Jobs Report Preview: Why A Goldilocks Report Matters For This Market

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What’s in Today’s Report:

  • Jobs Report Preview:  Why A Goldilocks Report Matters For This Market

Futures are little changed as markets await the next round of news on tariffs while economic data was mixed.

Economically, Euro Zone Retail Sales missed estimates (-0.2% vs. (E) 0.0%) underscoring still tepid EU growth.

On trade, a call between Trump and Xi still hasn’t happened but most expect tariffs to be reduced when it does.

Today will be a busy day in the markets, starting with a major central bank decision as the Bank of England is expected to cut rates 25 bps.

Economically, there are two notable reports today including Jobless Claims (E: 215K) and Unit Labor Costs (E: 3.3%) and as we’ve seen the last two days, slight misses vs. expectations will be positives for stocks and bonds.  On the Fed front, there are two speakers today but they won’t move markets as they both speak after the close (Logan at 5:10 p.m. ET and Waller at 7:30 p.m. ET.

Finally, on earnings, the key report today is AMZN ($1.52) after the bell.

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Trade War 2.0 Primer (Needed Context)

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What’s in Today’s Report:

  • U.S. Trade Primer (Needed Context for Trade War 2.0)
  • Chart – JOLTS Drop Consistent With Cooling Labor Market

Futures are lower thanks to lingering trade war jitters and soft earnings from two big tech companies late yesterday.

GOOGL (-7%) missed estimates on revenue due to a slowdown in their cloud business while AMD (-9%) offered weak forward guidance, both of which are weighing on tech today, dragging stock futures lower in pre-market trade.

Today, there are two potentially market moving economic reports to watch; the ADP Employment Report (E: 150K) and the ISM Services PMI (E: 54.0). investors will once again be looking for Goldilocks data with steady but cooling jobs data and positive but slowing growth in the service sector. Any “hot” numbers will likely weigh on stocks today.

Additionally, there are several Fed officials scheduled to speak today including: Barkin (9:00 a.m. ET), Goolsbee (1:00 p.m. ET), and Bowman (3:00 p.m. ET) while earnings season continues with Q4 reports due out from UBER ($0.50), DIS ($1.44), TM ($4.36), F ($0.34), QCOM ($2.97), and MCK ($8.11).

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Are Tariffs a Negotiating Tool or Real Risk?

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What’s in Today’s Report:

  • Are Tariffs a Negotiating Tool or Real Risk?
  • Why Are Tariffs Positive for the Dollar?
  • ISM Manufacturing Index Takeaways
  • Chart – A Volatility Warning From the VIX Futures Market

Futures are modestly lower as optimism surrounding strong earnings from data software company, PLTR (+20% pre-market), is being offset by simmering trade war fears.

After the close yesterday, news broke that U.S. tariffs on Canada would be paused like those on Mexico (for one month) which was well received by markets.

However, China retaliated against the U.S. with 10% tariffs overnight and opened an antitrust investigation into GOOGL, rekindling trade war fears which is weighing on global investor sentiment in early trade.

Looking into today’s session, there are two potentially market moving economic reports: Factory Orders (E: -0.6%) and JOLTS (E: 8.0 MM). Investors will be looking for more “Goldilocks” data that supports the case for a soft landing.

There are also, two Fed officials scheduled to speak today: Bostic (11:00 a.m. ET) and Daly (2:00 p.m. ET), and several big name earnings releases due out, including PYPL ($1.13), PEP ($1.95), PFE ($0.48), AMD ($1.09), GOOGL ($2.12), CMG ($0.24).

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Are Tariffs A Bearish Gamechanger? Not Yet.

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Are Tariffs A Bearish Gamechanger? Not Yet.: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are Tariffs A Bearish Gamechanger?  Not Yet.
  • Weekly Market Preview:  Tar War 2.0 and Key Economic Data (Including Friday’s Jobs Report)
  • Weekly Economic Cheat Sheet:  The “Big Three” Monthly Reports (Highlighted by Friday’s Jobs Report)

Futures are sharply lower (more than 1%) after President Trump made good on threats and placed 25% tariffs on Canada and Mexico in addition to an incremental 10% tariff on China, igniting another round of trade wars.

Economically, EU and UK manufacturing PMIs were slightly better than expected but both still were solidly in contraction territory, reinforcing EU and UK growth concerns.

Today could be a very busy day in the markets.  Obviously trade rhetoric will dominate trading today and to that end, Trump has calls planned today with Canadian PM Trudeau and Mexican President Sheinbaum and obviously those headlines will move markets.  Outside of trade drama, however, we get an important economic report, the ISM Manufacturing PMI (E: 49.5) and markets will want to continue to see Goldilocks readings close that are in-line or slightly weak.

In addition to trade drama and an important economic report, we also have two Fed speakers, Bostic (12:30 p.m. ET) and Musalem (6:30 p.m. ET) and their commentary on future cuts could also move markets.

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Two Sector Rotation Strategies With Proven Outperformance

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What’s in Today’s Report:

  • Two Sector Rotation Strategies With Proven Outperformance
  • Dueling Political Influences on Oil Prices

Futures are modestly higher on more solid tech earnings and as markets are in a “show me” mode on tariff threats.

Apple (AAPL) beat earnings overnight and the stock is up 3% pre-market and that’s helping push futures higher.

On tariffs, markets remain skeptical tariffs will be implemented against Canada and Mexico tomorrow and if they are, they’ll be largely ineffectual.

Today focus will be squarely on the Core PCE Price Index (E: 0.2% m/m, 2.6% y/y).  This is the Fed’s favorite measure of inflation and markets will want to see an in-line to weaker number to keep rate cut expectations intact.  If this number is above expectations, however, look for yields to jump and for that to likely hit stocks.

In addition to the core PCE Price Index we do have one Fed speaker today (Bowman at 8:30 a.m. ET) and some more notable earnings (XOM ($1.58), ABBV ($2.13), CL ($0.89)) but they’re unlikely to move markets.

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What Would Cause the Fed to Cut Rates Again? (Two Answers)

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What’s in Today’s Report:

  • What Would Cause the Fed to Cut Rates Again? (Two Answers)

Futures are modestly higher despite mixed tech earnings.

TSLA (up 3% pre-market) and META (up 1% pre-market) results were “fine” while MSFT disappointed (MSFT down  4% pre-market) but none of the results were surprising enough to impact the broader tech sector.

Today will be a busy day of economic data and earnings including, in order of importance, the ECB Rate Decision (E: 25 bps cut), Jobless Claims (E: 224K), Advanced Q4 GDP (E: 2.7%) and Pending Home Sales (E: 0.4%).  And, following yesterday’s Fed meeting, it remains the case that in-line to slightly weak results are the “best” case for stocks as they imply solid growth but keep rate cut expectations stable.

On earnings, the key results today include: AAPL ($2.36), INTC ($0.12), V ($2.66), UPS ($2.52), MA ($3.68), CAT ($4.97).

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FOMC Preview (Good, Bad, and Ugly Scenarios)

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What’s in Today’s Report:

  • FOMC Preview – What’s Expected, Hawkish-If, Dovish-If Scenarios
  • December Durable Goods Orders Takeaways (Goldilocks)
  • NVDA Chart – An Ominous Technical Setup

Stock futures are slightly higher ahead of today’s Fed decision as global bond markets remain steady on the back of some favorable inflation metrics overnight.

Economically, Australian CPI fell from 2.8% to 2.4% vs. (E) 2.6% in Q4’24 and Eurozone M3 Money Supply rose 3.5% Y/Y vs. (E) 4.0%, both of which helped ease inflation fears.

There are no economic reports today leaving market focus on the FOMC Decision (2:00 p.m. ET) and Powell’s Press Conference (2:30 p.m. ET). As today’s Fed preview details, a hawkish outcome that sends yields higher could cause a painful selloff in equities.

Today is also the first day of big tech earnings with TSLA ($0.75), META ($6.90), MSFT ($3.12), and IBM ($3.74) all due to report quarterly results after the close. Expectations are already optimistic for 2025 so any disappointment could pressure stocks in after-hours trading regardless of the initial reaction to the Fed announcement.

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Is DeepSeek a Bearish Gamechanger?

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What’s in Today’s Report:

  • Is DeepSeek a Bearish Gamechanger?

Futures are enjoying a relief rally after yesterday’s steep, tech-led losses as traders shrug off negative tariff news.

Late yesterday, Trump said he wants universal tariffs “much bigger than 2.5%” which pressured Asian markets overnight but is so far having a limited impact on U.S. stocks.

Looking into today’s session, price action should stabilize somewhat as the FOMC meeting gets underway and traders position into tomorrow’s policy announcement.

However, there are several noteworthy economic reports to watch this morning that could move markets including: Durable Goods (E: 0.8%), the Case-Shiller Home Price Index (E: 4.1%), and Consumer Confidence (E: 106.3). Investors will be looking for more Goldilocks data (cooling inflation, slowing but not collapsing demand/growth).

In the afternoon, there is a 7-Yr Treasury Note auction at 1:00 p.m. ET and it will be important to see solid demand to help shore up the idea that rates have put in at least a near-term peak (weak demand and subsequently rising yields could weigh on stocks).

Finally, earnings season continues will a few noteworthy companies reporting today, including: BA (-$2.27), GM ($1.65), SYF ($1.90), and SYY ($0.93).

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Why Did Stocks Hit New Highs?

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What’s in Today’s Report:

  • Why Did Stocks Hit New Highs?
  • Weekly Market Preview: Major Tech Earnings and Wednesday’s Fed Decision
  • Weekly Economic Cheat Sheet: Fed Wednesday (Do They Push Back on Pause Fears?)

Futures are sharply lower (down more than 2%) on AI and tariff concerns.

Tech stocks are extremely weak (Nasdaq futures are down 4%) on news that a Chinese AI company “Deep Seek” has produced cutting edge AI with minimal costs and no next-gen chips, and this is seriously undermining AI enthusiasm.

Geopolitically, Trump threatened Colombia with tariffs over the weekend and while they ultimately weren’t implemented, it’s a reminder that trade volatility is back.

Today there is only one notable economic report, New Home Sales (E: 669K) and that shouldn’t move markets.  Instead, tech (and specifically the Mag 7) will lead the markets and for stocks to rebound from these steep early losses, we’ll need to see the Nasdaq stabilize and rebound, otherwise this is looking like an ugly day in the markets.

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Were Tariff Fears Exaggerated? (No. Two Reasons Why)

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What’s in Today’s Report:

  • Were Tariff Fears Exaggerated? (No. Two Reasons Why)

Futures are slightly lower following a major central bank rate hike and despite better-than-expected economic data.

The Bank of Japan raised interest rates 25 bps, as expected, and signaled further rate hikes are coming (also as expected).

Economically, Euro Zone and UK Manufacturing PMIs slightly beat estimates but both remained in contraction territory.

Today we get the most important economic reports of the week via the January Flash Manufacturing PMI (E: 48.9) and Flash Services PMI (E: 56.7) and again, markets will want to see in-line to slightly soft data.  Stronger than expected readings would likely boost yields and pressure stocks.  Other economic reports today include Existing Home Sales (E: 4.16 million) and Consumer Sentiment (E: 73.2).

Turning to earnings, the key report I’m watching today is AXP ($3.03) as that will give us insight into consumer spending and the stronger the report, the better.

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