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Trading Today Will be Dominated by Politics, Geopolitics, and Yields

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Trading Today Will be Dominated by Politics, Geopolitics, and Yields: Tom Essaye Quoted in Barron’s

Stocks Continue Falling Following Powell Remarks

The 10-year Treasury yield ticked lower to 4.949% after threatening to hit 5% for the first time since 2007.

Sevens Reports Research’s Tom Essaye notes that although two Federal Reserve officials are set to speak publicly today. He doesn’t expect either to move markets following Powell’s comments on Thursday.

“So, trading today will be dominated by politics, geopolitics, and yields,” he writes. “Any progress on finding a Speaker of the House will be welcomed by markets (regardless of whether it’s Jordan, McHenry or anyone else), and calming of tensions in the Middle East will similarly be welcomed by markets as would a decline in the 10-year yield. Meanwhile, the opposite of any of those will likely add more headwinds to stocks.”

Also, click here to view the full Barron’s article published on October 21st, 2023. 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

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Why Have Stocks Dropped?

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Why Have Stocks Dropped? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Have Stocks Dropped (And Are the Reasons Legitimate?)
  • Weekly Market Preview:  Focus Turns to Earnings (And They Need To Be Good)
  • Weekly Economic Cheat Sheet:  Important Growth and Inflation Updates

Futures are solidly lower following a further increase in geopolitical tensions and a lack of domestic political progress over the weekend.

Attacks on Israel from Lebanon increased over the weekend, raising fears of a two-front conflict.

Domestically, political gridlock continued as nine Republicans are now running for Speaker. But it’s not clear any of them have enough support to actually become Speaker.

Today the calendar is quiet as there’s just one notable economic report, the Chicago Fed National Activity Index (E: 0.05), so focus will remain on yields.  The 10-year yield sits at 5.00% as of this writing, and the higher it goes today, the lower stocks will likely fall.  Any progress on electing a Speaker of the House will be welcomed by the markets and likely push yields lower.

On the earnings front, we get a lot of important reports later this week, including MSFT, AMZN, KO, VZ, META, and others. But they come on Tues/Wed/Thurs and today there are just two reports to watch:  CLF ($ 0.46) and LOGI ($0.60).

Why Have Stocks Dropped

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It’ll be Very Hard for This Market to Rally

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It’ll be Very Hard for This Market to Rally: Tom Essaye Quoted in Barron’s

Dow Falls Nearly 250 Points. 10-Year Nears 5%.

Stocks tumbled and bond yields rose Thursday after Federal Reserve Chair Jerome Powell paved the way for keeping rates steady.

“Treasury yields are doing exactly what we’d expect given Powell essentially said rates won’t go any higher, but they will stay higher for longer and the economy is strong,” Sevens Report Research’s Tom Essaye told Barron’s.

 “It’ll be very hard for this market to meaningfully rally with yields this high. But, barring a major geo-political positive surprise or great earnings season.”

Also, click here to view the full Barron’s article published on October 19th, 2023. 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.

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Why Didn’t Powells’ Comments Cause A Rally?

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Why Didn’t Powells’ Comments Cause A Rally? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Didn’t Powells’ Comments Cause A Rally?

Futures are modestly lower as global economic data pointed to slowing growth and falling inflation pressures.

German PPI declined more than expected (-0.2% vs. (E) 0.4%). While UK Retail Sales were weak (-0.9% vs. (E) -0.1%) pointing to slowing growth and lower inflation.

Politically, there remains no end in sight to Republicans’ efforts to elect a Speaker, as Jim Jordan is expected to seek a third round of voting (one he is likely to lose, again).

Today there are no economic reports but there are two Fed speakers, Harker (9:00 a.m. ET) and Mester (12:15 p.m. ET), although given Powell’s comments yesterday neither should move markets.

So, trading today will be dominated by politics, geopolitics and yields.  Any progress on finding a Speaker of the House will be welcomed by market (regardless of whether it’s Jordan, McHenry or anyone else), any calming of tensions in the Middle East will similarly be welcomed by markets as would a decline in the 10-year yield.  Meanwhile, the opposite of any of those will likely add more headwinds to stocks.

Why Didn’t Powells’ Comments Cause A Rally?

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Rising Oil Prices Will Continue to Act as a Headwind

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Rising Oil Prices Will Continue to Act as a Headwind: Tom Essaye Quoted in Barron’s

Stocks Open Lower Amid Rising Tensions in the Middle East

“Looking into today’s session, there will remain considerable focus on the conflict between Israel and Hamas amid Biden’s visit to the region and if no progress is made towards a ceasefire, rising oil prices will continue to act as a headwind on risk assets,” writes Sevens Report Research’s Tom Essaye.

President Joe Biden arrived in Tel Aviv to meet with Israeli Prime Minister Benjamin Netanyahu. President Biden’s trip to Israel followed the explosion of a hospital in Gaza.

Also, click here to view the full Barron’s article published on October 18th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Rising oil prices

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Powell Speech Preview

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Powell Speech Preview (Good, Bad & Ugly): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Powell Speech Preview:  Good, Bad & Ugly
  • EIA Update and Oil Market Analysis

Futures are slightly higher following a quiet night of news as investors await Fed Chair Powell’s speech later today.

Earnings overnight were mixed with TSLA (down 5% after hours) missing estimates while NFLX (up 14% after hours) posted strong results.

Today will be a very busy day of data and Fed speak.  The key event today is Powell’s speech at noon, and to keep things simple, if Powell repeats the sentiment that the spike in Treasury yields has done the Fed’s job for it and, as such, another rate hike is unlikely, that should be positive for stocks and bonds.  If he does not repeat that sentiment and leaves the door open for another hike in 2023, that will be a negative.

Outside of Powell, we get several important economic reports today including:  Jobless Claims (E: 211K), Philadelphia Fed Manufacturing (E: -7.0) and Existing Home Sales (E: 3.900M) and markets will want to see Goldilocks data to support a bounce.

Back to the Fed, there are multiple speakers today other than Powell, including Jefferson (9:00 a.m. ET), Goolsbee (1:20 p.m. ET), Barr (1:30 p.m. ET), Bostic (4:00 p.m. ET); Harker (5:30 p.m. ET) and Logan (7:00 p.m. ET) although their comments will be overshadowed by Powell, so they shouldn’t move markets.

Finally, earnings continue and important reports today include:  T ($0.63), TSM (1.16), AAL (0.26), WAL ($1.91) and CSX ($0.42).

Powell Speech Preview

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Treasury Yields Are Rising Back Towards Cycle Highs

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Treasury Yields Are Rising Back Towards Cycle Highs: Tom Essaye Quoted in Barron’s

Stocks Open Lower as Retail Sales, Middle East Conflict Overshadow Earnings

Sevens Report Research’s Tom Essaye noted prior to the retail sales report that markets appeared to react to news President Joe Biden will visit Israel on Wednesday.

“Treasury yields are rising back towards cycle highs on news that President Biden will travel to Israel tomorrow to try and ease tensions in the region,” Essaye wrote.

Earnings season is kicking into full gear, but so far the reports have been overshadowed by the Israel-Hamas war and economic developments.

Also, click here to view the full Barron’s article published on October 17th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Treasury Yields Are Rising

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To strengthen your market knowledge take a free trial of The Sevens Report.

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Yields Are Rising – Tom Essaye Quoted in Barron’s

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Yields Are Rising: Tom Essaye Quoted in Barron’s

Stocks Gain as Concerns About Conflict in Middle East Ease

Sevens Report Research’s Tom Essaye told Barron’s that reports President Joe Biden is weighing a visit to Israel have sent stocks higher and oil prices lower. WTI crude oil futures were down 0.7%, to $86.93 a barrel.

“Yields are higher but that’s likely by nervous investors reversing ‘fear based’ positions. That came last week as a result of the Israel/Hamas conflict,” Essaye wrote. “Point being, yields are rising as investors get more comfortable with the geo-political environment.”

Also, click here to view the full Barron’s article published on October 16th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Yields Are Rising

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.

Hard Landing vs. Soft Landing Scoreboard Update

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Hard Landing vs. Soft Landing Scoreboard Update: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why Didn’t Stocks Drop On Yesterday’s Yield Spike?
  • Hard Landing vs. Soft Landing Scoreboard Update

Stock futures are lower and oil is up 3% as tensions in the Middle East remain elevated despite President Biden’s visit to Israel.

Chinese economic data topped estimates across the board overnight. But an imminent default by embattled property developer Country Garden weighed on sentiment in Asian markets.

In Europe, U.K. CPI came in hot as it held steady at 6.7% vs. (E) 6.5% in September.  While the Eurozone HICP “Narrow Core” met estimates at 4.5%.

Looking into today’s session, there will remain considerable focus on the conflict between Israel and Hamas amid Biden’s visit to the region and if no progress is made towards a ceasefire, rising oil prices will continue to act as a headwind on risk assets.

Domestically, there is just one economic report today: Housing Starts (E: 1.394 million) that should not meaningfully move markets. There are aslo multiple Fed officials scheduled to speak: Waller, Williams, Bowman, and Harker.

Earnings season also continues today with: MS ($1.27), ALLY ($0.80), CFG ($0.92), WGO ($1.32), TRV ($2.93), and PG ($1.71) and reporting ahead of the bell, while TSLA ($0.75) and NFLX ($3.46) will release results after the close.Hard Landing vs. Soft Landing

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An Invasion of Gaza by Israel Remains Imminent

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An invasion of Gaza: Tom Essaye Quoted in Barron’s

Stocks Are Rising Ahead of Big Week for Earnings

The Dow Jones Industrial Average was up 215 points, or 0.6%, shortly after the market opened on Monday. The S&P 500 was up 0.5%. The Nasdaq Composite rose 0.4%.

“Futures are slightly higher as the weekend brought no major changes to the current macro-economic set up,” wrote Sevens Report Research’s Tom Essaye earlier Monday morning. “Geopolitically, an invasion of Gaza by Israel remains imminent but so far the conflict hasn’t expanded regionally and oil is little changed as a result.”

Also, click here to view the full Barron’s article published on October 16th, 2023. However, to see the Sevens Report’s full comments on the current market environment sign up here.

Israel Readies For A Potential Invasion

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.