Market Recon Friday (Jobs Day)

Good Morning,
                        Want some good news ??  The Chinese PMIs beat expectations…. all three of them.  the government number, the Caixin (formerly HSBC) number, and the service sector number.  Hooray…. the Shanghai Composite, though up just a smidge today, is close to the only green on my screen this morning.  Unfortunately for the rest of planet Earth, Japan is the bigger story, and that tale is a sad one.  Between, last night’s disappointing Tankan numbers (both manufacturing & non-manufacturing missed badly), and the Industrial Production number that we saw on Tuesday night, Japan is quite simply… a mess.  Mix that in with the uncertainty that markets always feel ahead of a US jobs print, and last night’s shaky US close (which, btw, you had plenty of heads up on) …and you have the recipe for some risk-off behavior.  For better or worse, market sentiment will likely be drastically altered at 08:30 this morning.
                        Gang, I apologize for the long note today, there is just so much macro that you have to be cognizant of.  I try to make my notes quick reads, but today…. it’s better to be prepared.  With that said…change your socks, drink some water…and let’s go.
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Employment Situation (March) released at 08:30 ET
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Non-Farm Payrolls: Today, we look for something close to 203K jobs created, down from February’s 242K, but comfortably within the range of 175K to 250K that does not change the macro narrative.  This is the single most important print within this release that traders will focus on….it is also where your knee-jerk in the futures market will come from.   A huge miss to the down side will likely rattle that macro story, and a huge beat to the plus side will put a hawkish accent on recent Fed comments.  The latter scenario ramps the US dollar.  Both of those cases could at least for today, hurt equity prices.  Traders want a stable number.
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Average Hourly Earnings:  After January’s impressive rise in this space, February’s surprise contraction really hurt…. not so much because a small decrease came after a large increase, but because the print so badly missed consensus expectations.  Today we try again, with most economists looking for a 0.2% m/m increase.  Some are actually looking for more.  Another surprising contraction here will be taken very poorly.  Fingers crossed.
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Average Hourly Workweek: This is a backdoor way for wage growth to reveal itself.  You may not give them a raise, but if they can at least work more, the velocity of money still gets a boost.  We are indeed expecting a slight increase in this space to 34.5 hours.  This print is somewhat tertiary as far as traders are concerned.
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Participation Rate:  We have seen mild improvement for this data-point of late.  At last glance, February came in at 62.9%, up from the horrendous 62.4% prints of a few months back.  A surge in this space, even if it brings with it… an increase in headline Unemployment would likely be considered a real positive by everyone involved.  Not the stuff that knee-jerk reactions are made of, but squarely within focus by the time equities open.
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Unemployment Rate:  I know some folks disagree with me, but I consider this number obsolete in the modern era.  The BLS will tell you that Unemployment is at, or near 4.9%.  Gallup told you yesterday that it was 6.0%.  How many folks not currently participating would take a job, if they could find one that paid something even sort of close to what they used to make is completely unknown.  We just know that there’s a lot of folks out there that fit that description.
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Underemployment Rate:  Many consider this release (U-6) to be closer to a more realistic unemployment rate than the headline rate (U-3), but this rate, although it includes those working part-time because they are unable to find anything else is probably still inaccurate.  The BLS printed this item at 9.7% in February.  Yesterday, Gallup’s Underemployment Rate printed at 14.5%.  At least they’re only five percentage points apart.  Not much room for error there.
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Other Macro
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All Day
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Total Vehicle Sales (March): Vehicle sales are well off of the torridly hot pace seen in late 2015.  That said, the numbers that we are seeing in early 2016 are in this guy’s opinion…still very good.  This, and the expected Q1 strength in Discretionary earnings (the one bright spot) are the best indicators we have of a consumer that is still active.  We look for an annualized rate of 17.6 million units, our fourth consecutive month in the mid-17 millions.
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09:45 ET
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Markit Manufacturing PMI (March):  Given what’s headed your way 15 minutes later, you can probably let this one pass.  Most traders will.  For those who have their eyes on everything, this one flashed at 51.5 this month, and that is what is expected here.
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10:00 ET
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ISM Manufacturing Index (March): This very closely focused upon macro-economic data-point has been mired in contraction for four consecutive months, but today, my friends… there is hope.  When the regional Fed districts printed their manufacturing data for March, New York (just barely), Philadelphia, and Richmond (easily) all printed above the Mendoza line.  Today, economists are looking for something like 50.6 for this item.  There are outlier views out there as high as 54.  This one could surprise to the up.
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U of M Consumer Sentiment (March) [f]: The mid-month release for this item printed at an even 90, which was the lowest print in this space for the better part of 2016.  However, the Conference Board’s Consumer Confidence release beat expectations handily on Tuesday of this week, and now they’re all juicing their expectations.  Consensus is now around 90.9, which is actually close to the bottom of the range.  The possible skew here is seriously higher.
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Construction Spending (February):  The feeling is that February was a tough month for Construction Spending, which may be a mild surprise in itself, given that January was the rougher month for New Home Sales.  Look for some growth here but not much, maybe 0.2% m/m, off from the month prior’s pace of 1.5%.  Though important, given the time of day, the staleness of this data, and what it’s competing against for attention, this item likely gets overlooked today.
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13:00 ET
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Baker Hughes Rig Count (Weekly):  This item will not be overlooked.  The rate of decay for total rigs (Nat. Gas & Oil) in this space finally slowed last week.  The US count dropped just 12 to 464, and in the Gulf of Mexico, they actually added one.  Canadian rigs however continued to drop in dramatic fashion, by 14 to just 55 operating rigs.  This release has been, at least lately…. moving the price of Crude about as much as Wednesday’s inventory print.  What that means… is if you’re trading Energy, Financials, or Transports, you have to stay sharp.
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Friday’s Earnings Highlight
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Before the Open: BBRY (-.10)
After the Close:  Lent is over….. Nachos, yes a disgusting, nasty plate of nachos.
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Weekend Note:  Batman may be up against Superman… I still don’t understand why those two want to fight, but more importantly….  The Dark Knight takes on the World Champion KC Royals this Sunday evening.  Let’s go Mets.