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Punxsutawney Phil will get bearish. (0:28) Watch these employment benchmark revisions. (2:22) Tariffs at ‘most hawkish finish of the protectionist spectrum.’ (5:38)
The next is an abridged transcript:
That’s proper, it’s Groundhog Day and to start with, spoiler alert:
Punxsutawney Phil noticed his shadow, predicting six extra weeks of winter. What does that must do with the inventory market? Greater than you may assume.
A Groundhog Day bump is an precise factor. And shares usually are not getting it in 2025.
Savva Shanaev of Northumbria College discovered that inventory returns are 2.78% greater when Phil forecasts an early spring. The examine in contrast a century of Wall Road returns in opposition to the annual predictions of the incarnations of Phil, noting that traders get irrationally optimistic over Phil’s early spring predictions.
“Some traders are genuinely superstitious, if solely on a unconscious degree,” Shanaev instructed the Harvard Enterprise Assessment. “Others will not be however are swayed by the shift in public sentiment that always accompanies cultural occasions like this one.”
“Nonetheless others could also be crafting funding methods in response to how they assume superstitious traders will react. In actual fact, the groundhog’s influence on the inventory market begins to turn out to be evident two weeks earlier than his February 2 predictions — suggesting that the latter rationalization is not less than partly in play.”
And talking of Groundhog Day, this week traders might really feel like they’re reliving final week. The earnings calendar is full, together with megacap names, and Fed forecasting will probably be in full swing as jobs report hits.
The BLS will launch the January employment figures on Friday as standard. Economists count on that nonfarm payrolls rose by 155,000 final month, with the unemployment price staying at 4.1% and common hourly earnings up 0.3%.
Proper now, the market continues to be pricing in a quarter-point price minimize on the June Fed assembly. However a stronger-than-expected rise in payrolls might push that out additional and presumably take one of many two cuts anticipated off the desk once more.
In its assertion final week, the FOMC modified the labor market evaluation wording from “situations have usually eased” to the “unemployment price has stabilized at a low degree in current months, and labor market situations stay stable.”
Together with the common numbers come the annual benchmark revisions. The August preliminary estimates indicated that payrolls within the yr by means of March was too excessive by 800,000.
Wells Fargo economists gave their expectations:
1. The benchmark revision is a lagged indicator of labor market power, exhibiting hiring was not fairly so impervious to the FOMC’s tightening cycle in 2023 and early 2024.
2. Imputed job progress from the birth-death issue is more likely to be revised decrease from March 2024 onward, however not sufficient to vary the image of stable hiring.
3. Up to date seasonal adjustment elements might alter hiring’s momentum heading into this yr, however This fall’s 170K tempo leaves some room to present earlier than the development seems worrisome.
4. A big inhabitants adjustment to the family survey has scope to shut the hole between the institution and family surveys’ measures of employment progress, however it ought to have little bearing on the unemployment price and different ratios inside the family survey.
Shifting to earnings, standout studies this week embody megacaps Amazon (AMZN) and Alphabet (GOOG)(GOOGL). Novo Nordisk (NVO), Walt Disney (DIS) and Qualcomm (QCOM) are additionally set to report.
However we’re going to dig a bit of deeper into a favourite of Looking for Alpha subscribers – Palantir (PLTR), which studies postmarket Monday.
The consensus EPS estimate is $0.11 (+37.5% Y/Y) and the consensus income estimate is $775.91 million (+27.5% Y/Y). Over the past 2 years, PLTR has overwhelmed EPS and income estimates 88% of the time
Jefferies set a cautious tone forward of the numbers, noting that the upcoming quarter will profit from rising momentum from the AI Platform, however it can turn out to be more and more troublesome for Palantir to ship accelerating progress on this and subsequent quarters.
Analysts stated: “Even with the constructive momentum we have seen with PLTR’s AI Platform up to now, we predict that the 4Q setup will probably be difficult.”
Wedbush, then again, raised its worth goal, with analyst Dan Ives expressing higher confidence within the firm’s AI technique and suggesting that it’s on “a path to turn out to be the following Oracle (ORCL) or Salesforce (CRM) over the approaching years.”
Additionally on the earnings calendar:
Together with Palantir, NXP Semi (NXPI), IDEXX Labs (IDXX), Tyson Meals (TSN) and Clorox (CLX) report Monday.
On Tuesday, Alphabet headlines, with Merck (MRK), Pepsi (PEP), AMD (AMD), and Amgen (AMGN) additionally on faucet.
Wednesday brings Disney, Novo Nordisk, Qualcomm, Arm Holdings (ARM) and Uber (UBER).
Amazon studies Thursday, with outcomes from Eli Lilly (LLY), Honeywell (HON), ConocoPhillips (COP), Neurocrine Biosciences (NBIX) and Bristol-Myers Squibb (BMY) additionally due.
Fortive (FTV), Cboe International Markets (CBOE), and Kimco Realty (KIM) weigh in on Friday.
Within the information this weekend, gere come the tariffs.
On Saturday, President Donald Trump imposed 25% tariffs on most imports from Canada and Mexico and 10% tariffs on Chinese language items, efficient Tuesday. Power merchandise from Canada will probably be assessed a ten% tariff.
In response, Canada Prime Minister Justin Trudeau stated his nation will place 25% tariffs on $155 billion in U.S. imports.
Mexico President Claudia Sheinbaum referred to as for her Secretary of Financial system to “implement plan B that now we have been engaged on, which incorporates tariff and non-tariff measures in protection of Mexico’s pursuits.”
And China stated it could take countermeasures and file a lawsuit with the WTO.
George Saravelos, head of FX technique at Deutsche Financial institution says he expects “a big and unstable market response” with the tariffs “on the most hawkish finish of the protectionist spectrum we might have envisaged.”
“Past FX, a tariff conflict ought to be interpreted as a mixture of fiscal tightening (a consumption tax) and a destructive provide shock. It’s due to this fact clearly destructive for fairness markets,” he stated.
“It’s particularly notable that power imports from Canada are in scope,” he added. “Even when at a diminished price of 10%, that the administration is prepared to impose tariffs on power pushes again in opposition to the market narrative that cost-of-living concerns would act as a restraint. The macroeconomic implications of such tariffs are more likely to be wide-ranging and materially disruptive, particularly exterior of the US.”
For earnings traders, Citigroup (C) goes ex-dividend on Monday, with a payout date of February 28.
MetLife (MET) goes ex-dividend Tuesday, paying out on March 11, whereas Sclumberger (SLB) goes ex-dividend Wednesday, with a payout date of April 3.
JB Hunt (JBHT) goes ex-dividend on Friday, paying out February 21.
Monolithic Energy Methods (MPWR) is anticipated to extend its dividend this week to $1.50 from $1.25.
And within the Wall Road Analysis Nook, Financial institution of America strategist Michael Hartnett says U.S. exceptionalism is peaking, which might result in the Magnificent 7 turning into the Lagnificent 7.
He says traders are “all-in on U.S. exceptionalism” and lacking secular bulls in “low cost, unloved Japan and Europe banks,” that are areas the place worth is outperforming progress shares.
U.S. nominal GDP is up an distinctive 50% previous 5 years, pushed by extra authorities spending ($7 trillion up to now 12 months), excessive immigration (which accounted for 84% of the three.3 million rise within the U.S. inhabitants in 2024) and an AI capex hyper-cycle (projected to hit $500 billion within the coming years), he stated.
This leaves U.S. exceptionalism “exceptionally costly (and) exceptionally well-owned.”
He famous that the Magazine 7 account for 11% of BofA’s international wealth and funding administration property beneath administration and 36% of its inventory holdings.
