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A Unique ETF Focused on Managing Tax Liabilities

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A Unique ETF Focused on Managing Tax Liabilities : Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • A Unique ETF Focused on Managing Tax Liabilities
  • JOLTS Data Takeaways – Another Goldilocks Report

Futures are higher with tech shares leading thanks to solid earnings reports after the close yesterday as investors look past political turmoil overseas.

Politically, lawmakers in South Korea moved to impeach President Yoon for implementing martial law yesterday while the French government faces a no-confidence vote today. Neither situation is a material negative for markets but both are weighing on sentiment.

In corporate news, CRM and OKTA (a newer cloud software focused company) both posted solid earnings after the close yesterday which is bolstering the broader tech sector in premarket trade today.

Today, we will get two more important economic reports: The ADP Report (E: 165K) and the ISM Services PMI (E: 55.5). Factory Orders (E: 0.4%) will also be released but is less likely to move markets than the first two data points.

The Fed’s Musalem is scheduled to speak at 8:45 a.m. ET, however the market’s main focus today will be Powell’s commentary (1:45 p.m. ET) as he could shed light on December rate cut plans or the policy rate path in 2025. Any hawkish surprise from the Fed Chair could spur volatility today.

Finally there is one notable earning release today from discount retailer DLTR ($1.07) that could offer insight into consumer spending habits.

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Sentiment Divergence Between Advisors and Investors

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What’s in Today’s Report:

  • Sentiment: Divergence Appearing Between Investors and Advisors
  • ISM Manufacturing PMI Takeaways

Futures are little changed amid escalating U.S.-China trade tensions and ongoing political turmoil in Europe.

Overnight, China announced an export ban of specific rare minerals with military applications to the U.S. in the latest escalation of trade tensions between the two countries.

EU shares edged higher ahead of the French government’s “vote of no confidence” (tomorrow) linked to ongoing budget turmoil.

Looking into today’s session, there are two economic reports to watch: JOLTS (E: 7.49 million) and Motor Vehicle Sales (E: 16.0 million). Investors will want to see more “Goldilocks” data to support post-election growth optimism.

Additionally, there are two Fed speakers to watch: Kugler (12:35 p.m. ET) and Goolsbee (1:30 p.m. ET and 3:45 p.m. ET), and as long as they do not offer any hawkish surprises, stocks should be able to extend gains to new record highs today.

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One Last Hurdle for the Santa Rally

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One Last Hurdle for the Santa Rally: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • One Last Hurdle for the Santa Rally
  • Weekly Market Preview: Can Goldilocks Data Offset Political Volatility?
  • Weekly Economic Cheat Sheet: The Last Big Week of 2024

Futures are slightly lower on political volatility as Trump issued more tariff threats and made another unorthodox cabinet appointment while President Biden pardoned his son Hunter.

Trump threatened 100% tariffs on BRICs countries (Brazil, Russia, India, China) if they abandon the U.S. dollar. In addition, Trump made another unorthodox cabinet pick with Kash Patel as FBI Director.

Finally, President Biden reversed course and gave an unconditional pardon to his son Hunter, sparking bi-partisan criticism.

Today focus will turn from politics to actual economic data and the key report today is the ISM Manufacturing PMI (E: 47.6).  As has been the case, an in-line to slightly soft number would be the best case for stocks as it wouldn’t signal any further deterioration in the manufacturing sector and, at the same time, keep a Fed rate cut more likely than not.

We also have two Fed speakers today, Waller (3:15 p.m. ET) and Williams (4:30 p.m. ET) and any commentary that makes a December rate cut more likely will be a positive for markets.

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What Credit Spreads Are Saying About the Economy

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What’s in Today’s Report:

  • What Credit Spreads Are Saying About the Economy

Futures are little changed despite more trade threats from President-elect Trump overnight.

After the close, Trump stated he’d apply a 25% tariff to all goods from Mexico and Canada and an additional 10% tariff on goods from China, again reminding investors that not all proposed policies are market friendly.

Focus today will be on economic data and earnings and it’s likely to be the last potentially busy day of the week given the looming holiday.

The key report today is the FOMC Minutes (2:00 p.m. ET) which will give us insight into the November Fed decision.  Any commentary in the minutes that makes a December rate cut less likely will be a modest negative for stocks, while a strong sense of commitment for additional cuts will be a positive.  Other reports today include the Case-Shiller Home Price Index (E: 4.8%) and New Home Sales (E: 725K),

Finally, there are important retail and tech earnings today and some reports we’ll be watching include: BBY ($1.30), DKS ($2.68), DELL ($2.05), HPQ ($0.94).

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How Clients Should View Political Headlines

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How Clients Should View Political Headlines: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Clients Should View Political Headlines
  • Weekly Economic Preview: Inflation and Fed Minutes in Focus

Markets are trading with a risk-on tone to start the week with stock futures solidly higher, bond yields falling and the dollar declining as investors digest Trump’s Wall-Street-friendly pick of Scott Bessent for Treasury Secretary.

Economically, Industrial Production in Taiwan (a proxy for global semiconductor demand) slowed from 11.22% to 8.85% in October which could weigh modestly on tech stocks today while a German Business Sentiment gauge saw current and expected conditions deteriorate, rekindling worries about the EU economy.

Looking into today’s session, there is one second-tiered economic report to watch: Dallas Fed Manufacturing Survey (E: -3.9) but it should not meaningfully move markets.

There are no Fed officials scheduled to speak today however there is a 2-Yr Treasury Note auction at 1:00 p.m. ET. A good portion of today’s early rally in stocks futures can be attributed to the pullback in yields this morning, so a soft auction that sends yields back higher is the biggest risk to the early week gains today.

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Who’s Right on the Consumer? WMT (Positive) or TGT (Negative)

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Who’s Right on the Consumer?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Who’s Right on the Consumer?  WMT (Positive) or TGT (Negative)

Futures are little changed on disappointing NVDA earnings and after further escalation in the Russia/Ukraine war.

NVDA beat earnings estimates ($0.81 vs. (E) $0.74) but guidance disappointed at only 6.8% FQ4 revenue growth vs. (E) 11.75% and the stock is down 2% pre-market.

Geo-politically, Russia fired a non-nuclear ICBM into Ukraine for the first time, further escalating the conflict.

Today focus will turn back towards economic data as there are three notable reports (ranked in order or importance):  Jobless Claims (E: 219K), Philly Fed (E: 7.0) and Existing Home Sales (E: 3.90 million).  Given elevated Treasury yields, in-line to slightly soft data will be best for markets, as it reinforces a soft landing and would slightly boost December rate cut expectations.

There are also several Fed officials speaking today, including Hammack (8:45 a.m.), Goolsbee (12:25 p.m. ET) and Barr (4:40 p.m. ET) although they are unlikely to move markets (the Fed outlook is pretty known at this point and the looming jobs report will likely decide if we get a rate cut in December, or not).

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Data Check: Hard Landing or Soft Landing?

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Data Check: Hard Landing or Soft Landing?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Hard Landing vs. Soft Landing Scoreboard
  • Chart: NVDA Earnings Loom Large – Key Technical Support in Focus

Futures are slightly higher but well off session highs as “warm” EU inflation data pushed yields higher overnight with the U.S. 10-Yr pushing back beyond 4.40%.

Economically, inflation data in Europe was “warm” as U.K. Core CPI rose 3.3% y/y vs. (E) 3.2% in October while German PPI unexpectedly rose 0.2% m/m last month following a sizeable 0.5% drop in September.

There are no notable economic reports today but there is a 20-Yr Treasury Bond auction at 1:00 p.m. ET that could move markets depending on demand measures for the longer duration government bonds (higher yields would weigh on stocks again).

Additionally, there are two Fed speakers today Cook (11:30 a.m. ET) and Bowman (12:15 p.m. ET), but unless they are materially hawkish, their comments should not move markets.

Finally, earnings season has largely wound down however there are some notables reporting quarterly results today including: TGT ($2.29), TJX ($1.09), NVDA ($0.74), PANW ($1.48), SQM ($0.64).

Interestingly, Barclays analysts noted earlier this week that options markets suggest today’s report from NVDA will be the biggest catalyst remaining in 2024, underscoring the importance of investor sentiment towards the AI-darling’s growth prospects, leaving the chip-maker’s earnings report a potential make-or-break event for markets this afternoon.

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2025 Market Risks: Pullback Causers vs. Rally Killers

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Why Did Stocks Drop Last Week?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • 2025 Market Risks: Pullback Causers vs. Rally Killers

Futures are lower with EU shares as escalating geopolitical tensions are driving risk-off money flows this morning.

Overnight, Russian President Putin approved a doctrine that lowered the threshold for the use of nuclear weapons and shortly thereafter, Ukraine reportedly launched their first long-range ballistic missile attack on targets in Russia prompting risk-off/safe-haven money flows.

Economically, Eurozone HICP (CPI equivalent) was inline in October with a headline of 2.0% y/y and 2.7% y/y Core which did not materially move markets amid the geopolitical developments.

Today, the fluid geopolitical situation in between Russia and Ukraine will be in focus as the uncertainties surrounding the next steps in the conflict will likely drive risk-aversion until some degree of clarity emerges.

Domestically, there is one economic report due to be released: Housing Starts (1.3M) and two Fed speakers to watch: Goolsbee (12:25 p.m. ET) and Schmid (1:10 p.m. ET). Barring a big surprise in the data or any meaningfully dovish or hawkish changes in rhetoric, the data and Fed speakers will not likely move markets materially.

Finally, on the earnings front we will get quarterly results from WMT ($0.53), LOW ($2.81) and MDT ($1.24) today.

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Why Did Stocks Drop Last Week?

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What’s in Today’s Report:

  • Why Did Stocks Drop Last Week?
  • Weekly Market Preview:  Focus on Treasury Secretary, NVDA earnings and economic growth (Thursday/Friday).
  • Weekly Economic Cheat Sheet:  Important Growth Data Late This Week

Futures are little changed following a quiet weekend of news as markets continue to digest last week’s rise in Treasury yields, and the return of political surprises (via Trump’s cabinet announcements).

There were no notable economic reports overnight.

Politically, the major remaining cabinet pick from Trump is Treasury Secretary and it should come early this week (and another unorthodox choice would further roil markets).

Today the calendar is quiet as there is just one economic report, Housing Market Index (E: 43), and one Fed speaker, Goolsbee (10:00 a.m. ET).  So, focus will be on Trump’s cabinet (again, the more traditional choice for Treasury, the better for markets) and on the 10-year yield.  If it keeps rising, that will be a continued headwind on stocks.

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The bullish thesis for stocks is stronger now

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The bullish thesis for stocks is stronger now: Tom Essaye Quoted in Market Watch

The market has passed four key tests, newsletter writer says

Tom Essaye, founder and president of the Sevens Report, says the bullish thesis for stocks is stronger now because all of the tests set up two weeks ago were passed.

The major economic reports of the past two weeks were solid, with the payrolls disappointment largely explained by hurricanes and strikes;

The Fed remains committed to cutting rates;

Earnings were more mixed than excellent but still haven’t changed estimates for S&P 500 earnings per share next year very much;

And Republicans have large enough majorities to push through pro-growth legislative changes.

“While the bullish thesis passed the tests of the past two weeks, do not confuse this with a market that cannot go down,” he says. “There are real risks to this rally that we cannot ignore over the medium/longer term, although investors could ignore them unless forced not to between now and year-end.” A move to 6,200 on the S&P 500 before the end of the year is “entirely possible” as he said the market will likely favor value, cyclical sectors and the equal-weight S&P 500 over the market-weighted index.

Also, click here to view the full MarketWatch article published on November 11th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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