Today is the release of the BLS employment survey.  The recessionary narrative rose yesterday as the Chicago PMI [manufacturing in the region] posted the lowest reading since 2015.  In my view a major reason for this decline is the GM strike and the issues surrounding Boeing.  I must write this is a minority opinion given the plethora of stories commenting about its weakness.

What I found interesting about the October survey, there were two “special” questions asked.  The first question was what impact do you believe the latest interest rate cuts have had on your firm’s business?  The majority (51.1%) expect no impact, while 31.1% state a positive impact.

The second question was about tariffs.  A majority of 56.5% noted little negative impact while 26% indicated a major negative effect.

There are a number of possible conclusions that can be made from the above data.  As widely known all harbor some type of confirmation bias.  There is never an “objective” view.  Data is picked to support one’s preconceived bias or narrative.

I will continue to believe the economy is stronger than the pundits suggests and I will hold this view until there is downturn in jobs, wages, and home prices outside of the largest markets.  Most measure their net worth by the value of their house, and job creation/rising wages support consumer spending.

Speaking of jobs at 8:30 the BLS Employment report is released. Consensus is expecting a 80k and a 85k increase in non-farm and private sector payrolls, respectively, a 3.6% unemployment rate, a 0.3% increase average hourly earnings, a 34.4% work week and a 63.1% labor participation rate.  It is widely expected the GM strike will impact the data.

Also released today is the ISM.  How will the data be interpreted?

Commenting about yesterday’s market action, equities fell on the weak Chicago PMI and renewed concerns over trade.

Last night the foreign markets were up.  London was up 0.31%, Paris up 0.41% and Frankfurt up 0.37%.  China was up 0.99%, Japan down 0.33% and Hang Sang up 0.72%.

The Dow should open nominally higher on better than expected Chinese manufacturing data but this could change dramatically if the data is different than the consensus view.  The 10-year is off 1/32 to yield 1.70%.


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