Best of the Week
Most Popular
1. Gold vs Cash in a Financial Crisis - Richard_Mills
2.Current Stock Market Rally Similarities To 1999 - Chris_Vermeulen
3.America See You On The Dark Side Of The Moon - Part2 - James_Quinn
4.Stock Market Trend Forecast Outlook for 2020 - Nadeem_Walayat
5.Who Said Stock Market Traders and Investor are Emotional Right Now? - Chris_Vermeulen
6.Gold Upswing and Lessons from Gold Tops - P_Radomski_CFA
7.Economic Tribulation is Coming, and Here is Why - Michael_Pento
8.What to Expect in Our Next Recession/Depression? - Raymond_Matison
9.The Fed Celebrates While Americans Drown in Financial Despair - John_Mauldin
10.Hi-yo Silver Away! - Richard_Mills
Last 7 days
Junior Gold Mining Stocks Setting Up For Another Rally - 22nd Jan 20
Debt the Only 'Bubble' That Counts, Buy Gold and Silver! - 22nd Jan 20
AMAZON (AMZN) - Primary AI Tech Stock Investing 2020 and Beyond - Video - 21st Jan 20
What Do Fresh U.S. Economic Reports Imply for Gold? - 21st Jan 20
Corporate Earnings Setup Rally To Stock Market Peak - 21st Jan 20
Gold Price Trend Forecast 2020 - Part1 - 21st Jan 20
How to Write a Good Finance College Essay  - 21st Jan 20
Risks to Global Economy is Balanced: Stock Market upside limited short term - 20th Jan 20
How Digital Technology is Changing the Sports Betting Industry - 20th Jan 20
Is CEOs Reputation Management Essential? All You Must Know - 20th Jan 20
APPLE (AAPL) AI Tech Stocks Investing 2020 - 20th Jan 20
FOMO or FOPA or Au? - 20th Jan 20
Stock Market SP500 Kitchin Cycle Review - 20th Jan 20
Why Intel i7-4790k Devils Canyon CPU is STILL GOOD in 2020! - 20th Jan 20
Stock Market Final Thrust Review - 19th Jan 20
Gold Trade Usage & Price Effect - 19th Jan 20
Stock Market Trend Forecast 2020 - Trend Analysis - Video - 19th Jan 20
Stock Trade-of-the-Week: Dorchester Minerals (DMLP) - 19th Jan 20
INTEL (INTC) Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 18th Jan 20
Gold Stocks Wavering - 18th Jan 20
Best Amazon iPhone Case Fits 6s, 7, 8 by Toovren Review - 18th Jan 20
1. GOOGLE (Alphabet) - Primary AI Tech Stock For Investing 2020 - 17th Jan 20
ERY Energy Bear Continues Basing Setup – Breakout Expected Near January 24th - 17th Jan 20
What Expiring Stock and Commodity Market Bubbles Look Like - 17th Jan 20
Platinum Breaks $1000 On Big Rally - What's Next Forecast - 17th Jan 20
Precious Metals Set to Keep Powering Ahead - 17th Jan 20
Stock Market and the US Presidential Election Cycle  - 16th Jan 20
Shifting Undercurrents In The US Stock Market - 16th Jan 20
America 2020 – YEAR OF LIVING DANGEROUSLY (PART TWO) - 16th Jan 20
Yes, China Is a Currency Manipulator – And the U.S. Banking System Is a Metals Manipulator - 16th Jan 20
MICROSOFT Stock Investing in AI Machine Intelligence Mega-trend 2020 and Beyond - 15th Jan 20
Silver Traders Big Trend Analysis – Part II - 15th Jan 20
Silver Short-Term Pullback Before Acceleration Higher - 15th Jan 20
Gold Overall Outlook Is 'Strongly Bullish' - 15th Jan 20
AMD is Killing Intel - Best CPU's For 2020! Ryzen 3900x, 3950x, 3960x Budget, to High End Systems - 15th Jan 20
The Importance Of Keeping Invoices Up To Date - 15th Jan 20
Stock Market Elliott Wave Analysis 2020 - 14th Jan 20
Walmart Has Made a Genius Move to Beat Amazon - 14th Jan 20
Deep State 2020 – A Year Of Living Dangerously! - 14th Jan 20
The End of College Is Near - 14th Jan 20
AI Stocks Investing 2020 to Profit from the Machine Intelligence Mega-trend - Video - 14th Jan 20
Stock Market Final Thrust - 14th Jan 20
British Pound GBP Trend Forecast Review - 13th Jan 20
Trumpism Stock Market and the crisis in American social equality - 13th Jan 20
Silver Investors Big Trend Analysis for – Part I - 13th Jan 20
Craig Hemke Gold & Silver 2020 Prediction, Slams Biased Gold Naysayers - 13th Jan 20

Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

US Payrolls Signalling Recession and US Interest Rate Cut

Economics / US Interest Rates Oct 03, 2008 - 04:04 PM GMT

By: Ashraf_Laidi

Economics Best Financial Markets Analysis ArticleSeptember payrolls fell by 159K, worst decline since May 2007, while the unemployment rate held at 6.1%. Although unchanged, the unemployment rate is widely expected to breach above the 6.3% rate in coming months, which would be the highest jobless rate since 1994. Our long held base call of 50-bps easing before year-end is now completely priced in the market, with about 55% chance of the cut emerging before the October 29 meeting.


Retail Jobs Extend Losses Beyond 2001 Recession

Taking a closer look at sectors, retail jobs show their 10th monthly consecutive loss, exceeding the 8-month loss during the 2001 recession, which is resounding reflection of the corrosion to US consumers. As the wealth effect to the US economic engine (consumers) stalls further via the negative transmission from negative home equity, falling stocks and disrupted debt market, the blow to the US economy will be far greater than that of the 2001 recession, when the wealth effect was solely disrupted by stocks and not housing. The fed funds graph in the charts below shows the Fed's pause will be only temporary, just as was the 10-month pause in 2002 (circled period).

The September jobs report confirms the economic deterioration already signaled in recent reports, including the 6-year low in manufacturing ISM and the 4.0% plunge in factory orders. As in previous reports, today's employment figures avoid the catastrophic payrolls readings seen in 2001, when the 3-month moving average was upward (worst) of -250K. Payrolls' 3-month moving average falls to -111K from -80K. The pace of declines in payrolls has been markedly less than in the 1990 and 2001-2 recessions, but the rate of increase in the unemployment rate remains at the same pace with past recessions. The possibility of a 14-year high in jobless rate in next month's report, is expected to force the Fed's hand, especially that price pressures are beginning to be dragged by eroding pricing power.

Jobs Won't be Shadowed by Govt Intervention This time

As in the August jobs report, which was shadowed by the Treasury's announcement of the takeover of Fannie Mae and Freddie Mac, today's September jobs report may slip under the attention and optimism surrounding the House vote on the TARP bill. The role of market impact from these announcements has led to short-lived buying opportunities in equities and risk appetite, yet, not long enough for the fundamentals to re-assert themselves and trigger renewed selling in equities.

Dollar loses initial gains and drops against the high yielders mainly due to a rebound in risk appetite and the resulting rally in US stocks in anticipation of the TARB bill approval. The bulk of USD losses occurred in the run-up to the jobs report, before a recovery following the no change in unemployment rate. USDJPY to face resistance at 106.50, while the GBPUSD rebound is seen capped at $1.7850, a rally that is predominantly based on improved risk appetite. We expect renewed losses in cable back towards $1.7650 and onto $1.7580s as markets anticipate next week's rate cut from the Bank of England. EURUSD capped at $1.3860, but losses seen resurfacing back towards $1.3740 and onto 1.3680s. USDCAD support stands at 1.0750s, for a prolonged rebound towards 1.0820s.

By Ashraf Laidi
CMC Markets NA
AshrafLaidi.com

Ashraf Laidi is the Chief FX Analyst at CMC Markets NA. This publication is intended to be used for information purposes only and does not constitute investment advice. CMC Markets (US) LLC is registered as a Futures Commission Merchant with the Commodity Futures Trading Commission and is a member of the National Futures Association.

Ashraf Laidi Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules