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Jobs Day (Updated Jobs Report Preview)

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

What’s in Today’s Report:

  • Jobs Day (Updated Jobs Report Preview)

Futures are solidly higher ahead of today’s jobs report thanks to strong earnings overnight.

META (up 17% pre-market) and AMZN (up 7% pre-market) posted strong earnings while AAPL (down 2% pre-market) underwhelmed, but overall earnings results were good overnight and that’s pushing futures higher.

Today focus will be on the jobs report and expectations are as follows: 187K job adds, 3.8% Unemployment Rate, 0.3%/4.1% wage growth.  Powell pushing back on a March rate cut helped increase the threshold for a “Too Hot” report, so there’s a wider lane for a “Just Right” reading.  But, if job growth remains very strong (so solidly above 200k) and the other details are “Too Hot,” don’t be surprised if yields rise and stocks decline as some investors start to doubt a May rate cut.

Other notable events today include Consumer Sentiment (E: 78.8, 1-Yr inflation expectations: 2.9%) and the last “important” day of earnings, although neither of those should move markets.

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Jobs Report Preview

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Jobs Report Preview: Get the simple talking points you need to strengthen your client relationships with a free trial of The Sevens Report.

What’s in Today’s Report:

  • Jobs Day

Futures are modestly higher ahead of the jobs report following slightly better than expected final global manufacturing PMIs.

Economic data overnight was better than expected as the Chinese Caixin manufacturing PMI (a private market reading) beat estimates (51.0 vs. (E) 49.3). While EU (43.5 vs. (E) 43.7) & UK (43.0 vs. (E) 42.5) final manufacturing PMIs were no worse than feared.

Today there are two important economic reports that have the potential to move markets.  The first is the jobs report, and expectations are as follows:  170K Job Adds, 3.5% UE Rate, 0.3% m/m & 4.4% y/y Wage Growth).

As we covered in the Jobs Report Preview, “Too Hot” readings in job adds or wages will likely push Treasury yields higher and weigh on stocks.  But, a “Too Cold” job adds number would be a potentially more concerning signal over the medium and longer term, regardless if there’s any short term “bad is good” rally.

The other important economic report today is the ISM Manufacturing Index (E: 46.8) and markets will want to see stability.  The August flash PMIs were ugly and if we see the ISM manufacturing PMI drop from current levels, that will increase hard landing concerns.

Finally, there’s one Fed speaker today, Mester at 9:45 a.m. ET, but she shouldn’t move markets.

Jobs Report Preview

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Jobs Day

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What’s in Today’s Report:

  • Jobs Day
  • Signs of Slowing Growth and Inflation Are Growing
  • Technical Update

Futures little changed following a quiet night of news as investors further digest Wednesday’s big rally in stocks and Thursday’s big rally in bonds all while awaiting today’s jobs report.

Economically, the only notable number overnight was Euro Zone PPI which fell more than expected (-2.9% vs. (E) -2.0%), adding to this week’s list of indicators showing global dis-inflation.

Focus today will be on the jobs report and expectations are as follows:  Job Adds 200K, UR Rate 3.7%, Wages 0.3% m/m 4.6% y/y.  Due to the big rally in stocks and bonds on Wed/Thurs, a lot of the “benefit” from a “Just Right” number is likely priced in at these levels, so the risk going into the report today is for disappointment, especially if we get a job adds number in the mid to high 200k.

Away from the jobs report, we also get two Fed speakers: Barkin (9:15 a.m. ET) and Evans (10:15 a.m., 1:00 p.m. ET).

Yield Curve Update (Getting Closer to a Danger Zone)

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What’s in Today’s Report:

  • Yield Curve Update (Getting Closer to a Danger Zone)
  • Jobs Day

Futures are modestly higher as the Senate moved forward on stimulus, so the positive market narrative of more stimulus and more vaccine continued overnight.

The Senate voted 51-50 (VP Harris breaking the tie) to move forward with the reconciliation process on a stimulus bill, meaning a $1.5T-$1.9T bill should pass in mid-March.

On the vaccine front, the FDA scheduled a Feb. 26th hearing to approve the JNJ single dose vaccine, so by March 1st there will be three COVID vaccines in the market.

Looking forward to today, the key number is the Jobs Report and estimates are for Job Adds of 50K and Unemployment Rate of 6.7%.  Unless the number is very good (so over 400k jobs adds, UE rate sharply lower) or absolutely horrible (-100k job losses or more) it shouldn’t interrupt this week’s rally.

Jobs Day

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What’s in Today’s Report:

  • Why Did Stocks Drop Yesterday?
  • How the VIX and Stocks Rose Together in August

Futures are seeing a marginal oversold bounce after Thursday’s big sell off, as newswires were quiet overnight.

Economic data again disappointed, as German Manufacturers’ Orders rose 2.8% vs. (E) 6.2%, while the UK Construction PMI fell to 54.6 vs. (E) 58.5.

Both reports, combined with other lack luster data this week, are limiting the size of the bounce this morning.

Today the focus will be on the Employment Situation Report and the expectations are as follows:  Jobs Adds: 1.413M, UE Rate: 9.9%.  As mentioned, the “best” outcome for this report is a strong number towards 2 MM job adds, but not so strong that it relieves pressure on Congress to pass a stimulus bill.  A very soft number (less than 1MM job adds) likely adds to yesterday’s downside.