CLOSING BELL CON PETER CARDILLO 11-30-21
November 30, 2021
Wall Street opens up, then turns around, skeptical of US jobs report
December 7, 2021NEW YORK, Dec 3 (Reuters) – U.S. employment increased far less than expected in November, likely as millions of unemployed Americans remained home despite companies boosting wages, generous jobless benefits expiring and schools fully reopening.
Nonfarm payrolls increased by 210,000 jobs last month, the Labor Department said on Friday. Economists polled by Reuters had forecast payrolls advancing by 550,000 jobs. Data for October was revised up to show employment rising by 546,000 jobs instead of 531,000 as previously reported. The unemployment rate dropped to 4.2%, the lowest since February 2020, from 4.6% in October. Wages increased further.
MARKET REACTION:
STOCKS: S&P e-mini futures extended slight gains and were up 0.22%, pointing to a steady open on Wall Street
COMMENTS:
JOSEPH LAVORGNA, AMERICAS CHIEF ECONOMIST, NATIXIS, NEW YORK
“On one side you got weak employment, slightly slower wages, a rising work week. So the job market is slowing but income growth is decent because people are working more hours. On the other hand, you’ve got the labor market tightening, unemployment dropped, and employment soared. That would suggest you’re operating beyond full employment, which we kind of knew.”
“If you’re looking at the trend in payrolls thinking that we’re going to moderate from here, that’s not going to argue for tightening sooner. On the other hand, if you’re looking at just the labor market, and the tightening of both the U3 and U6, that would support tightening sooner. I’m not sure which way the Fed is going to lean on this.”
JIM PAULSEN, CHIEF INVESTMENT STRATEGIST, THE LEUTHOLD GROUP, MINNEAPOLIS
“Underneath the headline of the payroll number there’s a pretty strong jobs report here.”
“The household gain is the biggest monthly household employment gain since Oct. 2020. I think that’s why you see the stock market up and bond yields barely changed.”
SAMEER SAMANA, SENIOR GLOBAL MARKET STRATEGIST AT WELLS FARGO INVESTMENT INSTITUTE IN ST. LOUIS
“It was a solid number. We wouldn’t get too hung up on the headline miss. The unemployment rate and under employment rate keep ticking down. Average weekly hours and the participation rate keep ticking higher all of which suggests that there’s additional demand for labor and workers have decent bargaining power when accepting new offers.”
“This doesn’t do anything to derail the fed from a faster taper. I’m not sure there’s anything here that would change their mind.”
“There’s nothing here that would suggest the laobr market is backtracking, despite the headline miss.”
THOMAS HAYES, MANAGING MEMBER, GREAT HILL CAPITAL LLC, NEW YORK “With this jobs report it may give them (the Fed) pause to say ‘ok we don’t have to accelerate in December. We can give it another few weeks until we have better data from Omicron and we know what we’re dealing with.’ They can keep ahead with their taper timeline but accelerating at this point in an information vacuum where we don’t have all the information on Omicron is irresponsible and hasty.”
“The numbers are obviously a big disappointment and the market is up because the market is now anticipating the Fed can’t be so quick.” “They’re (the Fed) getting a little bit too aggressive on their taper timeline, and possibly the rate hike timeline. Hopefully this short term miss should get them to reconsider going out at more modest pace, maybe sticking with their original taper timeline over six or seven months.”
BRIAN JACOBSEN, SENIOR INVESTMENT STRATEGIST, ALLSPRING GLOBAL INVESTMENTS, MENOMONEE FALLS, WISCONSIN
“The headline number missed lofty expectations. Retail hiring wasn’t as robust as in the past. Non-seasonally adjusted, retail added more than 300,000 jobs, but after seasonal adjustments it lost 20,000. Average weekly earnings for the private sector were up 4.8%, which isn’t keeping up with inflation, so there’s no wage-price spiral developing. There’s a large divergence between the household survey and establishment survey where the household survey showed employment increasing more than a million. The household survey is a smaller sample than the establishment survey, but this could point to more positive revisions in the months ahead. September and October were revised higher, so the trend is still in a healthy direction.”
PETER CARDILLO, CHIEF MARKET ECONOMIST, SPARTAN CAPITAL SECURITIES, NEW YORK
“It’s a market that’s healing, but healing at an uneven level. The reason we have the drop in unemployment is people dropping out the workforce and that’s not a good sign. This is significant, in that the if Fed abandons its full employment standard – which they probably will due to wage inflation concerns – it means that even though this is a disappointing report, the Fed is not likely to alter its accelerated tapering pace and could begin raising rates in the second quarter.
“The bottom line is it’s a disappointment.”
“But if you look at yesterday’s jobless claims it suggests that the overall jobs market is not as bleak as perhaps today’s numbers suggest.”
“From that perspective, that makes this report disappointing but not terribly weak.”
JIM VOGEL, INTEREST RATE STRATEGIST, FHN FINANCIAL, MEMPHIS, TENNESSEE
“Right now, people are sorting through the really good numbers in the household survey, and for now they are reducing their emphasis on the big payroll miss. It’s not completely unusual for the official business survey to be a bit wonky and that’s why we’ve seen so many upward revisions and that’s part of the feel. We are trading not only the payroll number this morning, but we are still trading Powell’s confident expression that tapering is a good idea from Tuesday, and we’re working on the premise that they’ve come to some pretty firm conclusions regardless of fourth quarter data.”
JJ KINAHAN, CHIEF MARKET STRATEGIST, TD AMERITRADE, CHICAGO
“So we’re going to have the unemployment rate fall by 0.4% but miss on the top line number – something doesn’t add up. As I was looking through the sectors, the sectors that don’t truly make sense to me are leisure and hospitality up so small and retail being down, which is very odd for this time of year. So I’m wondering if we are going to see some revisions going forward on those two because those just don’t add up with everything else I am seeing. Because you did get some strong numbers out of warehousing again, which is great, professional services, construction, manufacturing – all the areas you want to see growth we are seeing it, which is fantastic.”
“The futures seemed to like it, that top-line number, maybe people are thinking that although Powell talked this week about the taper maybe this slows the pace or slows them starting it.”
“Pretty significant revisions in September – 67,000 more, October 15,000 more. Something is very odd about this report.”
“The rally here may be top line related but when you add that top line with the employment rate it is hard to square the circle so we’ll see if the buying momentum can last off of that. There are two other things at work – the volatile week in general, this could be a little momentum from yesterday. And two weeks from today is quadruple witching, we also have the end of the year coming up, so you do have people already starting to adjust their portfolios in a bigger way.”
Source: https://www.reuters.com/business/view-us-november-payrolls-rise-falls-far-short-2021-12-03/
