Market Overview – Morning Express
– Nonfarm Payrolls for January are due at 7:30 am CT. Expectations are for 150,000 jobs created, Unemployment rate unchanged at 3.9%, and Average Hourly Earnings to increase by 0.5% MoM and 4.7% YoY.
– Job creation on four out of the last five Payroll reports missed expectations, but the last eight reports were revised better the following month. Still, 199,000 in December and 249,000 (revised from 210,000) in November was a big setback.
– ADP estimated 301,000 jobs were lost in January. We believe this sets a low bar and creates a Goldilocks scenario.
– Fed will lift off in March, 100% priced in by rates, but even so must be concerned job trajectory if loss confirmed.
– Range of -300k to +150k jobs would be seen as favorable to markets, barring Wage Growth.
– Wage Growth re-accelerated in December, if it is hotter than December’s +0.6% MoM in the face of job losses, would be seen as negative.
– Amazon blowout earnings report, but $11.8 billion on Rivian mark to market. Has subdued Amazon’s stock rally, although report is a breath of fresh air for broader market and stock is still up more than 12%.
– Crude Oil rallies above $92 as winter freeze hits Texas and concerns rise for production disruption ahead of the weekend as geopolitics remain elevated.
Breaking: 467,000 jobs created in January, with December being revised to 510,000 from 199,000. The Unemployment Rate rose to 4.0%. Average Hourly Earnings surged to +0.7% MoM and 5.7% YoY.
E-mini S&P (March) / NQ (March)
S&P, yesterday’s close: Settled at 4469, down 108.25
NQ, yesterday’s close: Settled at 14,492.25, down 622. 225
– Reiterating the above, Range of -300k to +150k jobs would be seen as favorable to markets, barring Wage Growth. Average Hourly Earnings expected +0.5% MoM, but if hotter than December’s +0.6% and jobs are lost like ADP alluded to, then we see a negative impact on risk-assets.
– Support at 4507.75-4510.50 in the S&P and 14,639-14,666 in NQ was decisively broken yesterday, Amazon and after close earnings lifted, but rebound has stalled on jobs jitters.
– Momentum indicators align as our Pivots, denoted below. Decisive action above this level will be seen as favorable and a close above here will open the door to strength next week. Decisive action below will leave tape on weak footing through session close.
– Selling will pick up with a close below … Click here to get our (FULL) daily reports emailed to you!
Crude Oil (March)
Yesterday’s close: Settled at 90.27, up 2.01
– The melt-up is real. There were several market notes yesterday that called for longs to take profits or hedge, us included. Others, like Citigroup called for a short. The idea was the OPEC+ decision created a spike on Wednesday and a rejection, a near-term blow off top, if you will. The Texas freeze news has completely negated this and creating added supply concerns.
– Strong support at 89.72-90.30 will invite buyers upon first test.
– Immediate threat of higher prices while holding above Click here to get our (FULL) daily reports emailed to you!
Gold (April) / Silver (March)
Gold, yesterday’s close: Settled at 1804.1, down 6.2
Silver, yesterday’s close: Settled at 22.375, down 0.332
– Gold and Silver are firm ahead of Nonfarm Payroll, see expectations above.
– U.S. Dollar weakness after ECB. Tailwinds to German 10-year trading in positive territory creating added currency flows. Supportive to Gold as we have been discussing for weeks.
– German 5-year Bobl traded into a high of +0.032% and 10-year Bund to +0.203%. This is big for currency flow as shorter-end creeps into positive territory.
– Gold testing first key resistance at 1815-1818
– Silver tethered to 22.55 area.
– The bulls will find themselves in the driver’s seat while Gold holds above Click here to get our (FULL) daily reports emailed to you!
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