A big part of the problem were those employment numbers out of the US on Friday. Atrocious apparently, and well below forecasts. Yet not really bad at all for mine. All the news flow – apparently straight from the Fed’s media relations department – was all about how Bernanke got it right with all his worry about the jobs market. Things really are terrible after all! Ohh, the schadenfreude.
Except they’re not. A total of 120,000 jobs were created – and after a very strong run of jobs growth that’s not a bad result. Numbers bounce around after all, and in any case, payrolls have a habit of being revised up. One ‘disappointing’ jobs number after six months of forecasts being blitzed, means little.
The momentum was overwhelmingly negative though and US equities were sold from the open, hitting a low soon after. The index retraced some from there but not much and at the bell, the S&P was down 1.1 per cent (1382). All sectors ended weaker but industrials, financials and basic materials were the key dead weights – off 1.4-1.6 per cent. The Dow then finished 1 per cent weaker (12929), the Nasdaq also fell 1 per cent (3047), while the SPI was 0.5 per cent weaker (4315).
US treasuries didn’t do much overnight, but then again they’ve already done so much! We’re talking a basis point or so for the 2-years and 5-years (down to 0.31 per cent and 0.903 per cent) and maybe 2 basis points on the 10-years to 2.04 per cent. Having said that, moves from Thursday afternoon are huge and the 5-year and 10-year yields are down about 15 and 20 basis points respectively with a good chunk of that after the weaker payrolls report.
In the forex space we haven’t really seen very much action at all. The Australian dollar is little changed from Thursday at $US1.0314 at the time of writing, while the euro is probably a bit weaker at $US1.3114, although that’s up 50 pips for last night's session. Sterling then sits at $US1.5903 which is pretty much the same as where it was Thursday. The Japanese yen is at $US81.57, down from 82.36 on Thursday. Finally the, gold is at $US1640 up about $US9 from Thursday but little changed overnight. Then WTI is off $1 for so to $102.3 – again, little changed overnight.
So, turning to the day ahead. The main news releases for Australia include ANZ jobs ads and NAB’s monthly business survey. Confidence we know is terrible in Australia, currently well below average with seemingly few prospects for a significant improvement. I’m not really sure then what to expect from the numbers today. Not much I guess. For mine nearly all our problems are psychological. Our metrics are excellent. Truly excellent and I know I’m sounding like a broken record – but – domestic demand was at it’s strongest in 4 years last year!
But as we all know it doesn’t feel like it. And yes, as regular readers will know, I lay some of the blame for that at the feet of a handful of lazy business leaders who are trying too hard to influence macro- economic policy settings. Who blame policy settings for their own business failures, their lack of vision and strategy. You know the old saying – a poor workman etc. that’s not to mention the carbon tax and the fact that the whole country pretty much wants a new election now. There is a very serious crisis of leadership across the spectrum.
Elsewhere abroad we see German trade and French industrial production figures and then US data includes small business optimism, job openings and wholesale inventories/sales – all lower tier data. That’s the big stuff I think.
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