Thursday, March 15, 2018
This Thursday, as almost every pre-market Thursday, we get a fresh read on Initial Jobless Claims. We also see other economic metrics on this particular Thursday, including Import/Export Prices, Empire State and Philly Fed reports. In short, a wealth of economic data ahead of next week’s Fed meeting, where there is more than a 90% chance interest rates will hike another quarter-percent, to 1.75-2.00%.
Initial Jobless Claims fell to near the bottom of its multi-year range of 225-250K, to 226K. This is a drop of 4000 claims from last week. Everyone knows we’re seeing a tremendously strong labor market in the U.S. right now, with no signs of exhaustion. Aside from the late summer 2017 hurricane-related spike in jobless claims, this range has held strong throughout the economic recovery in the U.S.
Continuing claims stayed mostly consistent at 1.879 million, slightly above the previous week’s 1.875 million. Remembering back to last week’s Employment Report, which saw gains of 313K new jobs in February and an Unemployment Rate steady at 4.1% (with 600K new entries into the labor force), this strength appears to be continuing through the month of March, as well.
Import Prices for February rose 0.4%, a bit hotter than expected. Stripping out volatile petrol prices, this figure ticks up to 0.5%, as the ex-Autos read does, too. Year over year imports have gone up 3.5% in price, which is a little cooler than consensus estimates. Exports rose 0.2% month over month (0.3% was expected), and year over year reached 3.3%.
These figures are largely in-line with what we’ve seen, again, for a while now. However, with new steel and aluminum tariffs on the horizon near-term, we can expect some surprises in these metrics in the months and quarters ahead. That said, what the actual tariff policy will wind up being is still up in the air somewhat. Many expect either a meeting of the minds or a showdown between President Trump’s advisors Peter Navarro and Larry Kudlow, who was just named this week to replace White House Economic Advisor Gary Cohn.
New March results for both the Empire State (New York) and Philly Fed (Philadelphia) also hit the tape ahead of today’s opening bell. The Empire State headline showed growth of 22.5% — 7 points higher than analysts were expecting. The Philly Fed survey showed 22.3%, pretty much in-line with expectations. Both regions are showing steady production without peaking into concerning inflationary territory.
Pre-market futures are in the green a half hour before the market opens. The S&P 500 is trying to fight off the first 4-straight days of down trading since late 2017. 10-year bonds are still yielding in the mid-2.8s, as they have for the past 15 straight sessions. None of the economic data reported this morning — while important and instructional, to the Fed especially, as well as market participants — look to be pushing these needles too far in any direction today.
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