Goldman forecasts nonfarm payroll growth of 215k in September, above consensus expectations of 200k by about 0.3 standard deviations of a typical surprise. Noting that August payrolls were likely distorted downward by seasonal bias last month and may be revised up, Goldman expects the unemployment rate to remain flat at 5.1% (and earnings growth to slow). Howver, judging by the collapse in September's regional Fed surveys, today's "most important" payrolls data ever could be a massive miss.
With China markets closed for holiday until the middle of next week, and little in terms of global macro data overnight (the only notable central banker comment overnight came from Mario Draghi who confidently proclaimed that "economic growth is returning" which on its own is bad for risk assets), it was all about the USDJPY which has seen the usual no-volume levitation overnight, dragging both the Nikkei higher with it, and US equity futures, which as of this moment were at session highs, up 7 points. The calm may be broken, though, as soon as two hours from now when the September "most important ever until the next" payrolls report is released.
As Bloomberg reports, "JPMorgan Chase & Co. is set to pay almost a third of a $1.86 billion settlement to resolve accusations that a dozen big banks conspired to limit competition in the credit-default swaps market, according to people briefed on terms of the deal."
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Given the fact that for the first time since the recession, manufacturing has added zero jobs this year, that ADP just saw a drop in manufacturing jobs, Markit reports September US Manufacturing PMI has stagnated for the last 2 months at 2 year lows (printing 53.1 final vs 53.0 prelim). Worst still, and confirming even further the demise of the US manufacturing "renaissance", the Employment sub-index dropped to 50.8 - the lowest since June 2013. As Markit sums up, "The Fed is therefore likely to keep an open mind as to whether tighter policy is appropriate given current economic conditions and await a clearer idea of the health of the economy in the fourth quarter."
Good news! Bad news is again great for stocks, and overnight we had just the right amount of bad news from Japan, China and Europe to send stocks surging on the first day of the final quarter.
While the official "data" was bad, and confirmed the economy remains in contraction, the Caixin - aka the new HSBC - Markit PMIs were absolutely atrocious. We bring you... the HSBC Manufacturing print, which dropped from 47.3 to 47.2, and which according to Caixin was the lowest print since March 2009. And it was the combination of this and the non-mfg PMI that told the full tale: at 48.0, the Caixin Composite index dropped from 48.8, down from 52.3 a year ago and was the lowest print on record.
After widespread weakness in global (yes and US) manufacturing PMIs, US Services PMI dipped in September (after 2 months of modest bounce back). The pace of expansion slowed to three-month lows with service sector confidnce close to its lowest in three years. This latest print indicates a slowdown in overall new business growth for the second month running, which brought the pace of expansion down to its weakest since January. Prices dropped for the 2nd month in a row and Markit warns that "various warning lights are now flashing brighter, meaning growth may continue to weaken in coming months."
The market, which clearly ignored the glaring contradictions in Yellen's speech which said that overseas events should not affect the Fed's policy path just a week after the Fed statement admitted it is "monitoring developments abroad", and also ignored Yellen explicit hint that NIRP is coming (only the size is unclear), and focused on the one thing it wanted to hear: a call to buy the all-critical USDJPY carry pair - because more dollar strength apparently is what the revenue and earnings recessioning S&P500 needs - which after trading around 120 in the past few days, had a 100 pip breakout overnight, hitting 121 just around 5am, in the process pushing US equity futures some 25 points higher at last check.
Palladium surged 6% yesterday. The move appeared to be a short squeeze and may be the precursor for the long awaited move higher in gold and silver.
On the heels of dismal China manufacturing data (worst PMI since March 2009) and mixed-to-weaker European data, US Manufacturing PMI printed a September preliminary 53.0 (flat from 53.0 in August and modestly better than expectations of 52.8). This is the equal lowest print since Oct 2013. Underlying components are mixed (factory prices dropped for first time in 3 years and new orders and employment slowed), but, confirming what Yellen told us last week (that the US economys is to fragile to handle a 25bps rate hike), Markit notes, "the sluggish growth, weaker forward-looking indicators and downturn in price pressures all point to the Fed holding off with rate hikes until next year."
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US Futures Surge Nearly 30 Points To Overnight Highs After Tumbling On Worst Chinese Data In 6 YearsSubmitted by Tyler Durden on 09/23/2015 06:55 -0400
In many ways, the overnight market has so far been a reversal of yesterday, when a stable Asia session (with China stocks rising) gave way to a European tumble which in turn dragged the US lower.
The good news: the collapse in global market cap since May of 2015 is not the worst ever.
The bad news: the $9 trillion drop in combined market cap between the MSCI All World index and Chinese stocks, is the second highest ever, surpassed only by the $13 plunge in global market capitalization in late 2008.
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