Let's get to the big story.
Breakdown on this Tuesday morning.
All eyes are on oil as well as stock futures, especially given the conflict in the Middle East and the deadline later this evening.
We are coming off a jobs report that showed 178,000 jobs added in March, but that data has been massively from month to month.
Now all eyes do turn to Thursday's PC as well as Friday's CPI reports for the first real look at.
How a 50% spike in oil over the last five weeks is hitting the broader economy will be coming out on Friday morning.
Joining me this morning is Michael Reinking, Senior Market Strategist at the New York Stock Exchange.
Good morning, Michael.
Welcome back.
Good morning, Remy.
Thanks for having me.
It is a Tuesday, which in the Reinking household means it's taco night, generally speaking, but we're going to have to see what the chef has on tap for us.
Yes, 8 p.m.
The deadline this evening and we will be keeping an eye on social media as well as the headlines, of course, for any developments but in the meantime it does look as though oil is back up and stock futures are lower.
So what are you paying attention to as we head into this?
Obviously this is a very headline driven market at this point and we continue to see those headlines moving through the markets this morning.
We saw some additional strikes on Cork Island, you know, military assets, you know, maybe kind of another warning sign that we would potentially be open to kind of moving some ground troops in if you know we don't come to some sort of agreement here with Iran, but we have, we have kind of this looming deadline.
Market participants kind of really kind of just stuck, right?
Last week we saw that oversold bounce in the S&P 500 took us right back up into the just under the 200 day moving average, but you've also seen volumes of trailing off.
Yesterday we were coming out of the long holiday weekend, but it was the lowest volume day of the year in that rally that we had seen yesterday, and we're kind of backing off this morning.
Yes, and it's really interesting because we're coming back from a long holiday weekend, but we did get that US jobs report last Friday when equity markets were closed, and this week we will be paying attention to inflation figures.
But of course the outcome of this conflict in the Middle East is something that both the Fed as well as markets are watching.
So tell us what you made of the labor market.
The question is, when you know when traders aren't at their seats, does anybody actually Attention to the data.
I think it's been a little bit hard recently in that there's been so much volatility in that labor market data where we've seen opposing big gains and losses in the last three months.
If you look at kind of the three month trailing average, you're looking at something a little over 60,000 jobs.
If you pull that out a little bit farther, it's kind of closer to 50,000.
The report itself At first glance is sort of hawkish in nature right in that you know you have the Federal Reserve which is looking at this kind of incoming inflationary impulse and you're not seeing a big change in the labor market where it remain in this low higher low fire environment you did see kind of the big pick up in in jobs, but that The establishment survey wasn't quite as strong.
The wages data kind of moderated.
The work week was a little bit lower, and we continued to see a lot of those job gains coming out of healthcare, which is not necessarily your most economically sensitive kind of sector, and it reverse what we've seen in February, right?
So we did see rates kind of move back up a little bit, which I think is also sort of interesting for what we have coming at us this week.
We have PCE.
That's really February data.
So I think Friday's data, which is the March CPI data, is going to be pretty important.
But in the next 3 days we have Treasury auctions 3, 10, and 30 years with the backup that we've seen in yields.
It will be interesting to see how markets digest those auctions to see if you start to see some real interest with the backup in yields that we've seen over the last month and a half.
Yes, and Michael, you bring up a lot of important.
Points, but I do want to hone in on what we saw in terms of wage growth in that jobs report, especially at a time when Americans are having to deal with pain at the pump, meaning the average price of a gallon of gasoline, regular gasoline, is above $4 a gallon, right?
So in terms of inflation, what are you paying attention to and what are your expectations?
Yes, I mean, look, we're going to continue to see kind of this move higher in oil is going to make its way. through the economy we're going to see kind of that inflationary impulse which is going to last for some kind of period of time.
Oil prices were pretty subdued coming in, so we've reversed some of that, right?
You have the hope that the tax returns as we are approaching tax deadline that that will also help to offset and help to offset some of that pain at the pump.
We have seen even Jamie Dimon sort of suggested it yesterday in his letter to shareholders that you've seen a little bit of a slowdown in those consumer spending numbers.
I think what will be really interesting in the coming weeks is listening to that commentary on conference calls as we get into earnings season to hear how management teams are seeing things kind of starting to shift on the ground, so to speak.
As we start to get a month into this conflict and we're starting to see kind of the impact of those energy markets, energy prices moving higher and finally, before I let you go, you mentioned Jamie Dimon as well as earnings, and we know that the big banks will start reporting their earnings, but when it comes to your outlook.
In terms of earnings by sector, has anything changed?
Look, coming into this year, there was this expectation that you were going to see kind of an expansion of earnings growth beyond just the tech sector.
Part of that was with the tailwinds that we had from potential monetary policy and fiscal.
Policy.
Both of those are a little bit you remove some of those tailwinds here in the near term.
We've continued to see earnings estimates have been moving higher throughout this, so it does raise the bar a little bit, I think for for companies to come out and kind of reiterate that they feel comfortable in.
In that guidance, but what we've also seen is that we're now almost 6 months into some sideways trading, sideways to down trading within markets, and what that does is also help to compress some of the valuations that had gotten stretched, so it's been kind of a correction via time, not necessarily price.
Right, which is just helping some of those larger tech tech companies that have that had started to get stretched from a evaluation perspective, you kind of get a little more, a little more interesting.
Well, Michael, we will have to leave it there for today, but a lot to watch in today's session as well as the next 12 hours.
So thank you so much for joining me.
Thanks for having me.
