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| Wall Street lower after US jobs report, as bitcoin slides - business live | |
| (35 minutes later) | |
| As expected US markets are in negative territory after the better than expected jobs figures gave a boost to the flagging dollar. | |
| The Dow Jones Industrial Average is currently down 217 points or 0.8%, on track for its worst weekly performance since January 2016..The S&P 500 opened down 0.6% while the Nasdaq Composite was 0.55% lower. | |
| The rise in average earnings is not spread across the board: | |
| anyone else notice that hourly earnings for production and non-supervisory workers was up just 2.4% y/y (table B8) ? right about where it has been for a while? The headline series is up 2.9%, but the one that is the bulk of regular workers is not up as much. | |
| Here are the jobs data charts: | |
| Pantheon economist Ian Shepherdson reckons the jobs data should be good for shares. | Pantheon economist Ian Shepherdson reckons the jobs data should be good for shares. |
| If productivity growth can keep up with the rise in wages, these numbers ought to be good for stocks. More wage gains = more revenue; steady unit labor cost = no margin hit, so earnings should rise. | If productivity growth can keep up with the rise in wages, these numbers ought to be good for stocks. More wage gains = more revenue; steady unit labor cost = no margin hit, so earnings should rise. |
| 2. Rising yields because of normalization/gradual rebound in neutral rate shouldn't be a problem for stocks. A surge in yields because of inflation panic is a different story, but it's not this one.(At this point.) | 2. Rising yields because of normalization/gradual rebound in neutral rate shouldn't be a problem for stocks. A surge in yields because of inflation panic is a different story, but it's not this one.(At this point.) |
| Wall Street futures have improved as we approach the opening of the US market. | Wall Street futures have improved as we approach the opening of the US market. |
| The Dow Jones Industrial Average is now forecast to open around 200 points lower, better than the 250 loss predicted in the immediate aftermath of the better than expected jobs figures. | The Dow Jones Industrial Average is now forecast to open around 200 points lower, better than the 250 loss predicted in the immediate aftermath of the better than expected jobs figures. |
| Kully Samra, UK managing director at Charles Schwab expects US rate rises this year. And increased market volatility: | Kully Samra, UK managing director at Charles Schwab expects US rate rises this year. And increased market volatility: |
| The US economy started 2018 on a positive note as the labour market continues to tighten. This latest set of job numbers supports the view that that some of the weakness in December’s service-providing industries would revert in January. | The US economy started 2018 on a positive note as the labour market continues to tighten. This latest set of job numbers supports the view that that some of the weakness in December’s service-providing industries would revert in January. |
| Tightening labour market conditions and indications of a pickup in wage growth will be welcomed by the Fed which has expressed concern over benign inflation. While the Fed held interest rates steady on Wednesday, we expect a hike in March as Jerome Powell is expected to continue down the familiar path of keeping inflation under control without raising rates so far or so fast as to stifle the improvement in growth expected this year. | Tightening labour market conditions and indications of a pickup in wage growth will be welcomed by the Fed which has expressed concern over benign inflation. While the Fed held interest rates steady on Wednesday, we expect a hike in March as Jerome Powell is expected to continue down the familiar path of keeping inflation under control without raising rates so far or so fast as to stifle the improvement in growth expected this year. |
| We continue to believe the Fed will hike rates at least three times this year and that, along with the paring of its balance sheet, historically-low financial conditions may start to tighten. However, with the outlook for inflation continuing to be carefully monitored, we do expect a higher level of volatility in the stock market this year relative to 2017. | We continue to believe the Fed will hike rates at least three times this year and that, along with the paring of its balance sheet, historically-low financial conditions may start to tighten. However, with the outlook for inflation continuing to be carefully monitored, we do expect a higher level of volatility in the stock market this year relative to 2017. |
| The big picture is that America’s economy has been creating jobs each month since early into Barack Obama’s first term, and it’s held steady under Donald Trump too. | The big picture is that America’s economy has been creating jobs each month since early into Barack Obama’s first term, and it’s held steady under Donald Trump too. |
| US - JAN #NFP's +200k (exp +180k, prior rev +160k from +148k). U/E rate 4.1% (exp 4.1%, prior 4.1%). Participation steady at 62.7%. pic.twitter.com/9XjxcnPW9s | US - JAN #NFP's +200k (exp +180k, prior rev +160k from +148k). U/E rate 4.1% (exp 4.1%, prior 4.1%). Participation steady at 62.7%. pic.twitter.com/9XjxcnPW9s |
| The upbeat US jobs figures makes it likely there will be an interest rate rise in March barring unforeseen circumstances, according to ING Bank. Economist James Knightley says: | The upbeat US jobs figures makes it likely there will be an interest rate rise in March barring unforeseen circumstances, according to ING Bank. Economist James Knightley says: |
| The US jobs report is very strong with payrolls rising 200,000 versus expectations of 180,000. There were some chunky upward revisions too, but the big story is wage growth which looks much, much better. Wages are now growing 2.9% year on year (the fastest rate of growth since 2009) with last month’s figure revised up to 2.7% from 2.5%. Unemployment stays at 4.1%, but given the strength of this report it is hard to argue against a March Fed rate hike now. | The US jobs report is very strong with payrolls rising 200,000 versus expectations of 180,000. There were some chunky upward revisions too, but the big story is wage growth which looks much, much better. Wages are now growing 2.9% year on year (the fastest rate of growth since 2009) with last month’s figure revised up to 2.7% from 2.5%. Unemployment stays at 4.1%, but given the strength of this report it is hard to argue against a March Fed rate hike now. |
| Wage growth has been the missing link in the strong economic growth, tight jobs market story. We have been hoping for some time to see a turnaround and it does finally look as though something is happening. It backs up evidence from yesterday’s National Federation of Independent Businesses small business survey, which showed the net proportion of businesses raising worker compensation is at its highest since 2000. The report also showed you have to go all the way back to 1989 to find when the index indicating the net proportion of businesses that plan to raise worker pay was higher. | Wage growth has been the missing link in the strong economic growth, tight jobs market story. We have been hoping for some time to see a turnaround and it does finally look as though something is happening. It backs up evidence from yesterday’s National Federation of Independent Businesses small business survey, which showed the net proportion of businesses raising worker compensation is at its highest since 2000. The report also showed you have to go all the way back to 1989 to find when the index indicating the net proportion of businesses that plan to raise worker pay was higher. |
| Given companies such as WalMart have credited Trump’s tax cuts as a way for them to afford higher worker pay we suspect we will see the wage numbers pick-up further. Rising wages and robust economic growth is also supportive for our 3% headline CPI call for this summer. | Given companies such as WalMart have credited Trump’s tax cuts as a way for them to afford higher worker pay we suspect we will see the wage numbers pick-up further. Rising wages and robust economic growth is also supportive for our 3% headline CPI call for this summer. |
| Consequently, it will need a big shock to prevent the Fed from hiking in March, but it could happen in the form of a damaging government shutdown should politicians fail to resolve their differences – next deadline is February 8. Nonetheless, it looks more and more likely that we will have to revise up our call for three Fed rate hikes this year to four. | Consequently, it will need a big shock to prevent the Fed from hiking in March, but it could happen in the form of a damaging government shutdown should politicians fail to resolve their differences – next deadline is February 8. Nonetheless, it looks more and more likely that we will have to revise up our call for three Fed rate hikes this year to four. |
| US firms are facing a real scramble to find staff to hire, reckons Joseph Brusuelas, chief economist of RSM. | US firms are facing a real scramble to find staff to hire, reckons Joseph Brusuelas, chief economist of RSM. |
| US January NFP: Strong Employment Report. Composition of hiring decisively tilted towards higher wage job creation. Avg hourly earnings up by most since 2009 to 2.9% on a year ago basis. | US January NFP: Strong Employment Report. Composition of hiring decisively tilted towards higher wage job creation. Avg hourly earnings up by most since 2009 to 2.9% on a year ago basis. |
| US NFP: Given that there is roughly one worker per job opening in the economy, the narrative inside the labor market is rapidly shifting from that of triumph to that of concern amongst firms of all sizes over how to fill positions among labor scarcity | US NFP: Given that there is roughly one worker per job opening in the economy, the narrative inside the labor market is rapidly shifting from that of triumph to that of concern amongst firms of all sizes over how to fill positions among labor scarcity |
| Stock futures don't like Payrolls-fuelled turbo boost for #Treasurys, though indices aren't extending pre-open declines much. $DJ dn 242 pts, Nasdaq, -35, S&P futures dn 19.75 pts ^KO | Stock futures don't like Payrolls-fuelled turbo boost for #Treasurys, though indices aren't extending pre-open declines much. $DJ dn 242 pts, Nasdaq, -35, S&P futures dn 19.75 pts ^KO |
| President Trump will probably enjoy today’s jobs report, says Dennis de Jong, managing director at UFX.com: | President Trump will probably enjoy today’s jobs report, says Dennis de Jong, managing director at UFX.com: |
| “While criticism of Donald Trump’s embattled White House continues to mount, job growth continues to go through the gears, with the latest nonfarm payroll figures proving job creation remains a competence within the president’s capabilities. | “While criticism of Donald Trump’s embattled White House continues to mount, job growth continues to go through the gears, with the latest nonfarm payroll figures proving job creation remains a competence within the president’s capabilities. |
| “Buoyant domestic and global demand, particularly for the manufacturing sector, appear the drivers in higher-than-anticipated numbers, and Trump’s fiscal stimulus package is clearly a shot in the arm for economic growth. | “Buoyant domestic and global demand, particularly for the manufacturing sector, appear the drivers in higher-than-anticipated numbers, and Trump’s fiscal stimulus package is clearly a shot in the arm for economic growth. |
| “However, with the economy close to full employment, increased pressure on wages looks an inevitable consequence. So higher inflation is surely on the cards, with taller interest rates set to arrive over the coming months.” | “However, with the economy close to full employment, increased pressure on wages looks an inevitable consequence. So higher inflation is surely on the cards, with taller interest rates set to arrive over the coming months.” |
| A good jobs report = falling shares and bonds. | A good jobs report = falling shares and bonds. |
| That’s because traders suspect it means US interest rates will rise faster than expected, as inflation worries encourage central bankers to empty the ‘punch bowl’ of loose monetary policy. | That’s because traders suspect it means US interest rates will rise faster than expected, as inflation worries encourage central bankers to empty the ‘punch bowl’ of loose monetary policy. |
| Dow futures slide 244 points after jobs report beats expectations https://t.co/DQ2BKK8qPi pic.twitter.com/uWpXCOVHwR | Dow futures slide 244 points after jobs report beats expectations https://t.co/DQ2BKK8qPi pic.twitter.com/uWpXCOVHwR |
| US 10-year Treasury yield jumps to 4-year high of 2.83% after jobs report https://t.co/MkBsMEmhXY pic.twitter.com/ircSDpIrs7 | US 10-year Treasury yield jumps to 4-year high of 2.83% after jobs report https://t.co/MkBsMEmhXY pic.twitter.com/ircSDpIrs7 |
| Financial experts like the look of today’s US labor market report. | Financial experts like the look of today’s US labor market report. |
| This is from Christopher Vecchio of DailyFX.com: | This is from Christopher Vecchio of DailyFX.com: |
| Good batch of data here: January US NFP at +200K vs +180K exp, prior revised up to +160K from +148K, U3 unemployment rate at 4.1% as exp, wage growth at +0.3% m/m as exp & +2.9% y/y (vs +2.6% exp, from +2.7%). $DXY catching a break from recent weakness. | Good batch of data here: January US NFP at +200K vs +180K exp, prior revised up to +160K from +148K, U3 unemployment rate at 4.1% as exp, wage growth at +0.3% m/m as exp & +2.9% y/y (vs +2.6% exp, from +2.7%). $DXY catching a break from recent weakness. |
| Jeremy Cook of World First and Ian Shepherdson of Pantheon Economics are both impressed by the wage growth: | Jeremy Cook of World First and Ian Shepherdson of Pantheon Economics are both impressed by the wage growth: |
| *U.S. AVERAGE HOURLY EARNINGS ROSE 2.9% Y/Y, MOST SINCE 2009 | *U.S. AVERAGE HOURLY EARNINGS ROSE 2.9% Y/Y, MOST SINCE 2009 |
| AHE 2.9% y/y best since 2009. That's all you need to know. | AHE 2.9% y/y best since 2009. That's all you need to know. |
| Bloomberg’s Jeanna Smialek suggests that the Phillips curve may not be dead after all (the idea that inflation rises when unemployment falls). | Bloomberg’s Jeanna Smialek suggests that the Phillips curve may not be dead after all (the idea that inflation rises when unemployment falls). |
| Average hourly earnings up to by the most since 2009 (yoy), but hours fall. Still, those AHE numbers are probably welcome news for wage Phillips curvers. | Average hourly earnings up to by the most since 2009 (yoy), but hours fall. Still, those AHE numbers are probably welcome news for wage Phillips curvers. |
| Economist Shaun Richards has spotted that bars and restaurants hired more staff last month: | Economist Shaun Richards has spotted that bars and restaurants hired more staff last month: |
| Meanwhile are Americans turning to drink? "Employment continued to trend up in construction, food services and drinking places,health care, and manufacturing." #NFP 🍺 | Meanwhile are Americans turning to drink? "Employment continued to trend up in construction, food services and drinking places,health care, and manufacturing." #NFP 🍺 |
| The dollar has climbed and US bond yields have risen following the better then expected jobs and wages figures. | The dollar has climbed and US bond yields have risen following the better then expected jobs and wages figures. |
| But the expected opening losses on Wall Street have increased according to the future market, with the Dow Jones Industrial Average forecast to open down around 250 points. Before the jobs data it was around 220 points lower. | But the expected opening losses on Wall Street have increased according to the future market, with the Dow Jones Industrial Average forecast to open down around 250 points. Before the jobs data it was around 220 points lower. |
| The dollar index has risen 0.3% to 88.95 while 10 year Treasury yields have hit a near four year high at 2.818%. | The dollar index has risen 0.3% to 88.95 while 10 year Treasury yields have hit a near four year high at 2.818%. |
| And the price of 30 year bonds has fallen more than a point with yields at their highest level since March 2017. | And the price of 30 year bonds has fallen more than a point with yields at their highest level since March 2017. |
| BREAKING: The US economy created 200,000 new jobs last month, a little more than Wall Street had expected. | BREAKING: The US economy created 200,000 new jobs last month, a little more than Wall Street had expected. |
| December’s figure have been revised up too, to 160,000 new jobs (from 146,000). | December’s figure have been revised up too, to 160,000 new jobs (from 146,000). |
| The US jobless rate remains at 4.1%, a 17-year low. | The US jobless rate remains at 4.1%, a 17-year low. |
| Wages rose too, by 0.3% during the month and a healthy 2.9% year-on-year (that’s average hourly earnings) | Wages rose too, by 0.3% during the month and a healthy 2.9% year-on-year (that’s average hourly earnings) |
| It looks like a pretty decent jobs report, at first glance. | It looks like a pretty decent jobs report, at first glance. |
| Well, this rather sums up the crypto bubble. | Well, this rather sums up the crypto bubble. |
| Long Blockchain Corp -- formally known as Long Island Iced Tea -- has announced that it has abandoned plans to buy bitcoin mining equipment. | Long Blockchain Corp -- formally known as Long Island Iced Tea -- has announced that it has abandoned plans to buy bitcoin mining equipment. |
| Long Island rebranded itself as a ‘blockchain’ company late last year, a move that caused its share price to quadruple. | Long Island rebranded itself as a ‘blockchain’ company late last year, a move that caused its share price to quadruple. |
| It is pressing on with its proposed merger with technology companyStater Blockchain Limited, but has ditched plans to buy “1,000 Antminer S9 mining rigs” to mine new bitcoins. More here.... | It is pressing on with its proposed merger with technology companyStater Blockchain Limited, but has ditched plans to buy “1,000 Antminer S9 mining rigs” to mine new bitcoins. More here.... |
| Hilarious. The company formerly known as Long Island Iced Tea but decided to become a blockchain company is not going to buy bitcoin mining equipment after all. My story on $LBCC. Back when it was still $LTEA. https://t.co/IYWPWi16M1 | Hilarious. The company formerly known as Long Island Iced Tea but decided to become a blockchain company is not going to buy bitcoin mining equipment after all. My story on $LBCC. Back when it was still $LTEA. https://t.co/IYWPWi16M1 |
| Tension is building in the markets as investors brace for America’s jobs report, due at 8.30am East Coast time (1.30pm in the UK). | Tension is building in the markets as investors brace for America’s jobs report, due at 8.30am East Coast time (1.30pm in the UK). |
| As usual, Wall Street experts have a range of predictions. The consensus is that 180,000 new jobs were created in January. | As usual, Wall Street experts have a range of predictions. The consensus is that 180,000 new jobs were created in January. |
| But it’s the wage growth figures that could move the markets; a (welcome) rise in earnings would make US interest rate rises more likely -- potentially bad news for bond prices and shares too. | But it’s the wage growth figures that could move the markets; a (welcome) rise in earnings would make US interest rate rises more likely -- potentially bad news for bond prices and shares too. |
| Primary Dealer #NFPguesses:BNP 230KDeutsche 210KBMO 205KGoldman 205KNomura 205KJefferies 200KJPM 200K Scotia 200KMS 195KSocGen 190KBofAML 180KUBS 177KBarclays 175KMizuho 175KRBC 175KTD 175KWFC 175KDaiwa 170KHSBC 170K Citi 165KCredit Suisse 165K | Primary Dealer #NFPguesses:BNP 230KDeutsche 210KBMO 205KGoldman 205KNomura 205KJefferies 200KJPM 200K Scotia 200KMS 195KSocGen 190KBofAML 180KUBS 177KBarclays 175KMizuho 175KRBC 175KTD 175KWFC 175KDaiwa 170KHSBC 170K Citi 165KCredit Suisse 165K |