Friday saw a quite a quite shocking miss on US Non-Farm Payrolls of just +20k, but the number needed to be seen in context of an exceptional January print (revised up to 311k) and weather-related hits to the likes of the construction sector (e.g. the Household Survey, from which the unemployment rate is calculated not non-farm payrolls, reported that the number of non-farm workers unable to work because of the weather was some 160k above the average of the last 10 Februarys). I should also note that at 186k, the 3-month average is still more than enough to keep downward pressure on the unemployment rate. Indeed, this fell by 0.2% to 3.8% so back close to the cycle low of 3.7% witnessed in Q4 2018. Equally, or perhaps even more significant, average hourly earnings rose by 0.4% (0.3% expected) too see annual growth lift to 3.4% from 3.2%. This compared to the 2018 increase of 3% and 2.6% in 2017. The Phillips Curve may be much flatter these days, but it is not completely flat, at least judging from these numbers.
To mark my 1800th issue of TraderNoble Daily Commentary I am offering a special 2 year rate of Euro 2750 for my Platinum Service which includes 1 to 4 updated emails throughout the trading day To demonstrate this value, a monthly subscription over the same period would cost 4440 euro in total This offer represents a 38% discount and is open to both new and existing members. If anyone is interested in this offer can you please email me on bryan@tradernoblecom for details
For anyone following my Platinum Service it made 209 points on Friday and is now ahead by 242 points for March, having made 1013 points in February, 1671 points in January, 2803 points in December, 1541 points in November and 2094 points in October. Since I started this New Platinum Service in June 2015 it has averaged a monthly gain of over 1600 points
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The ‘’ as yet unanswered’’ question for the Fed here is whether higher wages will translate into higher prices (or will it just result in lower margins?) and if it does, will the Fed resume tightening later this year or next? Fed chair Jay Powell <https://www.federalreserve.gov/newsevents/speech/powell20190308a.htm > gave a speech on Friday which reiterated the ‘’patient’’ and ‘’wait and see’’ mantra than now characterises almost all Fed-speak. But he also indicated that there was a high bar to adopting a new policy framework that seeks to embrace so called ‘’make-up’’ strategies that compensate for periods of sub-target inflation by aiming to achieve above-target inflation for a while such that the target is met on average over time. Such a policy might work in theory, but there is as yet no example in the real world of it working in practise, Powell noted. Expect ‘’evolution not revolution’’ was his conclusion.
US stock markets did not like the payrolls miss (or perhaps it was, as per the foregoing, also the strong earnings number and so concern that that slower growth/stronger wages combo will be bad for margins?). The S&P fell over 0.8% at the open, extending the earlier fall in the Futures Index, but then proceeded to eke out gains during the NY afternoon to close down just 0.2% down. Energy was by far the worst performing sector (-1.95%) after Norway’s Sovereign Wealth Fund announced that it was planning to disinvest from upstart (i.e. exploration-centric) oil and other fossil fuel companies.
US bond markets did not do too much with the employment report (the Powell speech was after Friday’s close) with Treasury yields about 1bps lower on average (10s ending at 2.628%)
In FX, the data also took the edge off the US Dollar’s post-ECB rally from Thursday that had seen the DXY index revisit its Q4 2018 highs (97.7). From 97.5 pre-payrolls, DXY sipped to 97.3 post the data and held the loss though the Ney York session.
Most G10 currencies closed higher against the softer USD led by NZD (+0.74%) and AUD (+0.41% to 0.7039 after a low of 0.7004 in late Sydney trade and following Friday’s China much worse than expected February trade numbers (but which were not quite so bad when looked at over January-February and bearing in mind Lunar New Year distortions).
EUR/USD pulled up to 1.1230 (+0.37%). CAD was +0.3% post strong employment data, while Sterling bucked the trend, down over 0.5% on fading hopes for UK PM May’s Withdrawal Agreement getting passed by parliament this Tuesday. It has also opened sharply lower this morning.
In Commodities, oil prices were 1% lower (Brent) and -0.8% (WTI) with the Norway news seemingly playing more to the ‘’peak oil demand’’ view than concerns about reduced future supply from less investment in oil exploration.
Base metals, iron ore and steel futures were all lower with the exception of aluminium, as too was steaming coal (-2%).
This morning on the Economic Front we already had the release of German Industrial Production which again came in weaker than the +0.5% expectation with a print of -0.8%. America moved their clocks forward by one hour over the weekend and as a result for the next three weeks all US Market Opening/closing and their Economic data will occur one hour earlier. At 12.30 pm we have Retail Sales. Finally at 2.00 pm we have Business Inventories.
March S&P 500
My S&P plan worked well on Friday with the S&P trading lower to my 2729 buy level after the NFP was released before rallying to my 2735 revised T/P level. This morning the S&P is trading higher at 2751 as yet again the buy the dip wins. Subsequently after my 2735 T/P level was executed I emailed my Platinum Members to re-buy the S&P at 2724 before unfortunately covering this position way too early at 2726.50 and I am now flat. The S&P has resistance from 2770/2782 and today I will be a small seller in this area with a 2789 tight stop. I will again look to buy the market on any dip lower to 2725/2735 with a 2718 stop.
As I wanted to be flat ahead of the NFP I covered my latest 1.1223 long position at a breakeven. This morning the Euro is a touch higher at 1.1240 as so far the key 1.1150/1.1190 support level is holding. Today I will be a small buyer on any dip to this area with a 1.1115 stop.
March Dollar Index
At the same time I exited my long Euro position I also covered my 97.40 short Dollar position at 97.36 and I am still flat. Today I will again look to sell the Dollar on any further move higher to 97.60/98.00 with a 98.35 stop.
I am still flat the DAX which fell short of my 11360 buy level on Friday. Today I will raise my buy level to 11345.11405 with a 11285 stop. I still do not want to be short the market at this time.
Shortly after I posted on Friday the FTSE traded higher to my 7115 T/P level on my 7100 latest long position and I am still flat. With Sterling continuing to weaken the FTSE will be a buy on dips. Today I will again look to buy the market from 7070/7110 with a 7035 stop.
Dow Rolling Contract
My Dow plan worked well with the market trading lower to my 25270 buy level before rallying to my revised 25340 T/P level and I am now flat. Late Friday the rally continued with the market hitting a closing high of 25510 before selling off overnight on the weakness in Boeing shares, following the tragic crash in Ethiopia. On Saturday the Bull Market for the US Stock Market reached its 10th Anniversary that started on March 9, 2009. It is already the longest in history and the first bull market to last 10 years. A recent Wall Street Journal article by Alan Blinder who pointed out that only two economic expansions since 1854 have lasted longer than 100 months. And none have lasted more than 120 months. If the current expansion lasts into July, it will be the longest in history. They say bull markets and economic expansions don’t die of old age. But old age usually brings most things closer to the end. There is no doubt that a recession in the US is close by and I would certainly expect this to happen over the next 6/12 months. The Dow has strong support at 25200 and today I will again look to buy the market from 25120/25250 with a 25030 stop.
My NASDAQ plan also worked well with the market trading lower to my 6950 buy level before rallying to my revised 6975 T/P level and I am now flat. Today I will again look to buy the NASDAQ on any dip lower to 6940/6990 with a 6895 stop.
No Change as I am still a seller on any rally higher to 165.10/165.60 with a 165.95 stop.
Gold Rolling Contract
Finally Gold rallied to my 1297 T/P level on my 1296 long position with a 1301 high print and I am still flat. Today I will again look to buy Gold on any dip lower to 1278/1288 with a 1271 stop.
Silver Rolling Contract
Frustrating Silver again missed my buy level by one cent before having a strong rally on Friday. Today I will now raise my buy level to 14.80/15.15 with a 14.45 stop.