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Jobs Report Preview (Markets Closed Tomorrow)

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Jobs Report Preview (Markets Closed Tomorrow): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Report Preview
  • ISM Services PMI Takeaways – Strong Data Supports Hawkish Fed Stance
  • Chart – JOLTS Jump to Multi-Month High But Still Trending Lower

Futures were slightly higher earlier this morning as traders digested disappointing data out of Europe but volatility has picked up since CNN reported that Trump is weighing emergency measures to implement new tariffs programs.

Economically, German Manufacturing Orders plunged -5.4% vs. (E) 0.0% while EU Economic Sentiment fell 93.7 vs. (E) 95.7 and Eurozone PPI declined just -1.2% vs. (E) -2.5%.

Today, traders are likely to remain keenly focused on the early tariff headlines that have roiled futures in the pre-market. Any commentary from Trump that tamps down concerns about aggressive tariffs and the threat of global trade wars will help settle markets over the course of the day.

Additionally, there are two key labor market reports to watch today, the ADP Employment Report (E: 134K), and Jobless Claims (E: 216K). After yesterday’s “hot” ISM and JOLTS data, investors will want to see a return to “Goldilocks” data consistent with a cooling labor market to help temper the recent spike in yields and help stocks stabilize.

Finally, there is one Fed speaker early in the day: Waller (8:30 a.m. ET) and a 30-Yr Treasury Bond auction in the early afternoon (1:00 p.m. ET) that cold move yields, and in turn, impact equity markets (strong demand for the long bonds is the best outcome for stocks).

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What Does Wall Street Expect for 2025? (SPX Forecasts)

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What Does Wall Street Expect for 2025? (SPX Forecasts): Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What Does Wall Street Expect for 2025? (SPX Forecasts)
  • S&P Services PMI Takeaways – Slightly Hawkish

Futures are little changed this morning as global investors digest the solid rebound in stocks over the last two sessions amid largely as-expected economic data overnight.

Economically, Eurozone CPI met estimates with a 0.2% rise to 2.4% Y/Y in December while the EU Unemployment Rate held steady at 6.3%, also inline with expectations.

Today, market focus will be on economic data early with International Trade in Goods (E: $-77.6B), ISM Services PMI (E: 53.2), and JOLTS (E: 7.65 million) all due to be released this morning. The ISM report will be critical as a “hot” print is a risk to the early 2025 rally as it will support the case for a Fed “pause” in their rate cutting cycle and put upward pressure on yields.

There is also one Fed speaker who could shed light on FOMC policy plans (although that is not very likely): Barkin (8:00 a.m. ET).

Finally, there is a 10-Yr Treasury Note auction at 1:00 p.m. ET and the results will be important to watch as yesterday’s weak 3-Yr Note auction contributed to the afternoon rise in yields that weighed on stocks. So, the best-case scenario outcome for stocks is a solid auction that turns yields lower, ideally with the 10-Yr yield falling back below 4.60%.

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Are H-1B Visas the Reason for this Pullback?

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Are H-1B Visas the Reason for this Pullback?: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Are H-1B Visas the Reason for this Pullback?

U.S. equity futures are bouncing back from yesterday’s losses in light holiday trading as investors square books into year-end and digest mixed Chinese economic data.

China’s Composite PMI rose 1.4 points to 52.2 in December thanks to the Services PMI rising to 52.2 vs. (E) 50.2 but the Manufacturing PMI unexpectedly fell to 50.1 vs. (E) 50.3.

There are two housing market reports today: Case-Shiller Home Price Index (E: 4.3%) and FHFA House Price Index (E: 0.5%) but neither release should materially move markets and there are no Fed officials scheduled to speak today.

The limited list of catalysts should make for a quiet session to end what has been a strong year of gains in the stock market as portfolio rebalancing and year-end book-squaring are likely to be the primary drivers of money flows today.

As a reminder, stocks will trade for a full, normal session through 4:00 p.m. ET but the bond market closes early today (2:00 p.m. ET).

 

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

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Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Sentiment Update: Bullish Enthusiasm Reduced, But Not Eliminated

Futures are modestly lower, again in quiet trading, on disappointing Chinese economic data.

Chinese industrial profits declined –7.3%, contracting for the fourth consecutive month and reminding investors that while there’s been a lot of stimulus from Chinese officials, it will take time to impact the economy.

In Japan, economic data was better than expected as retail sales and industrial production beat estimates.

Today there are no notable economic reports and trading should be quiet.  That said, the 10-year yield will remain an influence on stocks.  The higher the yield goes, the more it’ll pressure stocks.

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What to Expect from Markets in 2025

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What to Expect from Markets in 2025: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What to Expect from Markets in 2025
  • Weekly Market Preview:  Does the Fed Keep Cutting and Does Data Stay Goldilocks?
  • Weekly Economic Cheat Sheet:  All Eyes on the Fed Dots

Futures are slightly higher following a mostly quiet weekend of news and despite mixed global economic data.

Chinese Retail Sales (3.0% vs. (E) 4.6%) and Fixed Asset Investment (3.3% vs. (E) 3.5%) both missed estimates, reminding investors that despite promises for more stimulus, Chinese growth remains lackluster.

In Europe, data was better as the flash Composite PMIs for the EU (49.5 vs. (E) 48.0) and the UK (50.5 vs. (E) 50.0) both beat estimates.

Today focus will be on the Empire Manufacturing Survey (6.4) as that’s the first data point for December and investors will want to see in an-line to slightly soft reading to reinforce the Goldilocks narrative.

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What the CPI Report Means for Markets

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What the CPI Report Means for Markets: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • What the CPI Report Means for Markets

Futures are modestly lower on a surprise central bank rate hike and after ADBE posted disappointing guidance.

Brazil’s Central Bank hiked rates 100 bps (more than expected) and promised more rate hikes in the future, reflecting some mild fraying of the global rate cut cycle.

ADBE guidance missed investor expectations and it’s the second underwhelming tech report this week (after ORCL).

Today focus will be on rate cuts and economic data.  First, we get the ECB Rate Decision and markets expect a 25 bps cut (if there’s no cut, that’d be a surprise negative).  Economically, the key report today is Jobless Claims (E: 220K) and markets will want to see another Goldilocks reading (so around the 220k level).  We also get the latest PPI report (E: 0.3% m/m, 2.6% y/y) but barring a big jump, it shouldn’t move markets.

Finally, on the earnings front, the key report today is AVGO ($1.39) and markets will want to see a solid tech report to stop this mini-trend of underwhelming guidance (from ORCL and ADBE this week).

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The VIX index and VIX futures both getting pressured in a big way

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The VIX index and VIX futures both getting pressured in a big way: Sevens Report Co-Editor Tyler Richey Quoted in S&P Global

Stock market ‘fear gauge’ plunges; investors expect rally to persist into 2025

Volatility dynamics in the stock market have shifted since the election when many investors crowded into downside stock market hedges on fears that a Democratic victory could lead to taxes on unrealized capital gains, said Tyler Richey with Sevens Report Research. This also hurt the performance of short volatility strategies, which had been crushed by a massive VIX squeeze at the start of August, Richey said.

“Between the post-election unwind in broad stock market hedges and a suffering short-volatility crowd [throughout 2024], the derivatives market pendulum swung hard from one extreme to another with the VIX index and VIX futures both getting pressured in a big way over the last month,” Richey said.

Also, click here to view the full S&P Global article published on December 6th, 2024. However, to see the Sevens Report’s full comments on the current market environment sign up here.

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Jobs Day

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Jobs Day: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Day
  • Updated VIX Analysis

Futures are slightly lower following a mostly quiet night of news and ahead of today’s jobs report.

Economically, German Industrial Production missed expectations (-1.0% vs. (E) 1.5%) and became the latest underwhelming EU economic report.

Today focus will be on the jobs report and expectations are as follows:  200K Job-Adds, 4.2% Unemployment Rate, 3.9% y/y Wage Growth.  A “Goldilocks” job adds number is something around the 200k expectation or lower, as long as it’s not close to zero.  Anything in that range (with mostly in-line unemployment and wages) should “green light” a Fed rate cut in December and help fuel a Santa Rally.

Speaking of the Fed, there are numerous speakers today including Bowman (9:15 a.m. ET), Goolsbee (10:30 a.m. ET), Hammack (12:00 p.m. ET) and Daly (1:00 p.m. ET).  However, most of them have spoken recently and their message has been consistent:  A December rate cut is possible but not guaranteed and rates will come down over time.  As long as that’s the message from them today, they shouldn’t impact markets.

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The bullish thesis for stocks is stronger now

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The bullish thesis for stocks is stronger now: Tom Essaye Quoted in Market Watch

The market has passed four key tests, newsletter writer says

Tom Essaye, founder and president of the Sevens Report, says the bullish thesis for stocks is stronger now because all of the tests set up two weeks ago were passed.

The major economic reports of the past two weeks were solid, with the payrolls disappointment largely explained by hurricanes and strikes;

The Fed remains committed to cutting rates;

Earnings were more mixed than excellent but still haven’t changed estimates for S&P 500 earnings per share next year very much;

And Republicans have large enough majorities to push through pro-growth legislative changes.

“While the bullish thesis passed the tests of the past two weeks, do not confuse this with a market that cannot go down,” he says. “There are real risks to this rally that we cannot ignore over the medium/longer term, although investors could ignore them unless forced not to between now and year-end.” A move to 6,200 on the S&P 500 before the end of the year is “entirely possible” as he said the market will likely favor value, cyclical sectors and the equal-weight S&P 500 over the market-weighted index.

Also, click here to view the full MarketWatch article published on November 11th, 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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Why the Bullish Thesis Got Stronger

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Why the Bullish Thesis Got Stronger: Start a free trial of The Sevens Report.

What’s in Today’s Report:

  • Why the Bullish Thesis Got Stronger
  • Weekly Market Preview: Does the S&P 500 Breakthrough 6,000?
  • Weekly Economic Cheat Sheet: CPI on Wednesday, Important Growth Data on Thursday

Futures are modestly higher on post-election momentum and following a very quiet weekend of news.

Parts of the Trump administration are starting to come into view, most notably that Scott Bessent is looking most likely to become Treasury Secretary and the market views that as bullish.

Economically, there were no notable reports overnight.

Today is Veteran’s Day so trading should be quiet as there are no economic reports or Fed speakers, while the bond market is closed.  However, there are important updates this week on inflation (CPI on Wednesday) and growth (numerous reports on Thursday/Friday) so the week will get busier.

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