Markets shrugged off the realization that a March pivot in monetary policy may not occur, focusing instead on the upcoming earnings and jobs report. At the time of this writing, Fed Fund futures are only suggesting a 21% chance of a rate reduction in March. One month ago, the odds were over 90% and about 47% 15 minutes before the Committee’s post meeting statement.
Perhaps one of most significant statements made at the post meeting press conference was the Committee believes the CPI understates inflation. Privately many have stated as such, but fearful of making any public pronouncements under the simple guise that such comments could be viewed as unsubstantiated or supported.
At 8:30 January’s Employment report is released. Analysts are expecting a 188k and 165k increase in non-farm and private sector payrolls, respectively, a 3.8% unemployment rate, a 0.3% increase in hourly wages, a 34.3 work week and a 62.6% labor participation rate.
December’s report exceeded in all dimensions. Will there be significant revisions?
After the close three of the “Magnificent Seven” released results. META and AMNZ exceeded estimates sending shares higher by 16% and 6%, respectively. AAPL missed Chinese sales expectations and shares fell about 3%. Thus far the Magnificent Seven” are 2 and 4 with Navida left to report.
The question at hand are these earnings enough to support these lofty valuations, hence the indices, a question amplified by pivoting monetary policy expectations.
Last night the foreign markets were up. London was up 0.30%, Paris 0.64% and Frankfurt up 0.79%. China was down 1.46%, Japan up 0.41% and Hang Seng down 0.21%.
Dow and NASDAQ futures are up 0.2% and 1.0%, respectively, suggesting the averages should open higher but this could change significantly based upon the various interpretation of January’s labor report. The 10-year is off 2/32 to yield 3.89%.
