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Jobs Day

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What’s in Today’s Report:

  • Omicron Update
  • OPEC Meeting Takeways

Futures are slightly lower as markets digest Thursday’s rally ahead of the jobs report.

In Washington, the Senate passed a bill to avoid a government shutdown, removing a potential risk from markets.

The Omicron variant has been detected in five states now but symptoms so far appear mild.

Economically, EU and UK Composite PMIs generally met expectations.

Today focus will be on the Job Report and expectations are as follows: Job Adds 543K, UE Rate 4.5%, and Wages 5.0% y/y.  As long as the jobs report is around expectations (so not above 700k but still showing solid job additions with wages not spiking) then markets will expect a mild acceleration of tapering and the rally can continue.   We also get the ISM Services PMI (E: 65.0) and markets will be looking for a similarly “Just Right” number to show solid growth but nothing so strong it would encourage the Fed to substantially accelerate tapering of QE.

Omicron Update: The Two Key Questions We Need Answered

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What’s in Today’s Report:

  • Omicron Update:  The Two Key Questions We Need Answered
  • Weekly Market Preview:  How Big A Risk is the New Variant?
  • Weekly Economic Cheat Sheet:  A Very Busy Economic Week:  Jobs Report Friday, Final PMIs.

Futures are solidly higher as markets bounce following Friday’s COVID related steep declines.

The new COVID variant, named Omicron, was identified in numerous countries over the weekend, and governments enacted more travel bans to try and stop the spread.  But, beyond those measures, the market didn’t learn anything “new” about the variant over the weekend.

Regarding today’s bounce in futures, Friday’s steep declines were due in part to light liquidity and attendance, so we’re seeing that portion of the declines reversed this morning now that people are back to work.

Today we get the Pending Home Sales Index (E: 0.7%) and we have one Fed speaker (Williams at 3:00 p.m. ET) but the focus will be on COVID headlines.  It’s safe to assume the variant is already in the U.S. but a headline confirming that might create a short-term headwind.  Beyond the short term, however, the major unknown is whether the variant can evade the current vaccines, and that will determine whether this COVID pullback in stocks is brief, or something more extended.

Jobs Report Preview

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What’s in Today’s Report:

  • Jobs Report Preview
  • Why the Bank of England Surprise Matters to You
  • OPEC Decision and Oil Market Update

Futures are modestly higher ahead of the jobs report and despite underwhelming European economic data.

German Industrial Production (-1.1% vs. (E) 0.9%) and EU Retail Sales (-0.3% vs. (E) 0.8%) both missed estimates but those reports aren’t moving markets.

House Democrats are expected to pass the bipartisan infrastructure bill later today, while the larger $1.75 trillion stimulus bill remains in negotiations.

Today focus will be on the Jobs Report and expectations are as follows: Job Adds:  400K, UE Rate:   4.7%, Wages: 0.4%/4.8%.  Given the Fed didn’t commit to a $15 billion tapering beyond December, a “Too Hot” number (in either jobs adds or wages) could cause market volatility, but outside of that occurring the jobs report shouldn’t move markets too much.  We also get one Fed Speaker, George at 9:30 a.m. ET.

Macro Clarity This Week?

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What’s in Today’s Report:

  • Can We Get Macro Clarity This Week?
  • Weekly Market Preview:  All About the Fed
  • Weekly Economic Cheat Sheet:  A Very Busy Week (Final Oct. PMIs, Fed Decision, Jobs Report)

Futures are modestly higher on tariff reduction and hopes Democrats will pass the spending bill early this week.

The US and EU eased steel tariffs this weekend and that is leading to hope that U.S./China tariffs could also be cut.

Democrats have coalesced around a $1.75 trillion spending bill with few tax increases that could be passed this week.

Economic data was mixed as the Oct. Chinese Manufacturing PMI missed estimates (49.2 vs. (E) 49.7) while the UK reading slightly beat (57.8 vs. (E) 57.7).

Today focus will be on the ISM Manufacturing PMI (E: 60.3) and markets will want to see stability in the data to show the recovery remains on solid ground.  Additionally, any further signals from Washington that the spending bill will be signed this week should be at least a mild tailwind on markets today.

Tom Essaye Quoted in Barron’s on October 7, 2021

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The Dow Closes Higher on Debt Ceiling Deal and Ahead of Friday’s Critical Jobs Report

For Friday’s trading, if the employment result shows more than 750,000 jobs were added…writes Tom Essaye, founder of Sevens Report Research. Click here to read the full article.

Jobs Day

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What’s in Today’s Report:

  • Jobs Report Preview (Abbreviated Version)

Futures are little changed as the debt ceiling extension was made official during an otherwise quiet night.

Economic data was mixed as the Chinese Service Sector PMI beat estimates (53.4 vs. (E) 49.1) while Japanese House Hold Spending missed expectations (-3.0% vs. (E) -1.9%), but those numbers aren’t moving markets.

The debt ceiling extension was signed late last night and the proverbial “can” has been kicked to late December.

Today focus will be on the Employment Situation report are expectations are as follows:  E: Job Adds: 475K, UE Rate:  5.1%, Wages:  0.4% m/m 4.6% y/y.  Treasury yields remain buoyant (the 10-year yield was above 1.60% overnight) so risk remains that a “Too Hot” number spikes yields and hits stocks.

 

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Jobs Report Preview

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What’s in Today’s Report:

  • Is a Debt Ceiling Deal a Bullish Catalyst?
  • Jobs Report Preview
  • EIA Data Takeaways and Oil Update

Stock futures are trading higher with global shares this morning as investors cheer the likely deal to extend the debt ceiling while falling energy prices, particularly in Europe, are helping ease broader inflation concerns.

Economically, German Industrial Production for August was very disappointing with a -4.0% headline drop in August (E: -0.4%) however the data is not materially moving markets this morning.

Looking into today’s session, there is just one economic report to watch: Jobless Claims (E: 348K), but a meaningful beat or miss in the headline could cause a hawkish or dovish reaction in markets ahead of tomorrow’s September jobs report.

Additionally, there are a few central bank events that could move markets: ECB Minutes (7:30 a.m. ET) and Cleveland Fed President Loretta Mester speaks (11:45 a.m. ET).

Beyond those potential catalysts, markets will remain focused on the debt ceiling negotiations in Washington and bond yields. And as long as there is not material deterioration in the former or a major resurgence higher in the latter, then stocks should be able to maintain yesterday’s upside momentum.

How Bad Was the News Last Week?

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What’s in Today’s Report:

  • How Bad Was the News Last Week?
  • Weekly Market Preview:  Can Democrats Close the Gap?
  • Weekly Economic Cheat Sheet:  Jobs Report Friday.

Futures are modestly lower following a mostly quiet weekend of news as investors digested last week’s volatility.

On the Debt Ceiling and other Washington issues, there was no major progress over the weekend although Democrats continue to narrow the gap and progress is occurring towards a compromise deal between liberals and moderates (the compromise is likely at $1.5 trillion and the current negotiations are just above $2 trillion, down from $3.5 trillion).

Trade will be in focus again today as the Biden Administration gives a China trade and tariff update at 10:00 a.m. although no new tariffs are expected.

Today there are no notable economic reports although there are two Fed speakers, Bullard and Rosengren, both at 10:00 a.m. ET.  So, focus will be on the trade speech at 10:00 and on the Democrat’s ongoing negotiations.  Any signs of further progress towards a deal could help extend Friday’s rally.

Updating the Two Big Risks to the Rally

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What’s in Today’s Report:

  • Updating the Two Big Risks to the Rally
  • Weekly Economic Cheat Sheet: Jobs Report Takeaways and ECB Preview

U.S. equity futures are little changed this morning while overseas markets were mixed overnight with Asian stocks outperforming on upbeat Chinese economic data but EU shares drifted lower with focus turning to this week’s ECB meeting.

Economically, Chinese Exports were encouragingly up 25.6% vs. (E) 19.5% y/y in August which supported risk-on money flows in Asian markets however a soft German ZEW Survey is weighing on EU stocks this morning.

Today’s U.S. trading session is lining up to be fairly quiet as there are no economic reports and no Fed officials are scheduled to speak.

There is a 3-Year Treasury Note Auction at 1:00 p.m. ET, however, and weak demand would likely lead to a hawkish reaction across markets with yields moving higher and stocks potentially trading with a defensive tone.

Jobs Day (Slight Shift in Expectations)

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What’s in Today’s Report:

  • Jobs Day (Slightly Shift in Expectations)
  • Washington Update  –  Why Manchin’s Op-Ed is Important

Futures are modestly higher as markets ignored disappointing economic data ahead of today’s jobs report.

Global PMIs were disappointing as the Chinese Services PMI dropped to 46.7 vs. (E) 52.3 while the EU (59.0 vs. (E) 59.5) and UK (54.8 vs. (E) 55.0) Composite PMIs both slightly missed estimates

Japanese stocks surged 2% after PM Suga resigned, igniting speculation the government will unleash more stimulus.

Today the Employment Situation report is the key event, and the expectations are as follows: Job Adds: 740K, UE Rate: 5.2%, Wages: 3.9% yoy.  Because of the soft ADP report, the “whisper number” is slightly underwhelming vs. expectations (say around 500k), so the market may be a bit more sensitive if the actual jobs report is slightly stronger than expectations (it may cause a mild decline in stocks, but nothing major).

We also get the ISM Services PMI (E: 62.0) and markets will want to see stability in that PMI.