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March’s employment data is released at 8:30.  To write the incredibly obvious broad based conclusions may be drawn from the statistics, conclusions that may validate preconceived confirmation biases.

Consensus is expecting a 206,000 and 190,000 increase in non-farm and private sector payrolls, respectively, a 4.9% unemployment rate, a 0.2% increase in average hourly earnings, a 34.5 hour work week and a 62.9% labor participation rate (LPR).

Some are suggesting a 200,000 NFP print, a level that is today regarded as a “strong” will be hard to make given the declining unemployment rate but I will argue the opposite.  There is a vast pool of workers as measured by the LPR—aka inventories in oil jargon—that first must be exhausted.   If the LPR was around 68% or where it stood in 2008 I would agree with the above view.

Regarding wages, wages have been accelerating at the either end of the spectrum—the lowest because of political pressure and the highest because of the dearth of qualified workers.  I can argue the lack of wage pressures is from benign inflation statistics causing nonexistent COLAs all are closely correlated.

I think, however, even if the report is a proverbial blockbuster, I do not think it will change views regarding a change in interest rates at the April meeting, a conclusion based upon FRB Yellen’s early week comments.   The Committee is now publically stating it would be willing to permit inflation to be higher than its targeted rate to ensure the end of any lingering deflationary fears.

Commenting about yesterday’s market activity, trading was quiet ahead of the report as the S & P posted its best month in five.  The dollar fell yet again, heading for its worst monthly drop since 2010.  Gold is headed for its biggest three month gain since 1986 as per Bloomberg.

As noted yesterday, few would have suggested March’s trading activity.

Last night the foreign markets were down.   London was down 1.32%, Paris down 2.16% and Frankfurt down 2.15%.  China was down 0.56%,  Japan down 3.55%and Hang Sang down 1.34%

The Dow should open moderately lower as oil is down on headlines that Saudi Arabia may only freeze output only if Iran freezes output.  Europe was deeply in the red.  China’s manufacturing sector unexpectedly rose.  The direction however could change radically given the significance of the upcoming employment data.  The 10-year is

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Ken Engelke

Chief Economic Strategist Managing Director

The views expressed herein are those of Kent Engelke and do not necessarily reflect those of Capitol Securities Management. Any opinions expressed are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. This material is being provided for informational purposes only. Any information should not be deemed a recommendation to buy, hold or sell any security. Certain information has been obtained from third-party sources we consider reliable, but we do not guarantee that such information is accurate or complete. This report is not a complete description of the securities, markets, or developments referred to in this material and does not include all available data necessary for making an investment decision. Prior to making an investment decision, please consult with your financial advisor about your individual situation. Investing involves risk and you may incur a profit or loss regardless of strategy selected. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. If you would like to unsubscribe from this e-mail distribution, please reply to this e-mail and indicate that you wish to unsubscribe in your response.