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More Proof of How Vulnerable This Market is to AI Disappointment

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What’s in Today’s Report:

  • More Proof of How Vulnerable This Market is to AI Disappointment
  • Weekly Market Preview: Can Yields Continue to Move Lower?
  • Weekly Economic Cheat Sheet: Inflation in Focus This Week (CPI Wednesday)

Futures are slightly higher following mixed geopolitical news over the weekend.

Fighting between the Saudis and Houthis escalated substantially over the weekend following Houthi attacks on the Riyadh airport and the increased tensions are pushing oil prices higher (Brent up 0.75% this morning).

In Russia/Ukraine, President Trump announced an “energy ceasefire” between Russia and Ukraine that would push prices lower if it holds, although the market is rightly skeptical that it will.

Today there are no notable economic reports and just one Fed speaker, Hammack (12:10 p.m. ET), so focus will remain on geopolitics and AI (as it’s been for the last week).

 

Market Multiple Table: Explaining the Current Market Dynamic

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What’s in Today’s Report:

  • October Market Multiple Table: Explaining the Current Market Dynamic

Futures are modestly lower following a quiet night of news as both Treasury yields and oil rallied overnight.

French bond yields are 10 bps higher and erasing Tuesday’s declines as student protests sweep the nation. The rise in French yields are pulling global yields (including U.S. Treasury yields) higher.

Economically, German Industrial Production beat estimates, rising 2.0% vs. (E) 0.5% and underscoring solid economic activity in the EU.

Today focus will be on the FOMC Minutes (2:00 p.m. ET) and investors will be looking for insight into just how hawkish the committee was back in September (the less hawkish, the better as that will pressure yields and help support stocks).  We also get Consumer Credit (E: $15.0B) this afternoon, although that’s unlikely to move markets.

 

Your Window to Send a Q3 Client Letter Is Closing

Q4 is already underway. If you haven’t sent clients a Q3 update yet, you’re not too late. But this is the week to get it done.

Clients are hearing about renewed Fed hikes, 5% Treasury yields, $100 oil, inflation, geopolitics, and AI. They don’t need more headlines. They need your perspective on what it all means.

The good news: We already did the hard part.

The Q3 Sevens Report Quarterly Letter is finished and available as a fully editable Word document. We researched the quarter, identified what mattered, and wrote the client-ready letter. You customize it, send it through compliance, and get it to clients.

The window is still open. But it won’t be for much longer.

Get the Q3 Quarterly Letter Here

 

Why High Yields Haven’t Caused a Bigger Pullback (Yet)

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What’s in Today’s Report:

  • Why High Yields Haven’t Caused a Bigger Pullback (Yet)
  • Weekly Market Preview: Geopolitics and Fed in Focus (How many rate hikes?)
  • Weekly Economic Cheat Sheet: Can We Get More Goldilocks Data?

Futures are slightly lower following mixed geopolitical news over the weekend.

Starting with the geopolitical positives, there were reports that oil exports from the Middle East surpassed pre-war levels. Negatively, there was another unconfirmed attack on the Saudi East-West pipeline and increased fighting between Saudi Arabia and the Houthis. The net result is Brent Crude is modestly higher (up less than 1%).

Economically, the composite PMIs were solid as the EU PMI met expectations while the UK reading beat (52.0 vs. (E) 51.7.)

Today we get the final of the “Big Three” monthly economic reports via the ISM Services Index (E: 55.0) and the price index here will be key. The smaller the increase (or larger the decrease), the better for stocks as it pushes back on inflation concerns (and should push yields lower).

 

How Did the S&P 500 Rally Last Week Despite Higher Oil and Yields?

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What’s in Today’s Report:

  • How Did the S&P 500 Rally Last Week Despite Higher Oil and Yields? (Hint: AI).
  • Weekly Market Preview: Geopolitics Still Dominate, Will Oil and Yields Sustainably Decline?
  • Weekly Economic Cheat Sheet: A Busy and Important Week (Jobs Report Friday the Highlight)

Futures are moderately weaker as there was no diplomatic progress over the weekend between the U.S. and Iran and oil and Treasury yields are higher in response.

President Trump rejected an Iranian proposal to return to the June ceasefire agreement and re-open the Strait of Hormuz, although there is some hope that negotiations between the two sides will continue this week.

Oil was up 4% overnight while the 10 year Treasury yield rose four basis points and those factors are pressuring futures.

Focus will remain on geopolitics and, as was the case last week, any hint of diplomatic progress should help Treasury yields and oil fall and stocks recover from these early losses (while a continued rise in yields and oil will further pressure markets).

Turning to actual data/events, there are no economic reports today but there are several Fed speakers including Bowman (8:15 a.m. ET), Cook (1:25 p.m. ET) and Barkin (1:30 p.m. ET).  If they reinforce last week’s hawkish tone from Fed speakers, look for that to put incremental upward pressure on the 10 year yield.

 

Recipe for a Rally (Three Ingredients)

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What’s in Today’s Report:

  • Recipe for a Rally (Three Ingredients)
  • Weekly Market Preview: Yields Remain Key (Geopolitics and Inflation in Focus)
  • Weekly Economic Cheat Sheet: CPI (Friday) is the Key Report This Week

Futures are modestly lower on higher oil prices as geopolitical risks rose over the long weekend.

Oil prices hit multi-month highs and that’s directly weighing on global stocks as Iran launched an unsuccessful attack on a U.S. Naval vessel and the U.S. sunk three Iranian tankers in response, keeping tensions elevated and the prospect of a near term ceasefire low.

In Russia, there was no progress on a Russia/Ukraine ceasefire despite U.S./Russian meetings over the weekend.

Today there are no notable economic reports nor any major Fed speakers so focus will remain on geopolitical headlines, oil and Treasury yields.  As has been the case for the past few weeks, any headlines that push oil and yields lower will help stocks rally (and if oil and yields keep rising, stocks will continue their decline).

 

Three Important Events for Yields & Markets (This Week)

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What’s in Today’s Report:

  • Three Important Events for Yields & Markets (This Week)
  • Weekly Market Preview: Can Yields Decline (and Ease Pressure on Stocks)
  • Weekly Economic Cheat Sheet: Focus on the Fed (via Core PCE and Warsh’s speech)

Futures are slightly lower as investors digest rising trade tensions and await details of economic sanctions against Iran.

The U.S. applied a 50% tariff to Canadian imports and while exemptions will keep the actual impact small, this is negative for investor/market sentiment.

Details of new economic sanctions against Iran will be revealed this afternoon but unless they boost the chances of a ceasefire, they won’t impact markets.

Today there are no notable economic reports so focus will remain on geopolitics and the 2:00 p.m. ET reveal of the new economic sanctions against Iran.  However, unless the moves are viewed as realistically increasing the chances of a ceasefire, they shouldn’t move markets (and oil remains the key indicator to watch).

 

Needed Context for Rising Yields

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What’s in Today’s Report:

  • Needed Context for Rising Yields
  • What Could Push Yields Lower (Four Candidates)

Futures are little changed despite higher oil prices as President Trump threatened an “economic D-Day” for Iran.

President Trump threatened dramatic economic sanctions on countries with economic ties to Iran, increasing odds of a Iranian military response and pushing oil prices higher.

Focus today will be on yields and whether they recoup Wednesday’s losses or not.  Impacting that will be, in order of importance:  Oil prices (do they rise further than the current 2% rally) and economic data (does it come in hot or not?).

Economically, important reports today include Jobless Claims (E: 211K), Philly Fed (E: 25.0) and Leading Indicators (E: 0.1%) and the more “in-line” they are with expectations, the better (especially the Philly price indices).

Outside of economic data, there is one Fed speaker, Musalem (11:10 a.m. ET) and some notable retail earnings:  WMT ($0.73), BABA ($1.94), DE ($4.79), AAP ($0.81), ROST ($1.93).

 

The AI Trade Is Getting Bigger

AI may be one of the defining investment themes of the next decade. But that doesn’t mean today’s AI winners will remain tomorrow’s leaders.

In Tuesday’s issue of Sevens Report Alpha, we examined how investors can maintain meaningful long-term exposure to AI without making a concentrated bet on a handful of stocks. The report looks beyond the current chip and data center boom to the broader AI ecosystem, and how leadership could shift as the technology matures.

Most importantly, we outline three distinct approaches to gaining long-term AI exposure, including the trade-offs in diversification, concentration, flexibility, and cost.

If you believe AI is here to stay, follow the link below to read our most recent Alpha issue and see how I think investors can best participate.

Sevens Report Alpha

 

What Caused Yesterday’s Selloff? AI or Yields?

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What’s in Today’s Report:

  • What Caused Yesterday’s Drop, AI or Yields?
  • Three Reasons Yields Are Rising Right Now

Futures are flat as traders digest this week’s pullback in tech stocks amid stubbornly elevated oil prices and subsequently buoyant bond yields.

Economically, U.K. Core CPI held steady at 2.6% vs. (E) 2.5% y/y while the EU’s Core CPI equivalent (Core HICP) was unchanged at 2.5% y/y in July, meeting estimates; neither release suggested inflation is beginning to slow materially which is keeping yields elevated today.

There are no noteworthy economic reports today, however the Treasury will hold a 4-Month Bill auction at 11:30 a.m. ET and a 20-Yr Bond auction at 1:00 p.m. ET which could move the bond market, and a pullback in yields would be welcomed by equities today, potentially setting up a relief rally in the broader market.

Later in the afternoon, the July FOMC meeting minutes will be released (2:00 p.m. ET) and traders will be looking for any fresh insight as to the Fed’s most likely policy rate path in H2’26; the more dovish/accommodating, the better for equities.

Finally, there are a handful of late-season earnings releases due to be released today including ADI ($3.33), TGT ($2.30), TJX ($1.18), LOW ($4.22), EL ($0.32), and BULL ($0.03). And as has been the case, the stronger the results and guidance, the better for the market.

 

Sevens Report: Why Rising Yields Drove the S&P 500’s Worst Day Since October

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Sevens Report: Why Rising Yields Drove the S&P 500’s Worst Day Since October

S&P 500 has its worst day since October. Here’s why stocks were down.

The benchmark 10-year Treasury yield spiked to 4.293%, but “it’s not really a problem until 4.50% and higher,” said Tom Essaye, founder of the Sevens Report on the markets. “If yields keep rising, that will become an increasing headwind on markets and the economy.”

“The Goldilocks economic data continued last week, and that has been an important foundational positive and somewhat calming influence on markets amidst the recent headline chaos,” Essaye said. “As long as economic data stays this Goldilocks, the chances of a protracted decline in stocks will remain low.”

Also, click here to view the full article published in USAToday.com on January 20th, 2026. 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.

Tom Essaye: 10-Year Yield Recovery Key for Stock Market Stability

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Sevens Report says credit fears at regional banks are unlikely to sustain yield declines unless they worsen.

10-year Treasury yield edges up after falling below 4% on regional-bank worries

The 10-year Treasury yield hovered near 4% Friday after dipping below that level amid renewed concern over regional bank loans. Tom Essaye of Sevens Report Research said that while credit fears briefly drove yields lower, they are unlikely to keep falling unless the issue becomes a broader economic problem. He added that a move back above 4% would be a positive signal for stocks, reflecting easing market anxiety.

Also, click here to view the full article published in MarketWatch on October 17th, 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.