The U.S. Market demolishes previously made estimates while renewing wage gains and record lows in unemployment
The market may have been down the tubes last Friday, but data collected by our market analysts indicates that we are actually doing very well.
Some of the highlights of the most recent jobs report:
· Estimated payroll estimates of 190,000 were blown out of the water, reaching nearly 250,000
· October saw an increase of manufacturing jobs that reached over 30,000
· Unemployment remained at 3.7%, which is the lowest point since ’69.
· Hourly employees saw a pay increase of 5 cents per hour
While all this news is fantastic, the wage growth is what really surprised the economists. Since the recession in 2008 wage growth had hit a plateau. This is the first sign of life we are seeing in a while. In October alone, hourly salary increased by 3.1%, growth the likes of which we haven’t seen for nearly 10 years.
Traders remain reserved, despite the sunny outlook
The pain of October’s 11% crash is still wince-worthy for many a trader, alongside Apple’s disappointing Q3 Earnings Report saw the market stagnate. Friday’s losses nearly caused the market to breakeven from the gains the previous day. While some progress was seen in the late afternoon, there was no clear sign of the buying continuing into the following week.
A PNC analyst named Jeff Mills stated for CNBC’s Squack Box that “significant technical damage” was felt by all significant U.S. Equity markets and that more damage was still on the horizon.
“We broke through the 200-day moving average pretty significantly,” Mills said, “so you think about other corrective phases like 2011, 2015 where we did the same, and it took a while to work back through that volatility.”
He goes on to observe that during both instances, the 200-day moving average acted as a limit, preventing stocks from reaching greater highs.
Cornerstone Macro’s technical analyst, Carter Worth, had more to say on October’s market fall, stating that a total drop of 22% was probable.
Three Killjoys that Have the Potential to Ruin Last Week’s Rally
The bull market may be sprouting some gray hairs in its old age, but there are signs that it could go longer and higher., That being said, if any of the following events were to occur, that may no longer be the case.
The Fed Hiking Rates in December: These Halcyon Days in the market may be coming to the end in the light of the Federal Reserve raising its rates. The days of easy money may be over as the Federal Reserve continues to raise rates and shrink its balance sheet. They swiftly intend to hit a target of 3% as early as 2019 with the impending hike in December as fuel for market panic.
Abandon Hope All Ye Who were Counting on the G20 Summit: Trump stands at the ready to put hundreds upon billions of dollars in tariffs into motion, likely causing the Chinese to retaliate in kind. The G20 Summit happening in Buenos Aires near the end of November serves as the last great hope for the market bulls. Without some sort of compromise the U.S. market could plummet and China could see the beginning of its next Great Financial Crisis.
Another FANG Bloodbath: FANG stocks skyrocketed in 2016 and 2017, however, they may have peaked this year. Apple’s attempt to pull the wool over investor eyes by raising prices to cover slow sales may be what does FANG in, potentially taking the market with them.