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Is the Yen Carry Trade Become A Headwind on Markets?

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Is the Yen Carry Trade Become A Headwind on Markets?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is the Yen Carry Trade Become A Headwind on Markets?

Futures are seeing a solid bounce following a mostly quiet night of news as investors look ahead to (hopefully) another good inflation report.

Earnings remained broadly mixed overnight (some good, some bad) but none of the results are impacting markets.

There was no notable economic data or geo-political events overnight.

Today the focus will be on the Core PCE Price Index (E: 0.1% m/m, 2.5% y/y) and if this number is better than expected (or even dead in-line with expectations) that will remind investors that rate cuts are coming soon (September) and that should help extend this early rebound in stocks and bonds.

Earnings roll on although next week is, by far, the most important week of the season.  Reports we’re watching today include:  BMY (E: $1.64), MMM (E: $1.66) and CNC  (E: $2.42).

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Oil futures appropriately popped in the wake of the release

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 Oil futures appropriately popped in the wake of the release: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices climb as U.S. data show crude supplies down a fourth straight week

Wednesday’s EIA report was “solid and oil futures appropriately popped in the wake of the release,” said Tyler Richey, co-editor at Sevens Report Research.

Still, the “trend of strong consumer demand has faltered in July,” underscored by the fact the four-week moving average of gasoline supplied remains about 30,000 barrels per day off the early July year-to-date highs, he told MarketWatch.

Going forward, the “energy bulls will want to see more evidence of strong and persistent consumer demand in order for oil to hold above key technical support at $76.50 because recession worries are on the rise and volatility is picking up, both of which are typically headwinds for the price of oil,” said Richey.

Also, click here to view the full MarketWatch article published on Morningstar on July 24th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Oil Inventories

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The ultimate direction of the S&P 500 will still be determined by economic growth

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The ultimate direction of the S&P 500 will still be determined by economic growth: Tom Essaye Quoted in Forbes

Stocks Slide As Major Tech Earnings Get Off To ‘Underwhelming’ Start

The U.S. will report its second-quarter gross domestic product Wednesday morning, offering a glimpse into how well the broader economy is performing. “The ultimate direction of the S&P 500 will still be determined by economic growth,” remarked Sevens Report analyst Tom Essaye in a Monday note.

Also, click here to view the full Forbes article published on July 24th, 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.

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The oil market began the week with a thud

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The oil market began the week with a thud: Sevens Report Co-Editor, Tyler Richey, Quoted in Morningstar

Oil prices finish lower, holding ground at lowest since mid-June

“The oil market began the week with a thud [Monday], failing to stabilize after the sharp losses in the back half of last week,” said Tyler Richey, co-editor at Sevens Report Research.

Richey said last week’s significant drop in implied gasoline demand reported by the Energy Information Administration remains a “major bearish influence on the market.”

Also, from a supply standpoint, improved prospects for a victory by former President Donald Trump in the 2024 election are “price-negative for oil,” given his plans to “support production increases to increase energy independence and lower prices,” said Richey.

Also, click here to view the full MarketWatch article published on Morningstar on July 22nd, 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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Dow Theory: Transports Sputter, Industrials Power On

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Dow Theory: Transports Sputter, Industrials Power On: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Dow Theory: Transports Sputter, Industrials Power On
  • Visual – Existing Home Sales Fall, Home Prices & Inventories Rise

Futures are lower thanks to soft earnings from Mag-7 members TSLA (down 7% premarket) and GOOGL (down 3% premarket) as well as soft economic data in Europe.

The Eurozone’s July Composite Flash PMI fell to 50.1 vs. (E) 51.0 with both the manufacturing and services components missing estimates (German data was notably weak).

Looking into today’s session, the U.S. Flash Composite PMI (E: 51.6) will be the market’s primary focus early in the day but New Home Sales (E: 644K) data is also due to be released shortly after the bell.

From there focus will likely revert to how the Mag-7 trades in the wake of yesterday’s weak tech earnings and follow through selling (like we are seeing in the pre-market) will be a drag on the major indexes.

There is also a 5-Yr Treasury Note auction at 1:00 p.m. ET that could impact markets (yesterday’s strong 2-Yr auction pushed yields lower).

Finally, there are a few notable earnings reports due after the close including: F (E: $0.64), CMG (E: $0.31), and IBM (E: $2.16) and the Fed’s Bowman is scheduled to speak at 4:05 p.m. ET.

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Corporate earnings growth and interest rate movements are likely to more directly impact equity prices.

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Corporate earnings growth and interest rate movements are likely to more directly impact equity prices: Tom Essaye Quoted in Forbes

Is Kamala Harris Good For Stocks? ‘Blue’ Sectors Like Tech Lead Monday Market Rally

The stock market fallout of shifting expectations for November’s election will likely be “very short term,” Sevens Report founder Tom Essaye wrote to clients, as more directly impactful developments like corporate earnings growth and interest rate movements are likely to more directly impact equity prices.

Also, click here to view the full Forbes article published on July 22nd, 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.

This political shake-up shouldn’t materially alter the direction of the markets

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This political shake-up shouldn’t materially alter the direction of the markets: Tom Essaye Quoted on BNN Bloomberg

Markets today: dip buyers wade back in to drive Wall Street gains

“This political shake-up shouldn’t materially alter the direction of the markets,” said Tom Essaye at The Sevens Report. “The ultimate direction of the S&P 500 will still be determined by economic growth.”

Also, click here to view the full BNN Bloomberg article published on July 22nd, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

BNN Bloomberg logo

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Explaining My Market View More Clearly

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Explaining My Market View More Clearly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Explaining My Market View More Clearly – Subscriber Q&A
  • Chart: Visualizing the Recent Market Rotation

Futures are flat while overseas markets were mixed overnight with European shares trading higher on tech earnings optimism but Chinese markets fell on growth concerns.

There were no market moving economic reports overnight.

Looking into the U.S. session, there are no Fed officials scheduled to speak today and just one economic release to watch this morning: Existing Home Sales (E: 3.99M).

Additionally, there is a 2-Yr Treasury Note auction at 1:00 p.m. ET that could be a catalyst for bonds and ultimately impact stocks (especially if the outcome is weak, it could weigh on risk assets).

Finally, earnings season continues to pick up with UPS ($1.98), GM ($2.64), and KO ($0.80) releasing results before the bell and TSLA ($0.59), GOOGL ($1.84), V ($2.41), and COF ($3.28) reporting after the close.

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Massive rotation from tech and tech related sectors

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Massive rotation from tech and tech related sectors: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Why Tech Stocks Dropped — And Everything Else Popped

“Bottom line, this massive rotation from tech and tech related sectors was caused primarily by investors positioning for a rate cutting cycle and secondarily by anticipation for a Trump administration and negative tech news,” writes Sevens Report’s Tom Essaye. “The intensity of it was absolutely turbocharged by the historically crowded trade of ‘long mega-cap tech,’ which is making this rotation out of tech and into cyclicals, value and the ‘rest of the market’ more intense.”

Also, click here to view the full Barron’s article published on July 18th, 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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This generally isn’t great for markets. 

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This generally isn’t great for markets: Tom Essaye Quoted in Blockworks

On the Margin Newsletter: Can top-performing assets maintain their runs through H2?

The 10-year Treasury constant maturity minus the 2-year (aka 10s-2s), currently around -0.26, is moving in a positive direction, Sevens Report founder Tom Essaye said. This generally isn’t great for markets. 

“The rise in 10s-2s is reinforcing my concern that investors are underappreciating the economic risks facing this market in the coming quarters and instead are viewing the world through positively-tinted glasses,” Essaye said. “I very much hope they are right.”

10s-2s go positive when 2-year Treasurys fall quickly because the market expects aggressive rate cuts from the Fed, which is what’s happening now. Markets love this. But, the Fed lowers rates when they get concerned about slowing economic growth, which, Essaye says, the market is currently underestimating.

Also, click here to view the full Blockwork article published on July 17th, 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.

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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.