Tags: jobs | employment | investors | economy

Work Cut Out for Investors to Understand Complex Jobs Data

Work Cut Out for Investors to Understand Complex Jobs Data

By    |   Friday, 07 September 2018 08:22 AM

The US Employment Situation Report

It is U.S. employment situation report Friday, a day when financial markets pretend to understand complex and often revised data.

President Trump has not tweeted not anything directly on the topic which suggests the report is not going to surprise strongly to the upside. Of course, there may be other reasons for no employment report tweet. Perhaps someone took the relevant memo from the President’s desk or perhaps the President was distracted by a need to tweet about other things.

The market consensus is for a strong August report with a 195,000 rise for nonfarm payrolls with the unemployment rate seen falling 1 tenth to 3.8 percent. Average hourly earnings are forecasted a 0.3 percent growth with the year-on-year rate also expected to rise 1 tenth, to 2.8 percent. That tells us what is happening with average hourly earnings. It tells us less than nothing about what is happening with wages. Average ‘hourly earnings’ are not ‘wages.’ This is why the Bureau of Labor Statistics calls the data ‘average hourly earnings’ and does not call the data ‘wages.’

Private payrolls are seen rising 190,000 with manufacturing payrolls expected to show another very solid increase at a consensus 21,000. The workweek is seen unchanged at 34.5 hours with the labor participation rate down 1 tenth to 62.8 percent.

Tariffs on $200 billion of Chinese Imports

Meanwhile, the threat of tariffs continues to hang over the U.S. consumers’ heads suspended like the sword of Damocles by a single strand of blond hair.

The threat of tariffs on goods partially made in China is still there despite reports of lobbying against the tariffs by American businesses. The time for commenting on the proposed tariff increases has ended yesterday.

Some of America’s most prominent technology companies and retailers have made a last-minute push to convince President Donald Trump to reverse course on the plan to impose tariffs on $200 billion in Chinese imports.

As of midnight, U.S. time, Friday midday in Beijing, the White House had made no announcement on its intentions.

How aggressive these tariffs or taxes on U.S. consumers will be is influential in determining how much U.S. growth will slow in the coming quarters and therefore whether the Federal Reserve feels it can continue with the hike-pause, hike-pause cycle that it has established for its monetary policy.

Tariffs on Japan Could be Next

In a call with James Freeman, assistant editor of The Wall Street Journal's editorial page, Trump said he was “still bothered by the terms of U.S. trade with Japan.”

Mr. Trump described his good relations with the Japanese leadership but then added: “Of course that will end as soon as I tell them how much they have to pay.”

The report made investors nervous about a potential new flash point in the trade war, causing the yen to rise against the dollar, moving as high as 110.37 from 111.34 the previous evening.

The Not-NAFTA Talks Continue

Talks over the Not-NAFTA deal continue today. Canada’s Foreign Minister Chrystia Freeland reiterated that talks to save the North American Free Trade Agreement with the United States had been “positive and constructive,” repeating a phrase she used on Wednesday.

Politics and Financial Markets

Politics might matter to financial markets.

The leading candidate for the Brazilian Presidency the far-right firebrand Congressman Jair Bolsonarohas has been stabbed and is reported to be in a stable condition but pushing an already chaotic campaign into further disarray.

Interestingly, the Brazilian stock market and the Brazilian currency rose on the back of this attack.


The Bitcoin bubble has seen prices plunging again this week.

This is a process that continues to transfer wealth from the ‘many’ to the ‘few’ as those who bought Bitcoin in recent months surrender their wealth to a small number of Bitcoin sellers.

The number of Bitcoin buyers is too small for the wealth effects to show up particularly in economic data overall, but certain sections of society may suffer from this negative wealth effect.

Now, if you think that Bitcoin has hit bottom after the latest round of violent price drops, think again.

While Bitcoin, the world’s largest cryptocurrency is down 65 percent since its peak in December, technical indicators suggest there’s worse to come.

Bitcoin has consistently had lower peaks since its apex in December, with each new high lower than the last. In addition, the Directional Movement Index signals the bullish buying pressure came to an abrupt end, and a new selling pressure trend has started.

Etienne "Hans" Parisis is a bank economist who has advised investors on financial markets and international investments.

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It is U.S. employment situation report Friday, a day when financial markets pretend to understand complex and often revised data.
jobs, employment, investors, economy
Friday, 07 September 2018 08:22 AM
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