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The Fed is going to cut at some point—but nobody knows when

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The Fed is going to cut at some point—but nobody knows when: Tom Essaye Quoted in Barron’s

Dow Drops 300 Points as Indexes Turn Down

Traders were looking ahead to Wednesday’s consumer price index. Sevens Report Research’s Tom Essaye says traders seem to be biding their time, making sure their risk tolerance is appropriate heading into the 8:30 a.m. CPI release, especially with not much in the way of economic data or earnings in the meantime.

“We’re at this point where we all know the Fed is going to cut at some point—but nobody knows when—and it’s all going to be up to the data,” he says. “And there’s really not a lot else to focus on. So we’re all just sort of lurched from one data point to the other in this market right now. This is the way it gets when you get to long drawn out transitions in policy.”

Also, click here to view the full Barron’s article published on April 9th, 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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The CPI report has the potential to either push the S&P 500 index to new highs

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The CPI report has the potential to either push the S&P 500 index to new highs: Sevens Report, Quoted in MarketWatch

Fed-funds futures point to doubts over June rate cut as inflation data looms

Investors this week are waiting for a reading on inflation in March due out on Wednesday from the closely watched consumer-price index. The CPI report has the potential to either push the S&P 500 index to new highs or extend the U.S. stock market’s drop last week, according to a Sevens Report Research note on Monday.

Also, click here to view the full MarketWatch article published on April 8th, 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.

Why Did Stocks Drop Again?

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Why Did Stocks Drop Again? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Did Stocks Drop Again?
  • How High Can Gold Go?

Futures are bouncing modestly from Thursday’s afternoon selloff, following a quiet night of news and as investor look ahead to today’s jobs report.

Economic data overnight (German Manufacturers’ Orders and Euro Zone retail sales) slightly missed expectations but the numbers aren’t increasing growth worries.

Today the focus will be on the jobs report and expectations are as follows: 200K Job Adds, 3.9% Unemployment Rate, 4.1% y/y Wage Growth.  The risk for this market remains for a “Too Hot” report that shows strong job adds, low unemployment and hot wages, while a number modestly below expectations would be welcomed as “Goldilocks” and likely spur a rebound in stocks and bonds.

In addition to the jobs report, we also have several Fed speakers including Collins (8:30 a.m. ET), Barkin (9:15 a.m. ET), Logan (11:00 a.m. ET) and Bowman (12:15 p.m. ET). If their tone is hawkish, it could reduce June rate cut chances and increase volatility.

Sevens Report Quarterly Letter 

Our Q1 ’24 Quarterly Letter was delivered to subscribers this past Monday, complete with compliance backup and citations. We’re already receiving feedback about how it is saving advisors time and helping them communicate with their clients in this environment!

You can view our Q4 ’23 Quarterly Letter here.

To learn more about the product (including price) please click this link.

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How the Baltimore Bridge Collapse Could Impact Markets

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How the Baltimore Bridge Collapse Could Impact Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Core PCE Price Index Preview
  • How the Baltimore Bridge Collapse Could Impact Markets
  • Sevens Report Q1 ’24 Quarterly Letter Coming Monday

Futures are little changed on the final day of the quarter following a mostly quiet night of news.

Fed Governor Waller stated overnight the Fed should be in “no rush” to cut rates and while that’s being spun as hawkish, his full comments largely point to a June rate cut.

Economic data overnight, including Aussie Retail Sales, UK GDP and German Unemployment, met expectations.

Today is the final day of the quarter and the eve of a long weekend so trading should be mostly quiet, although some quarter-end book squaring could make for some low volume volatility late in the day.

Looking at the calendar, there are some notable economic reports to watch including, in order of importance:  Jobless Claims (E: 213K), Final Q4 GDP (3.2%) and Pending Home Sales (E: 1.3%) but as long as they mostly meet expectations, they shouldn’t move markets.  Additionally, the bond market will have an early close today (2:00 p.m. ET).

Sevens Report Q1 ’24 Quarterly Letter Coming April 1st.

The Q1 2024 Quarterly Letter will be delivered to advisor subscribers on Monday, April 1st.

The Q1 Sevens Report Quarterly Letter will highlight the best quarterly returns since 2019 but also address risks in the market, so clients aren’t blindsided by any sudden volatility over the next three months

We will deliver the letter on Monday, the 1st business day of the new quarter, because we want you to be able to send your quarterly letter before your competition (and with little to no work from you).

You can view our Q4 ’23 Quarterly Letter here.

To learn more about the product (including price) please click this link, and if you’re interested in subscribing please email info@sevensreport.com.

Join thousands 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.

Is the Baltimore Bridge Collapse a Risk to Inflation?

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Is the Baltimore Bridge Collapse a Risk to Inflation? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Could the Baltimore Bridge Collapse Spark a Rebound in Inflation?
  • Durable Goods Orders Takeaways (More Weak Revisions)
  • Philly Fed Nonmanufacturing Survey (Another Whiff of Stagflation)
  • Consumer Confidence Shows Fading Household Financial Situations – Chart

Stock futures are rebounding from yesterday’s late session selloff as economic data overnight was mostly market-friendly while traders eye continued volatility in the yen.

Economically, Chinese Industrial Profits jumped by 10.2% y/y in the first two months of the year and the Eurozone Economic Sentiment headline rose to 96.3 vs. (E) 95.8. The overseas data helped ease global growth concerns.

The yen is attempting to stabilize this morning after falling to its lowest level against the dollar since 1990 overnight. A short-squeeze in the yen is a threat stocks and other risk assets as it would force traditional carry trades to unwind. The yen warrants close attention into the end of the week here.

There is no economic data today and just one Fed speaker after the close: Waller 6:00 p.m. ET.

There is a 7-Yr Treasury Note auction at 1:00 p.m. ET today. Yesterday’s 5-Yr auction was solid and investors will be looking for more strong demand for Treasuries in the belly of the duration curve today (a rise in yields would weigh on stocks).

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Updated Risk/Reward Outlook

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Updated Risk/Reward Outlook: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Updated Risk/Reward Outlook

Futures are modestly lower following a quiet weekend of news as investors digest last week’s Fed decision, AI news and economic data.

Atlanta Fed President Bostic stated over the weekend he only expected one rate cut in 2024, pushing back slightly on the 2024 dot (which showed three cuts).

Oil rose above $81/bbl on rising geo-political tensions as Russia attacked Ukrainian energy infrastructure.

Today there are two notable economic reports, Chicago Fed (E: -0.50) and New Home Sales (E: 675k) but they’d have to be big surprises (positively or negatively) to move markets.  There are also two Fed speakers, Bostic (8:25 a.m.) and Cook (10:30 a.m.) and if they both push back on the idea of three cuts in 2024 that would slightly weigh on stocks.

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Growth is holding up, and that’s the key

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Growth is holding up, and that’s the key: Tom Essaye Quoted in Barron’s

S&P 500 Marks Record Close. Tech Stocks Rebound.

Sevens Report Research’s Tom Essaye told Barron’s that markets can rally higher on developments in the artificial intelligence world and signs of continued economic growth, even in the face of diminished hopes for imminent rate cuts.

“Growth is holding up, and that’s the key,” Essaye says. “It’s when growth begins to roll over that rate cuts really matter. And we’re not there yet. We’re getting hints of it. But we’re not there yet.”

Also, click here to view the full Barron’s article published on March 19th, 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.

What the Fed Decision Means for Markets

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What the Fed Decision Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the Fed Decision Means for Markets: Still All About Growth
  • Fed Statement and SEP Takeaways
  • Lesser Followed, But Still Important Data Eases Stagflation Threat
  • EIA Data Takeaways and Oil Update

Futures are rallying to new highs after the SNB unexpectedly cut rates overnight, the first major central bank to do so, while MU is up 18% pre-market on solid AI driven earnings which is bolstering big tech shares.

The March Eurozone Composite PMI rose to 49.9 vs. (E) 49.6 due to a 0.9-point rise in the Services index while the Manufacturing index unexpectedly fell 0.8 points to 45.7 pointing to an imbalanced EU economy that is at risk of slowing down meaningfully.

Looking into today session, there is a lot of domestic economic data to watch with Jobless Claims (E: 209K), the Philadelphia Fed Business Survey (E: -5.0), the PMI Composite Flash (E: 51.5), and the Existing Home Sales report (E: 3.92 million) all due to be released.

Additionally, traders will be focused on the BoE Decision and meeting minutes (8:00 a.m. ET) before the bell and then later the Fed’s Vice Chair, Michael Barr is schedule to speak at a  University of Michigan round table event (12:00 p.m. ET).

Bottom line, after the Fed yesterday, investors will want to see data hold up well but not be so “hot” that it dents the case for three rate cuts before yearend. Data that comes in “too hot” or “too cold” will be a negative for stocks as the Fed has a very narrow path to achieving a soft landing here.

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.

Fundamentals are positive, they still don’t justify current valuations

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The market is vulnerable to a negative surprise: Tom Essaye Quoted in SwissInfo.ch

Stocks Struggle Near Record Before Inflation Data: Markets Wrap

The current set-up reflects the drivers that have powered stocks higher this year: solid growth, prospects for Fed rate cuts and artificial-intelligence enthusiasm, according to Tom Essaye, founder of the Sevens Report. “While the fundamentals are positive, they still don’t justify current valuations — making the market vulnerable to a negative surprise.”

Also, click here to view the full article published on March 14th, 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.

The CPI release didn’t counter existing market narratives

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The market views it as keeping the Fed on schedule for June rate cuts: Tom Essaye Quoted in Barron’s

Stocks Are Rallying. Inflation Report Keeps the Fed on Track.

Sevens Report Research’s Tom Essaye told Barron’s in a phone interview that while the headline figure didn’t meet expectations, the numbers didn’t counter existing market narratives.

“People still very much subscribe to the idea that housing is artificially inflating CPI, and that whenever that begins to work its way out of the data, the number will move down even more quickly than it is,” Essaye says. “Nothing in this report refuted that, and so as a result, I think that the market views it as keeping the Fed on schedule for June rate cuts.”

“For now, the script is still in place,” Essaye says. “The issue markets have is that it’s already priced in, so we need to find the next new catalyst.”

Also, click here to view the full Barron’s article published on March 13th, 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 Rally

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.