Good morning! Here are the major stories you need to hear about before markets open in the US.
Get Ready For The US Jobs Report. The Department of Labour will release its November employment situation report at 8:30 a.m. ET. Economists estimated US companies added 230,000 net nonfarm payrolls, which would be right in line with the monthly average for 2014. The unemployment rate is expected to remain unchanged at 5.8%, which is a six-year low.
The Bull’s Take. In a note to clients ahead of the report, Brian Jones at Societe Generale, who expects nonfarm payrolls grew by 275,000 in November, said: “Our analysis suggests that last month’s readings on hiring, joblessness and wages will support the more upbeat assessment of labour-market conditions expressed by monetary policymakers following their October gathering.” Jones added that while his forecast was above consensus expectations, a reading in line with his estimates would not alter his expectation that the Fed would keep interest rates at 0% to 0.25% until next June.
The Bear’s Take. Ian Shepherdson at Pantheon Macroeconomics expects nonfarm payrolls grew by just 180,000 in November, owing to the severe weather seen in the northern Midwestern states at the end of the month. Shepherdson expects, however, that the October report will be revised higher, and he expects that down the road, November’s number will also be revised higher. Since 2009, November payroll gains have had a median upward revision of 71,000 after two months’ worth of revisions.
Markets Are Up A Bit. US futures are in the green, with Dow futures up 25 points and S&P futures up 2 points. Europe is up, with Britain’s FTSE 100 up 0.6%, France’s CAC 40 up 1.2%, and Germany’s DAX up 1.3%. Asia closed higher, with Japan Nikkei rising 0.2%, Hong Kong’s Hang Seng up 0.7%, and the Shanghai composite up 1.3%.
The ECB Is Gearing Up For Stimulus. Despite falling short of promising a more serious asset-buying program in their meeting Thursday, two senior European central bankers told Bloomberg a parcel of purchases including government debt was being prepared for next month.
German Factory Orders Bounced In October. Orders rose 2.5% from September, beating expectations for a 0.5% increase.
Germany Slashes Its 2015 Growth Forecast. The Bundesbank, Germany’s central bank, slashed its growth forecasts for the economy for 2014, 2015, and 2016. Growth in 2015 is expected to be just 1%, half of the 2% that was previously expected. From the Bundesbank: “The German economy lost considerable momentum in the second and third quarters of 2014 and moved onto a flatter growth path. Following a brisk start to the year, which was partly fuelled by favourable weather conditions, real GDP did not grow any further in the second and third quarters after seasonal and working-day adjustment and thus failed to live up to the hopes of the June outlook.”
Another Saudi Price Cut Sent Brent Back Below $US70. Saudi Arabia cut monthly prices for crude it sells to the US and Asia, while Iraq is set to export more oil, preventing Brent from staging a recovery after a near 13% plunge last week and sending the price back to $US69.28.
Shanghai’s Stock Exchange Saw Volatility At A 4-Year High. Stocks on China’s biggest exchange plunged from a 2.7% increase to a 3% drop Friday, the most volatile swings since 2010, according to Bloomberg.
JPMorgan Held The Top Spot As Best-Performing Investment Bank In 2014 So Far. According to analytics firm Coalition, JPMorgan comes top by revenue, followed by Goldman Sachs, Deutsche Bank, Citi, and BAML in that order.
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