What’s up here???

08:31
July Trade Balance -$39.5 bln vs -$43.0 bln Briefing.com consensus
08:30
August Average Workweek 34.3 vs 34.5 Briefing.com consensus
08:30
August Unemployment Rate 4.9% vs 4.8% Briefing.com consensus
08:30
August Nonfarm Private Payrolls 126K vs 175K Briefing.com consensus
08:30
August Nonfarm Payrolls 151K vs 180K Briefing.com consensus; Prior revised to 275K from 255K
08:30
August Average Hourly Earnings M/M +0.1% vs +0.2% Briefing.com consensus

Courtesy of Briefing.com

With the exception of the July Trade Balance all these numbers are bad.

Below is a chart of the SPY pre-market movement this morning.

blog spy 5m 9-2-2016

The large (huge) candlestick at seven thirty CDT occurred when the reports came out.

Let’s start with the fact that expected consensus numbers are what the market reaction is keyed to.

Average Workweek came in at 34.3 versus consensus of 34.5.

Unemployment rate was 4.9 versus consensus of 4.8.

Nonfarm Private Payrolls were 126K versus175K.

Nonfarm Payrolls were 151 versus consensus of 180.

Average Hourly Earnings Month over Month were 0.01 versus consensus of 0.02.

All were worse than expected. So why the big rise in the market?

Remember all the chatter from the FED (Federal Reserve) and their various governors in the last month or so about finally pushing through an interest rate hike. This had become the consensus of the market. Things were looking up and a rate hike was long overdue. As most of you know higher interest rates are a drag on a higher market because of the higher cost of borrowing money which raises the cost of doing business.

The report this morning sharply reduced the chances of an interest rate hike in the near future. The change in expectations is the reason the market popped 120 points this morning.

Dave C

 

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