Expect a Strange Mix of Jobs Numbers and Fed Chatter Today

It's Jobs Day. Will Wall Street react? Yes. Do the results of this month's employment survey really matter? Not as much as usual. Why? Simple: The surveys were put together ahead of the recent spate of federal government payroll reductions. Yes, the print for private sector job creation will matter somewhat and probably get a lot of attention after the ADP Employment Report on Wednesday showed a significant drop-off in net private sector hirings for February. That number landed at a seasonally adjusted net 77,000 payroll adds for the month, sharply lower than the 186,000 that printed for January and the weakest print for that series since the pandemic era month of December 2020.

This morning, consensus on the street is for close to 160,000 non-farm jobs created during the month. Readers will see below that my estimate is toward the lower end of the range of expectations at 153,000. Private sector job creation is seen by Wall Street at a rough 143,000 positions (I don't have my own estimate for this number), which would be up from 111,000 in January. Remember that data provided by the ADP and the Bureau of Labor Statistics, which is an agency within the Department of Labor, rarely match. Economists used to look at the BLS as the more accurate of the two, but that changed a couple of years back when ADP realized that their methods for data collection and information dissemination needed to be modernized.

ADP took their series offline for a few months and since then it has been considered the more accurate of the two. The BLS surveys over the past two years at least have been noted for their wildly inaccurate adjustments, for seasonality as well as for their birth/death (of businesses) modeling. Though humans know better, keyword reading algorithms do not. That's why you and I have to play the game and pretend just like the talking heads on financial TV with absolutely no skin in the game, that these numbers are for real.

The trends, though, are usually sort of on the right track. The numbers for job creation, however, are nearly always revised over the next two months, sometimes significantly so. Usually, lower, too. Then once a year, the BLS will make major adjustments to their benchmarks that change everything, and we'll just keep on going with the understanding that all of the employment data released for a year was incorrect, despite the fact that the data had impacted both investments made, and policy implemented.

Oh, the federal government's layoffs? Yeah, they started for the most part after the February surveys were conducted. Don't worry, though. I hear that if you whistle as you walk past the graveyard that you can distract yourself and pretend the creepy crawlers are not all about.

Chinese Economy Rolling Over?

The General Administration of Customs for mainland China posted that nation's import / export data for the January / February period overnight and the numbers were not pretty. Chinese exports grew just 2.3% in U.S. dollar terms on a year-over-year basis, falling well short of the 5% growth that had been the consensus view. If you think that's not good, imports simply fell off of a cliff. Imports into China contracted 8.4% on a year-over-year basis, which is the sharpest contraction for that series since July 2023. That missed the 1% growth that economists had expected by a country mile. No, make that two country miles.

What does that mean? Simply put, the surge in exports to get ahead of U.S. President Donald Trump's increased tariffs just never fully materialized, and demand for goods within China has withered significantly. Readers might need to recall that last year's demand for goods had been goosed by fiscal / monetary stimulus. That positive effect has apparently worn off.

Disappointed Crypto Bros

The President of the United States did indeed finally sign that long-awaited Executive Order on Thursday evening that would create for the nation a strategic Bitcoin reserve and with it a stockpile of other cryptocurrencies or digital assets. By all accounts though, much to the disappointment of the crypto crowd, the U.S. government will not be spending any tax dollars or seek funding in any other way to purchase Bitcoin.

This newly created reserve will be capitalized with Bitcoin and other digital assets already owned by the federal government largely attributed to asset freezes, seizures, and forfeitures due to civil or criminal outcomes. These actions have left the U.S. government with a rough $16.4 billion in Bitcoin and an additional $400 million in other crypto-assets.

As a matter of fact, it would be easier for the U.S. Treasury to sell off these assets than to purchase more. The order states that the department “may determine strategies for responsible stewardship, including potential sales." The order also states that adding to the reserve through the purchase of more assets would require “budget-neutral strategies for acquiring additional Bitcoin, provided that those strategies impose no incremental costs on American taxpayers.”

Something Going On?

Usually on "Jobs Day"... the Fed has the presence of mind to pipe down and stay out of the way. We usually hear our central bankers' opinions on labor markets and policy starting the Monday after a "Jobs Friday." That is not the case today.

Starting less than two hours after the February jobs data crosses the tape, four of our Fed officials will be making public speaking appearances, headlined by Fed Chair Jerome Powell who will speak on the economy from Chicago at 12:30 p.m. ET. Other notables speaking from the same forum will be Fed Gov. Michelle Bowman, who is a leader on the hawkish side of the football and New York Fed Pres. John "Lightning" Williams, who has never impressed anyone with his quick wit nor thoughts on policy.

In addition, President Trump will address the nation at 1:30 ET this afternoon. 

Remember...

... When we told you that the "Outside Day" on Monday signaled increased volatility for the days ahead. Well, wasn't that the darned truth?

That said, take a look at the way the 200-day simple moving average came to the rescue at the lows of the Thursday session. The S&P 500 loses that line, and this market will get uglier than what we've just seen, maybe a lot uglier. The S&P 500 is just 6.7% below its all-time intraday record high made on Feb. 19.

The Nasdaq Composite has given up that line, but has not lost contact with it. The Nasdaq Composite closed on Thursday down 10.6% from its all-time high on Dec. 16. In case you were wondering, the Philadelphia Semiconductor Index lost contact with its 200-day simple moving average on Feb. 25 and closed on Thursday, down 24.3% from its all-time record high back on July 11. Oh joy.

Note to Readers

I am taking a week off, gang. I do not expect to write again after today, until St. Patrick's Day. As always, I am reachable by the public at my Twitter / "X" handle... @Sarge986.

February Employment Situation (08:30 ET)

Non-Farm Payrolls: Expecting 153K, Last 143K.

Unemployment Rate: Expecting 4.0%, Last 4.0%.

Underemployment Rate: Expecting 7.6%, Last 7.5%.

Participation Rate: Expecting 62.6%, Last 62.6%.

Average Hourly Earnings: Expecting 4.1% y/y, Last 4.1% y/y.

Average Weekly Hours: Expecting 34.1, last 34.1 hours.

Economics (All Times Eastern)

13:00 - Baker Hughes Total Rig Count (Weekly): Last 593.

13:00 - Baker Hughes Oil Rig Count (Weekly): Last 489.

13:00 - Consumer Credit (Jan): Last $40.85B.

The Fed (All Times Eastern)

10:15 - Speaker: Reserve Board Gov. Michelle Bowman.

10:45 - Speaker: New York Fed Pres. John Williams.

12:20 p.m. - Speaker: Reserve Board Gov. Adriana Kugler.

12:30 - Speaker: Federal Reserve Chair Jerome Powell.

1:00 - Speaker: Reserve Board Gov. Adriana Kugler.

Today's Earnings Highlights (Consensus EPS Expectations)

Before the Open: GCO (3.31)

At the time of publication, Guilfoyle had no position in any security mentioned.