Prior to the entering of this tough week, a relatively well-informed traders/investors should have been able to notice a highly possible case of global weak data, especially those coming from the US. We also did provide insight to the market earlier ( http://www.mail-archive.com/[email protected]/msg56372.html). What may be surprising a bit is the level of damage took place just in a single day. The intended effect is still the same, declining.
Now, global market is awaiting for the key US jobs data which also plays a role as the ultimate worst data expected, Friday's non-farm payroll report. Having received a gauntlet of upper-cut, punch and nearly technical knock out on Wednesday, market psychology tends to exaggerate the worst come to worse scenario. And, as Friday's non-farm payroll report is approaching tonight US time, a number of big trading houses and news agencies have concertedly revised their estimates showing what may seem an undershot low revision. It may be worth noted and anticipated as Sam Turner, senior portfolio manager of large cap stocks at RiverFront Investment Group, said in the beginning of this week that against the negative backdrop of recent data, any positive news should be well received. Turner said, "The fact the market has held in light of weak data is in itself a positive indication." To some extent, this anticipatory stance may be quite right if all of the down slide of US data-led global market on Wednesday is understood in such a way that market itself has attempted to discount the worst scenario which may come out this Friday, as the market did with the anticipated end of US quantitative easing by the short-term collapse of commodities last May. That said, it is always a prudent trading and investing rule to always adjust yourself with market strength and weakness. We still advise our clients to remain cautious and maintain selective stock trading and investing. Under this volatile circumstances, *the ability to differentiate* on what is and has been *expensive* and what is still *cheap* available in the market providing its alignment to market preferred group industry and contemporary economic cycle, is the key of rationale and successful trading amidst global market uncertainty. Below is some of recent Friday's job data revised estimate which may show how market might have just discounted the worst. >From Alphaville: Deutsche Bank: The May ADP report was significantly lower than the +185k we had been assuming, registering a gain of only 38k. Moreover, we also learned that the employment component of the ISM fell as well (58.2 vs. 62.7 previously). Together, both series point to a nonfarm payroll gain of +160k, down from our previous estimate of +225k which we cut last week from +300k. We are leaving our estimate of the unemployment rate at 8.9% which compares to an April reading of 9.0%; our preliminary May unemployment rate estimate had been 8.7%. Citigroup: With a very disappointing 38,000 rise in private employment reported by payroll processor ADP in a month without weather distortions or other special factors, we have cut our forecast for non-farm employment in May to a gain of 100,000 versus a previous forecast of 170,000. RBC: Despite the relatively spotty track record of late, the sharp deceleration in ADP employment begets a reassessment of expectations for Friday’s NFP numbers. We have taken our headline payrolls call down to 135k (from 190k) and private down to just 155k (from 207k). Now, ADP has under-predicted private payrolls by about 60k over the last few months. So taking that into account and also keeping in mind that job growth from the McDonald’s hiring spree should show up this month gets us to those levels. In the ISM Manufacturing Index we also saw the employment gauge drop 4.5 points to 58.2, a rather sharp decline that accompanied an overall very weak manufacturing reading. That too points to weaker manufacturing hiring. '+'
