Morning Report: Day-traders try to do a short squeeze on Rocket

Vital Statistics:

 LastChange
S&P futures3855-9.8
Oil (WTI)60.811.14
10 year government bond yield 1.44%
30 year fixed rate mortgage 3.13%

Stocks are flattish this morning on no real news. Bonds and MBS are flat as well.

Rocket traded up 71% yesterday to $41.60 per share. What got into the stock? The Reddit / WallStBets crew who ramped up Gamestop took a look at the short interest in the name and decided to recommend it as a buy. I don’t know if Rocket is headed to a similar gain but the numbers the company put out were pretty good. The company also announced a special dividend, and the Street is taking up 2021 estimates (which are still too low, IMO). This could get interesting as the exchange traded funds start taking positions in the stock. The big retail ETFs like the XRT have Gamestop as their biggest holding. I could see some of the financial ETFs doing the same thing.

Mortgage applications actually increased last week despite the jump in rates. Purchases rose by 2% and refis rose by 0.5%. “Mortgage rates jumped last week on market expectations of stronger economic growth and higher inflation,” said Joel Kan, MBA Associate Vice President of Economic and Industry Forecasting. “The overall share of refinances declined for the fourth consecutive week, and conventional refinance applications fell more than 2 percent to the lowest level in four months.”

The ADP Employment report showed that 117k jobs were added in February. This is below the Street estimate of 140k for Friday’s jobs report. “The labor market continues to post a sluggish recovery across the board,” said Nela Richardson, chief economist, ADP. “We’re seeing large-sized companies increasingly feeling the effects of COVID-19, while job growth in the goods producing sector pauses. With the pandemic still in the driver’s seat, the service
sector remains well below its pre-pandemic levels; however, this sector is one that will likely benefit the most over time with reopenings and increased consumer confidence.

Author: Brent Nyitray

In the physical sciences, knowledge is cumulative. In the financial markets, it is cyclical

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