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The December Jobs Number May Really Be The "Most Important Ever"
Everyone has heard the phrase "this is the most important jobs report ever", and virtually every time this has been an exaggeration. However according to an analysis conducted by BofA's Vadim Iaralov, the nonfarm payrolls report on December 4 (a day after the just as critical ECB announcement, but more importantly 12 days before the Fed's "historic" December 16 "rate-hike" announcement) may just indeed be the most important jobs number. Ever.
Here is why, according to Bank of America:
With the much-anticipated 16 December FOMC meeting around the corner, the 4 December US non-farm payrolls (NFP) is one of the most important remaining data points. The significance of recent NFP surprises in driving asset prices has been increasing since summer 2014 and is near historical highs.
We last observed this pattern of market behavior during the 2004-2006 Fed hiking cycle, suggesting this relationship exists due to market expectations for rate policy normalization.
During the previous hiking cycle the importance of NFP surprises rose ahead of the first hike and continued to rise until the end of the hiking cycle. Despite high anticipation for the next Fed hike, the importance of the employment report could remain elevated even after the initial liftoff. This relationship is particularly pronounced now as the Fed has adopted a data-dependent stance, and each NFP report will likely continue to play a key role in informing the path of subsequent Fed policy decisions.
The importance is actually quite simple: if the report is a solid beat, and if the Fed beats, that means that the stronger the economy, at least as measured by the jobs report, the steeper the rate of hikes will be, the more negative the impact on risk assets. Perhaps this is why so many sellside firms have been setting the stage for a "newer normal" in which a monthly increase of 100,000 jobs is actually warmly greeted by the Fed, even if in reality it means that the US economy is actually stagnating and barely covering the natural rate of growth.
So what does this mean for various asset classes:
In past hiking cycles, financial assets all became more correlated to NFP surprises heading into the initial hike as the market began anticipating Fed policy changes. Currently, the importance of NFP surprises is elevated for USD pairs and rates, but low for equities.
This is an important divergence from the previous hiking cycle when all three asset classes exhibited consistent reactions to NFP surprises. Historically, on positive surprise days, dollars and equities rallied while rates sold off.
Here is something surprising: according to BofA "Currently, equities are unsure of how to react to a December rate hike."
And it all goes back to what we have been warning about for a few months now: if the Fed hikes, it would be a policy error, one from which the Fed may not recover:
One possible explanation for this divergence is that a December hike would take place at a time when global growth has been slowing rather than accelerating. World GDP YoY growth has been declining since 1Q14, whereas it was increasing during the 1999 and 2004 hikes. Another potential reason is the hike could disturb global imbalances from years of zero-interest rate policy. For these reasons, the risk of a policy mistake is greater than during previous hiking cycles.
None of which makes the December NFP any less important, however it does mean that just like the Fed's taper announcement in 2013, and the Fed's "hawkish" announcement which sent stock surging, the market reaction to next Friday's jobs report will have some solid support from the trading desk located on the 9th floor of Liberty 33, and, of course, its ancillary market spoofing division in Citadel.
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Enough with the hikes. Not happening ever.
Every US statistic is massaged to meet the needs of Wall Street. So the December jobs number will ensure that the rally rolls on.
Officially, the unemployment rate is 5%. John Williams of Shadowstats says it is 23%. Does anyone trust the US BLS numbers?
looking at todays PCE, I noticed that Healthcare premiums ar enot included in CPI, but are included in PCE. Every govt data point is tainted if for no other reason its a survey.
If we want to know why retail sales are taking a beating, its because rents are up big, healthcare is up big, and taxes are up big. Quality of jobs is down pretty big.
The consumer is getting squeezed and that goes across the spectrum from the lower end to a pretty high level. One issue is the upper end does not want to admit it if they lost their jobs or lost bonuses or if their family owned business is seeing declining sales and margins. At the upper end you have to act as if nothing bad is happening. Kid of like the govt, you do it til you actually run out of cash. The rationalization is its only temporary.
not this time.
The jobs number is what ever Jannet tells you it is mister, dont think you will find any truth going forward. (smarty-sarc)
It will be. Until January.
Oh puhlease!
All this hand wringing, skinny shit taking, asinine data, massaged more than Olga at a rush hour Stockholm bathhouse.
It's a FUCKIN QUARTER POINT!
...and these fucks are hesitating....
AMAZING that the majority of the populace can't connect THE FUCKIN DOTS
I use this ONE sentence to make the dumbed down blink and their eyes glaze over (especially the Obama taint lickers)....no come back;
"GEE - IF THE ECONOMY WAS RECOVERING/THINGS ARE GOOD...THEN THEY WOULD RAISE RATES WITH NO PROBLEM...."
stumps them....
There will be a rate increase when its time to pull the plug...I don't think the bankers are ready for that..it will take them awhile longer to steal everyone's money first...one wild card tho...the word "confidence"..... If the economy can't handle .25 interest rate hike then that says volumes in itself
I predit a number that is not good enough to raise rates, and yet not so bad it makes the administration look bad. What finally breaks everything is when people finally lose confidence in all the phoney numbers.
True Bluntly, But the propaganda presstitutes will be working overtime to keep confidence high. We know their jobs, if not their lives, depend upon it.
Job Number good --> S&P booms
Job Number bad ---> S&P booms
Job Number ok ----> S&P booms
It's what policy tools do: go unidirectional.
Regardless, there won't be a rate increase; the derivatives markets depend on that. (and there are still many days and current tinder for a false flag of epic proportions til the Fed meets).
Look at the big picture: if the Fed cocks it all up resulting in a major crisis, it will be a great argument for getting rid of the Fed. After all, how else do you think such a thing will ever be accomplished?
Fred: hey I just got a raise and doing well financially.
Mortgage banker: that's good but we have to raise your mortgage rate .25%. You mortgage is currently 1000 dollars per month, it will. Now be 1025 a month.
Fred: that will bankrupt me.
Mortgage broker: its only 25 dollars more, I thought you were doing well.
Fred: I lied.
The abysmal December "jobs report" may be a relevant part of the reason no rate hike occurs in December, but the liars at the fed like to mix-it-up.
So more likely the number one excuse to keep rates at zero will be abysmal xmas sales through mid-December.
That plus "recent increased terrorist activity" perhaps.
I kind of like the market goes up or down because the FED did not raise rates or will raise rates, but the trend is upward regardless of the "news". Confused yet; that is the goal.
Jobs are a lagging, not a leading economic indicator.
It's a fucking 1/4 point. Jesus H. Christ. At least the fed is almost Shariah compliant.
What's so important about the December jobs report? Just like all the others it will be as phony as a three dollar bill.
December jobs number +my dipshit neighbor having basement jacuzzi parties+ booze= GDP.
Just fudge, and triple re-hypothecate the figures.
Welcome to Brazil & Argentina bitchez.
And once it is seasonally adjusted four way to sunday it will be the perfect jobs number they wanted.
What a month to raise rates.
You want markets to be settled for consumer spending so they don't hoard their money. At the same time there is a benefit to a rate rise.
I would have to agree this jobs report is exceptionally important given the context - and the consequence.
The bets on this rate rise hike are going to be big.
I would hate to be the person calling the shot on this one - it is one hell of a big call, possibly one of the largest for a very long time.
We can bitch out Yelin all we want but nobody wants to be in her shoes this month.
OK then Yellen might surprise with a 1 basis point rise instead of 25 basis points. She at least raised 'em.
that will keep everyone happy in LA LA land. Oh and where the Hell is my lunatic medicine.
They can't raise rates without adding an unacceptable growth to the FED balance sheet and will kill the bond carry trade (that would kill the worlds markets); won't and can't raise rates unless they are ready for the grand finally. A major US false flag would have to accompany any such move; so watch Chicago and look for a mushroom.
People aren't STUPID, they just don't take the time to think before they act...
complete BS, nov.-dec. jobs data is always skewed, because of holiday hiring.
so the bls can go back2 months and readjust for the next 6months, 8 months if it snows.
we'll never see an accurate jobs # from bls as long as I'm alive, same for cpi.
if your going to invest on what the bls, or cpi are going to report, take that money and buy lottery tickets, or donate to your choice of tax-deductible org's.
"Currently, equities are unsure of how to react to a December rate hike."
Perhaps they should ask the algos.
trading desk located on the 9th floor of Liberty 33
Those numbers again. 33, 3x3=9, SPX recent bottom 666.
The Dow is magnetized to 17760. Does that mean anything?
obama told us to buy stocks at the bottom. Will he tell us when to sell?