The US economy added 235,000 jobs in February, beating upward revised expectations of 200K, in-line with whisper exepctations of 233K. Last month's report was upward revised from 227K to 238K with the net addition for the past two months coming to +9K. The bottom line: the number is good enough for the Fed to hike next Wednesday.
European and Asian shares rise along with a jump in S&P futures which are pointing to a solidly green open on US payrolls day. The dollar, trading somewhat weaker against the euro was stronger against the yen, and was on track for its firth week of gains, while the rout in global Treasuries continued following a Mario Draghi conference that was interpreted as more hawkish than expected.
If wages disappoint for the second month in a row, then markets may begin to ease back their hiking expectations for the rest of the year. For markets to price out a rate hike in March, wage growth would probably need to slow markedly and the headline NFP number to fall well below 100K.
Leaving rates unchanged (no surprise) and maintaining his dovish forward guidance, Mario Draghi has a tough job this morning to paint a picture of a European economy with "downside risks" which means he has to keep buying everything while every asset-gatherer in the world is crowing of Europe's comeback (rising growth, surging inflation, falling unemployment). We are sure the ex-Goldman partner will find a way to justify "lower for longer."
In his latest webcast to DoubleLine investors, Jeffrey Gundlach echoed Hartnett, when he said that he expects the Federal Reserve to begin a campaign of "old school" sequential interest rate hikes until "something breaks," such as a U.S. recession.
"The dissonance between what I have been observing and what is being flogged by the establishment mouthpieces in the corporate mainstream media has never been greater. I’m 53 years old. The older I get the less sure I am about things I was sure about when I was 25 years old... I find it exhausting. We’re lost in a blizzard of lies."
Having taken a one month break since his latest February webcast, the time has come for DoubleLine's Jeff Gundlach to take the microphone again for his latest address to his investors (and everyone else) - titled this time "The Byrds", and hopefully provide some insight into this increasingly more confusing market.
It could well be that US investors are taking to heart the words of Oscar Wilde: “Anyone who lives within their means suffers from a lack of imagination.” US stock markets clearly do not have that problem at the moment.
With sales slumping because of the new Philadelphia sweetened beverage tax, bottling giant Pepsi said it will fire 80 to 100 workers, or about 20% of its total employees in the city. The layoffs come in response to the beverage tax, which has cut sales by 40% in the city.
"There is a threat of Le Pen winning the election" French president Hollande acknowledged and added that "my ultimate duty is to make sure that France is not convinced by such a plan" of taking the country out of the EU."
The key economic release this week is the employment report on Friday, which as Janet Yellen noted in her speech on Friday, is the only economic event (together perhaps with the CPI report on April 15), that could potentially derail a now practically guaranteed rate hike.