US stock indexes have closed out their first month of gains for 2023 with the Nasdaq marking a gain of nearly +11% followed by a gain of over +6% for the S&P 500 and nearly +3% for the Dow. In fact, the S&P 500 just logged its best January in four years, and the Nasdaq posted its best January gain since 2001.

There's now a historical and technical argument being made by the bulls that a strong January performance following a negative year has historically yielded impressive full-year returns. It's only happened five times, whereas the stock market was down the year before, but opened up January with a +5% or higher bounce to the upside (1954, 1961, 1967, 1975, 2019, and 2023) but in each one of those years, the full year return showed big double-digit gains ranging from up +20% to +45%.

Investors today have all eyes on the Fed's latest policy decision due at 1 p.m. CST and a press conference with Fed Chair Jerome Powell at 1:30. According to the CME FedWatch Tool, Traders currently give a 25-basis point hike a a nearly 100% chance (99.9%) versus 0% for a 50-basis point hike and a less than 1% chance that the Fed leaves rates unchanged. Obviously, a surprise 50-point hike will likely spell trouble for the bulls who have been betting on a more accommodative Fed by the second-half of 2023.

Some bulls are even anticipating rate cuts, although that runs counter to the Fed's vow to keep rates high for longer than previous tightening cycles. Aside from the amount of today's rate hike, the biggest question of the moment is whether the Fed will hike rates at its next meeting on March 21-22 or will it decide to pivot. The Fed may not provide that answer today but investors will be listening very closely to Powell's follow-up press conference in an effort to garner clues as to how officials are leaning. Bulls are pointing to data released yesterday that showed a slowdown in wage gains in the 4th quarter and expect the Job Openings and Labor Turnover

Survey today will reveal a substantial pullback in company hiring. Analysts anticipate the number of open jobs will drop from 10.5 million in November to 10.2 million for December, though some estimates are as low as 9 million. The trajectory of the data has implications for the Fed's future policy decisions as the central bank has repeatedly pointed to the labor market as a major factor behind inflation remaining stubbornly elevated.

Also out today is ADP's Employment Report which economists expect to show job gains dropping back to +158,000 from +235,000 in December. That is slightly lower than consensus for the official January Employment Report due on Friday, with analysts expecting a gain of around +185,000 versus +223,000 in December. Importantly, the Labor Department on Friday will also release revisions for last year's payrolls data, based on updates to its annual benchmarking process.

There has been some speculation that the government may have overshot on job gains by as much as +1 million or more.

Other key data today includes the ISM Manufacturing Index and Construction Spending.

Turning to earnings, Facebook-parent Meta kicks off a two-day stretch of big tech earnings that have the potential to reverberate through the wider market. Results from Snap yesterday don't bode well for tech companies dependent on advertising. While sales were flat for Q4, Snap says sales in the current quarter have declined -7% so far and could be down as much as -10% for the full quarter.

Alphabet, Amazon, and Apple report tomorrow.

Other earnings highlights today include Allstate, Altria, Boston Scientific, Corteva, Humana, Johnson Controls, MetLife, Novo Nordisk, Novartis, Suncor, and TMobile.

Average Super Bowl Tickets Approach $10,000: The most expensive ticket price to the Super Bowl soared to nearly $40,000, while the average costs nearly $10,000, making the game between the Kansas City Chiefs and the Philadelphia Eagles the third-most expensive Super Bowl of all time, according to ticket data sites, with just over 2,500 tickets left. The average ticket price on the secondary market is narrowly cheaper than the average price from last year’s game between the Los Angeles Rams and the Cincinnati Bengals, though ticket prices two weeks out to the 2021 Super Bowl between the Chiefs and the Tampa Bay Buccaneers averaged more than $14,000. Although fans typically save money by buying tickets well in advance, waiting could prove beneficial, according to ticketiQ, which found over the past decade, ticket prices vary by day, and in five of those years, the cheapest seats were available within three days of the big game. Last year, the get-in price was lowest 11 days out, costing just over $3,500, and rose to $4,246 on the day of the game. Source Forbes

Rare Comet Will Pass Earth For First Time In 50,000 Years: Not since the last ice age has this comet appeared in the night skies. The bright green comet named C/2022 E3 (ZTF) will pass by Earth after first passing by the Sun, arriving from the outer parts of the solar system, which is why it’s taken thousands of years to return. The comet will be the closest to Earth today February 1, and although its brightness is unpredictable, by then it will only be visible to the naked eye in dark skies, according to NASA. For first-time comet gazers, experts recommend looking out on February 10 when the comet will be close to Mars, and for those who want to try and capture a photo, the easiest way would be to take long-exposure pictures of 20 to 30 seconds, likely revealing a fuzzy object with a tail. Contrary to popular belief, comets aren’t fiery balls flying through the sky but rather dirty ice balls made up of several compounds, such as dry ice, mineral grains, and carbon dioxide. Most comets have two tails, a dust tail that's bluish in color and an ion tail that’s yellowish. Source Forbes

IMF Boosts Global Growth Forecast, Saying a Recession Is Unlikely: The outlook for the global economy has brightened over the past few months as inflation slowed, the International Monetary Fund said yesterday. The IMF upgraded its forecast for world growth to +2.9% from a previous prediction of +2.7% in October. It sees the expansion accelerating to +3.1% in 2024. In 2022, it estimates the world economy grew +3.4%. “The year ahead will still be challenging,” said IMF Chief Economist Pierre-Olivier Gourinchas. “But it could well represent the turning point, with growth bottoming out and inflation declining.” Since the last forecasts, prospects have been lifted by a resilient third-quarter, still-tight labor markets, and strong spending by households and businesses, the IMF said. Price gains are slowing after energy prices retreated in the second half, and after the most aggressive interest-rate hike campaign in a generation. A global recession is unlikely, Gourinchas said, striking a different tone to the outlook given in October. Resurging inflation and an escalation in Russia’s war in Ukraine remain risks. On the other hand, China’s reopening after three years of Covid-19 lockdowns is good news for manufacturing and supply chains, the IMF said. It predicts the U.S. economy will grow +1.4% this year, down from +2% in 2022. Source Barrons

US in Second-Biggest Home Price Correction Since Post-WWII Era...But It's Still Pretty Mild: On Tuesday, we learned that U.S. home prices as measured by the seasonally adjusted Case-Shiller National Home Price Index fell for the fifth straight month in November. Since peaking in June, U.S. home prices have fallen -2.5%. On one hand that -2.5% drop in US home prices marks the second-biggest home price correction of the post–World War II era. On the other hand, through November, it’s just a mild correction compared to the -26% peak-to-trough drop notched between 2007 and 2012. Still, US home prices have declined for five consecutive months now. That said, this ongoing housing correction is hardly one-size-fits-all. In particular, it’s driven by declines in overheated Western housing markets like San Francisco (down -11.9% since its 2022 peak), Seattle (down -13.5%), Phoenix (down -7.7%), and Las Vegas (-7%). Meanwhile markets that didn’t get as detached from fundamentals during the Pandemic Housing Boom, including like New York (down- 2% from its 2022 peak) and Chicago (down -0.8%), aren’t seeing as sharp of a home price correction. Between March 2020 and June 2022, US home prices soared +41.4%. Through November, those total Pandemic Housing Boom gains have only slipped to +37.9%. That’s a mild correction—not a full-blown housing crash. Source Fortune

Cardboard Box Demand Plunges Along with Consumer Demand: Demand and output for cardboard boxes and other packaging material fell sharply in the fourth quarter of 2022, according to data released by the American Forest & Paper Association and Fibre Box Association. It’s the latest indicator that consumer demand is eroding following the pandemic. Such pressures would show up in the humble box industry, which serves as an excellent barometer for the larger economy. Practically everything we consume and use spends some time in a box, ranging from online orders to food sent to grocery stores. U.S. box shipments fell by 8.4% in the fourth quarter, according to the Fibre Box Association. KeyBanc’s Adam Josephson, who leads the bank’s analysis of the packaging industry, wrote in a recent note that this was “the most severe quarterly decline since the Great Financial Crisis (2Q09).” U.S. box operating rates fell to 80.9%, the Fibre Box Association said, which was also a low last seen in the first quarter of 2009. This means nearly 20% of the U.S. capacity to produce boxes was stagnant last quarter. Supply of containerboard, which is used to make corrugated boxes, stood at 4.3 weeks, according to the American Forest & Paper Association. That’s down from last quarter, but still historically high. Source FreightWaves

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