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AI Bubble Watch: Part 2

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What’s in Today’s Report:

  • AI Bubble Watch: Part 2

Futures are slightly higher following more mixed trade news.

Japanese stocks rallied after an announcement that the U.S. would “fix” an issue of tariff stacking that would result in some tariff reduction.

On gold, the U.S. may apply tariffs to Swiss gold imports, possibly disrupting to global physical gold trade.

Economically, there were no notable reports overnight.

There are no notable economic reports today but there are two Fed speakers, Musalem (10:20 a.m. ET) and Bowman, and if they join the growing “dovish” camp and hint at a September rate cut, that should help support markets.

 

Why Markets Continue to Ignore Macro Risks

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What’s in Today’s Report:

  • Why Markets Continue to Ignore Macro Risks
  • Weekly Market Preview:  Focus Turns to Earnings (Including Major Tech Names)
  • Weekly Economic Cheat Sheet:  Flash PMIs Thursday is the Big Report This Week

Futures are modestly higher mostly on momentum following a generally quiet weekend of news.

There were no notable trade headlines over the weekend and markets are still awaiting any progress on trade deals with the EU, India and Japan.

Economically, there were no notable international reports overnight.

Today there is only one economic report, Leading Indicators (E: -0.2%), and it shouldn’t move markets.

Instead, focus today and this week will be on earnings and specifically the commentary from CEOs on the consumer and economy.  Some reports we’re watching today include: NXPI ($2.29), VZ ($1.18), DPZ ($3.93), CLF ($-0.67), CCK ($1.86).

 

Are Utilities the New AI Stocks?

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Are Utilities the New AI Stocks?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are Utilities the New AI Stocks?
  • Chart – Utilities Overtakes Tech Stocks in YTD Performance

Stock futures are slightly lower this morning while international markets were mixed in quiet trading overnight.

Economically, the Organization for Economic Cooperation and Development (OECD) raised their 2024 global growth forecast to 3.2% vs. 3.1% in May which saw yields edge higher overnight.

Looking into today’s session, there is one economic report to watch: New Home Sales (E: 700K) and one Fed speaker on the calendar but not until the close: Kugler (4:00 p.m. ET).

The Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 5-Yr Note auction at 1:00 p.m. ET. The Note auction has more potential to move markets, especially if demand is weak and yields move higher in reaction (negative for stocks), however the Bill auction could also move short-duration yields and impact stocks today.

Finally, there is one notable tech company reporting earnings today: MU (E: $1.15), but barring a big surprise either way, it is unlikely to move the broader stock market.

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Markets could get a bit ugly given recent tech weakness

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Markets could get a bit ugly given recent tech weakness: Sevens Report Editor, Tom Essaye, Quoted in Bloomberg

Tech Stocks Hit as Microsoft Down 6% in Late Hours: Markets Wrap

“If the Fed does not signal a September rate cut, markets could get a bit ugly given recent tech weakness — especially if earnings underwhelm,” said Tom Essaye at The Sevens Report.

Also, click here to view the full Bloomberg article published on July 29th, 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.

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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.

How Important Is AI to This Market?

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How Important Is AI to This Market? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • How Important Is AI to This Market?
  • Chart: Key Levels to Watch in NVDA Today
  • Fed’s “SHED” Release Takeaways Support Soft Landing

Futures are mildly lower as UK core inflation data failed to “cool” as much as hoped in April while traders await NVDA earnings after the close today.

Economically, the UK’s Core CPI figure came in at 3.9% vs. (E) 3.7% y/y in April, down from 4.3% in March which was a mild disappointment for broader global disinflation hopes.

Looking into today’s session it is a fairly busy day from a catalyst standpoint as we will get the latest Existing Home Sales report (E: 4.195 million) later this morning while the Fed’s Goolsbee is scheduled to speak at 9:40 a.m. ET.

As we move into the afternoon traders will be watching the results of a 20-Yr Treasury Bond auction (1:00 p.m. ET) before waiting on the release of the latest FOMC meeting minutes (2:00 p.m. ET).

Finally, some late season earnings could move markets with two notable retailers releasing results in the premarket: TGT ($2.05), TJX ($0.87) before all eyes turn the widely anticipated release of NVDA earnings ($5.55) after the close.

Bottom line, with stocks sitting on record highs investors will need to see economic data that remains “goldilocks,” the absence of any hawkish Fed surprises (i.e. consideration of rate hikes), steady yields, good retailer earnings, and solid guidance from AI bellwether NVDA to meaningfully advance beyond current levels.

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Today’s moves are being driven by the tech earnings

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Today’s moves are being driven by the tech earnings: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Rally as Strong Tech Results Ease Anxiety

“Most of today’s moves are being driven by the tech earnings, which is helping ease the anxiety from Thursday’s results,” Sevens Report Research’s Tom Essaye told Barron’s.

Also, click here to view the full Barron’s article published on April 26th, 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.

As you see people reducing tech exposure, you’re getting the whole gamut being sold

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As you see people reducing tech exposure, you’re getting the whole gamut being sold: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Why the Dow and Nasdaq Are Going in Different Directions

Sevens Report Research’s Tom Essaye told Barron’s that earnings this week in the tech space haven’t been good. Netflix was the latest nail in the coffin ahead of major big tech players next week.

“As you see people reducing tech exposure, you’re getting the whole gamut being sold,” Essaye says. “And we know that’s really what’s happening, because the Dow is up on the day. And the S&P 500, if you were to pull tech out, wouldn’t be doing that bad.”

Also, click here to view the full Barron’s article published on April 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.

Nvidia Has Been The ‘Poster Child’ Of AI Enthusiasm

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Nvidia Has Been The ‘Poster Child’ Of AI Enthusiasm: Tom Essaye Quoted in Bloomberg Featured on Yahoo Finance

Tech Up in Late Hours on Nvidia’s Bullish Outlook: Markets Wrap

“Nvidia has been the ‘poster child’ of AI enthusiasm because NVDA makes the type of semiconductor chips that power generative AI and demand for those chips has gone through the roof,” said Tom Essaye, founder of The Sevens Report. “The AI-driven rally in the ‘Mag Seven’ is largely justified by the fact that they’re making a lot more money than they were previously.”

While Nvidia is the proverbial “picks and shovels” of the “AI gold rush”, other big-tech companies such as Microsoft Corp., Meta Platforms Inc., Alphabet Inc., Amazon.com Inc. and Apple Inc. have also seen large stock rallies as investors expect these companies to harness the power of generative AI to boost profits, Essaye noted.

“Has the AI mania gone too far and are we looking at a bubble situation?” Essaye said. “Based on what most of us think about typical bubbles, the answer is ‘no’ they are not in a bubble.”

Also, click here to view the full Bloomberg article featured on Yahoo Finance published on February 21st, 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.

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 Earnings Are Saying

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What Earnings Are Saying: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Earnings Are Saying About Current Economic Growth

Futures are modestly lower following a night of underwhelming earnings results.

INTC (stock down 10% premarket) gave soft guidance while V and TMUS (stocks down –3% each) posted underwhelming results.

Economically, German GfK Consumer Climate missed expectations (-29.7 vs. (E) -24.5) but that’s not moving markets.

Today focus will be on the Core PCE Price Index (E: 0.2% M/M, 3.0% Y/Y) and this number needs to meet or be lower than expectations to help support the stock rally.  If Core PCE prints solidly above expectations look for higher yields and lower stock prices.  The other notable economic number today is Pending Home Sales (E: 1.3%) but that shouldn’t move markets.

On the earnings front, the key report today is AXP ($2.65) and specifically we’ll be watching for is their commentary on consumer spending (the more positive, the better for markets).  Other notable earnings include CL ($0.85) and NSC ($2.90).

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