Today's payrolls report was so bad, that it blew right through the "just bad enough" category, and failed to even register as good news for stocks and algos, which would otherwise have sent markets surging as the number defecated on the grave of any future rate hikes and brought the moment of QE4 that much closer.
Needless to say Wall Street was confused, if not shocked, by today's unexpectedly ugly report (even if, as we reported ahead of the number, the whisper was for a far worse print). However, that does not mean Wall Street was speechless, and as the following hot takes reveal, research analysts and other sellsiders had quite a bit to say about the number, with some saying it was truly ugly, others saying to ignore it, and a third group saying it was, what else, Goldilocks and they are not surprised at all.
- Kristina Hooper, chief global market strategist at Invesco:
“The February jobs report was abysmal in terms of non-farm payroll but we have to put it in the context of incredibly strong January nonfarm payrolls. However, that is not going to be solace to investors, who have been put on alert by dramatic changes in monetary policy stances by first the Fed and then the Bank of Canada and most recently the European Central Bank. This jobs report will only amplify market worries.”
- Sameer Samana, senior global market strategist for Wells Fargo Investment Institute.
“If the weakness continues next month and there’s no revision to this month, it’s a meaningful deceleration in the outlook for the labor market. Given what happened in the fourth quarter, it could be that companies now are at this point at least deciding to really curtail hiring. If there’s going to be all these uncertainties around trade, politics, possibly taxes as we head into the 2020 election cycle, it could be corporations are going look, ‘I really need to in a more meaningful way start to prepare for the next downturn.”
’“It’ll probably put downward pressure on stocks, it’ll probably put downward pressure on interest rates. For the dollar, we’ll have to wait and see, but Europe is pretty weak too, so it could be overtime the dollar continues to do OK. And then you’re starting to see gold do better and that’s probably a two-part concern. One, it’s probably concern about a slowdown, and then two, it’s at least speculation around when and if central banks may become even easier. We’re at patient right now, but it could be they start to shift from patient to possibly cutting. Again, way too soon to make that switch, but that’s what the gold market is telling you.”
- Alec Young, managing director of global markets research at FTSE Russell
“February’s anemic 20,000 new jobs will inevitably exacerbate widespread fears of slowing economic growth, making it harder to be optimistic about corporate earnings. Meanwhile, the 3.4% year-over-year jump in wages represents a growing threat to profit margins. All in all, there’s little in this report to excite investors.”
- Chad Morganlander, portfolio manager at Washington Crossing Advisors:
“There jobs numbers are noisy because the government shutdown, but it’s clear that the U.S. economy is moderating. You’re seeing this push-pull between dovish monetary policy and deteriorating economic trend. Economic fundamentals will eventually win out, and investors are aware of that. Growth rate decelerates, housing data shows a break in growth, geopolitical concerns are not going away, and investors will wake up to that and sniff out higher recession possibilities.”
“The world is interconnected with a deceleration of growth on a global basis will start to spill over into U.S. You will probably start to see more economic data not looking good in the course of the next several quarters. Yet you haven’t seen a substantial drop in earnings revisions, where they take the expectations to negative. We would fade the risk-on trade at this point, a great amount of news is backed in, from dovish monetary policy to potential deal on trade.”
- Jim Paulsen, chief investment strategist at Leuthold Weeden Capital Management.
“There’s enough in the internals of this report, I think, to calm traders down on this number ... It’s not like people weren’t expecting job creation to slow down, so I think that it’s not that shocking that maybe it is a little bit, but if you average out the payroll number and the household number, it comes in at a fairly decent gain.’’
“It will become a neutral report here, and that’s what we’re getting around this market right now. We’re getting a mixed bag of bad reports and good reports...at the end of the day, the most you can say out of all of this data is the economy has slowed, which we know, but it’s probably not falling off a cliff, which is also an important part of this. So I think the stock market reaction is not a lot, it was already down quite a bit before this report came out, it hasn’t moved a lot more. I think as the day wears on, it’s going to have more to do with the failing at 4 times at 2800 on the S&P and technicals than it will about these reports.’’