Markets surged and more records were made as the investors celebrated the big tech profits.  However, the Employment Situation rained on the tech party coming in much hotter than expected causing bond yields to rally as rate worries grew.  We have an overall lite week on the economic calendar, however, there will be Fed speeches a plenty as they come out from under their blackout period. The focus will be on the busy earnings calendar so plan on some challenging price volatility. 

Overnight Asian markets closed mostly lower with the Nikkei the only index posting gains, up 0.54% with Shanghai leading the selling down 1.02%.  European markets trade green across the board this morning kicking off the week on a positive note.  U.S. futures have rallied sharply off the overnight lows fueled by earnings results, however, continue to suggest a flat to negative open concerned about Powell’s rate comments and rising bond yields. 

Economic Calendar

Earnings Calendar

Notable reports for Monday include AMG, APD, ALGT, AMKR, DRBR, CBT, CAT, CHGG, COHR, CCK, EL, FN, GBDC, HI, IDXX, JJSF, KFRC, KRC, MCD, NXPI, ON, PLTR, RMBS, SPG, SSD, SKY, TSN, VRNS, & VRTX.

News & Technicals’

In an interview with “60 Minutes” on Sunday, Federal Reserve Chair Jerome Powell said that the central bank will be cautious about lowering interest rates this year. He said that the Fed needs more evidence of a strong economic recovery before it starts to reduce the cost of borrowing. Powell also acknowledged that the Fed’s previous interest rate hikes had some negative effects on the economy. However, he said that the impact was not as severe as some had feared.

A bipartisan group of senators unveiled the details of their long-awaited bill to provide financial assistance to Ukraine, Israel, and the U.S. southern border. The bill, which was first proposed by President Joe Biden in October, aims to support the security and stability of these regions amid rising threats and challenges. The bill has faced months of delays and disagreements in the Senate, where some lawmakers wanted to prioritize different aspects of the aid package. The bill will also face a tough battle in the House, where Republicans have introduced their bill that would only fund Israel.

Turkey’s inflation soared to its highest level in decades in January, as prices of food, drinks, tobacco, transportation, and housing surged. The inflation rate rose by 6.7% from December, the biggest monthly increase since August, and by nearly 65% from a year ago. The inflation figures were released two days after Turkey named a new central bank governor, Fatih Karahan, who faces the daunting task of restoring confidence in the Turkish lira and stabilizing the economy.

The stock market ended the week on a high note as it celebrated big tech profits with the Mag7 totaling a full 33% of the SP-500. The U.S. economy added more jobs than expected in January with the nonfarm payroll increasing by 353,000, far exceeding the forecast of 185,000 new jobs. This boosted the U.S. Treasury yields, with the 10-year yield rising by 0.14% to 4.02%. The 2-year yield, which is seen as an indicator of the future fed funds rate, also increased by 0.16% to about 4.36%. Stocks managed to rise despite the higher yields on Friday.  Today we have a busy day on the earnings calendar with PMI, ISM bond auctions, and Fed speakers to provide bullish or bearish inspiration. 

Trade Wisely,

Doug