Traders Market Weekly: Disconnect of World at War and Stock Market Euphoria

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    Morning Market
    Dow 38287.86 +137.56 (0.36%)
    Nasdaq 15299.63 +135.62 (0.89%)
    SP 500 4875.29 +29.64 (0.61%)
    10-yr Note +3/32 3.886
    NYSE Adv 1899 Dec 792 Vol 150 mln
    Nasdaq Adv 2455 Dec 1491 Vol 1.3 bln

    Industry Watch
    Strong: Consumer Discretionary, Communication Services, Information Technology, Materials, Consumer Staples, Industrials
    Weak: Financials, Real Estate, Health Care

    Moving the Market

    — Mega caps rallying after underperforming yesterday
    — Broad buying activity after yesterday’s slide
    — Drop in Treasury yields supporting equities


    Dow 38,519.84 369.54 0.97%
    S&P 500 4,906.19 60.54 1.25%
    Nasdaq 15,361.64 197.63 1.30%
    VIX 14.10 -0.25 -1.74%
    Gold 2,072.90 5.50 0.27%
    Oil 73.86 -1.99 -2.62%

    MARKETS soared back — 1 day after the FED HAWKS landed & feasted on WALL STREET BULLS


    Good news … PUNXY PHIL did NOT see his shadow & EARLY spring predicted
    And meteorologically the 2nd half of winter should be milder


    MOTHER OF ALL REPORTS = 353,000+ jobs for JAN-2024
    and way too strong for FED RATE cuts ahead in MARCH
    PPPPLLLUUUUNNNGGGGEEEE — Dow futures went ‘-‘ losing about 200 points


    Equity indices in the Asia-Pacific region ended the week on a mostly higher note but markets in China and Hong Kong continued struggling.
    Japan’s Nikkei: +0.4% (+1.1% for the week),
    Hong Kong’s Hang Seng: -0.2% (-2.6% for the week),
    China’s Shanghai Composite: -1.5% (-6.2% for the week),
    India’s Sensex: +0.6% (+2.0% for the week),
    South Korea’s Kospi: +2.9% (+5.5% for the week),
    Australia’s ASX All Ordinaries: +1.4% (+1.9% for the week).

    Shares of Aozora bank lost another 16% in Tokyo, falling sharply for the second consecutive day after forecasting a net loss due to weakness in its U.S. commercial real estate portfolio.


    January Monetary Base 4.7% yr/yr (expected 7.5%; last 8.2%)
    Japan’s Prime Minister Kishida said that there are no current plans to cut the consumption tax rate.
    Shares of Aozora bank lost another 16% in Tokyo, falling sharply for the second consecutive day after forecasting a net loss due to weakness in its U.S. commercial real estate portfolio.


    South Korea
    January CPI 0.4% m/m, as expected (last 0.0%); 2.8% yr/yr (expected 2.9%; last 3.2%)


    New Zealand
    December Building Consents 3.7% m/m (last -10.6%)


    Q4 PPI 0.9% qtr/qtr (expected 1.9%; last 1.8%); 4.1% yr/yr (last 3.8%).

    • This reply was modified 2 months, 1 week ago by Truman.

    There was some more speculation about additional easing from Chinese authorities.


    Major European indices are looking for a higher finish to the week.
    STOXX Europe 600: +0.7% (+0.6% week-to-date),
    Germany’s DAX: +0.8% (+0.2% week-to-date),
    U.K.’s FTSE 100: +0.3% (+0.2% week-to-date),
    France’s CAC 40: +0.6% (UNCH week-to-date),
    Italy’s FTSE MIB: +0.5% (+1.6% week-to-date),
    Spain’s IBEX 35: +1.0% (+1.8% week-to-date).

    Danske Bank said that credit quality began deteriorating toward the end of 2023.


    December Industrial Production 1.1% m/m (expected 0.2%; last 0.5%)
    December government budget deficit EUR173.3 bln (last deficit of EUR198.0 bln)

    Two farming unions in France called on its members to end their blockades.


    January Unemployment Change 60,400 (expected -38,600; last -27,400)


    lower house approved the budget for 2024.
    Public transit workers in Germany went on strike.


    The January employment report showed headlines for the key metrics — nonfarm payrolls, private sector payrolls, the unemployment rate, and average hourly earnings — that were stronger than expected (much stronger for the payrolls data).

    The report had a few quirks, too, namely a notable drop in the average workweek to 34.1 hours from 34.3 hours, benchmark revisions that showed nonfarm payroll employment in November and December combined 126,000 higher than previously reported, and updated population estimates that decreased the estimated size of the civilian noninstitutional population by 625,000 and the civilian labor force by 299,000 in December.

    Nonfarm payrolls increased by 353,000 in January (consensus 175,000) following a 333,000 increase in December (revised from 216,000).
    Nonfarm private payrolls increased by 317,000 (consensus 150,000) following a 278,000 increase in December (revised from 164,000).
    Average hourly earnings rose by 0.6% in January (consensus 0.3%) following a 0.4% increase in December.
    The unemployment rate was unchanged at 3.7% in January (consensus 3.8%).
    The average workweek dropped to 34.1 hours in January (consensus 34.4) from 34.3 in December.

    The key takeaway, though, is that it is apt to be construed by the Fed as a report that, on balance, fits its current base case for seeing a March rate cut as unlikely.

    Treasury yields jumped in response.

    The 10-yr note yield, at 3.88% before the report, briefly moved above 4.00% before pulling back to 3.99% now.
    The 2-yr note yield, at 4.23% before 8:30 ET, jumped to 4.40% immediately after before pulling back to 4.36%.

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