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Understanding Why Stocks Hit New Highs

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What’s in Today’s Report:

  • Understanding Why Stocks Hit New Highs
  • Weekly Market Preview: Does Goldilocks Growth and Inflation Data Continue?
  • Weekly Economic Cheat Sheet: September Flash PMIs Tuesday, Core PCE Price Index Friday are Key Reports

Futures are modestly lower as markets digested last week’s new highs following a mostly quiet weekend of news.

Politically, the U.S. government could shut down this Friday and that is weighing slightly on markets, although we don’t view any temporary, partial shutdown as a risk to the rally.

There was no notable economic data overnight.

Today the only economic report is the Chicago Fed National Activity Index (E: -0.19) and it’s unlikely to move markets, so focus instead will be on the Fed.

There are several Fed speakers today and the most important of them is Williams at 9:45 a.m. ET.  If Williams embraces two additional rate cuts this year, that should help support markets.  More broadly, markets will want to see dovish tones from most Fed speakers going forward, confirming the Fed intends several more rate cuts.  Other Fed speakers today include: Musalem (10:00 a.m. ET), Hammack (12:00 p.m. ET) and Barkin (12:00 p.m. ET).

 

What the Fed Rate Cut Means for Markets

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What’s in Today’s Report:

  • What the Fed Rate Cut Means for Markets (A Vote for the Run Hot Economy)

Futures are moderately higher following a mostly quiet night of news as investors digest Wednesday’s rate cut and the prospect of even lower rates in the future.

Economic data underwhelmed overnight as Japanese Machine Orders dropped (–4.6% vs. (E) -3.5%) while Australian employment fell –5,400 vs. (E) 22k.

Today we get a rate decision from the Bank of England (no change is expected) and some notable economic reports: Jobless Claims (E: 246K), Philly Fed (E: 3.0) and Leading Indicators (E: -0.1%).  With the Fed now cutting rates, stable and solid economic data is needed to support a further rally in stocks.  If economic data begins to roll over, however, that will be a new negative for markets because it’ll imply the Fed waited too long to begin to cut.

On the earnings front, some notable reports include:  DRI ($1.99), FDX ($3.65), LEN ($2.12).

 

Sevens Report Weighs on AI Trade as Alphabet Hits $3 Trillion Milestone

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Essaye flags next Big Tech contender for record valuation

Google hits $3T market cap. This Big Tech name could be next.

Sevens Report Research Founder Tom Essaye joins Opening Bid to discuss the Google parent company’s recent gains and what it signals about the artificial intelligence (AI) trade. He also shares another Big Tech name that he thinks could be the next to hit $3 trillion.

Also, click here to view the full video on Yahoo Finance published on September 16th, 2025. 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.

What Would a “Run Hot Economy” Mean for Markets?

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What’s in Today’s Report:

  • What Would a “Run Hot” Economy Mean for Markets?
  • Retail Sales Data Takeaways – Consumer Resilience Persists

Futures are slightly lower ahead of the Fed decision after the Chinese government ordered tech companies to halt purchases of all AI chips from NVDA (-1.5% pre-market).

Economically, Eurozone Core HICP (CPI equivalent) held steady at 2.3% in August, meeting expectations which is helping tamp down worries about a potential resurgence in global inflation pressures.

Looking into today’s session, there is one economic report due to be released this morning: Housing Starts & Permits (E: 1.37M, 1.37M), but barring a big surprise one way or another, the market reaction should be limited as the Fed decision comes into focus.

There is a 4-Month Treasury Bill auction at 11:30 a.m. ET that could prompt a modest to moderate move in short-term Treasuries as traders attempt to gauge the near-term outlook for Fed policy ahead of the FOMC release, but again any market reaction should be limited.

The September FOMC meeting announcement will be released at 2:00 p.m. ET (E: -25 bp rate cut) followed by Fed Chair Powell’s press conference at 2:30 p.m. ET. An as-expected or dovish meeting outcome should support new stock market highs while the biggest risk to the rally is a hawkish surprise that could make for a painful afternoon selloff in the broader equity market.

 

FOMC Preview

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What’s in Today’s Report:

  • FOMC Preview
  • Chart – The Threshold for “Fed Disappointment” is 75 bp by Yearend
  • Empire State Manufacturing Survey Takeaways

Futures are modestly higher this morning thanks to bullish momentum as traders look ahead to the Fed decision.

Economically, Eurozone Industrial Production rose 0.3% vs. (E) 0.5% while the German ZEW Survey’s Current Conditions headline fell to -76.4 vs. (E) -74, however, neither report is materially impacting markets this morning with the Fed decision looming large.

Today, there are multiple important economic reports due to be released including Retail Sales (E: 0.3%), Import & Export Prices (E: -0.2%, -0.2%), Industrial Production (E: 0.0%), Business Inventories (E: 0.2%), and the Housing Market Index (E: 33).

Additionally, there is one noteworthy earnings release to watch: FERG ($3.01), but with the September FOMC meeting getting underway it is likely that a sense of “Fed paralysis” begins to grip markets as traders position into the decision.

 

Understanding Where the “Bubble” Is in AI

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What’s in Today’s Report:

  • Understanding Where the “Bubble” Is in AI
  • Weekly Market Preview: Does the Fed Start a New Rate Cutting Cycle?
  • Weekly Economic Cheat Sheet: Fed is Key, but There’s Important Growth Data This Week, Too

Futures are slightly higher following a mostly quiet weekend and despite negative tech news and economic data from China.

China declared that NVDA had broken anti-monopoly news, escalating existing tech tensions between China and the U.S. (although this move isn’t a total surprise).

Economically, Chinese data underwhelmed as Retail Sales rose 3.4% vs. (E) 3.8% while Industrial Production gained 5.2% vs. (E) 5.6%.

Focus today will be on the first economic reading of September, the Empire Manufacturing Index (4.3) and markets will want to see stability to further push back on slowdown concerns.

What Does A Bad Labor Market Look Like and What Does It Mean for Markets?

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What’s in Today’s Report:

  • What Does A Bad Labor Market Look Like and What Does It Mean for Markets?
  • Weekly Market Preview: Do Stagflation Fears Rise Further?
  • Weekly Economic Cheat Sheet: CPI on Wednesday the Key Report This Week

Futures are slightly higher as markets bounce from Friday’s post-jobs report declines, as investors look ahead to key inflation data this week.

Economically, data was mixed as Chinese and German exports (4.4% vs. (E) 5.5% and –0.6% vs. (E) 0.1% respectively) missed estimates, but German Industrial Production beat expectations (1.3% vs. (E ) 1.0%).

Geopolitically, Japanese stocks rallied hard (more than 1%) as PM Ishiba resigned (although it wasn’t a surprise).

This will be another important week because the PPI and CPI reports (Tuesday and Wednesday respectively) will either increase stagflation concerns (negative for stocks/bonds) or further pushback on them (positive for stocks and bonds). But, today should be mostly quiet as there are no notable economic reports nor any Fed speakers.

Breakeven Inflation Rates: Powell Has a “Price Problem”

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What’s in Today’s Report:

  • Breakeven Inflation Rates:  Powell Has a “Price Problem”

Futures are modestly lower following a night of underwhelming earnings.

Earnings overnight were bad as tech companies DELL (–6% pre-market) and MRVL (-15% pre-market) both posted disappointing results, as did retailer GAP.

Economically, German retail sales missed expectations (-1.5% vs. (E) 0.0%) but that isn’t moving markets.

Today focus will be on inflation via the Core PCE Price Index (E: 0.3% m/m, 2.9% y/y) and to keep things simple, if this number is “hot” (so Core PCE Price Index above 3.0% y/y) that will increase inflation concerns, push back on rate cut hopes and, likely, pressure stocks further.  The other notable economic report today is Consumer Sentiment (E: 58.6) and focus will be on the inflation expectations inside the report.  The less they rise from last month, the better.

 

The Most Important Fed Speech of the Year (So Far)

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What’s in Today’s Report:

  • The Most Important Fed Speech of the Year (So Far)
  • Takeaways from Yesterday’s Sector Performance

Futures are seeing a modest bounce following a generally quiet night of news and head of Powell’s 10:00 a.m. ET speech.

Economically, German GDP declined more than expected, falling –0.3% vs. (E) -0.1%, adding to other hints of stagflation in the global data this week, although Japanese CPI met expectations (3.1% y/y).

There are no notable economic reports today so all the focus will be on Powell’s speech at 10:00 a.m. ET.  Market expectations are that he will signal he’s open to a rate cut in September, essentially reinforcing current market expectations.  If he does not and pushes back on rate cut hopes or ignores policy in his speech altogether, it will be a new market negative.

Finally, mid-season earnings (which have been mixed) continue with two notable reports today: BJ ($1.10), GFI ($0.59).

 

Tom Essaye Quoted In Barron’s – Two Threats Could Derail Market Rally

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Sevens Report president says stagflation or fading AI enthusiasm are key risks

2 Factors That Could Trigger a Stock Market Selloff

Despite recent economic surprises and geopolitical noise, none of it has slowed the market rally, according to Tom Essaye, president of Sevens Report Research.

“For the simple reason that they weren’t enough to make investors think that 1) tariffs may cause stagflation or 2) meaningfully reduce AI enthusiasm,” Essaye wrote.

He stressed that while conflicting inflation data, questions about data validity, and global tensions add uncertainty, investors should focus on whether developments increase stagflation risk or curb AI optimism.

“As long as the answer to both is ‘no,’ then while stocks may see some volatility, the trend in this market should remain higher,” Essaye concluded.

Also, click here to view the full article featured on Barron’s published on August 18th, 2025. 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.