Non-farm payrolls rose by 235,000 in August, sharply below market expectations of 733,000 and the smallest increase since January 2021, according to data released by the Labor Department on Friday.
In terms of unemployment rate, the US unemployment rate in August was 5.2%, in line with market expectations and slightly improved from the previous value of 5.4%. The average hourly wage continued to improve in August, rising 0.6% month-on-month and exceeding market expectations by 0.3%.
It had been widely expected that the Fed would give advance notice in September and formally announce the start of scaling back its bond purchases in November. But after the data were released, Wall Street almost unanimously agreed that an announcement in September was almost impossible, but there was still a good chance of an official announcement in November or December.
While non-farm payrolls fell unexpectedly in August, almost all of the decline can be attributed to a temporary slowdown in the education and leisure-hotel sector, suggesting that job growth is still likely to rebound in the coming months. Recovery stocks took a setback lately but Investors should watch this space.
In general, market seems to accept that it is reasonable for US stocks to hit new highs as strong earnings, cash flow and the rate of return from major companies meant US stocks should be able to maintain record highs. I will talk about Apple later as an example.
The August manufacturing PMIs were cast adrift from a weak service sector’s PMI that disappointed by a very wide margin (47.5 vs 54). China’s businesses and the broader economy came under increasing pressure in August as factory activity expanded at a slower pace while the services sector slumped into contraction, raising the likelihood of more near-term policy support to boost growth. High raw material prices, slowing exports, tighter measures to tame hot property prices and a campaign to reduce carbon emissions. Higher raw material prices, especially of metals and semiconductors, have also pressured profits. Earnings at China’s industrial firms in July slowed for the fifth straight month.
More perturbing were signs that financial conditions were tightening with capital raising retracing. Coincidentally, last week Banks tightened credit lines for mortgages in first-tier cities – crimping mortgage quotas as well as asking for higher down payments. Also restrict on rent to boost affordability. July’s data was insipid with FAI and property especially weak declining by -0.4% y-y and property new starts plunging -21.5% y-y. Indeed, increasing property restrictions have meant two straight months of declining home sales and construction starts accounting for around half of the forecasted GDP slowdown. Largest Chinese property developer China Vanke, August Contracted Sales 37B Yuan Vs. 51.5B Yuan m/m. It seems plenty of room to increase local government bond issuance.
Expect Beijing to maintain its policy combination of ‘targeted tightening’ for a few sectors, especially the property sector and high-polluting industries, complemented by ‘universal easing’ for the rest of the economy.”
Analysts expect more policy support later in year, expect the central bank to deliver a further cut to the amount of cash banks must hold as reserves later this year to lift growth, on top of last month’s cut which released around 1 trillion yuan ($6.47 trillion) in long-term liquidity into the economy.
Apple Inc (AAPL.US) rose to historical high broker $150/share or $2.5trn market cap. on plans to launch “Apple Inc Automobile” in 2024.
Apple Inc is visiting South Korean and Japanese supply chains and carmakers to prepare for mass production of Apple Car electric vehicles in 2024. The company has also contacted BYD and Ningde about battery issues. The company has also visited Toyota Motor Corp, SK Group and LG Electronics. The main topic of discussion between the two sides is how to produce Apple Car in the context of a global chip shortage.
In terms of batteries, Apple Inc is considering equipping the Apple Car with lithium iron phosphate (LFP) batteries instead of lithium-ion batteries for safety reasons. But there are currently no South Korean manufacturers producing LFP batteries, and industry insiders expect Apple Inc to work with Chinese manufacturers to develop the technology. According to media reports, Apple Inc has been in contact with BYD and Ningde Times about battery issues.
Apple also announced news on iPhone 13 which will be released soon. Apple plans to add satellite capabilities to iPhone 13, and believes that iPhone 13 will usher in strong market demand. According to the Asian supply chain in the second half of the year, Apple Inc’s iPhone production would be between 130 million and 150 million, with iPhone 13 accounting for 35 -45 % of iPhone manufacturing in the third quarter. Foxconn will recruit another 200000 workers by the end of September.
Also see obviously funds flew into the US tech giants FAAMG.
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