A daily market update from FS Insight — what you need to know ahead of opening bell.
“Believe nothing you hear, and only one half that you see.” — Edgar Allan Poe
Overnight
Friday’s jobs report could present a mixed view of the labor market. Here’s what to expect CNBC
Fed Governor Bowman says December interest rate cut should be the last CNBC
Winter storm plods into the Deep South, prompting states of emergency and school closures AP
Who is right about ‘Maganomics’: bearish economists or bullish investors? FT
Silicon Valley’s largest start-ups to shun IPOs in 2025 FT
Nicolás Maduro is set to be Venezuela’s president until 2031 AP
Americans Are Tipping Less Than They Have in Years WSJ
Economists Are in the Wilderness. Can They Find a Way Back to Influence? NYT
Los Angeles wildfires could be costliest blaze in U.S. history CNBC
The U.K. Is the Biggest Loser From the Rise in Yields WSJ
Delta outlook tops estimates as CEO expects 2025 to be airline’s ‘best financial year in our history’ CNBC
U.S. Mortgage Rates Climb to Highest Since July WSJ
Supreme Court to Hear Challenge to Law That Could Shut Down TikTok NYT
Walgreens results top estimates as drugstore chain works to slash costs CNBC
The U.S. Has More Fancy Apartments Than It Is Able to Fill WSJ
World breaches 1.5C global warming target for first time in 2024 FT
The mysterious fish that live for a century and don’t decline with age BBC
Chart of the Day
| Overnight |
| S&P Futures -19
point(s) (-0.3%
) overnight range: -39 to -0 point(s) |
| APAC |
| Nikkei -1.05%
Topix -0.80% China SHCOMP -1.33% Hang Seng -0.92% Korea -0.24% Singapore -1.58% Australia -0.42% India -0.40% Taiwan -0.30% |
| Europe |
| Stoxx 50 +0.22%
Stoxx 600 -0.12% FTSE 100 -0.40% DAX +0.36% CAC 40 +0.31% Italy +0.23% IBEX -0.93% |
| FX |
| Dollar Index (DXY) +0.01%
to 109.19 EUR/USD +0.01% to 1.0301 GBP/USD -0.04% to 1.2303 USD/JPY +0.09% to 157.99 USD/CNY +0.00% to 7.3318 USD/CNH +0.14% to 7.3458 USD/CHF -0.18% to 0.9137 USD/CAD -0.11% to 1.4411 AUD/USD -0.16% to 0.6186 |
| UST Term Structure |
| 2Y-3
M Spread widened 1.8bps to -3.2bps
10Y-2 Y Spread narrowed -1.6bps to 40.7bps 30Y-10 Y Spread narrowed -0.4bps to 23.3bps |
| Yesterday's Recap |
| SPX +0.16%
SPX Eq Wt +0.12% NASDAQ 100 +0.04% NASDAQ Comp -0.06% Russell Midcap +0.15% R2k -0.48% R1k Value +0.14% R1k Growth +0.17% R2k Value -0.33% R2k Growth -0.62% FANG+ -0.23% Semis -0.71% Software +0.01% Biotech -0.60% Regional Banks -0.03% SPX GICS1 Sorted: Comm Srvcs -0.74% Energy -0.10% Utes -0.01% Tech +0.10% SPX +0.16% Cons Disc +0.24% Fin +0.30% Indu +0.41% REITs +0.44% Cons Staples +0.46% Materials +0.49% Healthcare +0.53% |
| USD HY OaS |
| All Sectors +1.2bps
to 314bps All Sectors ex-Energy +1.2bps 295bps Cons Disc +1.2bps 264bps Indu +1.3bps 244bps Tech +1.0bps 318bps Comm Srvcs +0.5bps 503bps Materials +1.9bps 291bps Energy +1.2bps 291bps Fin Snr +1.3bps 277bps Fin Sub +1.2bps 196bps Cons Staples +1.2bps 277bps Healthcare +1.2bps 366bps Utes +1.4bps 218bps * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 1/10 | 8:30 AM | Dec AHE m/m | 0.3 | 0.4 |
| 1/10 | 8:30 AM | Dec Unemployment Rate | 4.2 | 4.2 |
| 1/10 | 8:30 AM | Dec Non-farm Payrolls | 165 | 227 |
| 1/10 | 10:00 AM | Jan P UMich 1yr Inf Exp | 2.8 | 2.8 |
| 1/10 | 10:00 AM | Jan P UMich Sentiment | 74 | 74 |
| 1/13 | 11:00 AM | Dec NYFed 1yr Inf Exp | n/a | 2.97 |
| 1/14 | 6:00 AM | Dec Small Biz Optimisum | 100.5 | 101.7 |
| 1/14 | 8:30 AM | Dec PPI m/m | 0.3 | 0.4 |
| 1/14 | 8:30 AM | Dec Core PPI m/m | 0.2 | 0.2 |
| 1/15 | 8:30 AM | Dec CPI m/m | 0.3 | 0.3 |
| 1/15 | 8:30 AM | Dec Core CPI m/m | 0.2 | 0.3 |
| 1/15 | 8:30 AM | Dec CPI y/y | 2.9 | 2.7 |
| 1/15 | 8:30 AM | Dec Core CPI y/y | 3.3 | 3.3 |
| 1/16 | 8:30 AM | Dec Import Price m/m | n/a | 0.1 |
| 1/16 | 8:30 AM | Dec Retail Sales m/m | 0.5 | 0.7 |
| 1/16 | 10:00 AM | Jan Homebuilder Sentiment | n/a | 46 |
MORNING INSIGHT
Good morning!
The first five days were positive, which is a good omen for the rest of the year. The FOMC minutes show Fed officials acknowledge core components inflation weakening, but uncertainty around trade keeps members more cautious.
Click HERE for more.
TECHNICAL
- SPX looks likely to undercut 5829 post Friday’s jobs report, and technical support lies near 5700.
- Industrials look close to support, and should bottom within the next 1-2 weeks.
- Russell 2000 will require some patience given rising bond yields.
Click HERE for more.
CRYPTO
We discuss recent news about the DOJ securing approval to sell $6.5B in bitcoin and explore why the odds favor positive regulatory and legislative actions for crypto in the post-inauguration period.
Click HERE for more.
First News
The all-important jobs report is slated to come out this morning. But such reports don’t hold the same excitement and anticipation that they once did.
Trillions of dollars in global financial markets flow based on figures released by the Bureau of Labor Statistics. Lately, the releases have been subject to huge revisions and other mishaps. That has frustrated money managers and central bankers who rely on the quality of those key data points to figure out the strength and pain points within the economy.
In August, the BLS revised its non-farm payroll estimates downward by 818,000 over the 12 months ending in March, the largest such revision since 2009. In the past year, some investment firms on Wall Street have received an unfair headstart in the form of early access to consumer-price index data before it was released to the public. There have also been other publishing errors.
Problems like that have propelled the Federal Reserve and investors to constantly recalibrate forecasts on where interest rates are headed after seeing fresh economic data.
Money funnels in and out of areas based on where rates are. Tech stocks, for example, typically come under pressure from higher rates, which reduces the value of earnings expected to be generated many, many years in the future.
Behind the problems at BLS: Funding for the bureau has slumped almost 20% since 2010, after adjusting for inflation, according to Bloomberg. While it’s unclear if that is all to blame, it’s a given that the shortage of funds, along with falling response rates on surveys over the past decade, has put data quality at risk over the longer run, Erika McEntarfer, commissioner of the BLS, said in the article.
The issues have been most obvious in none other than the jobs report, which uses two surveys: the establishment and household. These are not expected to be aligned, but a diverging picture of the labor market over this long of a period is “extraordinary,” wrote Dean Baker, senior economist and co-founder of the Center for Economic and Policy Research. As a result, there have been disagreements among investors about whether the labor market is actually strong.
James Knightley, chief international economist at ING, wrote that during the early stages of an economic downturn, the BLS tends to overestimate jobs created by new start ups and underestimate the number of jobs lost by failing small businesses. “In steady times, their assumptions are accurate, but at turning points in the cycle they can be significantly wrong” he wrote.
As we know, the past few years have been anything but a normal economic cycle. But for now, investors are looking at multiple reports to get insights on the economy, and skepticism regarding the quality of the data in the reports is unlikely to help.
