This post was originally published on this site.
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Markets mixed as investors assessed earnings reports.
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Today is all about the NFP report.
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Keep your eyes on wage growth.
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Oil Steady, Gold continues to kiss highs, Bonds steady.
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Try Pasta Al Forno.
Markets ended the day mixed……as investors reacted to the slew of earnings reports during, the day while they waited patiently for the AMZN results after the close all while bracing themselves today’s key U.S. jobs report.
At the end of the day – the Dow lost 125 pts, the S&P’s up 22, the Nasdaq added 100 pts, The Russell lost 9, the Transports up 62 pts, while the Equal Weighted S&P lost 9 pts,
We heard from several major companies that were responsible for driving the action leading to significant swings:
PLTN surged by 12% on a bullish outlook, PM gained 11% rising to a record high thanks to strong Zyn nicotine pouch sales. RL gained 10%, TPR added 12%, HLT +4.8%.
RBLX lost 11% after QCOM sank amid concerns over weak handset demand, while F dropped following a profit warning and tariff concerns. SKWK lost 25%.
HON lost 5.5% after missing 2025 profit forecasts and announced that they are splitting the company into 3 separate and distinct public companies…. Aerospace, Automation and Advanced Materials.
All this happened as investors awaited AMZN results – which came in after the close and as expected – they were better than expected but did run into some trouble due to disappointing forward guidance…. Revenue jumped 10%, EPS of $1.86 vs. the $1.49 estimate. Forward guidance missing the estimates and that sent the algo’s into a tizzy…..Andy Jassy – CEO telling us that he is still feeling pain constraints in its cloud computing division – even as they plan to invest $100 billion in 2025 going towards data centers, chips, and other equipment to be able to provide AI services. Notice that AMZN is following in the footsteps of its competitors by increasing AI related spending and in the end, investors assume it will impact profitability. Jassy telling investors that growth will be ‘lumpy’ due to delays in hardware and ‘insufficient electricity’ (there’s that energy demand argument that I ranted about yesterday – insufficient electricity suggests to me that demand is stronger than supply – Econ 101).
This morning – AMZN is quoted down $7 at $231- leaving it down 4% off the most recent high reached – $242 – on Tuesday. Now, like I always say, I would look to add on weakness – down 4% is not weakness in my view….Now if it comes back to test the January low of $216 – that would represent an 11% move off the high and that would be considered a place to start. Remembering that I already own it, now if you are just starting a position – you have to start somewhere, so just ‘dip your toes’ and then see where it goes….
Ok – onto what the focus is today…. And that is the Non-Farm Payroll report which could shape the market’s next move. Key expectations include: 170k New jobs, although we could see that number increase due to hurricane-driven hires. Avg Hourly Earnings of +0.3% m/m and 3.8% y/y. Now if jobs and earnings grow faster than that – then that poses an issue for the FED and future policy moves.
My Friend Tommy Essaye of The Sevens Report telling us that “Friday’s jobs report is important because if it’s a Goldilocks number—not too hot or too cold—it will support the market, but if it misses expectations, it could add pressure to stocks.” Now here is the rub – In this case – a miss would be stronger numbers that forces the FED to remain on hold while weaker job growth and weaker earnings are also a ‘miss’ – but weaker numbers will give the FED the green light to CUT rates… Capisce?
In addition to the January report – markets are also due to get a revision to annual job growth thru March of 2024……and that is expected to show a downward revision of 600,000 to 700,000 jobs for the past year—lower than the initial 818,000 estimate. In any event – my guess is that the rate cutters will use this revision as a reason to say that the labor market is cooling – which I think is baloney since this is a revision to an original number that is actually LESS than the original number…NOT more than…..
Bonds did nothing really – the TLT and TLH remained unchanged leaving the 2-yr yield at 4.21%, while the 10-yr yield remains at 4.43%.
Oil continues to trade a bit lower…testing the trendline support at $70.45…. before bouncing. This morning it is up 35 cts at $70.97. It remains in the $70.45/$72 trading range. And if Andy Jassey’s concerns are real – about ‘insufficient electricity’ – then my guess is that demand for oil is alive and well.
Gold continues to tease and kiss all-time highs… This morning it is up $13 at $2890…. news that China’s central bank (along with a range of others) continues to buy even at all time highs only confirming that these countries are looking to add to reserves amid all of the geo-political and economic uncertainties. Let’s see what happens after the NFP report at 8:30….
Just fyi – The VIX pulled back even more and is now trading below all 3 trendlines suggesting less fear by investors…. putting it firmly back in the ‘complacent’ zone.
US futures are flat again…. Dow futures up 26, the S&P’s down 1, the Nasdaq is down 16 while the Russell is up 3. Markets in stand ‘buy’ mode until 8:30…. Any sense that the market is cooling will send stocks higher in a flash…. While any sense that it is not cooling will see stocks under pressure. Watch for the FED’s Michelle Bowman and Adrianna Kugler as they take to the stage. As you know, Bowman leans hawkish while Kugler leans dovish…she tends to focus on job growth and wage stability over aggressive inflation fighting measures. And so, it’s a stand off again…. Who will the market listen to?
European markets are all lower….as they too await today’s NFP report. L’Oreal reported earnings and the stock is trading down 4%. BoE Governor Andy Bailey clearly a bit worried about Trumps Tariffs saying that even if the UK manages to avoid tariffs, a trade war between the US and ‘another’ major economy will have an effect on Britain. Eco data today from France, Germany, UK and Spain all due out later this morning.
The S&P closed at 6083 up 23 pts…. A look at the chart reveals that the S&P has been consolidating and trading sideways since Mid-October – trading in the 5880/6110 band. Yesterday I said we were just about the trendline at 6000 leaving us to test the recent highs of 6110. Today’s NFP report will drive the next move…IF the report is weaker, then I suspect we could test that number today, if it is in line (as expected) then I think we churn, and if it is stronger then my guess is that we could test support at 6000….It just depends on what the number is and how they present it. Like food, it’s all in the presentation.
Pasta Al forno con salsiccia and piselli
(Baked Pasta with Sausage & Peas)
This is one of those comfort dishes…. Easy to make and so good.
For this you need: chopped carrots, celery and onions, Sweet Italian Sausage, Frozen Peas, Fresh Mozz, Fresh grated parmegiana cheese, white wine, bechamel sauce and 1 lb. of rigatoni pasta.
Preheat your oven to 375 degrees.
Bring a pot of salted water to a rolling boil on the back burner.
In a sauté pan, sauté the chopped veggies in olive oil. After 10 mins, add sweet sausage and brown. Now add 1 cup of dry white wine (you can use chicken broth if you prefer). Add frozen peas, turn the heat to low, cover and cook for 15 mins.
Now make the bechamel sauce. For this you need: 1 stick of butter, 3 tbls of flour, 2 cups of whole milk, s&p to taste and nutmeg to taste.
In a small saucepan, melt butter over medium-high heat. Add flour and whisk to form a paste. Whisking constantly, add milk in a steady stream, to maintain a homogeneous texture.
Turn heat to low, continue stirring, until sauce begins to thicken slightly. Done.
Now – add the pasta to the pot and cook for 6 mins….it will be a bit undercooked, that’s fine. Strain, saving a mug of water. Mix the pasta with the sausage mixture, add the chopped mozz, handful of parmegiana and the bechamel sauce. Mix well to coat.
In a buttered baking dish – add the pasta mixture, dust with more parmegiana and bake for about 20 mins.