🥂Here’s to the first full trading week of 2026!🥂
This week belongs to labor data, which means this is where the rubber meets the road.
Right now, the general consensus is that the Fed is prioritizing the labor side of its mandate. While there is a nuanced conversation to be had about what “full employment” looks like for an economy that clamped down on immigration and is — perhaps — in the midst of an AI productivity boon, the path of least volatility comes with results that paint a picture of a resilient jobs market, neither inflecting to the downside nor the upside.
Personally, I’d rather see amazing job numbers.
It would be better for our country’s social fabric as well as for 2026 EPS. Although lackluster labor numbers imply faster cuts, they also imply the economy needs them. With the benefit of 2022-2023 hiking cycle, it is clear today’s economy is less sensitive to interest rates than past economies. The lag between policy action and impact on the real economy is better framed in years than months.
During this lag, things can go wrong.
I’d rather see the economy inflect higher, the Fed able to declare victory, better paychecks for workers, and stronger earnings. That said, even though I disagree with this notion intellectually, the reality of the matter is that many areas of the stock market need some version of the rate-cut story to work.
It seems as though the rate cuts are more valuable than the earnings. It baffles me.
But… if you are going to play in rate-sensitive areas, this is the game you play. Best be aware of the rules.
Otherwise, I am aware of this weekend’s events between the U.S. and Venezuela. In my opinion, I don’t see this shaking the energy markets. The state of oil says it all: we’re either entering a period of minimal industrial growth or are in a period of immense oversupply. Beyond that, I don’t have any edge.
Monday
ISM Manufacturing Index (Dec.) | 48.3% est. & 48.2% prior | 1000
Tuesday
U.S. Services PMI (Dec., final) | 52.9 est. & 54.1 prior | 0945
Wednesday
ADP Employment (Dec.) | 45k est. & -32k prior | 0830
Job Openings (JOLTS, Nov.) | 7.65 millions est. & 7.67 million prior | 1000
Jefferies (JEF) | ATC
I am not fully aware of Jefferies’ current business position, but I do know that they operate in the same world—investment banking—as Goldman Sachs (GS). You wouldn’t assume these stocks lived in the same neighborhood by looking at their charts, though.
Assuming the market is wrong to doubt JEF, then eventually bulls will retake this stock. However, the stock clearly needs to prove it when they report. I don’t like getting ahead of “prove it” moments. Thankfully, assuming JEF proves their doubters wrong, there will be so much catching up to do that you can get in late and still end up with a position that has a tidy profit.
Thursday
Initial Jobless Claims | 216k est. & 199k prior | 0830
Q3 U.S. Productivity (preliminary) | 3.7% est. & 3.3% prior | 0830
Tilray (TLRY) | ATC
In December, President Trump issued an EO directing the DOJ and DEA to expedite the transition of marijuana from Schedule I to Schedule III. Legally, this shifts cannabis from the same restrictive category as heroin or LSD to the more medically accepted tier with ketamine, testosterone, and Tylenol with codeine.
The most immediate tailwind is the elimination of the Internal Revenue Code Section 280E. Schedule I status prevents cannabis companies from deducting ordinary business expenses, meaning they pay federal taxes on gross profit rather than net income. Rescheduling would provide them the same tax treatment as an ordinary business, potentially turning many operators cash-flow positive overnight.
However, as of now, this relief only applies moving forward and is not a reactive rebate. To stay afloat, many of these businesses were forced to destroy their balance sheets. If you are interested in this space longer-term, this is where you need to do your homework.
A lot of money can be made when a situation goes from terrible to bad… And, maybe there is some juice left to be squeezed there. But, once that move is over, the market will wise up to which companies – if any – remain in a viable position to capitalize and which will need years to heal.
Friday
December Nonfarm Payrolls | 0830
- Job Creation: 54k est. & 64k prior
- Unemployment: 4.7% est. & 4.6% prior
- YoY Wages: 3.6% est. & 3.5% prior
- MoM Wages: 0.3% est. & 0.1% prior
Key
- Macro Economic Events
- Corporate Earnings
- High Importance
Gorilla With Glasses 