“The key to tomorrow’s jobs report will be whether it keeps the hopes for a Fed pivot alive. If the jobs report is ‘Too Hot’ that kills the idea of a Fed pivot, and we should expect the S&P 500 to drop back towards levels where we ended the third quarter,” Sevens Report analysts said in a note. Click here to read the full article.
What’s in Today’s Report:
Futures are slightly lower as the looming jobs report helps offset soft economic data and disappointing earnings.
Economically, German Industrial Production, German Retail Sales, and Japanese Household spending all missed estimates.
On earnings, AMD became the latest widely held company to miss earnings, positing a material revenue shortfall.
Today focus will be on the Jobs Report and expectations are as follows: Job Adds: 250K, UE Rate 3.7%, Wages 0.3% m/m, 5.1% y/y. If the numbers are in the lower end of the “Just Right” range that will spur more hopes of a Fed pivot between now and year-end, and stocks will likely rally. Away from the jobs report there are also several Fed speakers including: Williams (10:00 a.m. ET), Kashkari (11:00 a.m. ET) and Bostic (12:00 p.m. ET) but they shouldn’t move markets (expect them to be hawkish in tone but not say anything new).
What’s in Today’s Report:
Futures are slightly higher following some backtracking on the UK fiscal spending plan.
UK PM Truss has abandoned part of her spending/tax cut plan amidst market and political pressure as she will no longer eliminate the 45% top tax rate (this is a mild positive as GILT yields were slightly lower on the news).
Oil prices rallied 3% as markets expect a material production cut from OPEC+ at this week’s meeting.
Today focus will be on the ISM Manufacturing PMI (E: 52.0) and while the headline reading is important as always, the Prices index will also be closely watched. If that index can decline below 50 it will be a strong signal that dis-inflation is starting to work its way into the economy (and that’s a good thing). There’s one Fed speakers today, Williams at 3:10 p.m. ET but he shouldn’t move markets.
What’s in Today’s Report:
Futures are solidly lower as negative China/COVID headlines and lackluster economic data weighed on markets.
Chinese authorities put the city of Chengdu (population 17 million) in a COVID lockdown, reminding markets “Zero COVID” is still in effect.
Economically, global manufacturing PMIs were underwhelming as all major regions (EU, UK and China) posted numbers below 50 (signaling contraction).
Today focus will be on economic data and the most important number is the ISM Manufacturing PMI (E: 52.2). Markets need to see an in-line reading, because if it’s a very strong number that will increase hawkish concerns about the Fed, and if it’s a very weak number (below 50) that will spike stagflation concerns. Outside of the PMI we also get Jobless Claims (E: 248K) and Unit Labor Costs (E: 10.7%) and there’s also one Fed speaker, Bostic at 3:30 p.m. ET.
The market has rallied hard on the idea of a Fed pivot. Friday’s jobs report didn’t support that hope and, if anything, will make the Fed more resolute about rate hikes. So, now inflation needs to clearly show signs of peaking and declining, otherwise we’d expect this market to abandon some of that near-term hope, and for volatility to increase, Essaye wrote. Click here to read the full article.
I think that as we are on the precipice of this jobs report, really what we’re seeing today is a bit of digestion of that of the recent of the two days gains,” Tom Essaye, founder of Sevens Report Research, told Barron’s on Thursday. Click here to read the full article.
What’s in Today’s Report:
Futures are flat ahead of today’s jobs report and following a generally quiet night of news.
The only notable economic report was German Industrial Production and it beat estimates rising 0.4% vs. (E) -0.4%.
Geo-politically, China suspended military, climate, and drug enforcement communications with the U.S in retaliation for the Pelosi visit to Taiwan. But, unless retaliation from China impacts U.S./China trade or commodities prices, markets will largely ignore it.
Today the focus will be on the jobs report and the key for markets is that it shows easing wage pressures and moderation in the labor market. So, a mildly underwhelming reports vs expectations (E: 250K job adds, 3.6% UE Rate, 5.0% y/y wage growth) is the best outcome for stocks.
There’s also one Fed speaker today, Barkin at 8:00 a.m. ET, but he shouldn’t move markets.
What’s in Today’s Report:
Futures are slightly higher on momentum from Wednesday’s rally and as the market again ignored soft economic data.
Economic data from Europe was again disappointing as German Manufacturers’ Orders slightly missed estimates (-9.0% vs. (E) -8.9%) as did the UK Construction PMI (48.9 vs. (E) 52.0).
Geo-politically, China began massive military drills around Taiwan, although they were previously announced.
Today focus will be on the Bank of England rate decision (E: 50 bps hike) and on weekly Jobless Claims (E: 260K). Specifically, markets will want to see if the BOE implies more 50 bps hikes are ahead (if so that’s a mild negative for the region). On jobless claims, will they continue to move methodically towards 300k? (That would be a mild positive as it implies slowing in the labor market, which the Fed needs to get to peak hawkishness).
From a Fed speak standpoint, Mester speaks at 12:00 p.m. ET.
What’s in Today’s Report:
Futures are slightly lower as markets digest last week’s big rally and following generally disappointing European economic data.
Data from Europe underwhelmed as German Retail Sales plunged –9.8% vs. (E) 7.5%, the biggest annual drop in 40 years.
The July EU and UK manufacturing PMIs were in-line with low expectations (Euro Zone manufacturing PMI 49.8 vs. (E) 49.6 and UK manufacturing PMI 52.1 vs. (E) 52.2.)
Today focus will be on the ISM Manufacturing PMI (E: 52.2) and markets will want to see a moderation in the data – a decline to show economic momentum is cooling, but no sudden drop. Practically speaking, if the ISM PMI drops to or below 50, that might scare markets that the economy is slowing too quickly.
The key for tomorrow’s jobs report is that it furthers the idea that we’ve hit ‘peak hawkishness’ with the Fed and peak inflation…says Tom Essaye, editor of the Sevens Report. Click here to read the full article.
