US LABOR MARKET: MNI US Payrolls Preview: Test For Fading Rate Cut Expectations
Jan-08 19:38
We've just published our preview of Friday's employment report (PDF HERE):
- Nonfarm payrolls growth is seen at circa 160k in December as some recent distortions from hurricanes and strikes are increasingly in the rear-view mirror, and with a relatively narrow range to analyst estimates.
- The initial response rate to the establishment payroll survey increased notably back last month but we don’t rule out further large two-month downward revisions.
- The unemployment rate is broadly seen holding at 4.2%, although at an unrounded 4.246% in November it wouldn’t surprise if it rounded to 4.3%. A ‘high’ 4.3% would still be notable, though, for a fresh recent high.
- This release will also see annual seasonal adjustment factor revisions for the household survey. They’re typically modest but we nevertheless watch them for any changes in recent trends.
- These revisions only affect the household survey, i.e. not payrolls figures from the establishment survey, although the latter will have more significant annual revisions in next month’s release.
- The next 25bp cut from the FOMC is only just fully priced for the June meeting whilst the USD index is at recent highs with the real exchange rate particularly elevated on a historical basis. We feel market sensitivity would be greatest in event of a report with broad dovish implications.
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US STOCKS: Late Equities Roundup: Communication, Financial Sectors Underperform
Dec-09 19:36
- Major averages held weaker levels late Monday, near session lows after reversing modest gains following the lower than expected Wholesale Trade sales data (-0.1% vs. 0.2% est; prior up revised to 0.5% from 0.3%, however). Currently, the DJIA trades down 92.59 points (-0.21%) at 44550.28, S&P E-Minis down 27.25 points (-0.45%) at 6072, Nasdaq down 107 points (-0.5%) at 19752.76.
- Communication Services and Financial sectors underperformed in the second half, leading laggers in the Communication sector included Comcast -9.72% after the CEO announced a 100k subscriber drop at a UBS investor event this morning, Omnicom Group -8.98% after announcing $13B deal to merge with Interpublic (IPG), while Charter Communications -7.23% on lackluster broadband subscriber numbers.
- Insurance and services companies weighed on the Financial sector: MetLife -3.75%, Harford and Travelers both -3.20% while Prudential declined 2.85%.
- Of interest, China officials announced they were investigating Nvidia over alleged anti-monopoly violations, the chip stock trading down 2.39% in late trade.
- Conversely, Health Care and Energy sectors led gainers in late trade, pharmaceuticals and service providers buoyed the Health Care sector: Charles River Labs +5.05%, Molina and Centene both +4.1% while Elevance Health gained 3.71%.
- Following the fall of the Assad regime in Syria this weekend, the power vacuum lending to increased uncertainty in the Middle East with crude prices rising (WTI +1.26 at 68.46). That in turn supported oil and gas shares with APA +4.84%, Occidental Petroleum +3.208%, Valero +2.86%.
- Meanwhile some standout earnings announcements this week include Toll Brothers and Oracle after today's close. AutoZone Inc kicks off Tuesday morning followed by GameStop after the close. Midweek on: Macy's, Adobe, Costco and Broadcom.
USDJPY TECHS: Short-Term Trend Needle Points South
Dec-09 19:30
- RES 4: 156.88 2.236 proj of the Sep 16 - 27 - 30 price swing
- RES 3: 155.89/156.75 High Nov 20 / 15 and the bull trigger
- RES 2: 154.49 High Nov 26
- RES 1: 151.20/151.75 50- and 20-day EMA values
- PRICE: 150.98 @ 16:19 GMT Dec 09
- SUP 1: 148.65 Low Dec 03
- SUP 2: 148.17 50.0% retracement of the Sep 16 - Nov 15 bull leg
- SUP 3: 147.35 Low Oct 8
- SUP 4: 147.33 3.0% 10-dma envelope
A bear cycle remains in USDJPY intact. The pair traded to a fresh short-term trend low on Dec 3, highlighting a resumption of the retracement of the Sep 16 - Nov 15 rally. Price has recently traded through the 20- and 50-day EMAs - a bearish development. Sights are on 148.17, a Fibonacci retracement. A reversal higher would refocus attention on the bull trigger at 156.75, Nov 15 high. Initial firm resistance is 151.75, the 20-day EMA.
US: Strong Voter Support For ACA Prompts Trump Strategy Reset On Health Care
Dec-09 19:11
A new survey from Gallup has found that a majority of Americans approve of the Affordable Care Act, a sign that US President-elect Donald Trump’s evolving position on healthcare is a response to increased support for government health provisions.
- Semafor notes on the survey: “The public is divided on whether a government-run healthcare system or a private system is better, but the share of Republicans who favor a government-run system — 21% — is the highest on record.”
- In his first broadcast network interview since winning the election, Trump suggested to NBC that he wouldn’t take another run at repealing the Affordable Care Act: “Obamacare stinks. It’s lousy. There are better answers. If we come up with a better answer, I would present that answer to Democrats and to everybody else and I’d do something about it. But until we have that or until they can approve it — but we’re not going to go through the big deal. I am the one that saved Obamacare, I will say.”
- On one of his other campaign trail promises, free IVF care, Trump told NBC: “Well, we’re going to see. We want them to -- ideally the insurance companies to pay for it…”
Figure 1: Approval of the Affordable Care Act, by Political Party
Source: Gallup, Semafor
