Happy Friday, Bull Sheeters.
Before the bell in New York today we get the October jobs report. Investors are holding fire for now. U.S. Futures have been trading sideways all morning. And there’s not much more action overseas.
Crypto bulls seem to be taking a long weekend, too. Bitcoin and Ethereum’s Ether are little changed. That dog of a coin, Shiba Inu, is under pressure again this morning.
In today’s By the Numbers I preview the jobs report and what it could mean for your portfolio.
But first, let’s see what else is moving markets as we close out the trading week.
Markets update
Asia
- The major Asian exchanges are mostly lower as we close out the the week, with the Shanghai Composite down 1% in afternoon trading.
- More troubles in China’s real estate market. Shares in Hong Kong-listed property developer Kaisa were halted today. Reminscent of the Evergrande crisis, Kaisa’s finance unit missed a debt payment.
- OPEC+ is in no mood to haggle with the White House. The oil-producing cartel on Thursday reiterated it won’t increase output beyond the 400,000 barrels-per-day it’s been promising, setting off a heated response from Washington.
Europe
- The European bourses are mixed with the Stoxx Europe 600 0.2% higher two hours into the session. Tech, retail and banks are in the green.
- Shares in Merck closed 2% higher yesterday (they’re up again this morning in pre-market) after U.K. Regulators were the first in the world to green-light its COVID-19 antiviral pill, molnupiravir.
U.S.
- U.S. Futures are a touch lower. That’s after the S&P and Nasdaq racked up—stop me if you’ve heard this one—yep, new all-time-highs.
- Shares in Peloton are off more than 30% in pre-market trading after the company, which reported after the bell yesterday, slashed a cool billion from its annual revenue forecast and recorded big misses on just about every key growth metric.
- Another dud came from Uber. The ride-hailing firm said the full-year bottom line will come in well below Wall Street estimates. On the positive side: it just recorded its first quarterly profit. Investors are unimpressed. Shares are down 2% in pre-market, well off their lows.
Elsewhere
- Gold is bouncing back, trading near $1,800.
- The dollar is up, adding to its impressive week.
- Crude is rebounding some, but it’s been a rough week. Brent trades above $82/barrel.
- Crypto is flat. Bitcoin sits above $62,000. The king of crypto is barely changed in the past week.
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By the numbers
450,000
We’ve had two straight duds with the monthly non-farm payrolls report. The September number (for the August report) came in a net-490,000 jobs below economists’ consensus. And then last month we got a 256,000-jobs miss. And today? Economists are sticking their neck out, calling for a +450,000 print on jobs. Goldman Sachs has a more rosy estimate, forecasting 525,000 new jobs. They see improving COVID numbers and the expiration last month of enhanced unemployment benefits as tailwinds to push jobs above forecast estimates. Vaccine mandates and an uncertain seasonal pre-Christmas jobs-rush, meanwhile, could prove to be headwinds, Goldman reckons. Remember: the labor market is huge determining factor for the Fed. Yes, it’s got runaway inflation to contend with. But it also has a puzzlingly inconsistent jobs picture that could very well give policy doves ammunition to go slow on tightening.
No change
Yesterday, shortly after noon, bond traders fixed their attention on London. The Bank of England stunned some by leaving interest rates unchanged. On cue, the global bond market and bank stocks on both sides of the Atlantic took a big hit. Among the worst performers was the scandal-plagued banking giant Credit Suisse, which was trying to placate investors with a sweeping new rescue plan. Financials were the worst performer on the S&P 500 as well. The sector fell 1.3% on the day. The BOE decision to stand pat signaled that central bankers aren’t quite ready to tighten lending rates to slow down runaway inflation. This will add to the criticism that the central banks are behind the curve, and that their timid approach now will lead to a more painful volley of rate hikes next year and the year after. Expect this narrative to pick up in the coming weeks if inflation persists.
38.9%
Yesterday was one of those days that tells you everything you need to know about these markets. That is, that the bulls are firmly in control. Tech stocks and gold climbed on Thursday, as did the S&P and the dollar. No wonder JPMorgan Chase head of U.S. Market intelligence Andrew Tyler is calling this “the everything rally.” The S&P 500 is now up 38.9% in the past 12 months. Every sector is in the green. In the first half of 2021, the runaway leaders were energy and financials as the reopening trade took off. In the past month, we’ve seen consumer discretionary and tech lead the way. The prevailing logic is that banks should do well as the Fed tapers its asset purchases. That trade still seems to be a winner. But what can we make of tech’s surge? Tyler says we shouldn’t be surprised to see a rally in Big Cap tech play out here. Why’s that? “After the 2013 tapering, Tech rallied alongside the Value sectors,” he writes. Big hat-tip to MarketEar for that insight.
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Postscript
If I were to build a pie chart of all the reader feedback I get, the “Scilla/dog/truffles” wedge would pop out. You’re right to point out we’re a month into truffles season and I haven’t given a single update about my truffle dog’s truffling performance.
Some news: We’re off to Amandola this evening for the start of the annual truffles festival. I’m bracing for nutty prices.
After last year’s disastrous effort, I succeeded in convincing my neighbor to take Scilla and I into the woods this weekend for another truffle-hunting excursion. There’s plenty of mud, he warned, but not much under the squishy footing. (The rains came too late this year.) I have low expectations, but I’ll report back next week.
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Have a lovely weekend. But first, there’s more news below.
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Bernhard Warner
@BernhardWarner
[email protected]
As always, you can write to [email protected] or reply to this email with suggestions and feedback.
Today's reads
How the SHIBArmy lifted the latest dog-themed crypto from joke to giant—Coins2Day
Robinhood expands IPO access to let companies set aside ‘friends and family’ shares—Coins2Day
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Market candy
Quote of the day
It’s tough to make predictions, especially about the future.
Yes, that was one of Hall of Famer Yogi Berra's many brilliant pearls of wisdom. It could have also been uttered by Zillow CEO Rich Barton this week after the company shuttered its home-flipping unit iBuyer. Coins2Day columnist Ben Carlson, he of Ritholtz Wealth Management, draws some instructive lessons from Zillow's failed gambit and the unique market that is America's real estate market.
