The so-called JOLTS report, which measures job openings, separations, and the pace of hiring people and quitting jobs, came in slightly below consensus for August. It is still near the all-time high established in July.

Although it’s more of a rearview look at the economy than most data releases, the trend is a critical part of decision-making at the Federal Reserve. We are told it is featured prominently on Janet Yellen’s dashboard.  The biggest jump in openings was in healthcare and social services (+71,000), and goods manufacturing up (+31,000). This buttresses my argument that the dirty fingernail economy keeps picking up steam, and it could see big increases in wages. 

That being said, Fed minutes make a December rate hike a done deal. However, there is little consensus among committee members on how transitory inflation (read: delayed wage hikes) will be. Read the tea leaves. It seems the Fed is bracing for the unemployment rate to dip below 4.0%. 

The market took conventional wisdom news of an impending rate hike in stride; in fact, it found its footing and rallied into the close on Wednesday.

The three major indices all closed at new record highs for the session, extending their juggernaut move since the election of President Trump:

• The Dow: 65^th record
• S&P 500: 52^nd record
• NASDAQ: 64^th record

Bond Rotation Sighting #569

I wrote that the last of signs of the long-awaited rotation out of bonds into stocks may have begun after all. The bond rally is lurching towards its fourth decade. It’s early, but it might explain the new bid for the market even as the Fed becomes less accommodative. The 10-year chart shows the yield bouncing off a perfect double bottom. 

This theory becomes more credible if the yield crosses above 2.50%, which is something to watch closely.

Keep on Trucking

Last night, President Trump gave a rousing speech in front of truck drivers in Harrisburg, Pennsylvania.  It was the right audience at the right time for sure as truckers are the lifeblood of American commerce, but high taxes and regulations have held back the industry.

The turnover in the first half of the year surged from 16% to 90%, the highest since the first-quarter 2015 (1Q15):

• 350,000 trucking companies
• 90% truck owner-operators have 10 trucks or less

There is a myth about folks not wanting to be truck drivers. And yet, the Department of Transportation registers 40,000 new commercial driver’s licenses each month.  The issues are stringent rules and the difficult rigors of the job along with high taxes and regulations.

Big truckers in 2016 endured hefty effective tax rates:

• J.B. Hunt Transport Services (JBHT): 38%
• Swift Transportation Co. (SWFT): 38%
• Knight-Swift Transportation (KNX): 31%

America First begins with helping those that transport our food and medicine.

Special Report Please ask about our Trucking Report that was released this summer. It has been a barnburner and it’s updated. Ask your rep or contact: research@wstreet.com

 

Today’s Session

Key bank earnings are out this morning, they saw beats but different initial assessments of quality of numbers.

Citigroup

Citigroup is being applauded for growth in key businesses and only seeing an 11% decline in trading revenue.  Consumer banking improved although not so much stateside, +1% versus +8% internationally.

3Q Results	Actual	Estimate
Revenue	$18.2 billion	$17.9 billion
Earnings Per Share	$1.42	$1.32

JP Morgan

Trading revenue is down 21% from a year ago, initially sending shares lower, but during the call Jamie Dimon soothe anxiety with upbeat talk about long term prospects especially with lowered corporate taxes.

3Q Results	Actual	Estimate
Revenue	$26.2 billion	$25.2 billion
Earnings Per Share	$1.76	$1.65

Overall, earning season anxiety is running high and I’m not getting in front of the emotions that are pressuring the market this morning.  The script has been these knee jerk sells, creating amazing buying opportunities, so let’s keep our powder dry for the moment.

Comments

Thanks for the info ..keep up the good work.. Derrick on 10/12/2017 10:29:10 AM

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