OCTOBER’S JOBS REPORT SURPRISED ON THE UPSIDE

October’s labor report surprised on the upside.  Both non-farm and private sector payrolls exceeded expectations, average hourly met expectations as did average hourly hours worked.  It is evident higher wages are at helping employers fill near record job openings.  The labor participation rate however remained unchanged at 61.6% versus a 61.7% estimate.

As widely noted federal expanded unemployment benefits for 7.5 million people ended in early September.  The throngs of workers that are expected to return with the expiry of these benefits is still not materializing.  There labor force is still 4.5 million people smaller than February 2020 as the LPR remains stuck around August 2020’s level.

Friday the JOLTS Job Openings is released.  As noted many times, the number of job openings are near or at record levels.  How will this data correlate back to the BLS statistics?

The OPEC + narrative is starting to rise. When last week Biden pressed OPEC + to bring oil prices down with a large output hike, he warned of consequences if the Cartel rejected his appeal stating “What we are considering doing on that, I am reluctant to say before I have to do it.”

Will it reach a fevered pitch?  Perhaps Bloomberg placed today’s environment into the proper perspective when the newswire wrote “For President Biden, the easy part was threating a response.  Now comes the tougher challenge of delivering one.”

What tools does he have at his disposal?  It is widely accepted that the release of oil from the Strategic Reserves provides only short-term benefits.  Thursday crude traded about 2% lower on this possibility only to recover losses and then some on Friday.

There are more radical options that include a ban of American oil exports to encouraging American lawmakers to pass legislation that would allow the US to sue OPEC for acting as a cartel to defying his party by reversing the Green Agenda and encourage the financing and exploration of oil in the US.

Bloomberg notes US oil production has declined from 13 million barrels in early 2020 to around 10.5 million today, a level that is projected to decline further given the President’s agenda to make lending to the oil industry prohibitively expensive, a policy that was endorsed in a communiqué from the last week’s climate conference.

As noted many times Green Proposals are popular but Green Policies are expensive and very difficult to implement.

One oil global consultant stated “The President is in one hell of a tough spot.”

What will happen this week?  Will it be as significant as last week and be called “The Sequel of What a Week?”

This week the economic calendar is comprised of several inflation indices, the JOLTs Job Openings, a sentiment survey as well as inventory data.  How will the data impact psychology?

Last night the foreign markets were mixed.  London was up 0.01%, Paris up 0.17% and Frankfurt down 01.5%.  China was up 0.20%,  Japan down 0.35%  and Hang Seng down 0.43%.

The Dow should open choppy on the approval of a Congressional spending package.  Oil is up about 2% as natural gas is surging in Europe as Russian President Putin reneged on its pledge to send more supplies to Western Europe.  This decision coupled with OPEC action amplified by the Administration’s tentative plans to close a major pipeline from Canada is suggesting that prices might not decline in the intermediate future.

 

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