Attention turns to US jobs data as geopolitical headlines flip... again

00:00:00: Hi everyone and happy Friday, it's Friday the eighth of May.

00:00:03: We could have woken up to news that the Iran War is over but no!

00:00:08: Tensions revolved again yesterday, sending crude prices rebounding a little bit... Not too much, but uncertainty creeps back in.

00:00:16: And as we keep turning round and around on Middle East headlines today's US jobs report will give a hint at whether investors are starting to reflect central bankers' rising concerns about inflation with price pressures increasingly taking over the job data in shaping market expectations or not?

00:00:36: We'll discuss all that before we do... Please keep in mind that opinions are my own and this is not financial advice.

00:00:55: What a week it has been!

00:00:56: And its not even over just yet.

00:00:58: A real roller coaster started with renewed Middle East tensions, remember?

00:01:02: On Mondays sending oil prices up to one hundred and fifteen dollars per barrel level.

00:01:07: then Tensions, Ease & Markets breathed a sigh of relief thanks the US unwillingness escalate tensions and Euphoria kicked in on news that if an appeased proposal came to table Meanwhile this weeks most closely monitored earnings went extremely well to say the least.

00:01:25: Chipsocks really don't better than expected.

00:01:27: results from Samsung and AMD primarily, NASDAQ renew record after a record And good mood got sugarcoating From the falling sovereign yields as falling oil prices also pulled inflation expectations lower around globe and softened central bank's policy forecasts.

00:01:45: But all of sudden, surprise!

00:01:47: The potential Iran deal headlines get replaced by the news that US struck military targets in Iran after the country fired on three navy destroyers sailing in the strait of Hormuz naturally suggesting that we're back to square one.

00:02:03: So a U.S.

00:02:03: square rebounded past ninety eight dollars per barrel level and is consolidating just below the ninety seven dollar per barrel mark at the time I'm talking here, while brands could settle as above the one hundred dollar per battle level of the time.

00:02:16: i am taking care.

00:02:17: The price action is not reflecting on going risk-of oil shortage to full extent in my opinion.

00:02:23: maybe news that some ships made it through this trade off hormones this week by going black so by turning off their navigations, but some charts that start creeping in are much less encouraging than that.

00:02:35: I have in mind the opinion to fill reserves looking like a nose-diving player into summer vacation.

00:02:41: So here we are again Friday morning and we have no idea how the situation will evolve.

00:02:46: but the track record of past two months is not really promising.

00:02:51: And friday closes always quite a critical moment as the US tends to make decisive moves during their NO-MARKET HOURS TO GIVE INVESTORS TIME TO DIGESS THE INFORMATION, THE NEWS AND HOPEING TO KICK VOLTILITY down to Monday, which I eventually drawn out bad news with encouraging often unfounded announcements and hoping that the markets would rally.

00:03:15: And it's got to marry to work.

00:03:17: quite well because since the start of the war in Iran this MP-Five hundred has hit fresh record highs nine times if my count is right.

00:03:25: And you know what?

00:03:26: The US futures are again in the positive this morning at a time I'm talking here.

00:03:31: On learnings, worldwide world pulls warnings.

00:03:33: that record law of sentiment due to the Iranian war and doubling off gas prices Plunge demand for appliances to a level that the company says could lead to recession-level industry decline doesn't show the same enthusiasm than their earlier technology earnings.

00:03:54: The stock plunged twelve percent yesterday, but the technology heavy S&P five hundred was just too busy flirting with fresh old time high levels.

00:04:02: oh well Anyway, we have one more thing to watch before this week's closing bell and that is the US Jobs Report.

00:04:09: The U.S economy has been in a stage of low hiring with latest jobs data suggesting that the slowdown isn't as bad as it was feared.

00:04:18: Earlier this week, remember?

00:04:20: ADP report printed lower than expected job additions of around one hundred nine thousand but number didn't sound alarming either!

00:04:29: And well, the data certainly got diluted in the middle of more exciting war and technology earnings headlines.

00:04:35: The headlines will remain busy with geopolitical tensions today but today's official jobs data from US still deserves some attention.

00:04:42: The median forecast on the latest Bloomberg survey points at sixty five thousand new non-farm job additions in U.S that investors expect during last month with a rebound an average wages growth from three and half to three point eight percent year-on-year.

00:04:57: now those who watch these episodes regularly know That I repeated several times earlier this week, that estimates regarding the jobs performance diverged remarkably right.

00:05:08: Some expect the US jobs market to have added a significantly lower number of jobs last month, or during these months compared thousands of job costs that we hear from the big technology names and other names as well due to AI replacement, and also ongoing immigration struggle in the US.

00:05:28: While others predicts that massive spending we are talking about hundreds or billions of USD will create jobs and should limit at least the AI related slowdown!

00:05:39: So it'll be interesting where data learns today... As for the market reaction, I would expect a set of stronger than expected figures to keep the Federal Reserve Hawks in charge off-the-market without necessarily taming their equity appetite.

00:05:54: Because the latter will likely depend on war headlines or just nothing.

00:05:58: so let's go high!

00:05:59: That a set of softer than expected jobs figures could revive the dovish Fed expectations and give further support to equity valuations, if of course war headlines leave some reaction space too investors.

00:06:12: And wages growth remains reasonable.

00:06:15: by reasonable I mean figure in line an ideally softer then basis while uncertainty about oil prices remains very, very high obviously.

00:06:26: And this last part is important because some Fed members are growing more concerned about the inflation outlook than the health of jobs market.

00:06:35: This a notable shift compared to pre-Iran War narrative and that change from worrying about softening labor markets to worrying over heating price pressures puts inflation data front and center, and that includes the wages data while making jobs data.

00:06:53: The headline NFP number somewhat secondary when it comes to guessing the feds next move.

00:06:59: so let's keep our fingers crossed.

00:07:01: best outcome for the market would be relatively strong job additions with a relatively softer wages growth.

00:07:08: speaking of good data lets end this episode.

00:07:11: Bank of England officials are apparently worried that the UK's economic data looks just too good to be true, and more importantly it may send a misleading signal to markers making setting monetary policy even trickier than what is already with Middle East jitters.

00:07:29: In fact first quarter graph numbers have consistently come in strong since two thousand twenty-two only to fade later this year.

00:07:38: It probably has to do with the consumer behavior and post-COVID spending habits, it is said.

00:07:44: And that's all I announced today.

00:07:45: then find a way to iron out their numbers for seasonally adjusted numbers be consistent.

00:07:51: If that patern repeats again, the Bank of England could end up tightening monetary policy more than necessary in its fight against inflation and into a more rapidly deteriorating economic outlook for the UK.

00:08:03: then early year data suggests.

00:08:05: No well... That doesn't sound great for The British Pound!

00:08:08: That has been bumping it's head against a one-thirty six, one thirty seven offers against US seller And there have persistently wakening against Euro as being left to the west.

00:08:21: mercy doesn't pay well these days but there's still a hope that the Middle East war comes to an end and everything gets better.

00:08:28: So let's hope for the best, be prepared FOR THE WORST!

00:08:42: This episode of Market Talk has been helpful and it's insightful to you.

00:08:47: So please, do not hesitate to leave your comments, reactions or questions below as usual!

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00:09:11: so let us know that you enjoy them.

00:09:13: So I will meet again next week, until then good day trading.

00:09:18: have a lovely

00:09:34: weekend!