Traders have all eyes on this morning’s release of the November Employment Report. Economists are expecting a gain of around +200,000 jobs versus +261,000 in October, with the unemployment rate remaining unchanged at 3.7%.


Remember, the Federal Reserve is trying to take steam out of the labor market so a decline in jobs added and an increase in unemployment would actually be viewed as “bad news” that’s ultimately viewed as “good news.”

The main drawback of having such a tight labor market is that it drives up wages, which in turn helps fuel consumer spending and thus inflation. While wage gains have fallen from around +5% earlier this year, they were still running at a very high annual rate of +4.7% in October.

Economists expect another pullback to +4.6% for November. Right now, those wage gains aren’t going very far as inflation is running well ahead +6%, according to the October PCE Prices Index released yesterday, which is down from +6.3% the previous month.

The core rate, which strips out food and energy, also declined to +5.0% from +5.2% in September. Manufacturing and construction data yesterday point to more signs of the US economy cooling, which has been the theme across most economic reports released this week. Bulls still believe that the Fed will be less inclined to continue its aggressive tightening program if the economy starts to show signs of a pullback and could even reverse next year if we hit a significant downturn or enter recession.

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Bears continue to warn that while the Fed will eventually stop raising rates, they typically only lower them when the economy is trouble. Meaning hopes for Fed rate cuts could be a double-edged sword. Bears also continue to question the justification for pushing stock prices higher with flashing signs of not only a US slowdown, but a global one that could cut especially deep with China’s economic engine constantly under Covid lockdown and global energy supplies in limbo.

Data to watch

Looking to next week, the economic data highlights include Factory Orders and ISN Non-Manufacturing on Monday; the Trade Balance on Tuesday; Productivity and Costs and Consumer Credit on Wednesday; and the Producer Price Index and Consumer Sentiment on Friday. 

There are a handful if earnings to watch for next week, including AutoZone, Casey’s General Stores, and Toll Brothers on Tuesday; Campbell Soup on Wednesday; and Broadcom, Chewy, Costco, lululemon, Oracle, and Vail Resorts on Thursday.

It’s worth noting that the Georgia Senate runoff election is next Tuesday, the results of which could have some implications in Washington as far as how much control the Democrats are able to wield. Remember, there’s only 15 trading days left ahead of the Christmas holiday. Have a great weekend!

Wall Street Has All Eyes On The November Employment Report

Wishing you a great week!

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