yields, as some investors sold long-term Treasuries,” the analysts wrote.

Stocks opened lower Monday, but Sevens emphasized that the downgrade “revealed nothing new.”

But Sevens called the timing questionable: “Downgrading U.S. debt for larger deficits and rising interest costs is the financial equivalent to saying ‘water is wet.’”

Sevens said, “There’s been no dramatic deterioration lately,” and noted that speculative fears tied to potential legislation “don’t justify the downgrade.”

“The deteriorating fiscal situation hasn’t stopped stocks from rallying over the past few years and that’s unlikely to change anytime soon.”

Also, click here to view the full article featured on Investing.com published on May 20th, 2025. 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.

What the Moody’s Downgrade Means for Markets (Two Important Charts)

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What’s in Today’s Report:

  • What the Moody’s Downgrade Means for Markets
  • Two Important Charts: Interest Expense and Deficits

Futures are modestly lower this morning as the S&P 500’s six-day rally is being digested amid a steadying Treasury market after the Moody’s downgrade of the U.S. last week.

There were positive trade war headlines out of Japan, Vietnam, and India overnight helping global stocks rally while economically, German PPI favorably fell -0.9% vs. (E) -0.5%.

Looking into today’s session, there are no notable economic reports in the U.S., however the Treasury will hold a 6-week Bill auction at 11:30 a.m. ET which could shed light on the market’s near-term Fed policy expectations, but barring any big surprise, the auction is not likely to move markets.

There are a handful of Fed speakers today including: Barkin & Bostic just ahead of the bell (9:00 a.m. ET), and Musalem in the early afternoon (1:00 p.m. ET). A “higher-for-longer” shift in Fed policy outlook has been priced in recently, so any dovish commentary out of the Fed officials would be well received.

Finally, some late season earnings will continue to be released today including: HD ($3.59), PANW ($0.41), TOL ($2.86).

Are Markets Giving An “All Clear” Signal?

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What’s in Today’s Report:

  • Are Markets Giving An “All Clear” Signal?
  • Weekly Market Preview:  Can This Rebound Hold?
  • Weekly Economic Cheat Sheet:  The First National Numbers for May (This Thursday)

Futures are lower (down more than 1%) following the Moody’s downgrade of U.S. debt Friday afternoon.

The Moody’s downgrade wasn’t dramatic news (S&P and Fitch downgraded U.S. debt years ago) but it is pushing the 10 year yield higher and that’s weighing on futures.

Economically, Chinese economic data underwhelmed (Retail Sales and Industrial Production missed estimates).

Today focus will be on economic data and Fed speak.  Economically, Leading Indicators (E: -0.7%) is the most notable report while we have several Feds speakers including: Williams & Bostic (8:30 a.m. ET), Jefferson (9:45 a.m. ET) and Logan (1:15 p.m. ET).  If they echo Powell from last week and are somewhat dismissive of near-term rate cuts, that could add to the headwinds on stocks today.

There are three core drivers behind the shift in sentiment

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There are three core drivers behind the shift in sentiment: Sevens Report Analysts Quoted in Investing.com

Here are 3 key reasons why markets are rallying

According to the Sevens Report, there are three core drivers behind the shift in sentiment, even as some analysts remain skeptical about the sustainability of the surge.

“In the past month, the S&P 500 has surged basically 10%, the VIX has dropped from 30 to 18 and sentiment indicators have swung more bullish,” Sevens wrote.

“Tariff levels aren’t enough to derail the economy,” Sevens said. Despite isolated price increases, like a 40% jump in the price of a Barbie at Target, Sevens notes that “if tariffs rates are 10%,” and cost absorption is split among supply chain players, the consumer burden remains limited.

“Once that’s obvious, the Fed will cut rates and further support stocks,” wrote the firm.

“However, I do think they’re aggressive right now and as such, I continue to think that while short-term momentum is bullish, chasing stocks here remains an unattractive risk/reward proposition.”

Also, click here to view the full article featured on Investing.com published on May 15th, 2025. 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.

Highlighting the Value of International Diversification

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What’s in Today’s Report:

  • Highlighting the Value of International Diversification

Futures are extending Thursday’s rally mostly on momentum, following a quiet night of news.

Economically, the only notable report was Italian CPI which, like other recent EU inflation metrics, was better than expected (2.0% vs. 2.1% y/y) and is helping EU shares extend the recent rally as well.

Today there are several economic reports including Housing Starts (1.362M), Import & Export Prices (E: -0.3% m/m, -0.3% m/m) and Consumer Sentiment (E: 53.0, 1-Yr Inflation Expectations: 6.6%).  But, the focus will really be on inflation as the cool CPI and PPI this week have been the most important positives for this market.  If the University of Michigan 5-Year Inflation Expectations don’t rise from last month (4.4% y/y), that will be an additional positive for stocks as it will further push back on inflation fears.

Finally, there are two Fed speakers today, Barkin (6:40 p.m. ET) and Daly (8:40 p.m. ET), but they shouldn’t move markets.

Alleviate consumer-demand concerns and recession worries

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Alleviate consumer-demand concerns and recession worries: Tyler Richey, editor of Sevens Report Technicals Quoted in MarketWatch

U.S. oil prices settle at highest in 3 weeks as trade-war optimism eases consumer-demand concerns

U.S. benchmark oil prices settled Tuesday at their highest in three weeks, as trade-war optimism helped “alleviate consumer-demand concerns and recession worries,” said Tyler Richey, co-editor at Sevens Report Research.

A multiyear low in annualized U.S. headline inflation was also a “welcomed surprise that effectively poured gasoline on an already raging risk-on fire across financial markets since the better-than-anticipated outcome of the U.S.-China trade negotiations over the weekend,” he told MarketWatch.

A continued relief rally seems to be likely in the weeks ahead, with the $70- to $72-a-barrel range the “first logical upside price target for WTI,” said Richey.

Also, click here to view the full article featured on MarketWatch published on May 14th, 2025. 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.