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Will the Trump Verdict Impact Markets?

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Will the Trump Verdict Impact Markets? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Will the Trump Verdict Impact Markets?
  • When Will Higher Yields Pressure Stocks?

Futures are moderately lower again following more disappointing tech earnings and another hot inflation print.

Salesforce (CRM) missed earnings and joined a growing list of non-AI tech companies to post disappointing result (WDAY last week) and that’s weighing on futures.

Economically, Spanish CPI was hotter than expected as it rose 3.8% y/y vs. (E) 3.7%, up from last month’s 3.4%

Today includes some potentially important economic data as we get the Revised Q1 GDP report (E: 1.5%) and focus will be on the headline as well as any revisions to the PCE Price Data (if it’s revised higher, that’s a negative).  Other notable data today includes Jobless Claims (E: 217K) and Pending Home Sales (E: 0.3%) and as has been the case all year, “hot” data will be negative for stocks and bond.

There are also two Fed speakers today, Williams (12:05 p.m. ET) and Logan (5:00 p.m. ET), although unless they talk about rate hikes, they comments shouldn’t move markets.

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Breadth matters because it basically speaks to investor conviction about fundamentals

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Breadth matters because it basically speaks to investor conviction about fundamentals: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The S&P 500 Is Suffering From Bad Breadth Again

“Breadth matters because it basically speaks to investor conviction about fundamentals,” Sevens Report Research’s Tom Essaye tells Barron’s. “The more sectors that are rallying, the stronger the perception of underlying fundamentals (a rising tide lifts all boats). If just one sector is carrying the market (poor breadth) it’s viewed as a vulnerable market because fundamentals aren’t that strong outside of the one sector.”

Also, click here to view the full Barron’s article published on May 23rd, 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.

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Explaining This Market to Clients (Summer Edition)

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Explaining This Market to Clients (Summer Edition): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Explaining This Market to Clients (Summer Edition)
  • Weekly Economic Preview – All Eyes on Inflation (Friday)

Futures are modestly higher, led by mega-cap tech, as traders return from the long weekend to mixed headlines.

Economically, an ECB survey showed a favorable dip in medium term (3-year) consumer inflation expectations which was well received by equity traders overnight.

Geopolitically, an Egyptian soldier was killed in a fire fight with Israeli forces at the Rafah border over the weekend while, separately, there were dozens of civilian casualties following an Israeli airstrike just north of Rafah leaving Middle East tensions as high as they’ve been in months (oil is up more than 1%).

Looking into today’s session, there are two economic reports to watch: S&P Case-Shiller Home Price Index (E: 0.3%) and Consumer Confidence (E: 95.3) while several Fed officials are scheduled to speak: Kashkari (9:55 a.m. ET), Cook (1:05 p.m. ET), and Daly (1:00 p.m. ET). The market will want to see more “goldilocks” economic data and preferably less-hawkish Fed chatter.

Additionally, there are two key Treasury auctions, the first for 2-Yr Notes at 11:30 a.m. ET, and the second for 5-Yr Notes at 1:00 p.m. ET. With the total amount being auctioned just shy of $150B, demand for the Notes will be closely watched and weak auction outcomes could push yields higher and weigh on stocks with key inflation data looming later in the week.

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No relation to the recent geopolitical tensions

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No relation to the recent geopolitical tensions: Sevens Report Research Analysts, Quoted in Morningstar

Oil prices settle lower as traders fret over the outlook for demand

Analysts at Sevens Report Research wrote in Tuesday’s newsletter that the crash was deemed to be “an accident and had no relation to the recent geopolitical tensions between Iran and Israel, which allowed for some of the fear bids added on Friday ahead of the weekend to come unwound” at the start of Monday’s trading.

Also, click here to view the full MarketWatch article published on Morningstar on May 21st, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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.

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Even after the revisions, the data was really mostly in line.

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Even after the revisions, the data was really mostly in line: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

The Market Is in a Trance. Wednesday’s Inflation Data Could Break It.

But Sevens Report Research’s Tom Essaye told Barron’s in a phone interview that even after the revisions, the data was really mostly in line.

“The markets could be entering an extension of the sweet spot that they were in earlier in the year,” Essaye says. “If you’re looking out, there are definitely some things you want to pay attention to, because some of this data is starting to point in a not-great direction. But it’s not necessarily a reason to sell now.”

“We were in the bullish trance, and now Powell has kind of put us back into it by saying, ‘Well, no, we’re not going to hike rates. Probably going to cut rates once or twice’ or whatever,” Essaye says. “That kind of got us back into it. So it’s going to take a hot data point.”

Also, click here to view the full Barron’s article published on May 14th, 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.

“Good, bad and ugly” outcomes for the April consumer-price index reading.

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“Good, bad and ugly” outcomes for the April consumer-price index reading: Tom Essaye, founder of Sevens Report Research, Quoted in Morningstar

Stock market could suffer ‘ugly’ day if April CPI comes in above this level

Tom Essaye, founder of Sevens Report Research, took a look Tuesday at potential “good, bad and ugly” outcomes for the April consumer-price index reading.

So what would provoke an ugly reaction? Essaye puts the threshold at 3.9%.

A core reading at or above that threshold would be likely to spark a “solid selloff,” further entrenching the idea that inflation remains sticky and rates will be higher for longer, Essaye wrote. That has the potential of undoing much of the rally seen over the last two weeks, as investors would likely scale back rate-cut expectations, penciling in just one cut in December.

Also, click here to view the full MarketWatch article published on Morningstar on May 14th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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.

Even a small bout of stagflation would result in a 10%-20% decline in stocks

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Even a small bout of stagflation would result in a 10%-20% decline in stocks: Tom Essaye Quoted in MarketWatch

The economy could be heading toward 1970s-style stagflation. What it means for the stock market.

 “Stagflation doesn’t have to be as bad as it was in the 1970s, but for a stock market that’s trading above 21 times earnings, the truth is that even a small bout of stagflation would result in a 10%-20% decline in stocks,” said Tom Essaye, founder of Sevens Report Research, in a Monday note.

“Of course, comparing this period to the 1970s, where GDP growth was flat or negative and CPI was running more than 10%, [Powell’s] absolutely right [that] there is no stagflation,” said Essaye. But he added that it’s somewhat “dismissive” to say that just because things aren’t as bad as they were in the 1970s, any talk of stagflation is unwarranted.

“In an absolute sense,” economic growth is not at levels that would imply stagflation — but data releases are becoming “more conclusive that economic momentum is slowing,” Essaye said. “While stagnation isn’t here yet, the data is showing a greater chance of it occurring than any time in the last year and a half.”

Also, click here to view the full MarketWatch article published on May 13th, 2024. 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.

Key Levels to Watch: S&P 500, 10Y, Gold, VIX

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Key Levels to Watch: S&P 500, 10Y, Gold, VIX: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • CPI Technical Preview: S&P 500, 10Y, Gold, VIX
  • Trading Color – The “Chase” Higher Continued Yesterday
  • PPI Takeaways: Downside Revisions Spark Dovish Money Flows

Futures are flat while European stocks are modestly higher thanks to market-friendly economic data overnight ahead of today’s U.S. CPI report.

GME and AMC are both notably up another 10%+ in pre-market trading suggesting the meme-stock frenzy is poised to continued today.

Economically, French CPI met estimates at 2.2% y/y while Eurozone Industrial Production was up 0.6% vs. (E) -0.5% helping to ease lingering worries about the threat of global stagflation.

Today, focus will be acutely on economic data in the premarket with CPI (E: 0.3% m/m, 3.4% y/y) and Core CPI (E: 0.3% m/m, 3.6% y/y) the most important release to watch. Downside revisions to March like we saw in yesterday’s PPI report and a goldilocks headline should see stocks extend gains and test or break through current records.

However, in order for the equity rally to continue it is important that Retail Sales (E: 0.4%), the Empire State Manufacturing Index (E: -10.0), and the Housing Market Index (E: 51.0) don’t offer and negative surprises as there is a tentative and complacent feel to the current test of the all-time-highs.

After the economic data is digested, there are two Fed officials scheduled to speak today: Kashkari (12:00 p.m. ET) and Bowman (3:20 p.m. ET). Investors have become comfortable with the higher-for-longer tone recently, but any mention of hikes could pressure markets here.

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CPI Preview: Good, Bad, & Ugly

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CPI Preview: Good, Bad, & Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Thoughts on the Meme-Stock Revival
  • CPI Preview: Good, Bad, & Ugly
  • Chart – NY Fed’s Consumer Survey Contains Hot Inflation Print

Global markets are little changed this morning as traders digest mostly better-than-expected economic data from Europe and await today’s PPI report and commentary from Fed Chair Powell.

“Meme stocks” GME and AMC are notably up 58% and 64%, respectively, in pre-market trading this morning (more on that in today’s report).

Economically, German CPI met estimates at 2.2% y/y while Economic Sentiment in the German ZEW came in at 47.1 vs. (E) 45.0. Domestically, the NFIB Small Business Optimism Index beat with a headline of 89.7 vs. (E) 88.3 but the data is having a limited impact on markets this morning.

Looking into today’s session, focus will be on PPI (E: 0.3% m/m, 2.2% y/y) and Core PPI (E: 0.2% m/m, 2.3% y/y) due out at 8:30 a.m. ET. A “hot” print would spark hawkish, risk-off money flows while a cooler-than-expected report could see the S&P 500 test all-time-highs as CPI whisper numbers are dialed back.

Finally, there are a handful of Fed speakers today including Cook (9:10 a.m. ET) ahead of the bell and Schmid (8:15 p.m. ET) later this evening. Most importantly though, Powell will speak at 10:00 a.m. ET and if he is more hawkish than two weeks ago at the May FOMC meeting, that will put upward pressure on rates and weigh, potentially heavily, on stocks.

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The key parts of the release will be one and five-year inflation expectations

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The key parts of the release will be one and five-year inflation expectations: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Dow Opens Higher, Extending Winning Streak

Aside from the Fed speakers, traders will get an update on consumer sentiment from the University of Michigan. Sevens Report Research’s Tom Essaye writes that the key parts of the release will be one-year inflation expectations and five-year inflation expectations.

“If both of those numbers are higher than expected, it’ll be another negative signal on inflation and don’t be surprised if Treasury yields rise in response to them and stocks give back these early gains,” Essaye writes.

Also, click here to view the full Barron’s article published on May 10th, 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.