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What’s in Today’s Report:

  • Is Valuation a Problem for the Market (Yes & No)
  • September Flash PMI Takeaways

Futures are rebounding from yesterday’s Powell-induced declines with tech leading as MU reported solid Q3 earnings while BABA announced a $50B AI investment overnight.

Economically, Germany’s Ifo Survey disappointed across the board with the headline Business Climate down to 87.7 vs. (E) 89.1.

Today, there is one economic report to watch: New Home Sales (E: 649K) and one Fed official scheduled to speak: Daly (4:10 p.m. ET).

The Treasury will hold a 4-Month Bill auction (11:30 a.m. ET) and a 5-Yr Note auction (1:00 p.m. ET) today, and as has been the case recently, the results have the potential to move fixed income markets/Fed policy expectations and ultimately could impact stocks.

Additionally, there are a few more noteworthy earnings releases due out today including: CTAS ($1.19), THO ($1.16), KBH ($1.50).

 

Sevens Report Q3 ’25 Quarterly Letter Coming Next Wednesday

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You can view our Q2 ’25 Quarterly Letter here.

To learn more about the product (including price), please click this link and if you’re interested in subscribing, please email info@sevensreport.com.

 

Valuation Update

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What’s in Today’s Report:

  • Valuation Update
  • Gold Market Update: Breakout or Breakdown?

Futures are indicating an open at fresh record highs and international markets traded higher overnight as earnings continue to top expectations and economic concerns fade.

There were no notable economic reports or market-moving headlines overnight outside of more mostly upbeat earnings.

Looking into today’s session, there are several reports on the housing market due out early: Case-Shiller Home Price Index (E: 1.3%), FHFA House Price Index (E: 1.3%), and New Home Sales (E: 760K), but the most important economic release to watch today is Consumer Confidence (E: 109.0) as a disappointing print could weigh on consumer spending expectations into year-end.

There are no Fed officials scheduled to speak today however the Treasury will hold a 2-Yr Note Auction at 1:00 p.m. ET. The risk to equities is a soft outcome as that could rekindle the hawkish policy concerns that weighed on risk assets this past Friday.

Finally, earnings remain the main focus of the market right now and several big companies are due to report today including: UPS ($2.52), GE ($0.41), and SHW ($2.07) before the open, and AMD ($0.67), MSFT ($2.06), GOOGL ($23.13), V ($1.53) after the close.

Tom Essaye Quoted in Barron’s on May 25, 2021

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Apple and the Rest of Big Tech Might Be Ready to Rally. Here’s Why.

Considering the pace at which AAPL/AMZN/NFLX/GOOGL and MSFT are growing earnings and the long-term prospects for these companies, valuations are reasonable…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

How Bad Can It Get? Valuation Worst Case Scenario

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What’s in Today’s Report:

  • How Bad Can It Get?  Valuation Worst Case Scenario

Futures are sharply higher after China took further steps to support the economy while economic data was mixed.

China announced a 1% cut to bank reserve requirements and pledged to do more to support the economy.  This announcement is the main reason stocks are bouncing back this morning.

Global composite PMIs were mixed as China beat estimates (52.2 vs. (E) 51.9) while the Euro Zone Composite PMI missed expectations (51.1 vs. (E) 51.3).

Today focus will be on two big events.  First, the jobs report.  Expectations are for 180K jobs adds, a 3.7% unemployment rate and a 3.0% annual wage increase.  The best case number is a mild miss on all three metrics, so around 150kish jobs, 3.8% unemployment (or higher) and under 3.0% wages.  The worst case scenario (a stagflation number) is a miss on jobs but firm unemployment and wages.  If that happens, it’ll likely be another ugly day.

The other major event today is the  Powell speech at 10:15 a.m. ET (he’ll be joined by Yellen and Bernanke).  The key here is Powell changing his rhetoric to look more flexible on 1) rate increases and 2) balance sheet reduction.  If he does that, especially with regards to the balance sheet, then stocks can extend this early rally.

Why the October Sell Off Was Different

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What’s in Today’s Report:

  • Why The October Sell Off Was Different
  • Valuation Update (the market is fairly valued here)

Futures are moderately lower following more disappointing Chinese economic data.

Chinese auto sales plunged 12% yoy in November and annual car sales growth turned negative for the first time since the early 1990’s, further fanning fears of a Chinese economic slowdown.

Earnings results were mixed as DIS posted solid numbers while EU corporate earnings were disappointing.

Today focus will be on inflation via PPI (E: 0.2%) and it needs to remain “Goldilocks” so as to not put more downward pressure on stocks.  We also have several Fed speakers (Williams (8:30 a.m. ET), Harker (8:50 a.m. ET), Quarles (9:00 a.m. ET)) although the next big Fed event will be Fed Chair Powell speaking on Tuesday.