Tin tức thì trường

James Knightley, the chief international economist at ING, note the December U.S. jobs report shows 145,000 jobs were created last month, which was a touch weaker than the 160,000 consensus, while there were a net 14,000 downward revisions to the previous couple of months.

• "The details have manufacturing jobs shrinking by 12,000 after the major swings seen in October and November relating to the recent strike action by GM staff. We continue to be concerned about the prospects for jobs here given the weakness in business surveys, such as the ISM.
• Construction was up 20,000 and is likely to continue being a positive contributor given growing optimism in the housing market (NAHB homebuilder sentiment at record highs).
• Private services gained 140,000 (strong retail, weak professional services), which was the smallest gain since July. Rounding it out, government employment rose 6,000.
• The clear disappointment is wages. Despite all the talk of a tight jobs market and companies struggling for staff with the right skill sets there is little evidence of labour costs being bid higher. Wage growth actually slowed to 2.9%, the weakest since July 2018. With employment gains likely to slow further in 2020, weaker real wages underline our view that softer consumer spending growth is going to be a key factor that leads to GDP disappointing in 2020.
• Moreover, while the unemployment rate remains at its lowest level since December 1969, this doesn't tell the whole story with regards to how "tight" the labour market is. After all, the proportion of the working-age population that has a job is still below the rates seen in the depths of the recessions in the early 1990s and early 2000s. There is a significant chunk of the US population that is simply not engaged. If these people can be incentivized and re-skilled, this could be a resource that keeps the US expansion going for longer.
• Overall, the report highlights the two-speed nature of the US economy where manufacturing continues to struggle and the service sector is performing relatively well. In aggregate, jobs continue to be created in decent numbers, but there is little wage inflation despite apparently tight labour markets. Today's figure merely reinforces the message that with the Federal Reserve seemingly content with its current monetary policy stance, the prospect of any near-term interest rate moves appears remote."

Analysts at TD Bank Financial Group note that December saw Canada add a net 35.2k jobs, while the unemployment rate fell to 5.6% (from 5.9%), helped by a downtick in labour force participation.

• "The composition of the gains was favourable. Full-time work led the charge(+38.4k). The private sector broke its contractionary streak, adding 56.9k net positions while public sector employment fell 21.5k. Gains were entirely due to employees (+35.4k) as self-employment was effectively unchanged.
• December's gains can largely be put down to net additions in construction (+17k) and accommodation and food services (+24.9k).
• Gains were also concentrated by region. Ontario added a net 25.1k positions, while Quebec added 21.1k. In both cases, enough jobs were added to drop their unemployment rates from 5.6% to 5.3%.
• Wage growth cooled a touch, to 3.8% y/y for permanent employees (from 4.4%). Aggregate hours worked were flat on the month, leaving the year-on-year tally at a paltry 0.3%.
• The twelve-month trend in hiring was roughly unchanged at 26.7k in December, while the six-month trend was a modest 12.1k. Despite the decent increase in December, the six-month trend in private sector employment stood at just 1.3k per month.
• Follow the bouncing ball. After November's across-the-board disappointment, one could be forgiven for a bit of nervousness ahead of today's report. By no means was the December report a barnburner, but neither is it too concerning. It was encouraging to see private sector hiring come back to life, even if the trend there is still weak. Indeed, the six-month trend in hiring more generally has unquestionably normalized, and is pretty close to the 15k to 20k that we would consider 'normal' at this point in the cycle.
• The more concerning trend is in hours worked, which while noisy, have been decelerating over the last two years. Given weak Canadian productivity of late, the soft trend does not augur well for economic growth.
• Today's data is consistent with Governor Poloz's remarks yesterday, where he played it cool. Some aspects of the jobs data, such as wages, have been performing well, while others, such as hours, have not been. It seems we'll have to wait for this month's Monetary Policy Report (January 22nd) to see where the Governor and his team land in interpreting these and other recent trends."

The Commerce Department announced on Friday the U.S. wholesale inventories edged down 0.1 percent m-o-m in November after a revised 0.1 percent m-o-m increase in October (originally flat m-o-m).

Economists had forecast wholesale inventories growing 0.1 percent m-o-m in November.

On a y-o-y basis, wholesale inventories surged 3.3 percent.

According to the report, wholesale auto stocks fell 1.1 percent m-o-m in November, following a 0.5percent m-o-m drop in the previous month. Apparel inventories decreased 0.4 percent m-o-m, after declining 1.6 percent m-o-m in October. In addition, decreases were also recorded in machinery, furniture and computer equipment inventories. Meanwhile, petroleum inventories rose 0.6 percent m-o-m in November, following a 3.5 percent m-o-m tumble in the previous month.

• Fact sheet on phase one trade deal will be released on January 15
• U.S. in constant discussions with Europe regarding trade

Analysts at Royal Bank of Canada (RBC) note that U.S. employment was up 145k in December, while the unemployment rate held steady at the cycle-low 3.5%.

• "The headline job gain was a touch below market expectations, and down from a 194k average increase over the prior 6 months. Still, the 145k increase in December is an above-trend pace that would, over time, put further downward pressure on the unemployment rate. That rate held steady at a cycle-low 3.5% in December - and the U6 rate that captures a broader range of underemployment like discouraged workers fell to a new cycle-low 6.7%, down from 6.9% in November and almost a full percentage point lower than a year ago. Wage growth softened to 2.9%, marking the first month below 3% since July 2018, but what ostensibly look like very tight labour markets should put a floor under that measure in the near-term.
• We expect that the pace of employment growth will continue to lose some momentum this year, outside of likely volatility in headline job counts tied to the 2020 census. But that is due more to 'supply-side' issues (weak growth in the working age population and the fact unemployment is already very low) than near-term domestic or external demand concerns. Indeed, the near-term growth backdrop looks somewhat more favourable than it did a few months ago with US/China trade tensions easing, at least modestly, late last year."

U.S. stock-index futures rose on Friday after the release of U.S. employment data, which revealed that job growth slowed more than forecast in December, but the pace of hiring remains more than enough to keep the longest economic expansion in history humming along.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Alphabet (GOOGL/GOOG) initiated with a Outperform at Bernstein

Amazon (AMZN) initiated with a Mkt Perform at Bernstein

Facebook (FB) initiated with a Outperform at Bernstein

Lyft (LYFT) initiated with a Mkt Perform at Bernstein

Snap (SNAP) initiated with a Outperform at Bernstein

Twitter (TWTR) initiated with a Underperform at Bernstein

Uber (UBER) initiated with a Outperform at Bernstein

Apple (AAPL) target raised to $275 from $221 at Credit Suisse; remain Neutral

Tesla (TSLA) target raised to $553 from $423 at Piper Sandler

Travelers (TRV) downgraded to Underperform from Mkt Perform at Keefe Bruyette; target lowered to $125

Statistics Canada reported on Friday that the number of employed people increased by 35,200 m-o-m in December, while economists had forecast a gain of 25,000 and after an unrevised drop of 71.200 in the previous month.

Meanwhile, Canada's unemployment remained fell to 5.6 percent in December from 5.9 percent in November, below economists' forecast for 5.8 percent.

According to the report, full-time employment increased by 38,400 (or +0.2 percent m-o-m) in December, while part-time jobs declined by 3,200 (or -0.1 percent m-o-m).

In December, the number of public sector employees decreased by 21,500 (-0.6 percent m-o-m), while the number of private sector employees rose by 56,900 (+0.5 percent m-o-m). At the same time, the number of self-employed dropped by 200 (flat m-o-m) last month.

Sector-wise, employment increased in both in goods-producing (+0.4 percent m-o-m) and in service-producing businesses (+0.1 percent m-o-m).

In the 12 months to December, employment in Canada grew by 320,000 or 1.7 percent, a faster pace than that observed in 2018 (+1.1 percent).

The U.S. Labor Department announced on Friday that nonfarm payrolls increased by 145,000 in December after a downwardly revised 256,000 gain in the prior month (originally an increase of 266,000). In 2019, payroll employment rose by 2.1 million, down from a gain of 2.7 million in 2018.

According to the report, significant job gains in December occurred in retail trade (+41,000 jobs) and health care (+28,000), while mining (-8,000) lost jobs.

The unemployment rate held at 3.5 percent in December.

Economists had forecast 166,000 new jobs and the jobless rate to stay at 3.5 percent.

The labor force participation rate was unchanged m-o-m at 63.2 percent in December, while hourly earnings for private-sector workers edged up 0.1 percent m-o-m (+3 cents) to $28.32, following a revised 0.3 percent m-o-m gain in November (originally an increase of 0.2 percent m-o-m). Economists had forecast a 0.3 percent m-o-m advance in the average hourly earnings. Over the year, average hourly earnings have increased by 2.9 percent, following an unrevised 3.1 percent rise in November.

The average workweek was 34.4 hours in December, up from downwardly revised 34.3 hours (originally 34.4 hours), matching economists' forecast.

CNBC reports that a leading commodities expert at Goldman Sachs (GS) has raised doubts over China buying at least $40 billion worth of U.S. farming goods to satisfy terms of the "phase one" trade deal.

Speaking to CNBC's "Street Signs" on Friday, Goldman's Global Head of Commodities Research Jeff Currie said U.S. livestock and agricultural prices couldn't yet factor in a coming boost to demand.

"There is still a lot of uncertainty about how you would achieve $40 (billion) or potentially even $50 billion of agricultural purchases," Currie said, before adding, "A lot of the people I talk to are really skeptical that you can really achieve that number."

The U.S. and China plan to sign the first draft of the trade pact on January 15 which will see tariffs eased and changes introduced to rules surrounding intellectual property and technology. Washington is also demanding that China buys between $40 billion and $50 billion worth of agricultural goods from the U.S. each year.

To suddenly reach an annual $40 billion figure as soon as this year, Currie said there would need to be a big increase in soybean exports - a tricky prospect given a swine fever outbreak that has reduced the number of pigs in China that are typically fattened up on soy beans.

Currie said there would need to be deep analysis on what else China needed.

"You put it all together and you say 'OK, what is China short? What is the U.S. long?' …. The two markets where you could see the biggest increases are corn, as well as pork."

Currie said while Goldman Sachs had identified soy beans, pork and corn as the likely big winners from the "phase one" trade deal, it would be a question of waiting to see if the physical demand existed.

"When you actually see boats loaded and what's on those boats then the question is going to be which commodity is the one that can perform here," said Currie.

Analysts at Westpac believe there is plenty of room for a surprise as ever in the U.S. employment report after Non-farm payrolls surged 266k in November, the strongest reading since January 2019, while the unemployment rate slipped back to 3.5%.

• "The median forecast for NFP is 160k, with the +/- 1 standard deviation range 146k to 185k (Bloomberg survey). The unemployment rate is expected to hold at 3.5%, while average hourly earnings are seen up 0.3%mth, 3.1%yr. The post-GFC peak in wages growth was 3.4%yr in Feb 2019."

Iris Pang, the economist for Greater China at ING, notes the yuan, USD/CNY, has been volatile in 2019, ranging between 6.67 in March and 7.18 in September.

• "This has reflected developments in trade negotiations, rather than the relative monetary policies of China and the US.
• We believe the yuan will continue to see volatile trading in 2020 because there is still a lot of uncertainty about the phase one trade deal, which has yet to be signed. And even if it is signed, there are still a number of tariffs imposed on China that will not be rolled back. (The media has reported that the rollback of tariffs may only be 7.5% on some Chinese goods). The market's focus could also soon shift to a phase two deal, and whether such an agreement is even likely as the US presidential election approaches in November.
• In addition to the trade war, there is an emerging technology war against Chinese technology brands operating in the US and Europe, which will add extra pressure to the Chinese economy.
• The high degree of uncertainty here suggests the yuan will remain volatile this year. This makes our year-end forecast for 2020 of 6.85 per dollar less valuable than would otherwise be the case."

Analysts at TD Securities are expecting Canada's labour market to bounce back with the creation of 25k jobs in December, in line with the market consensus, for a partial recovery of the 71k jobs lost during the prior month.

• "Goods-producing industries should lead the recovery after bearing the brunt of recent layoffs, while the unemployment rate should retreat to 5.7% from 5.9% as wage growth cools from 4.4% to 4.0% (market: 5.8%, 4.2%, respectively)."

Julien Manceaux, ING's senior economist for France, noted that the last Bank of France activity indicators painted a mixed picture of the French economy.

• "Declining from 97.3 to 96.5 in December, the main indicator ended the year below its 2019 average. Despite the end-of-year weakness, the indicator shows better activity figures for the fourth quarter last year than the third.
• In manufacturing, the indicator remained strong, showing higher levels of activity than in November. The manufacturing production figures for November, which were published at the same time, showed a 0.1% contraction after two months of positive growth. Consumer goods production was the main factor behind this, dropping by 9.2% month-on-month while investment goods production was still growing by 3.1%. Industrial production grew by a mere 0.3% thanks to better energy and construction growth figures. We think December should bring better figures, allowing for a rebound in manufacturing production in the fourth quarter after the 1% contraction (QoQ) registered in the third. However, this may already be yesterday's story: the Bank of France survey showed weaker capacity utilisation and lower order books at year-end which could bring some weakness in industrial activity figures at the start of this year.
• In December, the service sector was behind the drop in the Bank of France indicator, with one of the lowest activity readings of 2019 and signs of cash flow issues in more companies than at any point in 2019. We also noted a drop in consumer sentiment in December, with the main indicator falling from 105 to 102, the lowest level since July. The main factor behind the drop was consumers' assessment of the economic situation, which also affected their confidence in their future financial situation. Fears of unemployment remained contained and the survey did not show a large impact on their purchasing intentions."

Josh Nye, the senior economist at the Royal Bank of Canada (RBC), notes that Canada's housing starts slowed to 197,000 annualized units in December, while building permits edged down to 220,000 in November.

• "Housing starts lost a bit of steam toward the end of last year, slipping to an annualized pace of 201,000 in Q4/19 from a rate closer to 220,000 in the prior two quarters. We think starts will settle in the middle of that range in 2020, not far from the 209,000 pace seen in 2019. That would be consistent with a resurgent housing market-which we see extending into this year-and strong demographics (Canada's population now growing at its fastest rate since the early-90s). Also, with building permits still running faster than the pace of starts (and having done so for more than a year) we think there is scope for the latter to improve early this year.
• While today's data fell short of consensus, we don't think it does much to dent the narrative that Canada's housing market has shifted from a drag on growth to providing moderate support."

Italy's economy is likely to remain weak in the near term, national statistics bureau ISTAT said, citing its leading indicator for December.

The euro zone's third largest economy has been largely stagnant for the last seven quarters. Gross domestic product rose 0.1% in the third quarter on a quarter-on-quarter basis after an identical reading in the second quarter, data showed in November.

"The leading indicator maintains a negative profile, suggesting the continuation of weakness in production levels," ISTAT said.

ISTAT last month revised its forecast for Italian gross domestic product growth in 2019 to 0.2% from a previous 0.3% projection made in May. Last September, the Italian government revised its growth target for 2019 down to 0.1%.

Bank of England policymaker Silvana Tenreyro said she will be inclined to vote for a cut in interest rates, if the economy does not pick up this year as the central bank forecast in November.

The BoE's forecasts assumed that the Britain would move towards a deep free trade agreement with the EU this year, and that the recent global economic uncertainty quickly unwound.

"The risks to these assumptions are largely to the downside," Tenreyro said in a speech at the Resolution Foundation think tank in London.

"If uncertainty over the future trading arrangement or subdued global growth continue to weigh on demand, then my inclination is towards voting for a cut in Bank Rate in the near term," she continued.

According to Karen Jones, analyst at Commerzbank, EUR/GBP is trying to recover but its path is blocked by the 5 month downtrend at .8561 and the 55 day ma at .8534.

"Near term while capped here, a negative bias will persist. We will err on the bearish side and allow for another failure and possible retest of the .8239 recent low, together with the 55 quarter moving average at .8226. Above the .8609 December high would allow for a test of the 200 day ma at .8783. Below .8226 remain the June and October 2012 highs as well as the April 2016 high and the January and February 2014 lows at .8167/18."

According to UOB Group's Global Economics & Markets Research team, the PBoC is expected to keep reducing its rates this year.

"Although we still expect PBoC to guide rates lower, the elevated headline inflation and slowing momentum in global central banks' easing will keep it on a measured and cautious stance as focus remains on improving monetary policy transmission through reforms and push for greater adoption of the Loan Prime Rate (LPR). We expect future LPR fixings to be moved by 5bps each month on average into mid-2020, with no further cuts to MLF. This will see 1Y LPR at 3.80% by mid-2020".

TD Research discusses the JPY tactical outlook and sees a scope for only limited upside in USD/JPY, while prefers to fade rallies in CHF/JPY.

"Our global macro pricing engine shows a chunky premium in safe havens like gold and CHF. Gold's the most expensive, running at a 3% premium. It's a touch smaller in CHF but still sits at 2%. The JPY is mostly trading where it should, suggesting there's probably not much more upside in USDJPY that is likely to stall ahead of the recent highs near 110. A reduction of the gold premium takes up back to the early November levels around 1514. On net, that probably makes CHF one of the best candidates in the G10 to fund against stabilization in sentiment. We like fading rallies in CHFJPY," TD adds.

Deutsche Bank analysts suggest that all eyes today will be on the first payrolls Friday of the new decade and on the back of that bumper 266k payrolls print in November, the consensus expects a 160k reading for last month.

"Our US economists make the point that the November data was boosted by returning GM workers so they also expect some payback and forecast 155k. In light of the strong ADP report this week they also nudged their private payrolls forecast slightly higher, to 145k. As for the other details, our colleagues expect the unemployment rate to hold steady at 3.5%, hours worked to also hold steady at 34.4 and average hourly earnings to rise +0.3% mom - all of which is in line with the wider consensus".

Optimism at major British companies has improved by the largest margin in at least 11 years after Prime Minister Boris Johnson won a sweeping election victory last month, according to a survey from accountants Deloitte.

Some 53% of chief financial officers at large businesses said their optimism about the financial outlook had improved compared with three months ago, versus 9% in the last survey conducted in October.

This was the highest proportion since the quarterly survey began 11 years ago, Deloitte said.

"The fog of uncertainty that has lingered over the UK since the 2016 EU referendum is lifting. CFOs ... are beginning 2020 with sentiment levels that would have been unimaginable at any time in the last three years," Deloitte chief economist Ian Stewart said.

Just over half of chief financial officers said they expected revenues to rise over the next year, up from 18% three months ago, and 38% said they planned to invest more, the highest proportion in four years.

Some two thirds of CFOs said they expected Brexit to damage the business conditions, down from more than four fifths earlier in 2019. Weak domestic demand was the biggest risk, according to CFOs, though it was less of a worry than three months earlier.

The Global Economics & Markets Research team at UOB Group believes the RBNZ could keep the key rates unchanged during the current year.

"The next RBNZ meeting is not until 12 February 2020. Our current OCR forecast of 1.00% through 2020 remains intact. That said, we will remain watchful of both developments at home and abroad. Should employment growth, business investment and household spending weaken further, and/or the global economy deteriorates, we will not be surprise to see the RBNZ venturing into further interest rate cuts and the uncharted territory of unconventional monetary policy".

According to Karen Jones, analyst at Commerzbank, GBP/USD is under pressure while capped by the near term downtrend at 1.3156 to head back to the 55 day ma at 1.2997.

"Failure here will trigger a slide to the December low at 1.2908. Failure at the 1.2908 support would put the 4 month uptrend at 1.2792 and the 200 day moving average at 1.2690 back on the plate. The near term downtrend guards the Fibonacci resistance at 1.3285. This is considered to be the last defence for the December high at 1.3515. Failure at the 1.2908 support would target the 200 day moving average."

According to the report from Insee, in November 2019, output was virtually stable in the manufacturing industry (−0.1%, after +0.6%), but It increased slightly in the whole industry (+0.3%, after +0.5%). Economists had expected a 0.1% increase in the whole industry.

Over the last three months, output increased in manufacturing industry (+0.7%), and more moderately in the whole industry (+0.4%). Over the last three months, output increased in "other manufacturing" (+1.0%), in the manufacture of machinery and equipment goods (+1.3%), in the manufacture of transport equipment (+0.6%) and in the manufacture of food products and beverages (+0.5%). Conversely it went down in mining and quarrying, energy, water supply (−1.6%) and it slumped in the manufacture of coke and refined petroleum products (−16.7%).

In the manufacturing industry, output of the last three months was higher than the same months of 2018 (+0.7%), as well as in the whole industry (+0.5%). Over a year, output increased in "other manufacturing" (+1.3%), in the manufacture of machinery and equipment goods (+1.0%), in the manufacture of food products and beverages (+0.7%) and more moderately in the manufacture of transport equipment (+0.2%). In contrast, output slumped sharply in the manufacture of coke and refined petroleum products (−26.4%) and dipped slightly in mining and quarrying, energy, water supply (−0.5%).

• We are expecting a demand growth of slightly higher than 1 million barrels per day.

• Growth could remain weak, compared with historical levels.

• Non-OPEC production is very strong.

• We still expect production coming from, not just United States, but also Norway, Canada, Guyana, among other countries.

• We see prices remain at $65 a barrel.

• Sees a well-supplied oil market in 2020

Danske Bank analysts suggest that today's highlight is the US labour market report and are looking towards a 175K headline print.

"Also we expect unchanged yearly wage growth of 3.1% with risks skewed towards a slight drop to 3.0%. While this overall is slightly stronger than consensus expectations we would expect but a modest positive market impact if this proves right. The key thing for markets is that the report shows a continued tightening of the labour market, i.e. that job growth stays above roughly 100,000. A very weak print, which in our view is not in the cards, would on the other hand trigger a risk off move. In Canada we also get the monthly labour market report, which is very important given last month's disappointing reading, which fuelled rate cut speculations. Rates markets currently price in slightly less than a full rate cut from Bank of Canada in 2020 but this pricing is likely to be very sensitive to today's report as we approach the 22 January rate decision."

U.S. President Donald Trump, who announced last month that the Phase 1 trade deal with China would be signed on Jan. 15, said on Thursday the agreement could be signed "shortly thereafter."

Trump said: "We're going to be signing on January 15th - I think it will be January 15th, but shortly thereafter, but I think January 15th - a big deal with China."

The Phase 1 deal, struck last month, is expected to reduce tariffs and boost Chinese purchases of American farm, energy and manufactured goods while addressing some disputes over intellectual property.

Chinese Vice Premier Liu He, head of the country's negotiating team in Sino-U.S. trade talks, will sign the deal in Washington next week, China's commerce ministry said on Thursday.

Liu will visit Washington from Jan. 13-15, said Gao Feng, spokesman at the commerce ministry.

UK hiring conditions improved at the end of the year with an increase in permanent job placement, the Report on Jobs showed Friday.

According to Recruitment & Employment Confederation/KPMG report, permanent staff appointments increased for the first time in a year driven by higher business activity. Concurrently, temp billings also rose moderately at the end of the year.

Although staff demand strengthened slightly in November, the rate of expansion remained close to a decade-low. Meanwhile, permanent vacancies rose at the quickest pace for three months. At the same time, staff availability declined sharply in December. Permanent staff supply contracted at a faster pace than that seen for short-term workers.

Starting pay rose again for both permanent and temporary staff, with rates of growth picking up from November's recent lows.

"It would appear that following the clarity of the election outcome, the jobs market finally began to show signs of life with permanent placements rising for the first time in a year," James Stewart, vice chair at KPMG, said.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1268 (2552)

$1.1231 (2987)

$1.1201 (2902)

Price at time of writing this review: $1.1107

Support levels (open interest**, contracts):

$1.1072 (4678)

$1.1035 (3985)

$1.0992 (1169)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date February, 7 is 48767 contracts (according to data from January, 9) with the maximum number of contracts with strike price $1,1100 (4678);

GBP/USD

Resistance levels (open interest**, contracts)

$1.3253 (946)

$1.3192 (1308)

$1.3147 (889)

Price at time of writing this review: $1.3081

Support levels (open interest**, contracts):

$1.2989 (2725)

$1.2964 (1139)

$1.2934 (3087)

Comments:

- Overall open interest on the CALL options with the expiration date February, 7 is 20089 contracts, with the maximum number of contracts with strike price $1,3300 (2496);

- Overall open interest on the PUT options with the expiration date February, 7 is 19087 contracts, with the maximum number of contracts with strike price $1,3000 (3087);

- The ratio of PUT/CALL was 0.95 versus 0.95 from the previous trading day according to data from January, 9

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.