A daily market update from FS Insight — what you need to know ahead of opening bell.
“We are stronger, gentler, more resilient, and more beautiful than any of us imagine.” — Mark Nepo
Overnight
Private payrolls expanded by 183,000 in January, topping expectations, ADP says CNBC’
US begins deporting migrants to Guantanamo Bay SEM
Trump Campaigned on Ending Foreign Entanglements. Now He Wants to Own Gaza. WSJ
Streaming giant Spotify turns an annual profit for first time SEM
US Postal Service suspends China packages as tariff war heats up FT
Disney tops quarterly profit estimates, but starts to lose Disney+ streaming subscribers CNBC
Google’s Revenue Growth Slows, Sending Shares Down WSJ
Options Traders Bet the Rally in Big Tech Stocks Has More Room to Run WSJ
Nissan to Reject Honda Deal to Create World’s No. 3 Automaker WSJ
US Treasury moves to quell fears of Elon Musk taking over payments system FT
Are Eggs Safe to Eat as Bird Flu Spreads? NYT
It’s Tough Being a Buffalo Bills Fan, Especially in Antarctica NYT
Chart of the Day
| Overnight |
| S&P Futures -25
point(s) (-0.4%
) overnight range: -43 to -10 point(s) |
| APAC |
| Nikkei +0.09%
Topix +0.27% China SHCOMP -0.65% Hang Seng -0.93% Korea +1.11% Singapore -0.20% Australia +0.51% India -0.18% Taiwan +1.61% |
| Europe |
| Stoxx 50 -0.11%
Stoxx 600 +0.18% FTSE 100 +0.17% DAX -0.03% CAC 40 -0.18% Italy -0.59% IBEX +1.19% |
| FX |
| Dollar Index (DXY) -0.45%
to 107.47 EUR/USD +0.39% to 1.0419 GBP/USD +0.48% to 1.2540 USD/JPY +0.97% to 152.86 USD/CNY -0.39% to 7.2728 USD/CNH +0.09% to 7.2801 USD/CHF +0.39% to 0.9017 USD/CAD +0.31% to 1.4279 AUD/USD +0.48% to 0.6284 |
| UST Term Structure |
| 2Y-3
M Spread narrowed -3.4bps
to -13.7bps
10Y-2 Y Spread narrowed -2.9bps to 26.7bps 30Y-10 Y Spread widened 0.4bps to 23.5bps |
| Yesterday's Recap |
| SPX +0.72%
SPX Eq Wt +0.12% NASDAQ 100 +1.26% NASDAQ Comp +1.35% Russell Midcap +0.56% R2k +1.41% R1k Value +0.17% R1k Growth +1.18% R2k Value +1.45% R2k Growth +1.37% FANG+ +1.51% Semis +1.13% Software +1.78% Biotech +1.26% Regional Banks +1.94% SPX GICS1 Sorted: Utes -0.88% Cons Staples -0.51% Fin -0.28% Healthcare -0.27% REITs +0.01% Indu +0.07% Materials +0.28% SPX +0.72% Cons Disc +1.43% Tech +1.47% Comm Srvcs +1.48% Energy +2.18% |
| USD HY OaS |
| All Sectors +3.6bps
to 308bps All Sectors ex-Energy +3.2bps 292bps Cons Disc +3.8bps 249bps Indu +3.2bps 234bps Tech +4.2bps 318bps Comm Srvcs +3.0bps 499bps Materials +4.4bps 284bps Energy +3.5bps 289bps Fin Snr +3.3bps 265bps Fin Sub +0.2bps 188bps Cons Staples +1.6bps 284bps Healthcare +4.1bps 366bps Utes +3.6bps 234bps * |
| Date | Time | Description | Estimate | Last |
|---|---|---|---|---|
| 2/5 | 8:30 AM | Dec Trade Balance | -96.8 | -78.193 |
| 2/5 | 9:45 AM | Jan F S&P Srvcs PMI | 52.9 | 52.8 |
| 2/5 | 10:00 AM | Jan ISM Srvcs PMI | 54 | 54 |
| 2/6 | 8:30 AM | 4Q P Nonfarm Productivity | 1.2 | 2.2 |
| 2/6 | 8:30 AM | 4Q P Unit Labor Costs | 3.4 | 0.8 |
| 2/7 | 8:30 AM | Jan AHE m/m | 0.3 | 0.3 |
| 2/7 | 8:30 AM | Jan Unemployment Rate | 4.1 | 4.1 |
| 2/7 | 8:30 AM | Jan Non-farm Payrolls | 170 | 256 |
| 2/7 | 10:00 AM | Feb P UMich 1yr Inf Exp | 3.3 | 3.3 |
| 2/7 | 10:00 AM | Feb P UMich Sentiment | 71.7 | 71.1 |
| 2/10 | 11:00 AM | Jan NYFed 1yr Inf Exp | n/a | 3 |
| 2/11 | 6:00 AM | Jan Small Biz Optimisum | 104 | 105.1 |
MORNING INSIGHT
Good morning!
Incoming data supports equity prices. The ISM manufacturing also suggests small-cap EPS to accelerate in 2025.
Click HERE for more.
TECHNICAL
- SPX looks close to a time when bears might need to “hibernate” again.
- GOOGL weakness should prove to be appealing for dip buyers.
- USDMXN looks to have pulled back into its range and is stabilizing.
Click HERE for more.
CRYPTO
We discuss some of the reasons we think it’s prudent to be somewhat risk averse and favor BTC over alts. We also explore why current trade tensions hint at a significant long-term upside for BTC.
Click HERE for more.
First News
Eggs are struggling to keep it sunny side up.
Near-record prices for this household item contributed to unraveling Biden’s presidency. If some reprieve doesn’t come soon, it risks threatening the new administration’s power, too.
We won’t discuss which administration is or isn’t responsible for the prices, but instead focus on the impact to consumers and how they perceive inflation. Eggs are a great example for that because they are common across American households as a breakfast staple, ubiquitous to baking, and considered to be a cheaper source of animal protein.
The average price for a dozen, large eggs in December was $4.146, according to the Bureau of Labor Statistics. While that is off 16% from all-time highs of $4.823 hit in early 2023, prices are almost double from a decade ago.
There are reasons to believe egg prices extended their climb higher in January, as Avian flu rampaged. The situation is so dire that even the all-day breakfast chain Waffle House is placing a $0.50 surcharge on every egg it sells.
The increase has made it cheaper to buy chicken over eggs. Here’s the explanation: The USDA recommends that the average person (165 pounds) consume 60 grams of protein per day. That’s about 10 large eggs or half a pound of boneless chicken breast.
Based on St. Louis Fed data, that means that as of December 2024, the average adult American would need to buy $2.05 worth of chicken breast ($4.104/lb) to meet the recommended daily protein requirement. Using eggs to fulfill that requirement would cost $3.46 ($4.146/dozen).
The December consumer inflation report showed eggs rose 3.2% from a month ago. In comparison, other food items like potatoes added 0.3%, ice cream fell 1.5%, and crackers, bread, and cracker products climbed 2% from a month ago.
Under Biden’s presidency, the U.S. economy maintained a strong job market, but remained mired in higher inflation. Egg prices were just one of the many household items that shot up in price over that time.
That matters because January’s University of Michigan survey signals that consumers’ inflation expectations are heavily influenced by their political beliefs—and Fundstrat Head of Research Tom Lee says the same. The survey rose 3.3% from 2.8% a month ago. Democratic respondents’ inflation expectations exploded three months ago, whereas Republican respondents’ forecast collapsed. The preliminary February inflation expectations’ survey is scheduled to come out on Friday at 10 a.m.
Consumers have been able to absorb most of the price increases over the past few years, albeit begrudgingly, and they haven’t sounded the alarm too much about the increases this time around. But how long they can continue to holdout is anyone’s guess — particularly because it involves the price of something most Americans believe should be widely affordable.
It’s like Lee said on CNBC earlier this week, “consumers vote with their wallets.”
