Tag Archives for " august nfp report "
5 Thoughts on the Disappointing August Jobs Report
Now that we’re past the initial reaction to the weaker-than-expected August NFP report, let’s take an in-depth look at how the market’s doing: 1) Oil Wins! Oil is the big winner off the NFP report. WTI crude was red in the early going, but it’s now up 2.4%, and the Vaneck Vectors Oil Service ETF (OIH) is up 1.4%. And XLE is the best performing S&P sector ETF with a 1.1% gain. Plus, this is happening despite a major currency move… 2) Impressive Dollar USDJPY dropped to 102.811 post-NFP, but it’s rocketed up to 104.176. This really surprised me. I thought the light numbers would result in profit-taking, but I guess traders are happy to keep riding this freight train to the moon. This, along with the big selloff in bonds, is helping banks, especially the regionals. By the way, do you want to learn to trade forex? Sign up for next week’s FREE webinar. 3) Miners Rock Even with the dollar strength, gold is up 0.4% on the NFP miss. And the gold miners (GDX) are having a great day with a 1.9% pop following yesterday’s solid gain — wow. But remember, GDX just dropped from $31.79 on August 12 to $25.17 yesterday, so the pendulum had to eventually swing back the other way. 4) Rate Hike Odds Fed rate hike odds are essentially unchanged. Fed funds futures imply a 30% chance of a September rate hike, down from 34% yesterday. But December is holding steady at 60%. Traders will probably wait to see September numbers before really freaking out over employment data. 5) Fed Heads Fed officials will immediately continue their press tours, and there’s a chance they’ll comment on today’s jobs numbers. Lacker will be speaking in Richmond today at 1:00 p.m. ET And we have Williams next Tuesday and Rosengren next Friday. Only Rosengren is a voting member of the FOMC. The economic calendar is pretty light next week, so maybe these folks will get even more attention than usual, especially if they get feisty. P.S. Check out our FREE webinars and learn from our top traders!
Continue Reading -->August NFP Report Instant Analysis: Did the Fed Fool Us Again?
Oh man, did we just get fooled by the Fed again? Fed heads have been selling a super-hawkish narrative for weeks but today’s job report was just a little bit shaky. The 151K headline number missed expectations by 29K. And perhaps most importantly, average hourly earnings rose just 0.1% month-over-month, missing the 0.2% consensus. We’re seeing a predictable reaction: gold is ripping, up almost 1%, and the gold miners (GDX) are up 4.5%. Meanwhile, the US dollar is sagging and Treasuries are up. SPX futures are now about 10 handles off morning lows. I’d have though they’d sag on the report because markets have acted as if they’d welcome a rate hike. Fed funds futures are now pricing in a 58% chance of a December rate hike, down from 60% earlier today — that’s not much of a change. Remember, the Fed doesn’t make decisions based on a single data point, so let’s not go overboard. And of course, keep in mind that we often see multiple market reactions and counter-reactions on NFP days. We’ve already seen crude oil round-trip its reaction move and start yet another move: We could see ANYTHING by the close today… even actual volatility.
Continue Reading -->The Morning Hammer: Happy Jobs Day!
It’s been about a decade since the market’s made a real move, but maybe we’ll get some excitement with this morning’s August NFP report, which hits the wires at 8:30 a.m. ET. Traders are looking for 180K on the headline number with a 4.8% unemployment rate and 0.2% month-over-month growth in average hourly earnings. With the way the dollar’s been acting, it seems like the market is expecting a beat, which would help clear the way for the Fed to raise rates. The Fed heads have been out in force as of late preparing the market for coming rate hikes, but the market itself may need a little more convincing. Fed funds futures are currently pricing in a 60% chance of a December rate hike. That’s up from just 9% post-Brexit, but still — it doesn’t exactly scream total certainty. So maybe if we get big numbers today (headline number above 220K and 0.3% growth average hourly earnings), those odds push higher. On the flip side, if we get an in-line report or a miss, I’d expect the gold bugs to have a big party while equities pull back. I’d especially watch for a selloff in regional banks (KRE). But no one really knows. SPX futures are doing nothing this morning, which should come as no surprise since they’ve been doing nothing for 2 months. As I’ve said about 10 million times, the SPX hasn’t had a 1% down day since June 27. But with jobs numbers hitting, I guess today’s as good a day as any to break this miserable streak. Crude oil is up this morning, giving us a break from the downtrend. Russian President Vladimir Putin said he’s like OPEC and Russia to reach a deal to freeze supply. Nigerian exports also fell in August. So for now, it’s steady as she goes, though I’m hoping that changes when the big jobs report hits.
Continue Reading -->Jobs Report Preview: Is Volatility About to Explode?
The nonfarm payrolls report is always one of the biggest events of the month, and with traders thinking the Fed is about to raise rates, tomorrow’s August report is no exception. Here is a list of the consensus numbers: Change in Nonfarm Payrolls (Aug): exp. 180k, prior 255k Two-Month Payroll Net Revision (Aug): prior 18k Change in Private Payrolls (Aug): exp. 180k, prior 217k Change in Manufact. Payrolls (Aug): exp. -4k, prior 9k Unemployment Rate (Aug): exp. 4.80%, prior 4.90% Average Hourly Earnings MoM (Aug): exp. 0.20%, prior 0.30% Average Hourly Earnings YoY (Aug): exp. 2.50%, prior 2.60% Average Weekly Hours All Employees (Aug): exp. 34.5, prior 34.5 Change in Household Employment (Aug): prior 420 Labor Force Participation Rate (Aug): prior 62.80% Underemployment Rate (Aug): prior 9.70% Source: Bloomberg Today, the US dollar is down on profit-taking following the weaker-than-expected Markit US Manufacturing PMI,ISM Manufacturing, and Construction Spending numbers. But it’s been had a nice bounce since the Fed hawks came out in force to prepare the market for additional rate hikes. So presumable, traders are gearing up for a repeat of the big July jobs report, which was an impressive across-the-board beat. I’ve been waiting for an explosion in volatility, and it could come soon. To be clear, I’m long VIX calls so I have a vested interest in the market falling hard. But volatility is mean reverting, and tension is slowly returning to the tape. Of course, trying to time those reversions is incredibly difficult! But let’s look at the backdrop. The S&P 500 hasn’t had a 1% move since July 8, and the last 1% down day was on June 27 — the day after the Brexit. July and August was a total snoozefest, but cracks are appearing in the mirror: 1) The S&P 500 broke its 8 and 21 day moving averages, which means a loss of short-term momentum. 2) Crude oil is dropping like a rock. 3) Biotech is sagging, with IBB on the verge of breaking its 50 day moving averages. To be fair, over the past 2 months, the bears have failed at every possible turn. But a miss on tomorrow’s jobs numbers will likely reverse many of the recent big trades. Namely, I would expect the gold miners (GDX) to explode higher with a selloff in broader equities that drives the VIX up big. And if we see an in-line report or a small beat, there’s a decent chance of a “sell the news” reaction that gives the same result — strong gold, weak broader equities — albeit on a smaller scale. I’d imagine that it would require an enormous beat to drive the rate hike narrative — and associated trades like long USD/short gold — any further.
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