Good morning — it’s Friday! Today we’re covering the January jobs report, how investors could react to the data, and DOGE’s government cutting spree. First time reading? Join over 190,000 self-directed investors and sign up here.

Jobs day

The Federal Reserve remains zeroed in on the labor market but the January jobs report likely won’t show much movement. 

Wall Street expects the latest data, due at 8:30 a.m. ET this morning, to show a slowdown in hiring but no change to the unemployment rate.

Bloomberg estimates see non-farm payrolls rising by 170,000 to start 2025, while the jobless number sticks at 4.1%. 

In December, the US added 256,000 jobs. Notwithstanding multiple large government revisions, the labor market data from recent months hasn’t compelled the Fed to commit to any number of rate cuts for 2025. 

Indeed, Dallas Fed President Lorie Logan signaled Thursday that she saw no rush to lower interest rates, and sees a scenario where her team keeps them on hold for “quite some time” so long as the job market stays the same.

The combination of slowing inflation and a resilient jobs outlook have convinced Logan that monetary policy isn’t that restrictive.

In January, the central bank opted to keep rates unchanged near a two-decade high. 

Traders are currently assigning an 85% chance of no rate cut in March, too, according to CME.

In Logan’s view, recent economic data suggests “we’re already pretty close to the neutral rate, without much near-term room for further cuts.” 

That said, layoffs have continued to roll out in the new year.

Google, Microsoft, Salesforce, Meta, and Stripe, among others, have all cut staff over the last several weeks. 

As big as those organizations may be, even a handful of them together don’t move the needle on government jobs numbers.

Meanwhile, the Bureau of Labor Statistics released a report Tuesday that showed 7.6 million jobs remained open at the end of December, a dip from the 8.15 million seen in November.

That marked the biggest drop in job openings in over a year.

Swinging markets

If the January jobs report comes in without a hitch, the Fed will stay the course on cautious policy and the stock market reaction will remain tepid. 

But if the jobs report is too strong — let’s say above 250,000 jobs — the Fed may suddenly become even more hesitant to lower borrowing costs.

This scenario could spell trouble for asset prices because it would push another easy-money era further down the line. 

On the other hand, if January jobs look too weak — say below 100,000 — the market could similarly panic as recession fears re-enter the conversation. 

All this is to say that, as always, investors this morning are hoping for Goldilocks.

Comments or feedback? Reply directly to this email or let me know on X @philrosenn.

Elsewhere:

📦️ Amazon stock tumbled after a disappointing earnings outlook. It reported fourth-quarter results Thursday after the bell, beating on the top and bottom lines. Amazon fell short on first-quarter guidance and missed on its cloud business. The company expects up to $155 billion in revenue to start 2025, below Wall Street’s estimates for $158 billion. (Yahoo Finance)

🤝 Honeywell is breaking up. One of the last big industrial conglomerates in the US is preparing for a three-way split, dividing its aerospace, automation, and advanced-materials arms. Shares of Honeywell have lagged the broader market, and the stock fell further on its latest 2025 revenue outlook. (WSJ)

🎯 A top fund manager who oversees $2.7 billion shared his favorite investment pick for 2025 — it’s contrarian, undervalued, and nobody’s talking about it. Sign up for our Best Ideas Club to get the report on Sunday.

📈 Pinterest stock jumped 21% late Thursday. The company reported fourth-quarter sales of $1.15 billion, beating expectations, while also seeing revenue jump 18% year-over-year. Pinterest also recorded a deferred tax benefit of $1.6 billion in the period, fueling the upbeat outlook. (CNBC)

Rapid-fire: 

• A US court paused the government’s deadline for federal workers to accept its resignation offer (Barron’s)

• President Trump will seek to end carried interest tax break used by private equity fund managers (Bloomberg)

• Wall Street is becoming more upbeat on Elon Musk as he’s substantially turned around the business of X, formerly Twitter, and attracted advertisers back (Yahoo Finance)

• President Trump’s government worker buyout offer has hit 50,000 takers and the focus will soon shift to poor performers (Bloomberg)

• Franklin Templeton seeks SEC approval for a new crypto index ETF (Reuters)

• Treasury chief Scott Bessent says Elon Musk’s DOGE isn’t tinkering with Treasury systems, but have “read-only” access (Bloomberg)

• Want another top resource for investing insights? Sign up for WOLF Financial’s markets newsletter — subscribe free

Last thing:

*A message from Public: All investing involves the risk of loss, including loss of principal. Brokerage services for US-listed, registered securities, options and bonds in a self-directed account are offered by Open to the Public Investing, member FINRA & SIPC. Cryptocurrency trading services are offered by Bakkt Crypto Solutions, LLC (NMLS ID 1890144), which is licensed to engage in virtual currency business activity by the NYSDFS. Cryptocurrency is highly speculative, involves a high degree of risk, and has the potential for loss of the entire amount of an investment. Cryptocurrency holdings are not protected by the FDIC or SIPC.