Futures vs FV: SP -22.68; DJ -215.27; NASD -84.63
Two shocks, maybe three, for the world markets this morning.
First, Chinese exports imploded at -20.4% versus -6% expected. On top of that, a brokerage in China downgraded Chinese stocks to 'sell.' Of course, that means the Chinese government and thus the communists want to tamp down the rally.
Second, US jobs showed just +20K in a number obviously buffeted by seasonality and the government shutdown. What a perfect scenario for those starting to worry about the Fed stepping back in anytime soon.
Jobs: 20K vs 173K exp vs 311K Feb (from 304K); Jan: 227K vs 222K
LOTS of noise in this report: weather, government shutdown.
Unemployment: 3.8% vs 3.8% exp vs 4.0%
Wages: +0.4%, +3.4% year/year (highest since 4/2009).
Workweek: 34.4 vs 34.5 exp vs 34.5 prior
Participation: 63.2% vs 63.2% prior
300K less people were unemployed, going back to work after the shutdown.
390K were unemployed due to bad weather, a huge number.
U6: 7.3% VS 8.1% PRIOR
Demographics: 35 to 44 unemployment fell to lowest in 12 years. Meanwhile, for 25-54, that includes millennials, the participation rate remained at the post-recession highs. The millennials are not working. Small businesses all share the same complaint: the millennials have wholly unrealistic expectations and prefer not to work and collect benefits than work and get paid less than the value of their inflated self-worth. Have you seen the survey where 40%ish would not give up their iPhone for the home of their dreams -- they could have any other pone, just not an iPhone.
Leisure and Hospitality: 0K
Manufacturing: -4K (prior: 21K from 13K)
Wholesale trade: +11K
Third, the Trump/Xi summit at the end of March was put off by China. Word is China is afraid Trump will scuttle the whole deal as most of the concessions, we are told, are on the US side.
What is the effect? Frankly, companies are leaving China as soon as they find another place to make their goods. This simply buys more time for them to move. I personally am tired of buying poor quality goods made in China -- we remodeled a home and the screws from China are terrible; you pay more in labor using them than paying up more for quality screws. Just some anecdotal evidence.
AMZN: Suddenly stopped buying from suppliers for the 'fulfilled by Amazon' products. The Amazon Market business is $250B, twice the size of the Amazon website fulfilled. There is true panic among the suppliers who have mountains of inventory acquired to meet the monthly Amazon purchases. Turning against those who built AMZN into a monopoly of sorts? Fascinating.
Bonds: 2.632% versus 2.641%
EUR/USD: 1.1245 vs 1.11910
USD/JPY: 110.94 vs 111.483
Oil: 55.16, -1.50. Quite a haircut
Gold: 1297.10, +11.00. Jumping on the global data.
As you can see, LOTS of data for the market to absorb, and right now futures are right at the session lows in a steady decline that accelerated as the jobs report piled on top of the other news.
Looks as if the indices will indeed test the 50 day EMA and they may indeed bounce today from that level to some degree. We will watch the quality of that bounce and those names noted last night (GOOG, FB, INTC, ISRG, etc.) and see how deep they test and what levels/support they hold on the close.
Jon Johnson, Chief Market Strategist
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