E-mini S&P 500 Futures (March): Settled at 3928, up 0.25
E-mini Nasdaq-100 Futures (March): Settled at 13,699.75, down 68.00
U.S. benchmarks are slipping back into yesterday’s range after finishing strongly. The Federal Reserve minutes from the January 27th meeting, showing that officials have agreed the economy is “far from” their longer-term goals, jump-started markets during an unenthusiastic session. This means the Fed will remain accommodative, keeping rates near zero and maintaining asset purchases of at least $120 billion per month.
Jobs data has certainly agreed with this assessment, as Nonfarm Payroll has fallen shy of expectations for 5 of the last 6 months. Furthermore, Fed Chair Powell said last week the real Unemployment Rate is closer to 10%. Today, Initial Jobless Claims rose to 861,000, the highest since the week of January 21st. Although Continuing Claims improved WoW, they did come in higher than expected for the second week in a row.
Outside of jobs, the economy is improving and showing broad signs of economic activity. Yesterday, January Core Retail Sales blew the doors off and snapped back from 2 underwhelming holiday months, and PPI came in at the highest MoM improvement since September 2012. ISM/PMI data has also been strong and early this week NY Empire State Manufacturing finally lifted out of the gutter.
Today, Philly Fed Manufacturing came in at a robust 23.1. At the same time, Walmart reported earnings this morning and is down 5% after missing estimates and guiding that it expects sales growth to slow in the coming year.
The economy is certainly at an inflection point and this goes along with our rhetoric yesterday; U.S benchmarks, at these levels, have priced in perfection and we find little near-term value right here, right now. In conclusion, we welcome lower prices.
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