Why a Strong Jobs Report Could Rattle the Stock Market

admin July 7, 2023

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Jobs data that could shake markets

Economists and market participants are largely divided over Friday’s jobs report, due at 8:30 a.m. ET, and what it might suggest about the Fed’s interest rate policy and the likelihood of a recession this year. there is

of Numbers to watch: According to a survey of economists conducted by Bloomberg, employers Added 225,000 jobs The labor market will cool slightly in June. But economists have underestimated the strength of job growth in 14 of the past 17 months, including last month’s big setback.

The Fed will be watching wages statistics closely. Average hourly wages are expected to rise month-on-month, putting pressure on Fed officials to raise interest rates further to curb inflation. Dallas Fed President Laurie Logan became the newest voting member of the Interest Rates Committee on Thursday, saying: further increase was needed.

The pictures on the job offer are misleading. With vacancies far lower than they were a year ago, the “big resignations” seem to be a thing of the past, a sign that wage growth is starting to slow.

Elsewhere, the labor market appears to be in a deep red. On Thursday, data from payroll firm ADP showed employment surged again, especially in the leisure and hospitality sector. One possible reason is ‘fan-flation’, where restaurants remain full and demand for vacations and vacations is high, even though prices have skyrocketed. And so-called JOLTS unemployment claims fell to a four-month low, according to Labor Department data released Thursday.

These numbers suggest Friday’s numbers are higher. LPL Financial’s chief economist Jeffrey Roach wrote in an investor memo on Thursday that there were signs of “healthy jobs numbers again.”

Wall Street seems to be gearing up for bad news. Futures markets this morning priced in a 0.25 percentage point rate hike at this month’s Fed rate meeting, raising the odds of a second rate hike in September. Stocks and bonds tumbled after Thursday’s release of ADP data as investors worried further Fed action could hurt economic growth.

The Fed’s own economists expect a mild recession by the fourth quarter. But Friday’s payroll numbers could change that decision. “Given continued strong labor market conditions and the resilience of consumer spending, the staff said the economy could continue to grow moderately and avoid a recession almost as well as the criteria for a mild recession. I thought,” he said. Minutes of the Fed’s recent rate-setting meeting Said.

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Samsung issued a profit warning after sluggish chip demand. The South Korean tech giant estimates second-quarter earnings at: 96 percent plunge The year-on-year increase was due to the continued decline in demand for memory chips due to the global slump in computer and smartphone sales. This is a sign of the recent boom in AI-related spending. We’re screwed To overcome other weaknesses of the semiconductor market.

The Chinese government reportedly plans to end its crackdown on the Ant group. Chinese regulators Fine Ant, a fintech giant owned by AlibabaThe fine of at least $1.1 billion is one of the highest fines for an internet company in the country, according to Reuters. The move is expected to end a multi-year investigation into Ant after government officials blocked the company’s plans to go public.

Ford reports strong sales. New vehicle purchases rose 10% in the April quarter as demand for trucks recovered. But Ford’s shares tumbled on Thursday as sales of electric vehicles fell over the same period, undermining arch-rival Tesla. Analysts believe that while overall car sales are up year-on-year, the pace is still well below pre-pandemic levels.

A major food delivery company has filed a lawsuit over New York City’s new minimum wage rule. DoorDash, Grubhub, and Uber allege laws apply that require drivers to: paid at least $18 an hour, can unduly harm the industry and lead to higher prices for consumers. The regulation, which will go into effect on July 12, has drawn both support and opposition from the drivers themselves.

Mr. Musk challenges Mr. Zuckerberg to a fight

The feud between Elon Musk and Mark Zuckerberg intensified on Thursday when Twitter threatened to sue Meta for stealing trade secrets to build rival messaging platform Thread.

However, some thought the legal accusation lacked detail and was a sign that Twitter was reeling from the massive success of its new platform. Threads was downloaded over 30 million times in the first day after its release, the fastest pace for an app in history.

Twitter accused Meta of using former employees to build new businesses. Alex Spiro, an attorney at the company and a longtime attorney for Mr. Musk, sent a letter to Meta on Wednesday citing the theft of intellectual property, the hiring of former employees who had access to sensitive information, and the terms of Twitter’s data collection. accused the company of violating service. This letter was first reported by semaphore.

“Competition is good, cheating is bad” Musk Said on thursday. Meanwhile, Twitter’s new CEO Linda Yaccarino downplayed the new competition. “We are often imitated, but the Twitter community can never be imitated,” she said. tweeted.

Zuckerberg wasn’t too upset. “This is as good a start as we could have hoped for!” he wrote in the thread. Investors agreed. Meta shares hit a 52-week high on Thursday. Meta spokesman Andy Stone said in Threads that none of the former Twitter engineers are working on the new platform.

Intellectual property litigation General among big tech companies, especially given that workers move frequently. But for companies to win, they have to clear the high hurdle of proving that the “trade secrets” that give them a real competitive advantage have been stolen. In many cases, both parties reach a settlement in the following ways: arbitration.

Not sure what Twitter is actual the accusation. The letter was vague about what trade secrets were stolen, and did not say the employee had breached the secret, only stating that the employee had “continuing obligations” to the company. ing.

Sharon Sandeen, a law professor who specializes in trade secrets at the Mitchell Hamline School of Law, said, “If I were writing a letter like this and I knew they were under an explicit non-disclosure agreement, If I did, I would say,” he told Dealbook.

University of San Diego law professor Orry Lobel added: “The idea of a social media platform that provides short news and updates is no secret, and I don’t think there’s much to be secret about its format and deployment.” “

Yellen criticizes Chinese government pressure on US companies

Treasury Secretary Janet Yellen faces an extremely dangerous move during her four-day visit to China, trying to defuse tensions between the two countries while taking a tough stance against China’s often aggressive growth efforts. Within the Biden administration, he is known for advocating a non-combatant stance toward China, including restricting exports and investment.

But in some of her first public remarks after visiting North Korea, Yellen took an unusually hawkish stance, lashing out at what she said was an unjustified attack by China on companies with foreign ties, according to Allan of The Times. Rapeport writes.

“In my meetings with my counterparts, I have shared the concerns I have heard from the U.S. business community, including China’s use of non-market tools, such as increased subsidies for state-owned and domestic firms, and China’s market access barriers for foreign companies,” Yellen told members of the American Chamber of Commerce in China at a roundtable event. “We are particularly troubled by the punitive actions taken against US companies in recent months.” Representatives of Boeing, Bank of America and agricultural giant Cargill were also present.

Regarding these measures and China’s new measures, Yellen said: restrict export The export of some semiconductor-related minerals justified the Biden administration’s efforts to build supply chains outside of China.

Can Bitcoin Beat BlackRock?

Six years ago, BlackRock’s Larry Fink disavowed Bitcoin:Indicators of money launderingMr. Fink, now the CEO of the world’s largest wealth management company, Bitcoin price hits 13-month high, BlackRock joins a long line of companies seeking SEC approval for a Bitcoin-related exchange-traded fund. Such funds will allow retail investors to bet on Bitcoin prices through the stock market.

But it’s unclear whether even Fink, one of Wall Street’s most influential leaders, will thrive when dozens of smaller cryptocurrency players have failed.

BlackRock is pursuing the holy grail of cryptocurrency, Spot Bitcoin ETF SEC Approves Bitcoin Futures ETF. Bitcoin Futures ETFs are considered less likely to be fraudulent as they are under the jurisdiction of the regulated CME Commodity Exchange.

However, authorities have repeatedly denied applications for such ETFs, and one of their concerns is that such funds, which would directly hold Bitcoin, would be vulnerable to market manipulation.

Fink’s company is trying to address these concerns. BlackRock’s applications include monitoring sharing agreement It was a collaboration between Nasdaq and cryptocurrency exchange Coinbase aimed at preventing ETF fraud and manipulation, and the measure has since been adopted by other fund managers seeking approval for their own funds. .

Michael Sonnenschein, CEO of cryptocurrency giant Grayscale, told Dealbook that BlackRock’s move is encouraging. But he cautioned that the surveillance-sharing proposal is probably not a “silver bullet.”

However, the ultimate fate of these funds may not be up to the SEC. Grayscale sued the agency last year for denying an application to convert a bitcoin trust into an ETF. The company claims the refusal was arbitrary because the SEC approves Bitcoin futures funds. Sonnenschein said he expects the Federal Court of Appeals to rule on the matter soon.

Many things are at stake, Whichever ETF gets approved first, it could gain a lead among investors that will be hard to beat, according to Matthew Siegel, head of digital asset research at investment management firm VanEck. (BlackRock declined to comment.)