Reports » US

US stock market, economy and companies update (September 07, 2012)

Contributed by Trade The News

- Equity markets are responding calmly to today's August payrolls disappointment, thanks mostly to yesterday's ECB bond news, the Chinese stimulus news and the realization that the news practically guarantees QE3. The payroll numbers were brutal, with the headline nonfarm, private and manufacturing numbers all widely missing expectations. The overall unemployment rate fell to 8.1% but the decline was for all the wrong reasons, mostly due to unemployed individuals dropping out of the workforce. Analysts believe that jobs data assures some sort of easing announcement at the FOMC meeting scheduled for Sept 12-13. A Goldman Sachs note suggested that Fed officials will agree to unsterilized, open-ended bond buys, and Goldman economist Hatzius put the probability of a QE3 launch at next week's meeting above 50%. Some commentators highlighted the chances for a big September number, asserting that employment is a lagging indicator and pointing out that the year-ago August payrolls figure was zero, which was followed by a +103K figure in September 2011 (that crushed expectations). The dollar index is headed for four-month lows after the data on broad USD weakness, with EUR/USD at three-month highs above 1.2770 and USD/JPY trading below 78.30.

- China's NDRC expanded upon recent infrastructure spending announcements, adding 13 roadway projects to the 25 urban transit projects approved yesterday. The total investment outlined over the last two days amounts to CNY1.0T or $157B, or roughly one quarter the size of the 2008/09 stimulus plan. Note that this comes just days before the big August data dump out of Beijing, heightening fears about what the numbers may say about the state of the Chinese economy. Recall that since April, the government has also approved a number of other infrastructure projects, including several airport and energy developments. Today's news sent the Shanghai Composite up approximately 4%, taking it off recent three and a half-year lows. Various commodities futures are surging on the China news.

- Intel slashed its Q3 revenue guidance and withdrew its FY12 forecast this morning. The company warned that revenue was weak due to flagging demand in a challenging macroeconomic environment, with customers reducing inventory in the supply chain at a time when they usually increase inventory. Intel also said emerging market demand, an area of strength cited by numerous other IT firms, is slowing.

- Shares of cult stock Lululemon are up nearly 7% this morning in the wake of its Q2 report. Earings and revenue were more or less in line with expectations and the firm also boosted its FY12 forecast. Note that there were some questions about how much a one-time tax benefit helped the firm meet targets and boost guidance. Shares of supermarket giant Kroger are down slightly after the firm's revenue came in slightly soft and its FY12 guidance boost was a bit softer than expected. Amazon continues to gain this morning following their big tablet roll-out yesterday, with shares of AMZN up 3%. Pandora is down 18% on a press report that Apple is building a competing streaming music service.

***Looking Ahead***
- 11:40 (CA) Bank of Canada Gov Carney speaks in Calgary

***Economic Data***
- (CL) Chile Aug CPI M/M: 0.3%e v 0.0% prior; Y/Y: 2.6% v 2.7%e; CPI Ex Perishables & Fuel M/M: -0.2%e
- (CL) Chile Aug Trade Balance: -$843M v -$350Me; Total Exports: $5.9Bt v $6.1B prior; Total Imports: 6.7B v $6.2B prior
- (CL) Chile Aug Copper Exports: $3.0B v $3.3B prior
- (RU) Russia Q2 Preliminary GDP Y/Y: 4.0% v 4.0% prior
- (PL) Poland Aug Official Reserves: $103.5B v $102.3B prior
- (US) Aug Change in Nonfarm Payrolls: 96K v 130Ke; Change in Private Payrolls: 103K v 142Ke; Change in Manufacturing Payrolls: -15K v +10Ke
- (US) Aug Unemployment Rate: 8.1% v 8.3%e; Underemployment Rate: 14.7% v 15.0% prior; Change in Household Employment: No est v -195K prior
- (US) Aug Avg Hourly Earning M/M: 0.0% v 0.2%e; Y/Y: 1.7% v 1.9%e; Avg Weekly Hours: 34.4 v 34.5e
- (CA) Canada Aug Net Change in Employment: +34.3K v +10.0Ke; Unemployment Rate: 7.3% v 7.3%e; Full Time Employment Change: -12.5K v +21.3K prior; Part Time Employment Change: +46.7K v -51.6K prior; Participation Rate: 66.6 v 66.5%e
- (CA) Canada Q2 Labor Productivity Q/Q: -0.4% v +0.1% prior
- (CA) Canada July Building Permits M/M: -2.3% v -2.5% prior
- (BE) Belgium Q2 Final GDP Q/Q: -0.5% v -0.6% prelim; Y/Y: -0.3 v -0.4% prelim
- (MX) Mexico Aug Consumer Prices M/M: 0.3% v 0.3%e; Y/Y: 4.6% v 4.5%e; CPI Core M/M: 0.3% v 0.3%e
- (CA) Canada Aug Ivey Purchasing Managers Index: 62.5 v 59.0e; PMI Unadj: 65.2 v 58.8 prior
- (MX) Mexico Central Bank leaves the Overnight Rate unchanged at 4.50%; as expected
- (UK) Aug NIESR GDP Estimate: -0.2% v -0.2% prior