The markets opened lower with the S&P 500 on track for a second week of decline. Strong monthly jobs report heightened expectations the U.S. Federal Reserve could raise interest rates sooner than anticipated which is not market friendly.
$NYA200R chart below is the percentage of stocks above the 200 DMA and is always a good statistic to follow. It can depict a trend of declining equities which is always troubling, especially when it drops below 60% - 55%. Dropping below 40%-35% signals serious continuing weakness and falling averages.
A quick recap to the trade data released today again shows both the unadjusted value of import and export rolling averages decelerating month-over-month. Many care about the trade balance (which was better than last month and at expectations), but trade balance simply has little correlation to economic activity. Likely much of the bad data is due to the West Coast ports labor issues.
LONDON (Reuters) - Brent crude oil rose toward $61 a barrel on Friday as fighting in Libya and Iraq stoked output worries, while traders kept a close eye on Iran nuclear talks that could eventually bring more supply to world markets.
DETROIT (Reuters) - Nissan Motor Co expanded the North American recall of its top-selling Altima sedan to about 878,000 vehicles because a secondary hood latch may fail and cause the hood to fly up while the car is in motion, according to a company filing with U.S. safety regulators.
The BLS jobs report headlines from the establishment survey were strong and above expectations. The unadjusted data shows relatively strong jobs growth. The household survey continues to tell a different story - and consider that the unadjusted data from the establishment survey was about average for growth seen in times of economic expansion. The rate of jobs growth continues to accelerate.
WASHINGTON (Reuters) - U.S. employment accelerated in February and the jobless rate fell to a more than 6-1/2 year low of 5.5 percent, signs that could encourage the Federal Reserve to consider hiking interest rates in June.
(Reuters) - Staples Inc reported lower-than-expected fourth-quarter sales, hurt by a strong dollar and weak demand for computers and related accessories, and the company said sales in the current quarter would be lower than those in the same quarter last year.
For those (very few now, with even the Fed admitting the unemployment rate has become a meaningless, anachronistic relic) still wondering why the unemployment rate dropped once again, sliding from 5.7% to 5.5%, the reason is that while the number of unemployed Americans dropped by 274K thousand while those employed rose by 96K, the underlying math is that the civilian labor force dropped from 157,180 to 157,002 (following the major revisions posted last month), while the people not in the labor force rose by 354,000 in February, rising to a record 92,898,000 (people who currently want a job rose to 6,538K) matching the all time high number of Americans not in the labor force.
End result: the labor force participation rate dropped once more, declining to only 62.8%, which as the chart below shows is just off the lowest print recorded since 1978.
As Chinese exports crashed in January (and imports were extremely weak), one could be forgiven for expecting the US trade deficit to be more extreme than the tumble it experienced in December... but no. The US Trade Deficit printed $41.8bn, slightly worse than the $41.1bn expectation but 'better' than the adjusted $45.6 billion. Imports dropped 3.9% in January and Exports fell 2.9% but YoY imports fell 0.17% and exports fell 1.75% - the last time both fell YoY was November 2008. This is the 2nd month in a row of worse than expected deficits (and 4th of last 5). The shift is led by big drops in Food & Beverage (-9.1%) and Auto (-7.0%) exports and an 11.3% plunge in Industrial Supplies imports.
4th of last 5 month bigger than expected trade deficit...
While America 'believes' it is highly productive, former Fed Chair Alan Greenspan instantly dispels that myth in another ominous appearance on CNBC this morning, "American productivity has gone nowhere in the last few years," and that is what is holding back wage growth. Furthermore, reiterating his concerns about the inverse relationship between surging entitlements and weak savings rates, Greenspan noted, "the annual rate of increase in entitlements of 9% per year...and the people that receive it believe they are getting their money back and have a right to it." There simply is no long-term investment as businesses favor short-term actions as the Maestro explains Fed QE lowering the real rate of interest "has been responsible for the rise in P/E multiples... and when rates normalize, that will reverse," adding that "we can't argue that we are extremely overvalued in the marketplace."
Greenspan explains... Productivity... Savings... Entitlements... Euro Failure... QE...Fed bubble-blowing... stock overvaluation and 1929 looms...
The markets are quiet awaiting the release of the BLS Jobs Report. Some are predicting if the jobs report comes in strong, it may cause pressure on the Fed to raise rates sooner than later. Asian and European Markets are mixed.
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