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What will traders be paying attention to? Like pretty much every first week of a given month, the big macro moment is the U.S. non-farm payroll report.
The post-lockdown U.S. jobs recovery should continue. An impressive 1.375 million U.S. job additions are expected, and a trip down to a 9.8% from 10.2% last month is what to look for from the Household Unemployment rate.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Japan’s PM Shinzo Abe Has Resigned
Shinzo Abe, Japan’s longest-serving premier and author of the signature shock-and-awe “Abenomics” stimulus strategy, has resigned for health reasons.
Sweeping to power in late 2012, Abe deployed his three arrows of Abenomics — large-scale monetary easing, fiscal spending and structural reforms — to reignite the world’s third biggest economy after years of sub-par growth and falling prices.
Japan watchers are split on its success. The central bank’s “bazooka” stimulus program improved business sentiment and weakened the yen, giving exporters windfall profits that trickled down to wages and new jobs.
But the country has also been sinking deeper into recession and Abe leaves behind a pile of unfinished business. Investors are keen to figure out who his successor could be and what this means for the legacy of Abenomics.
(2) Friday Brings a Non-Farm Payroll Report
Friday’s August non-farm payrolls will be a reality check on the devastation wreaked by the coronavirus pandemic on Main Street, even as Wall Street rallies to record highs.
Economists polled by Reuters forecast the U.S. economy created 1.55 million new jobs versus 1.76 million in July.
Weekly jobless claims hovered around 1 million last week, suggesting a labor market recovery may be stalling as the health crisis drags on, government support dries up and Congress remains gridlocked over potential new stimulus.
Jobs data is also in focus after Federal Reserve Chairman Jerome Powell rolled out a sweeping rewrite of its approach, saying the Fed would put more weight in bolstering labor markets. Meanwhile, the S&P 500 hit record highs — powered by Amazon, Microsoft and Apple — in a rally that has accentuated the divide between the blistering stock market and a still-badly damaged U.S. economy.
Slowing U.S. job growth and rising COVID-19 rates raise doubts on the recovery’s strength — in landmark shift, Fed changes approach to inflation and the labor market.
(3) We Get Fresh China PMIs
Fresh readings of China’s factory activity should provide a health check on the world’s second-largest economy.
The vast industrial sector is steadily returning to levels seen before the pandemic paralyzed huge swathes of the economy early this year.
Pent-up demand, stimulus-driven infrastructure and surprisingly resilient exports have been the main drivers propelling the rebound, but private consumption is lagging as consumers remain cautious about spending.
Signals point in the right direction. Industrial profits grew in July at the fastest pace since June 2018.
The official PMI, scheduled for Monday, is seen picking up moderately to 51.2 in August from July’s four-month high of 51.1 and Tuesday’s Caixin factory PMI is expected to ease to 52.7 from 52.8 in July.
(4) How Are Emerging Market Economies Doing Now?
Data releases across bigger emerging markets should provide fresh reading on how developing nations are weathering the post-pandemic landscape.
Turkey’s GDP reading due on Monday is expected to show a contraction of nearly 12% in the second quarter, which would be its worst year-over-year performance in over a decade.
Turkey’s lira has tumbled to record lows in recent weeks and the economy, suffering also from a severe hit to tourism, is expected to shrink for the full year.
Data on Tuesday is expected to show Brazil’s economy shrank 9.4% in the second quarter, as the country suffers the second worst coronavirus outbreak after the United States. Economic activity began to stir after President Jair Bolsonaro launched fiscal spending to deal with the COVID-19 aftermath, but optimism has been dented by fears this approach could derail his austerity agenda.
(5) Germany Will Sell a Green Bond
The Eurozone’s benchmark bond issuer, Germany, is set to sell its first green bond in September, perhaps as early as next week.
The sale of at least 4 billion euros of new green debt marks a milestone for a market that accounts for less than 4% of global bond issuance, making it difficult for central banks and investors to build green bond portfolios.
Yet green bond supply is growing fast and stands to benefit from hefty state spending in the wake of the coronavirus shock.
Germany is a laggard. France issued its first green bond in 2017; others such as the Netherlands and Belgium followed. Still, Europe’s biggest economy now has its sights set on issuing green bonds across the yield curve quickly, providing a reference point that could encourage other sovereigns to sell green debt. Better late than never, as they say.
Top Zacks #1 Rank Stocks
At the top of our #1 list, when sorted by Market Cap, are these three U.S. tech stocks. Note: they all get poor Zacks Value scores of F. Beware!
(1) Apple (AAPL - Free Report) : This is a $500 dollar stock now, giving this ticker a $2.14T market cap. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of F.
(2) Salesforce.com (CRM - Free Report) : This is a $271 a share stock, giving this ticker a $244.3B market cap. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of C.
(3) Texas Instruments (TXN - Free Report) : This is a $143 a share stock, giving this ticker a $131.4B market cap. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of F.
Key Global Macro
The key Global Week Ahead macro report is the August U.S. non-farm payroll report on Friday.
On Monday, the markets will have in hand the latest China manufacturing PMI.
Columbia’s central bank (BanRep) will likely cut its policy rate 25 basis points.
On Tuesday, the ISM manufacturing index for the U.S. comes out. 54.5 is consensus.
Italy (52.0 consensus) and Germany (53.0 consensus) release manufacturing PMIs. The Eurozone manufacturing PMI consensus is 51.7.
India releases its manufacturing PMI too.
The Reserve Bank of Australia is going to keep its 0.25% policy rate.
On Wednesday, private ADP payrolls are looking for +900K job additions.
On Thursday, the ISM non-manufacturing index for the US comes out. 57.0 is the consensus.
On Friday, August payrolls and the companion household survey are expected to post another solid gain of +1.375 million, another decline in the unemployment rate to 9.8% from 10.2%, and a further deceleration in reported wage growth to +4.5% y/y.
Conclusion
That’s it for me.
I don’t think the first week of September will deliver much for most stocks. A lot of trading desks are still short of staff, due to employees taking holidays.
Nonetheless, pay attention to the Friday non-farm payroll report.
Happy trading to all!
Regards,
John Blank
Will you retire a millionaire? One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.” Click to get it free >>
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The Key Is Nonfarm Payrolls: Global Week Ahead
It is the first week of September.
What will traders be paying attention to? Like pretty much every first week of a given month, the big macro moment is the U.S. non-farm payroll report.
The post-lockdown U.S. jobs recovery should continue. An impressive 1.375 million U.S. job additions are expected, and a trip down to a 9.8% from 10.2% last month is what to look for from the Household Unemployment rate.
Next are Reuters’ five world market themes, reordered for equity traders—
(1) Japan’s PM Shinzo Abe Has Resigned
Shinzo Abe, Japan’s longest-serving premier and author of the signature shock-and-awe “Abenomics” stimulus strategy, has resigned for health reasons.
Sweeping to power in late 2012, Abe deployed his three arrows of Abenomics — large-scale monetary easing, fiscal spending and structural reforms — to reignite the world’s third biggest economy after years of sub-par growth and falling prices.
Japan watchers are split on its success. The central bank’s “bazooka” stimulus program improved business sentiment and weakened the yen, giving exporters windfall profits that trickled down to wages and new jobs.
But the country has also been sinking deeper into recession and Abe leaves behind a pile of unfinished business. Investors are keen to figure out who his successor could be and what this means for the legacy of Abenomics.
(2) Friday Brings a Non-Farm Payroll Report
Friday’s August non-farm payrolls will be a reality check on the devastation wreaked by the coronavirus pandemic on Main Street, even as Wall Street rallies to record highs.
Economists polled by Reuters forecast the U.S. economy created 1.55 million new jobs versus 1.76 million in July.
Weekly jobless claims hovered around 1 million last week, suggesting a labor market recovery may be stalling as the health crisis drags on, government support dries up and Congress remains gridlocked over potential new stimulus.
Jobs data is also in focus after Federal Reserve Chairman Jerome Powell rolled out a sweeping rewrite of its approach, saying the Fed would put more weight in bolstering labor markets. Meanwhile, the S&P 500 hit record highs — powered by Amazon, Microsoft and Apple — in a rally that has accentuated the divide between the blistering stock market and a still-badly damaged U.S. economy.
Slowing U.S. job growth and rising COVID-19 rates raise doubts on the recovery’s strength — in landmark shift, Fed changes approach to inflation and the labor market.
(3) We Get Fresh China PMIs
Fresh readings of China’s factory activity should provide a health check on the world’s second-largest economy.
The vast industrial sector is steadily returning to levels seen before the pandemic paralyzed huge swathes of the economy early this year.
Pent-up demand, stimulus-driven infrastructure and surprisingly resilient exports have been the main drivers propelling the rebound, but private consumption is lagging as consumers remain cautious about spending.
Signals point in the right direction. Industrial profits grew in July at the fastest pace since June 2018.
The official PMI, scheduled for Monday, is seen picking up moderately to 51.2 in August from July’s four-month high of 51.1 and Tuesday’s Caixin factory PMI is expected to ease to 52.7 from 52.8 in July.
(4) How Are Emerging Market Economies Doing Now?
Data releases across bigger emerging markets should provide fresh reading on how developing nations are weathering the post-pandemic landscape.
Turkey’s GDP reading due on Monday is expected to show a contraction of nearly 12% in the second quarter, which would be its worst year-over-year performance in over a decade.
Turkey’s lira has tumbled to record lows in recent weeks and the economy, suffering also from a severe hit to tourism, is expected to shrink for the full year.
Data on Tuesday is expected to show Brazil’s economy shrank 9.4% in the second quarter, as the country suffers the second worst coronavirus outbreak after the United States. Economic activity began to stir after President Jair Bolsonaro launched fiscal spending to deal with the COVID-19 aftermath, but optimism has been dented by fears this approach could derail his austerity agenda.
(5) Germany Will Sell a Green Bond
The Eurozone’s benchmark bond issuer, Germany, is set to sell its first green bond in September, perhaps as early as next week.
The sale of at least 4 billion euros of new green debt marks a milestone for a market that accounts for less than 4% of global bond issuance, making it difficult for central banks and investors to build green bond portfolios.
Yet green bond supply is growing fast and stands to benefit from hefty state spending in the wake of the coronavirus shock.
Germany is a laggard. France issued its first green bond in 2017; others such as the Netherlands and Belgium followed. Still, Europe’s biggest economy now has its sights set on issuing green bonds across the yield curve quickly, providing a reference point that could encourage other sovereigns to sell green debt. Better late than never, as they say.
Top Zacks #1 Rank Stocks
At the top of our #1 list, when sorted by Market Cap, are these three U.S. tech stocks. Note: they all get poor Zacks Value scores of F. Beware!
(1) Apple (AAPL - Free Report) : This is a $500 dollar stock now, giving this ticker a $2.14T market cap. I see a Zacks Value score of F, a Zacks Growth score of D and a Zacks Momentum score of F.
(2) Salesforce.com (CRM - Free Report) : This is a $271 a share stock, giving this ticker a $244.3B market cap. I see a Zacks Value score of F, a Zacks Growth score of F and a Zacks Momentum score of C.
(3) Texas Instruments (TXN - Free Report) : This is a $143 a share stock, giving this ticker a $131.4B market cap. I see a Zacks Value score of F, a Zacks Growth score of C and a Zacks Momentum score of F.
Key Global Macro
The key Global Week Ahead macro report is the August U.S. non-farm payroll report on Friday.
On Monday, the markets will have in hand the latest China manufacturing PMI.
Columbia’s central bank (BanRep) will likely cut its policy rate 25 basis points.
On Tuesday, the ISM manufacturing index for the U.S. comes out. 54.5 is consensus.
Italy (52.0 consensus) and Germany (53.0 consensus) release manufacturing PMIs. The Eurozone manufacturing PMI consensus is 51.7.
India releases its manufacturing PMI too.
The Reserve Bank of Australia is going to keep its 0.25% policy rate.
On Wednesday, private ADP payrolls are looking for +900K job additions.
On Thursday, the ISM non-manufacturing index for the US comes out. 57.0 is the consensus.
On Friday, August payrolls and the companion household survey are expected to post another solid gain of +1.375 million, another decline in the unemployment rate to 9.8% from 10.2%, and a further deceleration in reported wage growth to +4.5% y/y.
Conclusion
That’s it for me.
I don’t think the first week of September will deliver much for most stocks. A lot of trading desks are still short of staff, due to employees taking holidays.
Nonetheless, pay attention to the Friday non-farm payroll report.
Happy trading to all!
Regards,
John Blank
Will you retire a millionaire?
One out of every six people retires a multimillionaire. Get smart tips you can do today to become one of them in a new Special Report, “7 Things You Can Do Now to Retire a Multimillionaire.”
Click to get it free >>