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거시경제 및 지정학

Employment, Earnings & Trade Momentum Ease Market Fears

2019년11월8일 - 4 분 읽기

Labor market seems in good health, earnings continue to beat expectations and a trade deal could occur in December.


Employment is Better Than it May Seem: The October employment report showed that the U.S. labor market is in even better health than consensus thought. Payrolls rose 128,000 in October and the previous two months were revised up a net 95,000. Job gains in October were weighed down by the United Auto Workers strike and the layoff of temporary Census Bureau workers—lowering the headline by a combined 66,000 jobs over the month. Adjusting for this, underlying three-month average job growth is clocking in just shy of 200,000—well above the rate needed to keep pace with growth in the working-age population. The UAW strike also weighed on average hourly earnings, which gained .2% M/M and 3% Y/Y in October, as the higher-wage manufacturing workers were off payrolls, resulting in a downside compositional bias. The September JOLTs report showed that while hiring slowed amid a tightening labor market, the number of open positions exceeds the number of unemployed, qualified workers are becoming increasingly hard to find, and workers remain confident about job prospects.

3Q19 Earnings: Approximately 87% of the S&P 500 has reported earnings with revenues up 3.6% Y/Y and earnings down 1% Y/Y, according to Bloomberg. So far the biggest positive earnings surprises have come from Information Technology, Health Care, and Consumer Discretionary. About 76% of the companies that report in the current season for the Stoxx 600 have announced results, with sales up .7% Y/Y and earnings up .5% Y/Y. So far, both sales and earnings have surprised to the upside. 

"Phase One” Deal Delay: The “Phase One” trade deal may now be delayed until December. Despite recent positive market reactions to a deal, a long delay would be a risk to the downside. After the APEC Summit, where the meeting between President Donald Trump and President Xi Jinping was originally scheduled to take place, got canceled, the two countries are struggling to find a new meeting location. China saw a quick turnaround in the partial trade deal as the best path forward for favorable terms. With a possibly much later-than-expected meeting, there is growing uncertainty surrounding the deal. Possible locations include London fallowing a NATO summit, Sweden, and Switzerland, among others, as Iowa seems to have been taken off the table.


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