Micron, Microsoft, Qualcomm Vote, Job Report – The Week Of March 5th
This coming week should be exciting, with ADP on Wednesday and BLS Job report on Friday morning. Has it been a month already? It feels like the other day the market was freaking out over “the hot wage” reading. Mind you the reading was a 2.9 percent rise in wages for January. It was 2.83 percent September, but nobody cared about the wage number back then.
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It is sad that wages grew at 2.9 percent in January and that was the highest reading since May of 2009.
What Happened To Wage Growth
This next chart will demonstrate how bad it has been now for years. Can you believe there was a time when hourly wages were rising at 9 percent a year? Look at that, true we had inflation issues in the 1970’s. But look at the growth in wages in the 1990’s. Now, look at today.
The next chart shows us what has been happening to our workforce through the years. In 1970 Manufacturing jobs were the most prominent part of the labor force, with roughly 18 million workers, now it is about 12 million. Meanwhile, leisure and hospitality jobs have risen from approximately 6 million to nearly 16 million today. Retail trade in 1970 7.4 million, today 15.8 million.
The jobs that pay the highest hourly wages Construction, Professional and Business services, while Retail and Hospitality pay the lowest. Durable goods and manufacturing are the third and fourth highest. Over the years, the economy has shifted from higher paying jobs, into lower paying jobs. It seems pretty clear, as to what has happened.
Obviously, this coming week will be critical to hear what the latest developments on the tariff situation and we should get more clarity this following week. The news around the tariff likely takes center stage, until Friday, when the only that might matter is Job report.
But we need to see the stock market continue where it left off on Friday. We are going to want to see a strong opening on Monday, and a solid follow through during the day.
The vix is another important to gauge; we need to watch the vix spot vs. the future contracts. The chart below shows its nicely. Notice starting from the bottom with the purple line, the VIX spot is the cheapest, followed by the orange line (APRIL), Red (MAY), Green (JUNE), Purple (July), make sense? But notice how the market goes into backwardation at the start of February and where June become the cheapest, followed by July, May, April and then the Spot. Just keep an eye on this, it could be something to watch should the stock market start going off the rails. It tells us what the market is thinking regarding the future of volatility
Micron could be on the verge of a massive breakout should be it able to rise above $50, and could see its shares rise to levels not seen in nearly two decades, back to $58.
Roku appears to be on the verge of a major breakdown, that could send shares back into upper 20’s.
Microsoft, found support at the previous downtrend, but will it hold? It also failed at resistance at $93.25, Microsoft will be an important one to watch? Does it break out or break down?
It is a big week for Broadcom, with Qualcomm’s shareholder vote on Tuesday. Will Broadcom get its nominees on to Qualcomm’s board?
The stock held support at $241, now where does it go? It will likely depend on the outcome of the Qualcomm board vote this pending week. Right now the options market is not looking for a deal to get between the two companies. The long straddle options strategy is looking for a rise or fall of only 11.7 percent, putting the stocks in a trading range of $57.5 to $72.5 by expiration on April 20. The open interest for the $75 calls is relatively small at approximately 40,500 contracts, a notional value of only $2.8 million. Does Broadcom succeed at buying Qualcomm? Probably not.
That is it. Good Luck this week.
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