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08May2015 Pre-Market Commentary: U.S Futures Up Significantly On Good Jobs Report, Fed Interest Rate Hike Expected

Written by Gary

U.S. stock futures rose +0.8% this morning after the government's employment report for April added 223,000 jobs in April, and unemployment ticked down to 5.4%, which could affect when the U.S. Federal Reserve raises interest rates for the first time since 2006.

U.S. job growth likely rebounded last month and the unemployment rate probably dropped to a near seven-year low, signs of a pick up in economic momentum that could keep the Federal Reserve on track to hike interest rates this year.


Here is the current market situation from CNN Money

European markets are broadly higher today with shares in London leading the region. The FTSE 100 is up 2.05% while Germany's DAX is up 1.39% and France's CAC 40 is up 0.82%.

15 minute SP 500 future view at 08.51 this morning.

What Is Moving the Markets

Here are the headlines moving the markets.

U.K. Banks Still Face Tax Headache in Tory Britain

Heavy-handed restrictions on market share are unlikely under a Conservative government. But the U.K.'s place in Europe and the bank levy remain thorny issues for lenders.

U.S. Stock Futures Rise After Jobs Report

U.S. stock futures rose Friday after the government's employment report for April came in near expected levels.

Gasoline Prices Rev Up for Summer

Gasoline prices have been rising, spurred by a rebound in crude oil and also in anticipation of strong demand this summer. Despite recent gains, prices at the pump remain lower than in recent years, likely enticing more Americans to hit the road this vacation season.

British Pound, Stocks Rally

U.K. markets rallied as Prime Minister David Cameron's Conservative Party looked on track to win the U.K. election with a slim parliamentary majority after drawing far stronger support than expected.

McDonald's April restaurant sales fall 0.6 percent

(Reuters) - McDonald's Corp's worldwide sales at established restaurants fell 0.6 percent in April as the fast-food giant fights to lure back customers and boost sales.

PBOC Says No to QE

China's economy faces downward pressure in the short term, but there is no need to use quantitative easing to boost liquidity, the central bank said.

U.S. Urges Greece to Reject Russian Energy Project

The State Department hopes to convince Athens to choose a Western-backed project that would link Europe to natural gas supplies in Azerbaijan.

Greek PM forecasts 'happy end'; Eurogroup chief cites progress in talks

ATHENS/ROME (Reuters) - Greek Prime Minister Alexis Tsipras forecast a happy end soon to fraught negotiations with creditors on a cash-for-reform deal, and the chairman of euro zone finance ministers said talks were making progress, though not enough for a deal next Monday.

Frontrunning: May 8

Ed Miliband, Nick Clegg and Nigel Farage resign as Tories sweep to victory (Telegraph)

Bonds and stocks rebound, sterling soars after UK election (Reuters)

Cameron Set to Return With U.K. Majority as SNP Sweeps Scotland (BBG)

Tory win brings marked EU exit risk (Reuters)

Why did Labour lose this election? It never tried to win it (Telegraph)

Stock Buybacks Hit New Records (WSJ)

Hard Money Comes Easy as Wall Street Funds Home Flippers (BBG)

Justice Department to Investigate Baltimore Police (WSJ)

Saudi Arabia mulling land operations on Yemen border (

Alibaba has a new CEO, but it's still Jack's house

SHANGHAI (Reuters) - When Alibaba Group Holding Ltd's eccentric founder Jack Ma stepped down as CEO two years ago, he declared "the Internet belongs to young people," and promised that most of the company's leaders born in the 1960s would soon retreat from management.

Payrolls Preview - Hope Abounds Amid Better-Weather Boost

The last two months have been nothing if not a lesson in the disater that is the economic-forecasters of the world. With a 3-sigma beat followed by a 5-sigma miss, hope abounds that April will be the 'goldilocks' print - just cold enough to leave the Fed on hold and just hot enough to 'prove' growth remains. Goldman expects nonfarm payroll job growth of 230k in April, in line with consensus expectations. While labor market indicators were mixed in April, the employment components of service sector surveys were strong and better weather conditions should provide a boost. In addition, they see some upside risk to the forecast from a calendar effect, and expect the unemployment rate to decline by one-tenth to 5.4% and average hourly earnings to rise 0.2%.

Not a great track record the last few months... extreme outlier prints...

Via Goldman Sachs' Jan Hatzius,

We forecast nonfarm payroll job growth of 230k in April, in line with consensus expectations. While not all major labor market indicators improved in April, jobless claims fell, the employment components of most service sector surveys improved, and weather conditions were more favorable. If realized, we would view a 230k gain in April as a strong print in light of last month's soft gain of 126k, the broader weakness seen across major economic indicators, and our expectation that the trend rate of payroll gains is likely to be closer to 200k in coming months than the 261k average seen over the last year. We also see some upside risk to our baseline forecast from a calendar effe ...

Takata Expects Return to Profit Despite Facing Airbag Lawsuits

The company, which had losses tied to recalls, said that the worst of the financial damage was in the rearview mirror but acknowledged uncertainly.

Bonds and stocks rebound, sterling soars after UK election

LONDON (Reuters) - World bond and stock markets rose on Friday after a bruising week and sterling jumped to a two-month high after the business-friendly Conservative party won Britain's national elections.

U.S. job growth seen regaining steam, keeping Fed rate hike on track

WASHINGTON (Reuters) - U.S. job growth likely rebounded last month and the unemployment rate probably dropped to a near seven-year low, signs of a pick up in economic momentum that could keep the Federal Reserve on track to hike interest rates this year.

U.K. Election Swaps Uncertainty Now for Uncertainty Later

A surprise victory for David Cameron's Conservative Party appears to offer continuity for investors. But the U.K. election result simply stores up serious uncertainty over Europe and Scotland.

Daniel Loeb Criticizes Warren Buffett, in a Rare Public Swipe

For years, Warren Buffett has poked, prodded and needled hedge-fund managers. This week, one of the biggest, Daniel Loeb, bit back.

Nike backs Obama on trade with pledge to create 10,000 U.S. jobs

PORTLAND, Oregon (Reuters) - Sports shoe maker Nike Inc put its weight behind President Barack Obama's push for a trade deal with Asian countries on Friday with a promise to create up to 10,000 U.S.-based manufacturing jobs if the pact is approved.

Negotiations - Greek Style

With deadlines looming ever closer - and the Germans far more pessimistic than the Greeks - we await the next hurdle to slow the process...

Source: @TheEconomist

Grits 'n Bits Power a Couple of IPOs

Fitbit, a pioneer in wearable fitness tracking, on Thursday filed for an initial public offering, on the same day that Bojangles priced its IPO at the high end of expectations.

Toyota flags third year of record profit on strong U.S. sales, cost cuts

TOKYO (Reuters) - Toyota Motor Corp said it will crank net profit up to a third straight record this year as cost cuts and rising U.S. sales offset weaker business elsewhere, building on bumper earnings last year powered largely by foreign-exchange gains.

Troubled air bag maker Takata says to return to profit in 2015/16

TOKYO (Reuters) - Japan's Takata Corp said it expects to return to profit this financial year on higher Asian and U.S. sales, but the troubled company made few provisions for possible costs related to a massive global recall of its exploding air bags.

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To contact me with questions, comments or constructive criticism is always encouraged and appreciated:

gary@econintersect.com

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