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Good morning! Here’s the latest in trending:
IPO roadmap: Anthropic (ANTHRO) is planning to go public before the Thanksgiving holiday.
Dim outlook: Nike’s (NKE) turnaround falters as it forecasts bigger sales drop, more layoffs.
Oil volatility: The U.S. sends third aircraft carrier and more troops to the Middle East.
The Bureau of Labor Statistics will release nonfarm payroll numbers for September this morning, offering fresh data on whether the month showed surprising resilience or underwhelmed. While the data may create a lot of noise month to month, the overall U.S. labor market has remained roughly stable amid stagnant supply and lackluster demand.
What to expect: When trying to estimate nonfarm payroll numbers, “sometimes it’s like a coin toss,” said Olu Sonola, U.S. head of economic research at Fitch Ratings. “Maybe everybody should just give up forecasting the jobs report.” Nevertheless, economists do run their models to predict where they think the number will land. The consensus estimate sees the U.S. economy adding 90K jobs in September, down from August’s reading of +162K. The unemployment rate is expected to hold at 4.1%. The Chicago Fed’s latest estimate for the unemployment rate is 4.10%, compared to 4.14% in August. It sees an uptick in the hiring rate for unemployed workers in September to 45.81% from 44.85% in the prior month. Layoffs are seen remaining low at 2.03% vs. 2.04% in August, while consensus points to a 0.3% M/M increase in average hourly earnings, unchanged from August.
Bigger picture: To some extent, the jobs report has “been relegated… to the background just because of the pressures of inflation,” Sonola said. “But it’s still important.” After all, full employment is half of the Federal Reserve’s dual mandate, with the other half being price stability. Signs of widening cracks in the labor market would certainly get the central bank’s attention. But so far, the labor market appears to be calm. Latest ADP data showed an increase of 90K jobs in the private sector in September. Sonola would describe the labor market’s state as “fragile stability, because it wouldn’t take much to tip it over.” Two years ago, the U.S. economy was routinely adding over 100K jobs, but for months now, payroll growth has averaged less than 100K per month. For the past three months, the average monthly increase was about 72K. That reduced demand is occurring as supply growth stagnates due to demographic trends and the sharp drop in immigration.
SA commentary: Seeking Alpha analyst Damir Tokic expects a very strong jobs report, based on the PMI flash report for September, which suggested that manufacturing and service jobs increased due to a backlog of uncompleted orders. “A strong report could push the US10Y yields higher, and if the wage growth accelerates, US2Y yields could spike and invert the yield curve,” he added. Strong labor data diminishes the likelihood of imminent rate cuts by the Fed, raising the probability of another 25-bp hike, Investing Group Leader Chris Lau noted. “Stock markets might react poorly if the U.S. economy added jobs to the government, health care, manufacturing, and food services and drinking places sectors,” he added. 10-Year Treasury Note Greatly Oversold On Eve Of September Nonfarm Payroll Report
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What else is happening…
Broadcom (AVGO) gathers $60B to fund chips for Anthropic.
Amazon (AMZN) eyes offloading $8B of Nvidia (NVDA) chips.
Data privacy: New Mexico seeks $40B fine from Meta (META).
Berkshire (BRK.B) piles into housing with Lennar (LEN) stake.
Fair Isaac (FICO) stock rebounds nearly 12% after steep selloff.
Moderna (MRNA) to replace Warner Bros. (WBD) on Nasdaq 100.
Florida AG sues Pfizer (PFE) over COVID-19 vaccine marketing.
Fed speak: Logan backs more rate hikes, Bowman says no rush.
Release diesel stocks or face export ban – U.S. tells France, Germany.
UNDP: Countries running out of room to cushion energy shock impact.
Today’s Markets
In Asia, Japan -0.9%. Hong Kong -2.6%. China closed. India closed.
In Europe, at midday, London +0.2%. Paris +0.8%. Frankfurt +1.1%.
Futures at 6:30, Dow +0.4%. S&P +0.4%. Nasdaq +0.7%. Crude -3.5% to $89.62. Gold flat at $4,202.90. Bitcoin +3.2% to $86,372.
Ten-year Treasury Yield unchanged at 5.24%.
On The Calendar
See the full earnings calendar on Seeking Alpha, as well as today’s economic calendar