Maybe not today, but there will be a negative payroll number next year
November 4, 2022
–It might not be captured in today’s data, but there are widespread reports that a powerful engine of the US economy is about to announce massive layoffs. Yes, Twitter.
–From FT today: ‘China’s central bank struggles to force tech groups to share user data with state.’ I guess that’s another example of China lagging the US.
–Finally, from ZH, a story summarizing Maersk’s Wednesday conference call: “Maersk has lowered its estimate for 2022 global container demand to minus 2% to minus 4%, down from plus 1% to minus 1% in early August. “Clearly, the risks are to the downside going forward,” said Skou.” See chart below from WSJ on peak world trade…
–Continuing notable adjustments following the FOMC. New high in SFRZ2/Z3 at 20.5, the highest since early June. One week ago on October 27 this spread was negative 22.5, a swing of 43 in a week! FFF3/FFF4 settled 44.5 vs -5 one week ago, nearly half a percent swing. The market clearly took Powell’s messaging to heart, specifically ‘no pause’ and ‘higher for longer’. However, in taking this policy at face value, the market also fears a hard landing, resulting in eventual ease. For example, the red/green eurodollar pack spread settled at its lowest ever level -62. In 1989 it had gotten as low as -36 and in 1995 -18.5.
–On a related note is the 2/10 treasury spread. At the end of the day it was -57, just edging out the low from April 2000 of -56.0. In 1989 2/10 had printed just under -44 (this at the same time as the red/green ED low spread -36.0). The hints being projected from these spreads may not ultimately be right, but the current forecast is a very hard hit with respect to growth. By the way, further back in history in 2/10, a low of -170 in 1981, and -240 in 1980.
–Today’s news of course, features the employment report. The rate is expected to tick up to 3.6% from 3.5, with Avg Hourly Earnings annualized at +4.7% vs last of +5.0%. NFP expected 195k.
https://www.zerohedge.com/markets/end-era-profits-finally-peak-shipping-giant-maersk
