Market Commentary

» Posted by on Apr 4, 2019 in Announcements, Shop Talk, Uncategorized | 0 comments

Stocks are steady this morning ahead of President Trump’s scheduled meeting with Chinese Vice Premier Liu. Reports circulating show the U.S. will continue to keep punitive tariffs in place on China to help ensure they follow through with their promises.

Traders might also be pausing a moment ahead of tomorrow’s monthly employment number. The consensus among insiders is that 160,000 new private-sector jobs were created in March. There’s some talk and debate that non-Manufacturing jobs may have pulled back a bit as the non-manufacturing purchasing managers index fell slightly in March from February. Which could create more headwinds than expected in employment numbers.

These are jobs in the “services” sector i.e. retail stores, waiters, cooks, hotel workers, transportation, etc… Despite the weaker than expected data we’ve still seen overall growth for 110-straight months. That’s almost crazy to think about.

Something else I should remind everyone, the “services sector” accounts for more than +80% of all private-sector jobs, at the same time “services” make up two-thirds of all consumer spending, so the “services sector” is vitally important!

The monthly data from payrolls firm ADP was release yesterday and showed the private sector hiring in the U.S. slowed for the second month in a row, hitting its slowest pace in 18-months.

Many employers, especially those in the service sector are saying they simply can’t find any additional workers, so growth is somewhat suspect and muted. There’s also talks that businesses are starting to hire a bit more cautiously.

Small businesses with fewer than 20 employees also weakened a bit as of late.

Keep in mind, Q1 corporate earnings season is right around the next corner with several of the big banks scheduled to report next Friday.

Bears are wondering about “growth” and specifically how corporate America is going to hold up under shrinking margins?

Remember, several big-name U.S. corporations in the past couple of weeks have already come out and issued profit warnings for the first quarter.

Bulls point to the fact several headwinds from Q4 earnings have eased and subsided i.e. no government shutdown, and improved winter weather. I’m not really on the same page with the improved weather, as I thought the winter, especially in January, February and early-March were extremely difficult in many parts of the U.S.

I’m also wondering about the big U.S. corporations that rely heavily on overseas earnings for growth. Earnings from those corporations might be starting to show more signs of stress or at least a slowdown in growth? It’s going to be a very interesting Q1 earnings season!

The big weeks for earnings reports will be the third and fourth weeks of April. There’s very little in the way of fresh economic headlines today.

Most all eye will be on U.S. and Chinese trade negotiations, continued talks in Washington involving the Mexican border, and tomorrow’s monthly employment report.

 

 

 

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