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Feb 1, 2019

Markets: Fans of the Super Bowl Market Predictor Are Rooting for the Rams

The Wall Street Journal.
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Did the government shutdown end a record streak of job growth? We're monitoring that and more. I'm Jessica Menton, breaking down the final trading day of the week.
  • The jobs report is on tap. If U.S. employers add to payrolls in January, as expected, it would would mark 100 straight months of job creation. Investors will be watching to see whether the shutdown impacted the broader landscape.
     
  • Amazon shares are dropping premarket. The e-commerce giant warned of increased spending in 2019, disappointing investors even as it posted record earnings again for the holiday quarter. Wall Street will also monitor results from Exxon Mobil, Chevron, Honeywell and Merck.
     
  • Stock futures are mixed. All three major indexes were still set to rise at least 1% this week, with the Dow industrials on course to extend its winning streak to six straight weeks.
     
  • Plus, want stocks to go up? Root for the Rams. Our William Power explains why some investors are using a quirky indicator ahead of the big game.
 
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Markets in a Minute

Markets Data
 

Overnight Developments

 

Investors Eye Super Bowl-Based Market Predictor

By William Power, News Editor
The Rams are bulls on Sunday, as far as the possible impact on the stock market./PHOTO: Scott Cunningham/Getty Images
Bullish investors who look at an unscientific but popular indicator will be rooting for the Los Angeles Rams on Sunday when they face the New England Patriots in the Super Bowl.
The Super Bowl Predictor—popularized by market analyst Robert H. Stovall— foretells the stock market for the full year based on who wins the big game in February.
The quirky indicator, which has even been studied by academics, goes like this: Stocks go up for the calendar year if an original National Football League team (like the Rams) wins, but down if the winner is from the old American Football League (like the Patriots). Teams added after the two leagues’ long-ago merger count for either the National or American side depending on which of today’s two conferences they play in.
But after a strong run of success, the Predictor has misfired for three straight years. It now has been accurate after 40 of the 52 Super Bowls, or a 77% rate.
That's better than most of the scientific indicators that Wall Street uses, but still...
It didn't work for 2018 because the Philadelphia Eagles' win incorrectly predicted that the stock market would rise in 2018. It looked good for a while but was ultimately a fumble. Not even a replay challenge can change that market result.
The Eagles have now been to three Super Bowls in their history: 1981, 2005 and 2018. The first two times, they lost, and the Dow fell, so the Predictor worked. But last year, the market didn't follow the Eagles' winning lead.
If New England wins its second Super Bowl in three years, bulls will be hoping for a repeat of 2017, when the Predictor failed and stocks surged following a Patriots victory.

Market Facts

  • The Dow industrials and the S&P 500 have both climbed 15% since Dec. 24, their largest such percentage gain between the trading day before Christmas and the end of January since 1975, according to Dow Jones Market Data.
     
  • Shares of cosmetics seller Avon surged 24% Thursday, their biggest percentage rise on record, based on data going back to 1972, according to Dow Jones Market Data.
     
  • On this day in 1869, the New York Stock Exchange required listed companies to register their securities to prevent "watered stock," or the manipulated over-issuance of shares by insiders.

Key Events

U.S. nonfarm payrolls for January, released at 8:30 a.m. ET, are expected to increase by 170,000 from the prior month, a marked slowdown from December's 312,000 gain. The unemployment rate is expected to hold steady at 3.9%.

The Dallas Fed's Robert Kaplan participates in a moderated Q&A at 9:45 a.m.

Markit's manufacturing purchasing managers index for January, due at 9:45 a.m., is expected to tick down to 54.8.

The Institute for Supply Management manufacturing PMI for January, released at 10 a.m., is expected to inch down to 54.0 from 54.1 a month earlier.

U.S. construction spending for November, issued at 10 a.m., is expected to rise 0.2% from the prior month.

The University of Michigan's consumer sentiment index for January, also on tap at 10 a.m., is expected to climb to 91.0 from 90.7 earlier in the month. 
The Baker-Hughes rig count is slated for 1 p.m.

U.S. auto sales for January are expected to slow to an annual pace of 17.2 million from 17.55 million a month earlier.
 

Must Reads

Pacific Gas & Electric Co. employees dig trenches to locate gas lines in Paradise, Calif., on Jan. 22. Some analysts have estimated that PG&E is worth around $55 billion, while it has roughly $22 billion of debt. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS
PG&E filed for bankruptcy. Why did its shares then rise? Shares of PG&E have risen since the utility company filed for chapter 11 bankruptcy protection, an unusual development. Here’s why the stock is enjoying a rebound.
Blackstone and Apollo were hurt by falling markets in the fourth quarter. Private-equity firms Blackstone Group and Apollo Global Management reported quarterly losses, but their portfolios held up better than the broader market.
How to raise your own rates even if the Fed won't. In a few minutes and with a few clicks of a mouse, you can crank up the yield on your cash by two percentage points, often adding hundreds—even thousands—of dollars to your investment income annually.
Brookfield raised a $15 billion real-estate fund. The global fund, which will seek high returns by taking more risks than conservative investors, is the second-largest private real-estate fund ever to close.
Stock exchanges aim to fire the company building a stock-market supercomputer. Stock exchanges intend to fire the contractor they hired to build a data warehouse for all U.S. stock-market activity, the latest sign of trouble for a project designed to detect trading fraud and causes behind wild swings in prices.
Deutsche Bank’s profit belies deeper problems. German lender Deutsche Bank reported its first full-year net income in four years despite a fourth-quarter loss, but still disappointed investors with continued revenue declines and other signs of vulnerability.
Oil trains are making a comeback, as pipelines can’t keep up. The use of trains to carry crude is surging as drillers in parts of North America produce more oil than pipelines can accommodate.
 

What We've Heard on the Street

“Global consumer companies have radically changed their shopping habits and now favor acquisitions of small, insurgent brands. Unilever is the first to highlight the risk of such deals turning sour but won’t be the last.”
—Heard on the Street columnist Carol Ryan
 

Stocks to Watch

Amazon: The e-commerce giant posted its third record quarterly profit in a row, driven by strong holiday sales and its growing cloud computing and advertising businesses.
CVS: The Trump administration proposed late Thursday curbing billions of dollars in annual rebates that drug makers give middlemen in Medicare and some Medicaid plans. Shares of CVS and Cigna came under pressure ahead of the opening bell. 
Deckers Outdoor: The maker of UGG boots delivered weaker-than-expected guidance despite topping analysts' profit expectations in the latest quarter.
1-800 Flowers.com: Shares of the florist and gift retailer surged 20% Thursday to $2.61, their highest close since January 2002. 

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