Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • Why Surging EU HICP Matters to Us
  • EIA Analysis and Oil Market Update

Futures are sharply lower following a big earnings miss by Facebook (FB was down 20% after hours).

FB posted disappointing margins and guidance and the steep decline in the stock is pulling futures lower.

EU and UK Composite PMIs were mixed as the EU reading slightly missed while the UK PMI beat estimates, although neither number is moving markets.

Today will be a busy day.  First, we get two central bank announcements (BOE at 7:00 a.m. and ECB at 7:45 a.m.).  The BOE is expected to hike rates 25 basis points and while there’s no change expected to ECB policy if Lagarde is hawkish at her press conference that will add to the earnings-inspired declines.

We also get some notable economic data, including the ISM Services PMI (E: 59.9), Jobless Claims (E: 250K), and Productivity and Costs (E: 2.4%, 1.7%) and as has been the case, markets will crave stability to ward off stagflation fears.

Finally, on the earnings front, AMZN ($3.88) after the close is the big report today.  Of the super cap tech stocks, we’re had some good reports (AAPL/MSFT/GOOGL) and some bad reports (NFLX/FB), and markets need AMZN to land in the former.  Beyond AMZN, some other reports we’ll be watching include: MRK ($1.52), LLY ($2.51), COP ($2.20), HON ($2.08),  SNAP ($0.10), and F ($0.43).

Market Multiple Levels: S&P 500 Chart

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What’s in Today’s Report:

  • Market Multiple Levels: S&P 500 Chart

Futures are solidly higher this morning after more strong tech earnings as investor focus shifts to January jobs data.

Q4 results from GOOGL and AMD handily beat estimates, sending both stocks higher by more than 10% overnight.

Economically, the Eurozone HICP Flash rose to 5.1% vs. (E) 4.3% which is rekindling some global inflation concerns.

Today, there are no Fed speakers on the calendar which will leave the focus on economic data including: the ADP Employment Report (E: 225K) and Motor Vehicle Sales (E: 12.6 million).

On the earnings front, we hear from: ABBV ($3.28), MPC ($0.47), TMO ($5.22), and CHRW ($1.85) before the open and FB ($3.78), QCOM ($3.00) and TMUS ($0.16) after the close.

Fed officials have been talking down the January jobs report so far this week, so if today’s ADP report comes in hot, that could cause another wave of hawkish money flows and equity volatility while the prospect of more upbeat tech earnings could see this week’s relief rally continue.

Market Multiple Table: February Update

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What’s in Today’s Report:

  • Market Multiple Table: February Update

Stock futures swung between gains and losses overnight as the sizeable two-day rally to end January is being digested while most global equity markets rallied to start the month of February.

Economically, the EU unemployment rate fell to 7.0% vs. (E) 7.2% but final Manufacturing PMIs were disappointing. None of the data is materially impacting markets this morning, however.

Looking into the U.S. session, there are a few economic reports to watch today: ISM Manufacturing Index (E: 57.5), Construction Spending (E: 0.7%), and JOLTS (10.5 million) while no Fed officials are scheduled to speak.

We are getting into the heart of earnings season and there are some notable companies releasing Q4 results today including: UPS ($3.11), and XOM ($1.96) before the open and then PYPL ($1.13), AMD ($0.76), GOOGL ($26.69), GM ($1.15) and SBUX ($0.80) after the close.

Bottom line, near-term momentum continues to favor the bulls right now and this relief rally can continue if economic data is inline or slightly better than estimates (not too hot), earnings remain positive, and Fed policy expectations continue to get less hawkish.

Why the Bounce Can Continue (But Volatility Isn’t Over)

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What’s in Today’s Report:

  • Why Stocks Can Bounce Further (But Volatility Isn’t Over)
  • Technical Update:  Important Support and Resistance Levels to Watch
  • Weekly Economic Cheat Sheet:  Jobs Report Friday

Futures are slightly lower following a quiet weekend as markets digested last week’s volatility and Friday’s rally.

Atlanta Fed President Bostic was encouraged by Friday’s inflation data and expected three hikes this year, which is less hawkish than the current market expectation.

China’s manufacturing PMI slightly best estimates at 51.1 vs. (E) 51.0, further implying that economy is stabilizing.

There are no economic reports today, but there are two Fed speakers, Daly (11:30 a.m. ET) and George (12:40 p.m. ET) and if they echo Bostic’s “not as hawkish as expected” commentary from this weekend, then stocks can extend the rally.

On the earnings front, most of the big reports come later this week (FB, GOOGL, AMZN) but after the close today, we get NXPI ($2.98) and markets will be focused on chip availability, and if there’s positive commentary there that could be another tailwind on this market.

Tom Essaye Quoted by Switzer Daily on January 28, 2022

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Why are stocks slumping and why am I not worried?

The Fed is serious about raising rates, that’s going to continue to … keep markets volatile…Tom Essaye, founder of Sevens Report, said in a note. Click here to read the full article.

Tom Essaye Quoted by Big News Network on January 28, 2022

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Yesterday’s FOMC decision and Powell’s presser was both positive and negative for markets, but in the end, it mostly reinforced what we know: The Fed is serious about raising rates, that’s going to continue to…Tom Essaye, founder of Sevens Report, said in a note to clients Thursday, as reported by CNBC. Click here to read the full article.

 

Sevens Report Co-Editor Tyler Richey Quoted by MarketWatch on January 27, 2022

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Why natural-gas futures logged their biggest one-day percent gain on record

Physical demand is so high with this looming storm in the Northeast that the February futures contract got piled into for those looking to reload stockpiles they expect to offload…explained Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

 

Sevens Report Co-Editor Tyler Richey Quoted by MarketWatch on January 27, 2022

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Natural-gas futures jump by more than 46%; oil settles lower

The 219 billion-cubic-foot weekly fall in U.S. supplies of the fuel reported by the Energy Information Administration Thursday leaves stockpiles more than 10% below last year’s levels…said Tyler Richey, co-editor at Sevens Report Research. Click here to read the full article.

Tom Essaye Quoted by CNBC on January 26, 2022

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S&P 500 closes lower, gives up earlier gains as volatility continues

Yesterday’s FOMC decision and Powell’s presser was both positive and negative for markets, but in the end, it mostly reinforced what we know: The Fed is serious about raising rates, that’s going to continue to…Tom Essaye, founder of Sevens Report, said in a note. Click here to read the full article.

Why Aren’t TIPS Rising?

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What’s in Today’s Report:

  • Why Aren’t TIPS Rising?
  • What Could Send 10’s-2’s Closer to Inversion?

Futures are slightly lower as markets continue to digest Wednesday’s Fed decision (50 bps in March or five hikes in 2022) amidst mixed earnings results.

AAPL posted better than expected earnings and the stock was up 3% overnight, but overall results continue to be mixed and that’s contributing to market volatility.

Today’s focus will be on important inflation data and the reason is clear:  If the inflation data is materially stronger than estimates, that will only encourage the Fed to get more hawkish/unpredictable, and that will add to the headwinds on stocks.  The key inflation numbers to watch today are: Core PCE Price Index (E: 0.5%, 4.8%), Employment Cost Index: (E: 1.2%, 4.1%), and the Inflation Expectations in the 10:00 a.m. Consumer Sentiment Index.

We also get some notable earnings today, including CAT ($2.22), CVX ($3.10), SYC ($1.47), and CL ($0.79).  But, barring a major disappointment, they shouldn’t move markets.