Chris Temple joins me to wrap up the markets today with comments on the jobs data that disappointing and what could happen on the trade front at next week’s meeting/signing. The markets sold off into the close but in no way have traders rushing for the exits.
Marc Chandler, Managing Partner at Bannockburn Global ForEx joins me for a comprehensive recap of economic from the US and around the world and how it all impacts the markets. We have seen a shift to a more risk on attitude but the safe assets are not getting hit as hard as one would think. All this data needs to be looked at in a big picture sense to help investors navigate these choppy markets.
Chris joins me for an in depth discussion on the Fed statement and press conference. The Fed delivered a rate cut but it is being considered a hawkish rate cut as they will be on hold until next year. We also look at the ADP jobs number and GDP data point from this morning.
While most everyone will be watching the Fed statements and press conference tomorrow there are a couple other important events to watch. Ed Moya, Senior Market Analyst at OANDA joins me to share his thoughts on the Fed meeting but also look to some earnings from big tech, Facebook and Apple. There is also jobs data that will be released and trade updates on the possible Phase 1 deal.
After a disappointing ADP jobs number today that was preceded by the weak manufacturing data yesterday the overwhelming factor pointed to is global growth concerns. As much as Trump wants to push on the Fed to lower rates business are not willing to borrow more money and invest when the global outlook is so cloudy.
Ed Moya, Senior Market Analyst at OANDA joins me to focus on this overwhelming point. We look to the sectors that are showing this as well as some of the upcoming political events that have the potential to either clear up the situation or drive the world further into a recession.
Marc Chandler, Managing Partner at Bannockburn Global ForEx joins me to recap the major news from this week. We start with the jobs data and how this is shifting some of the expectations heading into the Fed meeting. Next are some comments on the new head of the ECB and the trend of negative yields around Europe. This all leads to a discussion on what mutual funds and large money managers are doing to find yield.
John Rubino, Founder of the Dollar Collapse website joins me to share his thoughts on the strong US jobs number from today. This data point is moving the US dollar higher and pushing gold lower along with US markets (marginally). We address where gold is trading right now and how some major fund managers are really warming up to the yellow metal recently.
With all the market volatility and moves in the bond markets the ECB meeting this week has been largely ignored. Marc Chandler, Managing Partner at Bannockburn Global ForEx and editor of the Marc to Market blog joins me to address some of the key points that came out of that meeting. We also recap the weak jobs number today and more importantly the market moves.
Chris Temple joins me today to recap the weak jobs data and the ECB statement from yesterday. Overall the global slowdown continues and central banks are more than a little worried about it.
Below is a breakdown courtesy of our good friend Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group. He breaks down the key data released today which include ADP job numbers, the ever widening trade deficit, and the ECB’s statement this morning.
This post was taken off of Peter’s The Boock Report website. Click here to visit the site and follow along with all the other data and news.
ADP said the private sector added a net 183k jobs in February, not far off from the estimate of 190k. Due to benchmark revision over the past 12 months, January was revised up by 87k to 300k but that was given back over the prior months in 2018. Of note, small companies slowed their hiring with those with less than 20 employees shedding 8k jobs, the first time jobs here were trimmed since December 2016. ADP said “There was a sharp decline in small business growth as these firms continue to struggle with offering competitive wages and benefits.” For the jobs picture overall, Mark Zandi added this, “The economy has throttled back and so too has job growth. The job slowdown is clearest in the retail and travel industries, and at smaller companies. Job gains are still strong, but they have likely seen their high watermark for this expansion.”
The services sector added 139k vs more than 200k in the two prior months and is the 2nd least since last April. The goods side contributed 44k with construction hiring totaling 25k and manufacturing adding 17k.
Bottom line and smoothing out all the revisions, the 3 month average in job gains is still a solid 244k vs the 6 month average of 218k and 12 month average of 220k. If Zandi is right though and the slight upward trend in jobless claims is a tell, assume job hiring trends are closer to the 200k level than what was seen in December and January. The ADP figure today is about right in line with what the private sector estimate is for Friday’s BLS report at 180k. Lastly, keep in mind that jobs data typically lags.
The December trade deficit widened to $59.8b, about $2b higher than expected and November was revised up by $1b. This is the widest trade deficit since October 2008. Exports fell 1.9% m/o/m to the least since February 2018 and reflecting the global slowdown. Imports rose 2.1% m/o/m but after falling by 2.8% in November. Bottom line, a 10 yr high in the trade deficit will lead to a trimming of Q4 GDP estimates.
Bloomberg News is reporting that “ECB officials are poised to cut their economic forecasts by enough to justify another bout of loans for banks, according to people with knowledge of the matter.” These loans are in the form to Targeted Long Term Refi Operations and will mostly be used to refi what is coming due next year. The ECB meets tomorrow and they already have a balance sheet that is 40% of GDP and of course NIRP. There is really not much more they can do to deal with an economy that is slowing to almost flat line. As this is not unexpected, the euro is little changed but the inflation cut is sending European bond yields lower. The German 10 yr bund yield is down by 3 bps to just .14%. This in turn is leading to a rally in US Treasuries with the 10 yr yield approaching 2.70%. The ECB is now in a desperate situation.