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Punxsutawney Phil gets bearish. (0:28) Watch those employment benchmark revisions. (2:22) Tariffs at ‘most hawkish end of the protectionist spectrum.’ (5:38)
The following is an abridged transcript:
That’s right, it’s Groundhog Day and first of all, spoiler alert:
Punxsutawney Phil saw his shadow, predicting six more weeks of winter. What does that have to do with the stock market? More than you might think.
A Groundhog Day bump is an actual thing. And stocks are not getting it in 2025.
Savva Shanaev of Northumbria University found that stock returns are 2.78% higher when Phil forecasts an early spring. The study compared a century of Wall Street returns against the annual predictions of the incarnations of Phil, noting that investors get irrationally optimistic over Phil’s early spring predictions.
“Some investors are genuinely superstitious, if only on a subconscious level,” Shanaev told the Harvard Business Review. “Others may not be but are swayed by the shift in public sentiment that often accompanies cultural events like this one.”
“Still others may be crafting investment strategies according to how they think superstitious investors will react. In fact, the groundhog’s impact on the stock market starts to become evident two weeks before his February 2 predictions — suggesting that the latter explanation is at least partly in play.”
And speaking of Groundhog Day, this week investors may feel like they are reliving last week. The earnings calendar is full, including megacap names, and Fed forecasting will be in full swing as jobs report hits.
The BLS will release the January employment figures on Friday as usual. Economists expect that nonfarm payrolls rose by 155,000 last month, with the unemployment rate staying at 4.1% and average hourly earnings up 0.3%.
Right now, the market is still pricing in a quarter-point rate cut at the June Fed meeting. But a stronger-than-expected rise in payrolls could push that out further and possibly take one of the two cuts expected off the table again.
In its statement last week, the FOMC changed the labor market assessment wording from “conditions have generally eased” to the “unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid.”
Along with the regular numbers come the annual benchmark revisions. The August preliminary estimates indicated that payrolls in the year through March was too high by 800,000.
Wells Fargo economists gave their expectations:
1. The benchmark revision is a lagged indicator of labor market strength, showing hiring was not quite so impervious to the FOMC’s tightening cycle in 2023 and early 2024.
2. Imputed job growth from the birth-death factor is likely to be revised lower from March 2024 onward, but not enough to change the picture of solid hiring.
3. Updated seasonal adjustment factors could alter hiring’s momentum heading into this year, but Q4’s 170K pace leaves some room to give before the trend looks worrisome.
4. A large population adjustment to the household survey has scope to close the gap between the establishment and household surveys’ measures of employment growth, but it should have little bearing on the unemployment rate and other ratios within the household survey.
Moving to earnings, standout reports this week include megacaps Amazon (AMZN) and Alphabet (GOOG)(GOOGL). Novo Nordisk (NVO), Walt Disney (DIS) and Qualcomm (QCOM) are also set to report.
But we’re going to dig a little deeper into a favorite of Seeking Alpha subscribers – Palantir (PLTR), which reports postmarket Monday.
The consensus EPS estimate is $0.11 (+37.5% Y/Y) and the consensus revenue estimate is $775.91 million (+27.5% Y/Y). Over the last 2 years, PLTR has beaten EPS and revenue estimates 88% of the time
Jefferies set a cautious tone ahead of the numbers, noting that the upcoming quarter will benefit from increasing momentum from the AI Platform, but it will become increasingly difficult for Palantir to deliver accelerating growth in this and subsequent quarters.
Analysts said: “Even with the positive momentum we’ve seen with PLTR’s AI Platform so far, we think that the 4Q setup will be challenging.”
Wedbush, on the other hand, raised its price target, with analyst Dan Ives expressing greater confidence in the company’s AI strategy and suggesting that it is on “a path to become the next Oracle (ORCL) or Salesforce (CRM) over the coming years.”
Also on the earnings calendar:
Along with Palantir, NXP Semi (NXPI), IDEXX Labs (IDXX), Tyson Foods (TSN) and Clorox (CLX) report Monday.
On Tuesday, Alphabet headlines, with Merck (MRK), Pepsi (PEP), AMD (AMD), and Amgen (AMGN) also on tap.
Wednesday brings Disney, Novo Nordisk, Qualcomm, Arm Holdings (ARM) and Uber (UBER).
Amazon reports Thursday, with results from Eli Lilly (LLY), Honeywell (HON), ConocoPhillips (COP), Neurocrine Biosciences (NBIX) and Bristol-Myers Squibb (BMY) also due.
Fortive (FTV), Cboe Global Markets (CBOE), and Kimco Realty (KIM) weigh in on Friday.
In the news this weekend, gere come the tariffs.
On Saturday, President Donald Trump imposed 25% tariffs on most imports from Canada and Mexico and 10% tariffs on Chinese goods, effective Tuesday. Energy products from Canada will be assessed a 10% tariff.
In response, Canada Prime Minister Justin Trudeau said his country will place 25% tariffs on $155 billion in U.S. imports.
Mexico President Claudia Sheinbaum called for her Secretary of Economy to “implement plan B that we have been working on, which includes tariff and non-tariff measures in defense of Mexico’s interests.”
And China said it would take countermeasures and file a lawsuit with the WTO.
George Saravelos, head of FX strategy at Deutsche Bank says he expects “a large and volatile market reaction” with the tariffs “at the most hawkish end of the protectionist spectrum we could have envisaged.”
“Beyond FX, a tariff war should be interpreted as a combination of fiscal tightening (a consumption tax) and a negative supply shock. It is therefore clearly negative for equity markets,” he said.
“It is especially notable that energy imports from Canada are in scope,” he added. “Even if at a reduced rate of 10%, that the administration is willing to impose tariffs on energy pushes back against the market narrative that cost-of-living considerations would act as a restraint. The macroeconomic implications of such tariffs are likely to be wide-ranging and materially disruptive, especially outside of the US.”
For income investors, Citigroup (C) goes ex-dividend on Monday, with a payout date of February 28.
MetLife (MET) goes ex-dividend Tuesday, paying out on March 11, while Sclumberger (SLB) goes ex-dividend Wednesday, with a payout date of April 3.
JB Hunt (JBHT) goes ex-dividend on Friday, paying out February 21.
Monolithic Power Systems (MPWR) is expected to increase its dividend this week to $1.50 from $1.25.
And in the Wall Street Research Corner, Bank of America strategist Michael Hartnett says U.S. exceptionalism is peaking, which could lead to the Magnificent 7 becoming the Lagnificent 7.
He says investors are “all-in on U.S. exceptionalism” and missing secular bulls in “cheap, unloved Japan and Europe banks,” which are areas where value is outperforming growth stocks.
U.S. nominal GDP is up an exceptional 50% past five years, driven by excess government spending ($7 trillion in the past 12 months), high immigration (which accounted for 84% of the 3.3 million rise in the U.S. population in 2024) and an AI capex hyper-cycle (projected to hit $500 billion in the coming years), he said.
This leaves U.S. exceptionalism “exceptionally expensive (and) exceptionally well-owned.”
He noted that the Mag 7 account for 11% of BofA’s global wealth and investment management assets under management and 36% of its stock holdings.
