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06Nov2015 Pre-Market Commentary: NFP Numbers Set Futures Tumbling Into The Red, Volatility May Be The Key Factor In Morning Session, US Dollar Climbing

Written by Gary

U.S. stock future indexes were flat and then took a dive (-0.3 %) after the employment rate and NFP came in. NFP printed 271K Vs. 185K estimate, US dollar shot up to 99.40 as volatility took over swinging stock and commodity numbers widely, mostly in the red.

Markets expected to open in the red, but a waterfall exposure is not planned, but moderate volatility is.


Here is the current market situation from CNN Money

European markets are mixed today. The DAX is up 0.88% while the FTSE 100 gains 0.18%. The CAC 40 is off 0.84%.

What Is Moving the Markets

Here are the headlines moving the markets.

Futures move lower after jobs data

(Reuters) - U.S. stock index futures moved lower on Friday after data showed a bigger-than-expected rise in nonfarm payrolls in October, making it almost likely the Federal Reserve will raise interest rates next month.

Robust U.S. jobs report bolsters December rate hike case

WASHINGTON, (Reuters) - U.S. job growth surged in October after two straight months of tepid gains, with the unemployment rate hitting a 7-1/2-year low in a show of domestic strength that makes it almost likely the Federal Reserve will hike interest rates in December.

Crude set for weekly loss as supply glut and dollar drag

LONDON (Reuters) - Crude oil prices were on track to post weekly losses on Friday as an oversupply of physical oil and a strong dollar bedevilled the market.

Dollar at three-month high as pre-payrolls paralysis sets in

LONDON (Reuters) - The dollar reached a three-month high on Friday and world shares headed for their fifth week of gains out of six, before U.S. jobs data that may nudge the Federal Reserve towards its first interest rate increase in almost a decade.

Health insurer Cigna reports better-than-expected profit

(Reuters) - Health insurer Cigna Corp reported a better-than-expected quarterly profit, helped by higher enrollments in its government plans and favorable medical costs.

Takata slashes outlook as automakers drop its air bag inflators

TOKYO (Reuters) - Japanese auto parts supplier Takata Corp slashed its annual earnings forecast on Friday, and said it had yet to determine the full impact of a global safety recall as customers began ditching its air bag inflators.

AstraZeneca buys ZS Pharma for $2.7 billion, pips Actelion

LONDON (Reuters) - Britain's AstraZeneca said on Friday it had agreed to buy U.S biotech company ZS Pharma for $2.7 billion, pipping Swiss firm Actelion to the prize in the latest bout of deal-making for the hyperactive healthcare sector.

October Jobs Soar To 271K, Smash Expectations, Unemployment Rate 5.0%, Hourly Earnings Spike

If there was any doubt if the Fed would hike rates in December, it is gone now: October payrolls soared by 271K, smashing not only consensus of 184K, but the highest expected print. This was the highest monthly print since December 2014 when the gain was 329K and pushed the YTD average monthly gain from 199K to 206K.

The unemployment rate dropped from 5.1% to 5.0%, the lowest since April 2008, and most importantly, the average hourly earnings rose from 0.2% to 0.4%, the highest hourly earnings jump since 2009!

The wage gain was even more dramatic:

The breakdown from the report:

Total nonfarm payroll employment increased by 271,000 in October. Over the prior 12 months, employment growth had averaged 230,000 per month. In October, job gains occurred in professional and business services, health care, retail trade, food services and drinking places, and construction. (See table B-1.)

Employment in professional and business services increased by 78,000 in October, compared with an average gain of 52,000 per month over the prior 12 months. In October, job gains occurred in administrative and support services (+46,000), computer systems design and related services (+10,000), and architectural and engineering services (+8,000).

Health care added 45,000 jobs in ...

Bullard Reveals The Fed's Biggest Headache: Convincing The Market Slowing Jobs Is Good For The Economy

Well, it’s NFP day (again), and that means we’ll get what Deutsche Bank described earlier as a “randomly generated number†out of the BLS and the market will either soar, tank, or shrug it off, because let’s face it, investors now have absolutely no clue how to interpret macro data.

On the one hand, strong data should be positive for risk as it indicates the US is on the path to recovery (i.e. good news is good news). But then again, a hike means the FOMC is taking away the punch bowl and if the Fed moves and the dollar soars, that’s bad news for US corporate bottom lines just as the cost of capital rises imperiling the buyback bonanza that allows corporate management teams to take a pitiable top line and turn it into a sizeable EPS beat.

Of course poor data means the “recovery†isn’t really a recovery at all (something we’ve been suggesting for years) and that means no hike, portending MOAR cowbell (risk positive) but it also means the US economy is going down the tubes which could be negative for risk (i.e. bad news is bad news).

Who knows? We don’t, and neither does the Fed frankly, but don’t worry, the Bullard was unleashed ahead of today’s NFP print to explain why Yellen can still hike even if the jobs number is miserable which should be bullish... or bearish... or something. Here’s Reuters:

The Federal Reserve has been struggling to convince investors it is about to raise interest rates and now faces the risk that a likely slowdown in job growth will be interpreted as a downturn in the broader economy that will cause the Fed to hold off yet again, St. Louis Fed President James Bullard said on Thursday.

In an interview with Reuters, ...

Global Stocks Slide on Strong Jobs Data

U.S. stock futures slipped after a stronger-than-expected jobs report bolstered the case that the Federal Reserve will raise short-term interest rates next month.

Rail Week Ending 31 October 2015: Monthly Data Now Contracting 4.3% Year-over-Year

Week 43 of 2015 shows same week total rail traffic (from same week one year ago) and monthly total rail traffic (from same month one year ago) declined according to the Association of American Railroads (AAR) traffic data. Intermodal traffic contracted year-over-year, which accounts for approximately half of movements. and weekly railcar counts continued in contraction. October 2015 is down 4.3% over October 2014.

The Tell: These 5 charts say the Nasdaq's surge is different this time

The Nasdaq-100’s surge to a fresh record this week might worry investors who remember the technology bubble that popped a little over 15 years ago. These five charts that suggest the current rally is very different.

Need to Know: Gundlach says the S&P 500 can't handle a December rate rise

Investors are backing off this market a little bit. Who can blame them when rockstar fund managers are screaming about the sky about to fall in on the market if the Fed hikes rates in December?

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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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