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Payrolls seen up 150,000 for December. (0:37) AI, autonomous driving among big themes at Consumer Electronics Show. (3:13) The NFL owns TV. (4:37)
The following is an abridged transcript:
Wall Street heads for a rare third shortened trading week in a row.
The stock market will be closed on Thursday, January 9, along with federal agencies, for former President Jimmy Carter’s state funeral and a national day of mourning. Most bond markets will close early at 2 p.m. ET, as advised by the Securities Industry and Financial Markets Association.
While not a full week, it’s a busy one, starting with the labor market. Given the timing of the New Year’s Day holiday, the December jobs report was delayed until the 10th of the month.
The lead up to the report on Friday will include the latest job openings figures in the JOLTs report on Tuesday, the ADP private payrolls report on Wednesday, along with the weekly jobless claims figures a day early due to federal offices being closed on Thursday.
When the big numbers arrive, economists are expecting a gain of about 150,000 in nonfarm payrolls, with the unemployment rate staying at 4.2% and average hourly earnings up 0.3%.
Analysts at Nomura, who expect a rise of 180,000 in payrolls, say the survey data “suggest the labor market is improving, and we expect additional strength in the retail and construction sectors.”
“The unemployment rate likely moved lower but remained at 4.2% in rounded terms. Weakness in the household survey’s measure of job-finding has not been consistent with broader labor data, leading us to expect a stabilization.”
A weaker print could provide some juice to equities by giving the Fed a little more breathing room for its next cut. The recent inflation figures and dot plot have led to the markets pricing in just 50 bps of cuts next year.
Some strategists say a gain of 125,000 or lower or a meaningful rise in the jobless rate could put a quarter-point cut at the end of the month back in play. Right now the odds are just 10%.
We’ll get more insight into the FOMC’s thinking during the last meeting when the minutes arrive Wednesday afternoon.
They “will likely reveal how divided the Committee is on the policy action as well the outlook for 2025,” Nomura said.
“Although Cleveland Fed President Hammack was the only member who dissented against the rate cut of 25bp at the meeting, the distribution of the federal funds rate projections for 2024 suggests there were three additional ‘tacit’ dissents among FOMC participants.”
“According to post-FOMC Fedspeak, San Francisco Fed President Daly described the 25bp rate cut as ‘a close call’, which suggests that some other policymakers might have preferred to keep the policy rate unchanged,” they added.
And as we move past the holiday season, we’re back in earnings season. Delta Air Lines (DAL) is the marquee name and the carrier reports Friday.
Wolfe Research noted last month that the airlines are the cheapest subsector based on valuations vs. history. Delta has underperformed the group in the past month, down about 7% vs. a 2% rise for airlines as a whole.
Also on the earnings calendar, RPM International (RPM), Cal-Maine Foods (CALM), and Apogee Enterprises (APOG) report on Tuesday.
On Wednesday, Jefferies Financial Group (JEF), Albertsons (ACI), MSC Industrial Direct (MSM), Acuity Brands (AYI), Helen of Troy (HELE) and UniFirst (UNF) weigh in.
Walgreens (WBA) and Constellation Brands (STZ) join Delta on Friday.
The always busy tech sector will also get even more attention this week with the Consumer Electronics Show in Vegas running through the week.
Nvidia (NVDA) CEO Jensen Huang giving the keynote address on Monday evening to kick off the AI frenzy.
AMD (AMD) is scheduled to appear and is ikely to show off new products geared towards the PC space, AI and automotive. Intel (INTC), which forced out former CEO Pat Gelsinger last month, is likely to show off its own AI updates.
Another hot topic will be autonomous driving. Waymo (GOOG) (GOOGL) co-CEO Tekedra Mawakana will deliver a keynote speech discussing the future of autonomous vehicles and have a booth with interactive demonstrations.
Garmin (GRMN) will display an updated state-of-the-art domain controller that integrates various systems, including driver monitoring for autonomous features.
And Oshkosh (OSK) will make its debut by showing off its advancements in electrification, AI, autonomy, connectivity and advanced analytics.
In the news this weekend, President Joe Biden plans to ban new offshore oil and gas projects over a large swath of US coastal territory.
Bloomberg says the ban is expected to be announced Monday and will affect 625 million acres of US coastal territory along the Atlantic and Pacific coasts, as well as the eastern Gulf of Mexico. Biden will keep the door open for new oil and gas leasing in the central and western areas of the Gulf that have for decades been drilled and account for 14% of U.S. production of the fuels.
And the NFL dominated the list of top 100 television broadcasts again last year, though sports programming overall faced greater competition from other live events.
Eighty-seven of the top 100 broadcasts consisted of sports, down from 96 in 2023. The NFL accounted for 70 of the top programs, down from the record of 93 a year earlier, when the games didn’t compete with the Olympics or election-related programs.
Only four college sporting events last year were in the top 100. The appearance of Caitlin Clark drove the Women’s NCAA Basketball Championship into the top 100 for the first time.
For income investors, JPMorgan (JPM) and Dollar General (DG) go ex-dividend on Tuesday. JPM pays out on January 21 and DG pays out on January 13.
On Thursday, Mastercard (MA) and Oracle (ORCL) go ex-dividend. Mastercard has a payout date of February 7 and Oracle is paying out on January 23.
And in the Wall Street Research Corner, although the biggest stocks in the S&P 500 (SP500) represent more than a third of the index, its valuations are cheaper according to UBS.
The S&P has become increasingly concentrated over the past decade. The largest six stocks – (AAPL), (AMZN), (GOOGL), (META), (MSFT), (NVDA) – now represent 31.2% of the total market cap of the index compared to 11.2% in 2013.
Strategist Jonathan Golub says because of the higher returns of the Big 6 over the past two years, “it is natural to assume that their valuations would be extended.” But their multiples have increased less than the rest of the market.
“Earnings have contributed far more to the mega-cap tech stocks in 2024 than the rest of the market (38.9% vs. 5.0%), and valuations up less (5.8% vs. 8.6%). Put differently, the ‘Big 6’ have become cheaper relative to the rest of the market over the past 12 months.”
In addition, consensus growth expectations for the Big 6 are expected outpace the rest of the S&P again in 2025 at 19.1% vs. 10.8%, and while the 2025 EPS spread is expected to narrow compared to 2024, “it is nonetheless well above the 30-year average of 5%,” Golub said.
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