🥵🔥 Job Market Stays SIZZLING
Welcome to the Sunday Primer,
Hope you had a good week. Markets closed in the green which is a good sign going forward (we take our wins where we can get them at this point). As always, we have a ton to cover and brief you on for the week ahead. Let’s get to business.
- Humphrey, Rickie & Tim
Market Report
This past week, a gauge of U.S. manufacturing activity fell to a two-year low and missed median estimates as indicators point towards softening demand. The index for new orders also fell for the third time in four months. Definitely signs of economic slowdown.
We also got signs of labor market resiliency. Nonfarm payrolls rose 263k in the month of September (this was below analyst expectations, and the slowest monthly gain in nearly 18 months), but the unemployment rate fell again which suggests that labor demand remains exceptionally strong and that the Fed will go further with rate hikes.
After the jobs data, the market began pricing a higher chance of the Fed raising rates by 0.75 percentage points next month, rather than a smaller hike that some were hoping for.
Forecast Ahead
Economic Data (Throughout Week)
September Inflation Report (Wednesday & Thursday, October 12th-13th)
Consumer prices are projected to have risen 0.2% last month, compared with a 0.1% gain in August. On an annual basis, headline CPI inflation is expected to have moderated slightly to 8.1% in September and core CPI inflation is projected to have accelerated somewhat to a 6.5% annual rate, up from 6.3% in August.
G20 Financial Stability Crypto Meeting (Wednesday & Thursday, October 12th-13th)
Next week could be a big one for crypto as the G20’s Financial Stability Board will unveil plans to regulate the crypto and decentralized finance industries at the G20 meeting in Washington.
Big Bank Earnings (Friday, October 14th)
Many big banks will be reporting earnings next week. While financials usually perform well in a rising rate environment, recession fears have pushed the financial sector lower this year (-18% YTD vs. S&P 500 -23% YTD). Investors will be watching investment banking activity, refinancing demand, and other consumer loans as rates continue to rise.
Corporate Earnings (Throughout Week)
October 12th - PepsiCo (PEP)
October 13th - Taiwan Semiconductor (TSM), Delta Air Lines (DAL), BlackRock (BLK), Walgreens (WBA), Domino’s Pizza (DPZ)
October 14th - JPMorgan Chase (JPM), Morgan Stanley (MS), Citigroup (C), Wells Fargo (WFC), UnitedHealth Group (UNH)
What We Read Last Week
How Hidden Risks at Pension Funds Almost Toppled Britain’s Bond Market (BBG)
Credit Suisse Eyes Outside Money for Investment Bank Spinoff (BBG)
A Fed Pivot Is a Long Shot. Why Powell Won’t Come Riding in on a White Horse. (Barron’s)
Elon Musk’s Revived Twitter Deal Could Saddle Banks With Big Losses (WSJ)
Holiday Deals Are Here. Retailers Want You to Buy Earlier Than Ever. (Barron’s)