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The big story of the day is the job report, said Chris Ciaccia, which came in less than expected (0:25). Nike slides after acquisition (0:55) Moderna rises from the dead (2:10) Treasury yields retreat (4:00)
Transcript
Rena Sherbill: good morning everyone. It was Friday, October 2. We are talking about jobs. We are talking about some earnings. And we are back with Mr. Chris Ciaccia.
Chris, welcome to the show. What have you got for us this morning?
Chris Ciaccia: So the big story today was the jobs report, which was weaker than expected. And now your only typical case of bad news is good news for the market.
While traders saw that the report was weaker than economists had expected. You see the futures go up. We’ve also seen some underemployment concerns there, income concerns there.
So it seems that any bad news is good news for the market and stocks are responding.
Rena Sherbill: And the first stock news I want to highlight this morning is Nike’s (NKE) earnings. And we see some news that isn’t too good to hold back. And when we saw one of the biggest losses of the day, it plunged 6% pre-market.
What other colors will you add to the Nike story today?
Chris Ciaccia: sometimes i feel like i’m the only person still wearing nike shoes.
Rena Sherbill: You have an exclusive contract with him, right? So it makes sense.
Chris Ciaccia: If only I had the same money as Caitlin Clark.
It’s just a case of consumers moving elsewhere. And that is always the case with fashion. That’s a concern. Companies like ON and Hoka, Asics, Adidas, are all eating up market share for Nike.
Nike is starting to come back a bit in North America, but it is a big market in China and there the situation is still a bit weak. So you’ve seen companies try to throw everything away but sink the kitchen in an attempt to fix itself. They have started another reorganization and layoffs, and the investors just ran away from there.
Rena Sherbill: Another stock news we have, Moderna (MRNA) will join the NASDAQ 100. It will replace Warner Brothers Discovery (WBD). What would you say about Moderna?
Chris Ciaccia: So I think Moderna is a bit of a case of rising from the dead. He was a lover of COVID in his twenties and twenty-ones when everyone was in lockdown and everyone was told to get the vaccine and they were making money left and right. Then when the lockdowns and pandemics are over, investors look back and think it’s actually the only pony that’s there now.
But the company has kind of reinvigorated itself. They have used all the money generated from the COVID and become this platform with RMNA technology and have done several deals with Merck (MRK).
And really you’ve seen a few months ago Merck’s co-vaccine on this skin cancer drug, which has really attracted investors back into the stock and you’ve seen the stock react over the last few months and actually year to date, I think the stock is up four hundred percent.
Year to date, this is one of the biggest winners.
Specifically related to Warner Brothers (WBD), they were purchased by Paramount. And now as mentioned, they will have the company name SkyDance, which I think is a little strange because Paramount and Warner Brothers are very good brands, but David Ellison again denied it and said that he does not want one of the brands to hold the other. And that’s where the SkyDance name comes in. So it’s just an umbrella name for the company and it allows Warner Brothers, HBO, Paramount, other brands to thrive as they are today.
But in terms of going in and out of the index, this stuff happens all the time and it probably doesn’t make any difference if you’re an ETF investor or an index investor, it probably won’t tell you if you look at your portfolio at the end of the day or at the end of the week or whatever you have.
Rena Sherbill: So, as a final note, as mentioned, futures have been higher, treasury yields have fallen while we have been in the market.
And I just wanted to share this quote from Deutsche Bank strategist Jim Reid who said about the jobs report that obviously the monthly jobs report is always the macro highlight, but it’s important as the resilience of the data going forward. It has been a big factor supporting US risk assets and also giving the Fed room to start hiking rates.
Chris, anything to add as an investor to the weekend? Anything that investors should be aware of?
Chris Ciaccia: Well, I think about the jobs report today, as you mentioned, we saw the results come down because they were weaker than expected.
And as you mentioned yesterday, Rena, the yield has been increasing over the last few months. And I think, investors are probably looking at it again over the last few days. Maybe the trade is overextended in part because of project data, but maybe it’s just that the trade is overextended.
So you see money flowing back into US treasuries and that’s pushing yields down and that’s helping US risk assets.
And now this gives the Fed a bit of leeway to maybe not raise rates for a few weeks when they meet again. Odds on a hike according to CME Fed Watch has dropped significantly this week, which has been a bit of a surprise to me and some investors, just given the magnitude and speed.
So, I think right now, things are looking good for risk assets.
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