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WHAT WILL SEPTEMBER’S JOBS DATA SUGGEST?

The first day of the fourth quarter was initially similar to most of the days of the third quarter. Shares fell spooked by a disappointing reason on the ISM manufacturing index. This influential survey representing about 17% of the economy is suggesting manufacturers are barely expanding, falling to the lowest level since May 2013. The reason…stronger dollar and faltering overseas markets.
What started out as weakness among energy companies is now spreading to other sectors such as computers and machinery makers. I rhetorically ask how will the current environment impact third quarter earnings in the aggregate for the multinationals?
Other data released yesterday indicated continuing strength. Construction spending led by residential construction, rose by a solid 0.7%. Moreover auto sales were unusually strong in September.
Today is the release of September’s employment report. Will this data deny or confirm the economy is still expanding around the 2.5% to 2.7% pace?
Analysts are expecting a 5.1% unemployment rate, a 201,000 increase in nonfarm payrolls, a 198k gain in private sector jobs, a 0.2% increase in average hourly earnings, a 34.6 hour work week and a 62.6% labor participation rate.
As inferred above, markets opened considerably lower but rallied to close relatively unchanged ahead of today’s labor report.
To write the incredibly obvious, all markets will trade off the interpretation of this data, interpretations that I am certain will change several times during the day.
Changing topics, the markets have thus ignored the events in the Middle East. Will the narrative suddenly change where all other topics are ignored? Perhaps the safest statement to make is the Middle East is in total chaos bordering on anarchy as this region is undergoing the greatest change since the dissolution of the Ottoman Empire 100 years ago. What are the ramifications of today’s radical and unexpected events?
Last night the foreign markets were up. London was up 1.54%, Paris up 1.77% and Frankfurt up 1.42%. China was up 0.48% Japan up 0.02% and Hang Sang up 3.17%
The Dow should open nominally higher ahead of the jobs data and stabilization in the foreign markets believing the worst is behind in China. Oil is up. 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.