The jobs report revealed an unexpected outcome, but it's not what you think – Kitco NEWS
Today’s jobs report for February came in well over forecasts by economists that were polled by various news services. The polls of economists predicted that there would be a total of between 200,000 to 225,000 new jobs added last month. This would have been a decent number, but extremely tepid when compared to the 517,000 new jobs added to payrolls during January. Chairman Powell addressed the House and Senate earlier this week in which he attributed the strong numbers of January’s jobs report as the outcome of un-seasonally warm weather.
Today the US Labor Department showed that job growth continues to convey strong economic growth in the United States. The jobs report certainly reflected that, revealing that the total nonfarm payroll employment increased by 311,000.
Today’s jobs report was exceedingly important with profound implications for the upcoming FOMC meeting and the rate hike they will announce at the conclusion on March 22. It was widely believed by many analysts including myself that if the report showed that jobs came in strongly above expectations or forecasts it would give the Federal Reserve the necessary ammunition or data to become even more aggressive in implementing a 50-bps (1/2%) rate hike which would take the Federal Reserve’s current terminal rate from between 4 ½% – 4 ¾% to between 5% – 5 ¼%.
This more aggressive rate hike was a modification of their former policy to slow the pace of rate hikes which was evident in the fact that after four consecutive rate hikes of ¾% last year in December the Fed reduced the magnitude of each rate hike just slightly to ½% then followed its “slowing the pace philosophy” with a rate hike of ¼% in January.
However, recent reports such as last month’s jobs report coming in over 500,000 and inflation reports revealed that certain sectors continue to run hot with high inflationary pressures. The primary sector that had been troublesome to the Federal Reserve is the services industry. This changed the narrative of the Federal Reserve members. At first, it was only the more hawkish faction including Mary Daly and James Bullard which both recommended a more aggressive stance containing a 50-bps rate hike this month. It was not long after that the more conservative faction of Federal Reserve officials moved into that camp and this report was the line in the sand that would either seal the deal of ½% rate hike or cause them to abandon it.
While market participants had braced themselves for an unexpected result with a robust jobs report which Fed officials warned would lead to a larger interest rate hike, the unexpected outcome was that it now is most likely that the Fed will only raise rates by ¼%. Truly an unexpected outcome but not because of the number of new jobs added to payroll last month but rather a change in the unemployment rate that no one had anticipated. Forecasts were looking for a 0.1% reduction from 3.5% in January to 3.4% in February. While the economists were correct in that the net change to the unemployment numbers which came in at 0.1% however, it was an uptick rather than a downtick. The February unemployment numbers rose to 3.6% above the January unemployment numbers that came in at 3.5%.
This took gold futures strongly higher with the most active August contract currently fixed at $1872.70 resulting from today’s gain of $38.10 or 2.08%. Gold opened at $1835, traded to a low of $1830 and a high of $1874.30. On a technical basis, today’s close took gold prices right to the 50-day simple moving average which is currently fixed at $1872.70.
With the jobs report behind us we now have a weekend to decompress until Monday morning when we will once again focus on the next key and critical report the CPI, the Consumer Price Index for February.
Let us leave that topic for Monday have a great weekend.
Wishing you as always good trading,
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Live updates: Fed rate decision countdown – CNN
UK consumer prices jumped by 10.4% in February compared with a year ago, as food inflation hit its highest level in more than 45 years, and as the cost of visiting restaurants and hotels increased, official data showed Wednesday.
Food prices soared 18.2% through the year to February, the sharpest rise since the late 1970s. The Office for National Statistics noted particular increases for some salad and vegetable items, partly caused by shortages, which led to rationing by supermarkets.
The surprise uptick in inflation in February follows months of deceleration since the pace of price rises reached a 41-year high of 11.1% in October.
The latest figures could make it more likely that the Bank of England hikes interest rates again when it meets Thursday.
Although recent turmoil in the banking sector is expected to weaken economic activity, as lending criteria are tightened, and so dampen inflation, “the Bank of England may well want to see hard evidence of that before it stops raising interest rates,” said Paul Dales, chief UK economist at Capital Economics.
“It’s still a very close call, but these figures give us a bit more confidence in our forecast that the Bank will raise interest rates from 4% to 4.25% tomorrow.”
But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said increases in food inflation and catering services inflation accounted for all of the rise in the headline rate and both were linked to the jump in the price of fresh food as a result of bad harvests.
“This boost should unwind over the coming months,” he said on Twitter. “It makes little sense to hike rates to counter a weather-related jump in food prices.”
Core inflation — which strips out volatile food and energy costs — also rose, coming in at 6.2% in the year to February, up from 5.8% in January.
The data complicates the central bank’s decision over whether it should raise rates for the 11th consecutive time Thursday — and makes it harder for the government to deliver on its January pledge to halve inflation this year.
And Britons are still getting poorer. Wages rose 6.5% in January compared with a year prior, far below the inflation rate both that month and in February.
Stock market news today: Stocks waver with all eyes on Fed meeting – Yahoo Canada Finance
U.S. stocks wavered early Wednesday as Wall Street awaits for the Federal Reserve’s latest interest rate decision amid of a fast-moving banking crisis.
The S&P 500 (^GSPC) ticked down near the flatline, and the Dow Jones Industrial Average (^DJI) edged higher. Contracts on the technology-heavy Nasdaq Composite (^IXIC) edged down by 0.1%.
U.S. government bond yields edged up. The benchmark 10-year Treasury yield increased to 3.6%, while on the front end of the yield curve, two-year yields rose 4.2%. Oil prices gained, with WTI crude up to $70 a barrel.
The Federal Reserve’s policy-making committee, headed by Chair Jerome Powell, will take center stage Wednesday. Market expectations have skewed firmly toward a 25-basis point rate hike or no move at all. The shift has been spurred by recent turmoil in the banking sector and the European Central Bank’s decision to hike rates by 50 basis points last Thursday.
Jim Reid and colleagues at Deutsche Bank believe that the “ECB’s decision last week offers a relevant blueprint for the Fed: Raise rates in line with expectations, drop forward guidance, but signal a continued tightening bias.”
This move came amid calls for central banks on both sides of the Atlantic to dial back on policy tightening in light of the banking crisis. Ahead of the U.S. policy meeting, markets are pricing in an 87% probability of a 25-basis point hike by the Fed – according to the CME FedWatch Tool.
The Fed releases its decision and economic projections at 2 p.m. ET, and Powell gives a statement and takes questions starting around 2:30 p.m. ET.
“Powell’s challenge in the press conference will be to maintain focus on fighting inflation while signaling flexibility in how they deal with the banking crisis,” Michael Feroli, Chief U.S. Economist at JPMorgan, wrote in a note to clients.
Regulators have taken pains to emphasize the banking system is stable. On Tuesday, Treasury Secretary Janet Yellen said the U.S. banking system is “sound” but additional rescue arrangements “could be warranted” if new failures pose risks to financial stability.
Bank sentiment slid on Wednesday after surging Tuesday amid Yellen’s comments. Regional bank stocks including First Republic Bank (FRC), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL),Regions Financial (RF), and Zions Bancorporation (ZION) all traded lower.
Separately, PacWest said it secured $1.4 billion in new cash from a firm backed by Apollo. The regional lender saw deposits drop 20% since the start of the new year.
Big bank stocks slipped, as Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) all traded down Wednesday morning.
Meanwhile, despite a $30 billion cash lifeline last week to First Republic, news reports are swirling that Wall Street executives and US officials are in talks over a new rescue plan to restore investor confidence and potentially ensure a buyer.
UBS Group AG (UBS) has offered to buy back 2.75 billion euros ($3 billion) worth of bonds that were issued days before the weekend’s forced marriage between UBS and Credit Suisse, Bloomberg reported. At the same time, Credit Suisse (CS) was ordered by the Swiss government to temporarily suspend certain forms of variable bonuses for its employees.
Here are other trending tickers on Yahoo Finance:
Nike (NKE): The sports apparel brand announced a dramatic fiscal third-quarter revenue beat of 8%, while earnings per share came in higher at 79 cents compared to expectations of 54 cents. Bloated inventory levels had been a concern for the company, but that appears to be reversing.
GameStop (GME): The meme stock reported after hours Tuesday sales came in 2% ahead of estimates. The retailer posted a surprise adjusted earnings per share of 16 cents compared to analysts expectations of a loss of 15 cents per share.
AMC Entertainment Holdings, Inc. (AMC): Shares are trading higher amid the strength posted by GameStop earnings. Both stocks often move in tandem, as this duo is popular among retail investors who tend to heavily short stocks.
Coinbase (COIN): Bitcoin’s rally is fueling a bounce in shares of Coinbase amid reignited interest in digital assets.
XRP USD (XRP-USD): The altcoin ripple has surged 13% in the past 24 hours to $0.45 amid ongoing case between XRP and the Securities and Exchange Commission (SEC) in the US.
On the earnings calendar, results from Chewy (CHWY) and KB Home (KBH) are set for release on Wednesday.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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Shake Shack plans to expand to Canada next year – CBC News
Shake Shack Inc. is expanding to Canada, with its first location planned for Toronto next year.
The New York-based restaurant chain made the announcement in a press release Wednesday, saying it will partner with two Toronto-based investment firms — Osmington Inc. and Harlo Entertainment Inc. — to open its first Canadian location in 2024.
The burger-and-fries chain first opened in New York in 2004 and has since expanded to have 290 locations across 32 U.S. states, and 150 international locations including London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo and Seoul.
The Toronto location will be its first in Canada, but the chain says it plans to have up to 35 locations across the country by 2035.
“We have been eyeing this incredible opportunity in Canada for quite some time,” said Michael Kark, the chain’s global licensing officer.
Osmington is a privately held commercial real estate investment fund owned and controlled by David Thomson, chairman of Thomson Reuters. Osmington’s assets also include the Winnipeg Jets, which it acquired when the NHL franchise was relocated from Atlanta. Osmington also owns the retail concourse at Toronto’s newly refurbished transit hub, Union Station.
“Shake Shack has long been a brand that we admire,” Osmington CEO Lawrence Zucker said in the release. “Their emphasis on community building, enlightened hospitality and exceptional food quality aligns with our values and we are thrilled to be bringing them to Canada.”
Burger wars heating up
Shake Shack’s long-awaited entrance into the Canadian market comes amid a wave of U.S. fast food brands expanding to Canada over the last decade.
Five Guys, Carl’s Jr., Wahlburgers and Blaze Pizza all flocked to Canada before Chick-fil-A and Dave’s Hot Chicken headed north in recent years.
The newest entrants leaned heavily on chicken, a category that has increased in popularity as some consumers become more health-conscious and shift their diets away from red meat.
Chicken sandwiches were included in 7.3 per cent of all restaurant orders in Canada in 2020, data released by research firm NPD Group found. That amounts to 386.4 million servings.
Some 17.6 million BBQ chicken sandwiches were ordered in Canada in 2020, up 40 per cent from the year before, while 228 million breaded chicken sandwiches were gobbled up, down three per cent from the year before.
However, burgers, the star of Shake Shack’s menu, still reign supreme. They were included in 9.6 per cent of all Canadian restaurant orders in 2020, which translated to 739.3 million servings of burgers.
Canadian companies have coped with the onslaught of American counterparts by expanding their own fast-food offerings. Several added chicken sandwiches and all-day breakfast menus, while Tim Hortons partnered with pop superstar Justin Bieber to launch three new Timbit flavours — called Timbiebs — and experimented with flatbread pizza.
But drawing in customers has become even more challenging after inflation reached a near 40-year high last year, making the cost of dining out harder for consumers to stomach.
Statistics Canada’s latest data shows the cost of food purchased from takeout restaurants increased 8.6 per cent since last February.
Visits to fast food joints in Canada were up nine per cent in 2022, just shy of the 11 per cent gain they saw in 2021, NPD Group research shows.
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