Friday, May 8, 2015

Keystone's Morning Wake-Up 5/8/15; Monthly Jobs Report

Global markets are calm awaiting the important US Monthly Jobs Report. Consensus is 220K jobs with several media outlets quoting 228K jobs expected. The unemployment rate is expected to drop one tick to 5.4% from the ongoing steady 5.5% rate. The general expectation is that the number will come in lower than 220K. A blowout number at 250K would increase the likelihood of the first rate increase sooner rather than later. Last month’s jobs were 126K (weakest in 15 months) so revisions are important. Did the soft patch in the first quarter continue?

The labor participation rate is expected to remain steady at 62.7%. Average Hourly Earnings are expected to retreat by one tick from 0.3% last month to 0.2%. Average Workweek is expected to remain steady at 34.5 hours. There are no notable earnings releases today so the jobs report and Wholesale Trade numbers at 10 AM run the show today.

At 8:20 AM, S&P +5. Dow +42. Nasdaq +10. Euro 1.1223. Euro/yen 134.92. Dollar/yen 120.22. Pound 1.5408. WTIC oil 59.48. Brent oil 65.82. Natty gas 2.78. Gold 1185. Silver 16.34. Copper 2.9155.

Treasury yields are; 2-year 0.64%, 5-year 1.56%, 10-year 2.18%, 30-year 2.90%. German bund 0.616%.

At 8:30 AM, the Monthly Jobs Report is 223K jobs dead in line with expectations. Ditto the unemployment rate at 5.4% as expected. The unemployment rate is the lowest since 2008. Last month’s jobs are lowered from 126K down to 85K and the prior month from 264K to 266K for a net revision of down 39K jobs. Average hourly earnings are a miss up a paltry +0.1%. The average annual earnings are at +2.2% for the last twelve months and the Fed likely wants to see 4% or higher to push ahead with rate hikes. US futures explode higher. The weak jobs revision and wages hint that a rate hike is not coming anytime soon. S&P +13. Dow +120. Nasdaq +26. 10-year yield 2.13%.

Construction jobs bounce back strongly but it is springtime as would be expected. Greater housing activity is a plus for the economy. The service sector is strong. The mining sector is weak. The U-6 unemployment rate is 10.8% the lowest since August 2008. Labor participation rate is 62.8%. Average hours worked are 34.5.

At 8:35 AM, S&P +17. Dow +151. Nasdaq +37. FTSE +2%. DAX +1.2%. CAC +1.3%. 10-year yield 2.13%.

At 8:47 AM, S&P +19. Dow +166. Nasdaq +44. Traders are happy with the weak jobs picture and stocks run higher. Bad news is good news. There are only about 300K jobs created over the last two months which barely keeps up with the new entries into the workforce let alone employ the millions that remain out of work looking for jobs. The Federal Reserve will continue greasing the wheels of the economy with easy money which benefits the wealthy that own stocks. 10-year yield 2.16%. German bund 0.605%.

Euro 1.1253. Dollar/yen 119.82. Pound 1.5425. WTIC oil 59.72. Brent oil 65.58. Natty 2.778. Gold 1184. Silver 16.305. Copper drops -0.7% to 2.8965.

Treasury yields are; 2-year 0.60%, 5-year 1.53%, 10-year 2.16%, 30-year 2.91%.

At 8:53 AM, S&P +19. Dow +165. Nasdaq +43.

At 9:04 AM, S&P +20. Dow +180. Nasdaq +46.

The bulls are running higher.

As always, the daily chronology of global markets is provided by Keystone the Scribe.

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