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Market Commentary Tomorrow the all inclusive unemployment data is released Tomorrow the all inclusive unemployment data is released. Consensus is estimating an 184,000 increase in nonfarm payrolls, the largest advance since March 2007. Is this number realistic?
Yesterday’s release of the private ADP Employment survey suggested the private sector lost an additional 23,000 jobs in March. Even thought this was fewest amount of jobs lost in two years, consensus was expecting a 40,000 increase in workers. However as penned many times, the correlation back to the national BLS survey is weak at best.
The ADP survey has consistently under estimated the amount of private sector jobs created (or lost) by a large margin. For example as recently as November, the ADP miscounted by 151,000 workers. The last 3 months it has miscalculated by around 20,000.
Referring back to the original question, is an 184,000 increase in nonfarm payrolls realistic? Perhaps the only conclusion that one can make is that the odds of an upside surprise is reduced. Tomorrow equity markets are closed for the Good Friday holiday. The bond market is however open but ranks will be thinned thus suggesting if the data was indeed a surprise the reaction could be exacerbated given the dearth of participants.
Today is also a major data day as the ISM Manufacturing, initial jobless claims, domestic vehicle sales, construction spending and Challenger job cuts are released. All data could potentially impact prices.
Commenting briefly upon yesterday’s market action, stocks declined moderately for a myriad of reasons…sovereign debt woes, domestic fiscal concerns, earnings and economic fears. I think the market is ripe for profit taking ahead of tomorrow’s unemployment data where traders will be unable to react to the data until Monday. Also earning season starts next week. Will results again exceed expectations? Consensus is expecting a 28%-29% increase in profits.
Last night the foreign markets were up. London was up 0.60%, Paris up 1.04% and Frankfurt up 0.89%. Japan was up 1.39% and Hang Sang up 1.40%.
The Dow should open moderately higher on global economic news suggesting the recovery is gaining momentum. The 10-year is off 7/32 to yield 3.85%. The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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