Market players are intently focused on interest rates, bonds, and a rotation between growth and value names after the Fed minutes surprised with a more hawkish tilt. The minutes triggered a vicious rotation that triggered significant computer-driven action and roiled many stocks.
This morning, market players will be focusing on December jobs news as further evidence that inflationary pressures might be building.
Expectations are for around 450,000 new jobs, with the unemployment rate ticking down to 4.1%. If the number is over 550,000 or so, it will likely trigger more inflation concerns and trigger further rotational action. If the number comes in under 250,000, then some of the worries would like to dissipate, and we'd see some 'risk on' action.
Regardless of what happens with jobs today, the issue of inflation and a more hawkish Fed is going to be with us for a while and cause rotational movement and more action on the index level.
Unfortunately, this action is challenging for stock pickers as fundamentals and technical patterns don't move stocks to the same degree as macro issues and rotations. The good news is that earnings season is fast approaching, and that will force more focus on how well individual stocks are executing.
Currently, the big issue is trying to discern to what degree a more hawkish Fed is already discounted by the market. The jobs news this morning will be one source of information, but there still are significant issues that are impacted by the trajectory of Omicron and supply chains.
The biggest danger for traders will be more positioning that triggers giant algorithms that disregard the merits of individual stocks. Fundamentals will not keep you safe when the computers are moving stocks.
We will see what the jobs news brings. Many market players would love to buy a weak report so watch for a jump should the numbers come in lower than expected.