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CPI Preview: Good, Bad, & Ugly

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CPI Preview: Good, Bad, & Ugly: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Thoughts on the Meme-Stock Revival
  • CPI Preview: Good, Bad, & Ugly
  • Chart – NY Fed’s Consumer Survey Contains Hot Inflation Print

Global markets are little changed this morning as traders digest mostly better-than-expected economic data from Europe and await today’s PPI report and commentary from Fed Chair Powell.

“Meme stocks” GME and AMC are notably up 58% and 64%, respectively, in pre-market trading this morning (more on that in today’s report).

Economically, German CPI met estimates at 2.2% y/y while Economic Sentiment in the German ZEW came in at 47.1 vs. (E) 45.0. Domestically, the NFIB Small Business Optimism Index beat with a headline of 89.7 vs. (E) 88.3 but the data is having a limited impact on markets this morning.

Looking into today’s session, focus will be on PPI (E: 0.3% m/m, 2.2% y/y) and Core PPI (E: 0.2% m/m, 2.3% y/y) due out at 8:30 a.m. ET. A “hot” print would spark hawkish, risk-off money flows while a cooler-than-expected report could see the S&P 500 test all-time-highs as CPI whisper numbers are dialed back.

Finally, there are a handful of Fed speakers today including Cook (9:10 a.m. ET) ahead of the bell and Schmid (8:15 p.m. ET) later this evening. Most importantly though, Powell will speak at 10:00 a.m. ET and if he is more hawkish than two weeks ago at the May FOMC meeting, that will put upward pressure on rates and weigh, potentially heavily, on stocks.

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The key parts of the release will be one and five-year inflation expectations

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The key parts of the release will be one and five-year inflation expectations: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Dow Opens Higher, Extending Winning Streak

Aside from the Fed speakers, traders will get an update on consumer sentiment from the University of Michigan. Sevens Report Research’s Tom Essaye writes that the key parts of the release will be one-year inflation expectations and five-year inflation expectations.

“If both of those numbers are higher than expected, it’ll be another negative signal on inflation and don’t be surprised if Treasury yields rise in response to them and stocks give back these early gains,” Essaye writes.

Also, click here to view the full Barron’s article published on May 10th, 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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Are Stagflation Risks Real?

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Are Stagflation Risks Real? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are Stagflation Risks Real?
  • Weekly Market Preview:  If Treasury Yields Rebound, Will That Hit Stocks?
  • Weekly Economic Cheat Sheet:  CPI on Wednesday, Important Growth Data Throughout the Week

Futures are slightly higher following a very quiet weekend of news as investors look ahead to a potentially very important week that includes Wednesday’s CPI report.

China announced plans to sell $140 billion in long term bonds to fund more economic stimulus, which will help combat recession fears in that economy.

There was no notable economic data out over the weekend.

Today focus will be on the New York Fed One Year Inflation Expectations (3.0%).  If they run hot like we saw in Friday’s University of Michigan Inflation Expectations, Treasury yields should rise and pressure stocks.  Outside of that data, we also have two Fed speakers, Jefferson & Mester (9:00 a.m. ET), but they shouldn’t move markets unless they talk about rate hikes.

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Is Gasoline Demand Another Economic Warning Sign?

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Is Gasoline Demand Another Economic Warning Sign? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Is Gasoline Demand Another Economic Warning Sign?
  • Did Earnings Season Change the Market Outlook?

Futures are solidly higher thanks to continued momentum from Thursday’s rally following a quiet night of news.

Economically, UK data was stronger than expected (GDP and Industrial Production beat estimates) but it’s not changing BOE June rate cut assumptions.

Today there is just one notable economic report, the University of Michigan Consumer Sentiment Index (E: 77.0) and the key parts of that release will be the 1-Yr Inflation Expectations (E: 3.2%) and the 5-Yr. Inflation Expectations (E: 3.0%).  If both of those numbers are higher than expected, it’ll be another negative signal on inflation and don’t be surprised if Treasury yields rise in response to them and stocks give back these early gains.

In addition to that one economic report, we also get numerous Fed speakers today including: Bowman (9:00 a.m. ET), Logan (10:00 a.m. ET), Kashkari (10:00 a.m. ET), Goolsbee (12:45 p.m. ET) and Barr (1:30 p.m. ET).  However, unless one of them explicitly advocates for rate hikes, they shouldn’t move markets.

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There are only really three important weeks of earnings season

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There are only really three important weeks of earnings season: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Dow, S&P 500 Tick Higher

“There are only really three important weeks of earnings season, and Disney comes the week after it,” Sevens Report Research’s Tom Essaye told Barron’s. “It sort of puts a bow on earnings season, but it’s not like Disney is really that representative of the broader economy.”

“The global market has convinced themselves that that the [European Central Bank] and the BOE are going to cut in June,” Essaye says. “And if the Bank of England pushes back on that, I think could be a little bit of a negative surprise.”

Also, click here to view the full Barron’s article published on May 7th, 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.

What Are The GRANOLAS and Why Are They Attractive?

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What Are The GRANOLAS and Why Are They Attractive? Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Are The GRANOLAS and Why Are They Attractive?
  • EIA Analysis and Oil Market Update

Futures are modestly weaker following a quiet night of news as investors digest the last weeks’ gains.

Economically, Chinese exports (1.5% vs. (E) 1.3%) and imports (8.4% vs. (E) 4.7%) were stronger than expected, offering some optimism for that economy.

Tech earnings continued to be mixed as semiconductor company ARM Holdings (ARM) posted soft guidance and the stock is down 8% pre-market.

Today focus initially will be on the BOE Rate Decision, as no rate cut is expected but the BOE may signal a rate cut is coming in June.  In the U.S., the only notable number is Jobless Claims (E: 212K) and there’s just one Fed speaker today (Daly at 2:00 p.m. ET) and it’ll take a significant surprise from either event to move markets.

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May MMT Update: Less Bad News Is Not Good

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May MMT Update: Less Bad News Is Not Good: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • May Market Multiple Table Update: Don’t Confuse Less-Bad News for Actual Good News

Futures are little changed this morning as favorable EU economic data and strong bank earnings from UBS and UniCredit offset escalating geopolitical tensions in Gaza.

Geopolitically, Israeli tank units seized a critical Rafah border crossing with Egypt as ceasefire talks reportedly continue, however the market impact is limited this morning with oil futures slightly lower.

Economically, UK’s Construction PMI topped estimates (53.0 vs. E: 51.1) and EU Retail Sales rose 0.8% vs. (E) 0.7% helping ease worries about fading economic growth in Europe.

Looking into today’s session, focus will be on the Fed’s Kashkari who speaks mid-morning (11:30 a.m. ET). The market is looking for more confirmation of sooner-than-later rate hikes in 2024.

Then this afternoon, there is a 3-Yr Treasury Note auction at 1:00 p.m. ET which will be closely watched by bond traders to see how well the larger than expected Q2 bond issuance will be absorbed by the market. A tailing auction that sends yields higher will be negative for stocks.

Finally, there is just one economic report this afternoon: Consumer Credit ($15.5B) and two earnings reports to watch: DIS ($1.11), LYFT ($0.02).

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Markets have held up well to a dramatic reduction in rate-cut estimates

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Markets have held up well to a dramatic reduction in rate-cut estimates: Tom Essaye, Sevens Report Editor, Quoted in MarketWatch on MSN

This is the big question markets have for Fed’s Jerome Powell, BlackRock says

“Since the start of the year, markets have held up well to a dramatic reduction in rate-cut estimates,” Tom Essaye, founder and president of Sevens Report Research, said in a note on Tuesday. “Remember, in January the market expected six rate cuts starting in March.”

Stocks and bonds haven’t been hit harder by the recent shift in those expectations because “the market still expects the next move from the Fed to be a cut,” Essaye said. A reiteration of that message by Powell on Wednesday could help stop the S&P 500’s recent slide, he said.

Also, click here to view the full MarketWatch article published by MSN on May 1st, 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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Earnings in those tech companies are really important

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Earnings in those tech companies are really important: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Stocks Open Mixed Ahead of Fed Decision

“Bottom line, there are a lot of potential catalysts for markets today but the key to stocks stabilizing will be economic data that contradicts recent signs of stagflation emerging in the economy and a benign Fed day with an as-expected dovish announcement and no surprises from Chair Powell,” writes Sevens Report Research’s Tom Essaye. “Otherwise, we could easily see a test or breakdown through the April lows in the S&P 500 today.”

Also, click here to view the full Barron’s article published on May 1st, 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.

Earnings in those tech companies are really important

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Earnings in those tech companies are really important: Sevens Report Editor, Tom Essaye, Quoted in Barron’s

Magnificent Seven Stocks Largely Dip Before Amazon Earnings Release

“I can tell you with a lot of confidence that if Google [parent Alphabet] and Microsoft did not post strong earnings last week, we would be below 5000 in the S&P 500 because, really, nothing else was that positive,” Sevens Report Research’s Tom Essaye told Barron’s. “Earnings in those tech companies are really important. And if you see Amazon whiff and you see Apple whiff, that’s just going to add to the negativity.”

Also, click here to view the full Barron’s article published on April 30th, 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.