Today is all about the April Employment Situation number and how the market will react as the economy heats up. Economists suggest the number could top 1 million. With the Fed warnings that the rapid increase in asset prices poses a significant economic risk, inflation impacts could soon change the easy policies. Making new record highs in the Dow yesterday and pushing higher still in the premarket, the bulls seem undeterred, at least for the moment. However, it may be wise to reduce some risk heading onto the weekend depending on the reaction to jobs data.
Asian markets closed mostly lower but near the flatline overnight. European markets are, however, decidedly bullish this morning, with the DAX surging more than 1.3%. Ahead of earnings and jobs data, the futures point to possible new records at the open as we wait on the release of the Employment Situation data. Stay focused; it could be a wild morning of price action.
We have a lighter day on the earnings calendar but still have more than 125 companies reporting. Notable reports include AMCX, CI, CNK, CIO, CRON, DKNG, ELAN, ERF, FLR, LEA, NKLA, RUTH, SPB, TU, & VTR.
News & Technicals’
All eyes will be on the April Employment Situation number coming out before the bell this morning. Consensus expects new jobs will top 1 million, but that number could also be hot enough to consider the unwinding the easy Fed policies. The pandemic situation in India continues to worsen, with more than 400,000 infections for the 3rd time this week. In the last seven days, the country total stands at 2.7 million cases. Treasury yields turned slightly higher early this morning, with the 10-Year rising to 1.575% and the 30-year edging up to 2.247% ahead of today’s jobs report. In a report, yesterday afternoon Fed warned that the rising asset prices pose an increasing threat to the financial system. “Asset prices may be vulnerable to significant declines should risk appetite fall,” the central bank said. Well, thank you very much, Captain Obvious! Who would guessed that printing nearly 19 Trillion in one year would have significant financial impacts?
However, a warning from the Fed did not detur the bulls yesterday, pushing the Dow to new record highs in a substantial late-day surge. The push continues this morning in the premarket, with the futures currently pointing to a bullish gap-up open ahead of the Jobs report. Ths SPY also had a good day yesterday, putting it in striking distance of a new record at the open. That said, the tech sector remains the problem child below a substantial price resistance, facing higher bond prices and a severely expanding chip shortage. We have partied for an entire year on easy Fed policy and massive money printing. The trend remains bullish, so stay with it as long as it lasts, but one must consider the magnitude of the hangover lurking in the near future.