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Markets Take a Break Before New Jobs Numbers

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Tuesday, October 2, 2018

Following a lower trading day across the globe overnight, we are seeing U.S. market futures dipping slightly in the red this morning. Perhaps some profit-taking after yesterday’s big day, especially in the Dow, as there is no new major economic data on which to trade ahead of today’s opening bell.

We do expect to hear from various Fed members after the market opens both today and tomorrow, including Fed Chair Jay Powell today at noon ET and 4pm Wednesday. Our analysts will be listening for specifics regarding the future of this robust economy, how they’ve changed from the Fed members’ previous statements and the tone each one of them takes as they deliver their addresses.

We have some new delivery and manufacturing numbers from Tesla (TSLA - Free Report) this morning, with slightly better-than-expected Q3 vehicles produced and delivered in Q3 (which ended Friday). Analysts had been looking for Model 3 production to come in at 52,500 units, and Tesla created 53K. The total amount of vehicles produced reached 80,142, with 83,500 total deliveries. The company’s target of 100K delivered for full-year 2018 is unchanged.

Tesla has come a long way since late last week, when CEO Elon Musk was defiant in the face of an SEC investigation that he committed securities fraud. Having now reached a deal (paying the piper to the tune of $20 million from Tesla and $20 million from Musk personally, plus the surrender of his Chairmanship for the next 3 years), Tesla’s outlook is less stormy. The company may even report its first-even quarterly profit when Q3 earnings are released late this month.

Amazon (AMZN - Free Report) has ratcheted up its minimum wage to $15 per hour from the previous federally mandated $7.25 previously. This puts the lowest rung of the Amazon pay ladder with higher paying jobs than those of Target (TGT - Free Report) , $12/hour) and Walmart (WMT - Free Report) , $11). Should bottom-rung employment start seeing this sort of wage-growth bottom-swell, expect this to ignite hotter inflation in the general economy before too long.

Speaking of jobs, tomorrow we get the ADP (ADP - Free Report) private-sector payroll totals for the month of September, followed on Friday with the latest Bureau of Labor Statistics (BLS) jobs numbers, including the latest Unemployment Rate, wage growth and U-6 “real” unemployment. These figures will move the needle more than anything we’ve so far seen this week, especially if they are much better than expected.

And PepsiCo (PEP - Free Report) has released earnings for its fiscal Q3, beating estimates on top and bottom lines — marking at least 20 straight quarters of outperforming on earnings — with headlines of $1.59 per share and $16.49 billion. However, a stronger dollar has made a dent in the company’s international businesses, and forward full-year guidance has been pulled back by a nickel. This has sent Pepsi’s share price down another 1.6%; it is down roughly 9% from the start of the year. For more on PEP’s earnings, click here.

Mark Vickery
Senior Editor

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