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An economic downturn resulting from a ‘Fed mistake’

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An economic downturn resulting from a ‘Fed mistake’: Tyler Richey, co-editor at Sevens Report Research

WTI Extends Losses After API Reports Small (Surprise) Crude Build

“An economic downturn resulting from a ‘Fed mistake’ would lead to a bear market in the global energy markets,” Tyler Richey, co-editor at Sevens Report Research, told MarketWatch.

So “if we start to see economic data deteriorate in the coming weeks or months, demand estimates penciled in based on the optimistic hope of a soft landing will fall considerably amid an emerging recessionary reality.”

Also, click here to view the full ZeroHedge article published on August 20th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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.

The slow and steady recovery implies some health behind the move

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The slow and steady recovery implies some health behind the move: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Stock Market Is Quiet. What Could Change That.

“The slow and steady recovery implies some health behind the move,” Sevens Report Research’s Tom Essaye told Barron’s. “The biggest thing of the last 10 days, is sort of how quickly the market has has sort of erased any of the concerns that hit stocks in early August.”

Essaye says Wall Street has reverted to a state where the default path is higher, “unless somebody puts something in front of it that really directly challenges it.”

“And right now, there’s really nothing going on,” he says.

Essaye notes that the very little news we’ve gotten was a bit negative, including the decision by Lowe’s to cut its full-year outlook. But the S&P 500 is still in striking distance of its ninth straight session of gains. He says it will take a truly bad economic number or Federal Reserve Chair Jerome Powell arguing that inflation is still high to really wake the market up.

Also, click here to view the full Barron’s article published on August 20th, 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 RallyIf 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 Concerning Gap Between Stocks, Treasuries and the Yen

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The Concerning Gap Between Stocks, Treasuries and the Yen: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Concerning Gap Between Stocks, Treasuries and the Yen
  • Oil Update (Why is Oil Hitting Multi-Month Lows?)

Futures are slightly higher on more Goldilocks economic data.

The EU and UK August flash composite PMIs were better than expected (51.2 vs. (E) 50.7 in the EU and 53.4 vs. (E) 52.9 in the UK) and that’s supporting the global soft landing narrative.

On inflation, EU wages rose less than expected in Q2, reinforcing expectations for a Sept. rate cut from the ECB.

Today focus will be on economic data as today is the most important day of the week from a data standpoint.  Key reports, in order of importance, include Jobless Claims (E: 234K), August Flash Composite PMI (E: 53.3) and Existing Home Sales (E: 3.90 million).  More Goldilocks data (at or close to expectations) should further support the rally and if that’s the case, new highs for the S&P 500 shouldn’t be a shock.

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Watch the BLS Revisions Today

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Watch the BLS Revisions Today: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Something to Watch Today: BLS Revisions
  • How a Fed Mistake Would Impact Commodities
  • VIX Expiration Poses Threat to Short-Volatility Trade – Chart

Futures are slightly higher as traders await job growth revisions from the BLS after a mostly quiet night of news.

Economically, Japanese trade data revealed a deeper than anticipated deficit in July but amid solid import/export growth numbers which importantly helped pause a rally in the yen and reduced pressure on risk assets overnight.

Looking into today’s session, there are no typical economic reports on the calendar, however, the BLS Revisions to Net Payroll Growth for the trailing 12-months through March 2024 will be released at 10:00 a.m. ET and a significant downward revision could rekindle the recession fears initially sparked by the July jobs report which would result in broad market volatility.

In the afternoon, there is a 20-Yr Bond auction at 1:00 p.m. ET which could move yields and influence equity markets before investor focus will turn to the release of the July FOMC Meeting Minutes at 2:00 p.m. ET.

Finally, earnings season continues to wind down but a few notable companies reporting today include: TGT ($2.17), TJX $0.92), ZM ($1.21).

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The Most Important Central Banker This Week (Not Powell)

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The Most Important Central Banker This Week (Not Powell): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • The Most Important Central Banker This Week (Not Powell)

Futures are slightly higher on better than feared tech earnings and more global central bank rate cuts.

Palo Alto Networks (PANW) posted solid guidance and that, along with CSCO results last week, is helping to bolster the outlook for tech and that’s supporting futures.

Sweden’s Riksbank (their central bank) cut rates 25 bps, as expected, and that reminded investors we are in the midst of a global rate cutting campaign (which is a positive).

There are no notable economic reports today but there are two Feds speakers, Bostic (1:35 p.m. ET) and Barr (2:45 p.m. ET) and if they join other colleagues in expressing openness to cutting rates in September, it should be a mild tailwind for stocks.

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Updated Market Outlook

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Updated Market Outlook: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Updated Market Outlook
  • Weekly Market Preview:  Will Powell Confirm A September Rate Cut?
  • Weekly Economic Cheat Sheet:  The First Big Number of August (and It Needs to be Goldilocks)

Futures are little changed following a very quiet weekend of news as investors look ahead to more growth data this week and Powell’s speech on Friday.

There was no notable economic data over the weekend or overnight.

Geopolitically, optimism is continuing to build towards a ceasefire between Israel and Hamas and that’s weighing on oil prices, although nothing formal has been announced.

Today there is only one economic number, Leading Indicators (E: -0.3%), and barring a big surprise that shouldn’t move markets.  There is also one Fed speaker, Waller (9:15 a.m. ET), and he is part of Fed leadership so if he strongly hints at a September rate cut, that should be a mild tailwind for stocks and bonds.

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The Right Way to Think About Economic Growth Right Now

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The Right Way to Think About Economic Growth Right Now: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing/Soft Landing Scoreboard (The Right Way to Think About the U.S. Economy)

Futures are slightly lower following a mostly quiet night of news as markets digest Thursday’s strong rally.

The only notable economic report overnight was UK retail sales, which rose 0.8% vs. (E) 0.5% and added to Thursday’s haul of solid global data.

Geo-politically, Israel/Hamas ceasefire talks continued and any breakthrough would be a surprise market positive.

Today there are a few notable economic reports including Consumer Sentiment (E: 67.0), 1-Yr Inflation Expectations: (E: 2.9%), 5-Yr. Inflation Expectations (E: 3.0%) and Housing Starts (1.342M).  However, those numbers aren’t that important to growth so barring a major surprise, they shouldn’t move markets and we should mostly see digestion of Thursday’s big rally.

There is also one Fed speaker today, Goolsbee (1:25 p.m. ET), and he’s dovish do don’t be surprised if he openly talks about cutting rates in September.

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Why Falling Inflation Won’t Help Stocks Anymore

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Why Falling Inflation Won’t Help Stocks Anymore: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Falling Inflation Won’t Help Stocks Anymore
  • EIA Analysis and Oil Market Update

Futures are slightly higher thanks to better-than-expected tech earnings and despite mixed economic data.

CSCO posted solid earnings and that’s helping extend the tech sector bounce and boosting futures.

Economically, Chinese and UK data was more mixed than good and point to a modest slowing of global growth.

Economic growth is now the main fundamental driver of this market and today is full of important growth updates including, in order of importance: Retail Sales (E: 0.3%), Jobless Claims (E: 234K), Industrial Production (E: -0.1%), Philly Fed (E: 5.8),  Empire Manufacturing (-6.0) and Housing Market Index (E: 42).  In-line to slightly underwhelming economic data will be the “best case” for stocks in the near term as it increases 50 bps rate cut chances but doesn’t imply a dramatic growth slowdown.

There are also two Fed speakers today, Musalem (9:10 a.m. ET) and Harker (1:10 p.m. ET) and officials might start to be more explicit about a rate cut following Wednesday’s CPI (Atlanta Fed President Bostic said he was open to a cut in September overnight).

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Two “Smart Market” Recession Signals to Watch For

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Two “Smart Market” Recession Signals to Watch For: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Follow-Up Thoughts on the Yield Curve Reversion Process – Two Signals to Watch For
  • PPI Takeaways – Will Falling Inflation Flip from a Tailwind to a Headwind?
  • NFIB Small Business Optimism Index Echoes HD Sales Concerns

U.S. stock futures are flat as traders digest yesterday’s sizeable rally ahead of today’s critical CPI release.

Overseas, the Reserve Bank of New Zealand unexpectedly cut rates overnight citing recession concerns in H2’24 while the EU GDP Flash met estimates at 0.6% y/y helping push back on imminent recession fears.

Today, market focus will be on the key U.S. inflation data due ahead of the bell: CPI (E: 0.2% m/m, 3.0% y/y), Core CPI (E: 0.2% m/m, 3.2% y/y). A “cool” release will be welcomed and likely support an extension of the week-to-date gains while a “hot” print would be negative for risk assets.

There are no Fed speakers today, however there is a 4-Week Treasury Bill auction at 11:30 a.m. ET which normally wouldn’t pique investors interest, but this one lines up with the September Fed meeting and could shed light on the market’s policy rate expectations.

Finally, earnings season continues to wind down with a few noteworthy companies reporting today including: CAH (E: $1.72), UBS (E: $0.12), TCEHY (E: $0.61), CSCO (E: $0.85).

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I continue to advocate for defensive sector exposure and and minimum volatility funds

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 I continue to advocate for defensive sector exposure and and minimum volatility funds: Tom Essaye Quoted in SwissInfo.ch

Stocks Halt Rebound as Oil Hits $80 on War Angst: Markets Wrap

Tom Essaye at The Sevens Report says he doesn’t think fundamentals have deteriorated enough to warrant de-risking and reducing equity or risk exposure — but he also wants to caution against dismissing the recent uptick in volatility.

“Much of what I read over the weekend characterized this recent volatility as just a typical pullback in an upward-trending market,” Essaye. “Because of that, I continue to advocate for defensive sector exposure and and minimum volatility funds.”

Also, click here to view the full article published on August 12th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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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.