Friday Morning Reads
- Digital Money Space to Private Sector
- Volatile Bonds
- Headed for $100 Trillion
- Shiba Inu Coin Craze Is Driving Demand for
- The World’s Addiction to Palm Oil
- The Power Grid Is Just Another Casino
- If the Labor Shortage Continues
- Battered Bond Traders
- To Build the Metaverse
- Boeing Shareholders Reach Settlement i
- Elon Musk Is Building a Sci-Fi World
- What Red Flags?
...more coming next week
It's been a long week of economic data, high-profile events and Q3 earnings, but there's one more to go before it comes to a close. The Labor Department will report the latest numbers on job growth this morning, with the figures set for release at 8:30 a.m. ET. Headwinds like the summer surge in COVID-19 infections are hoped to have subsided, giving more evidence that economic activity regained some momentum early in Q4, though seasonal hiring and worker shortages have been wild cards, weighing on recent reports.
Snapshot: Consensus estimates call for 450K jobs added in October, though September's report totaled 194K additional jobs, far short of a forecast of 500K. The unemployment rate is expected to tick down to 4.7% from 4.8%, while hourly wages are expected to climb by 4.9% on a year-over-year basis. That last number will be especially important for investors, given that the market is hyper-focused on inflation and whether it will continue to run hotter than expected.
"[The] payrolls numbers become even more significant, as it is the first full month of hiring following the expiration of federal enhanced unemployment benefits, while public health has simultaneously improved and labor demand has remained strong," noted Chris Hussey, managing director at Goldman Sachs.
Outlook: If job reports over the next few months point to stronger hiring, the Fed could accelerate its newly announced tapering plans. On the flip side, the central bank's announcement this week put markets on high alert for inflation, meaning it will be more sensitive to economic reports in the near-term. The ADP National Employment Report already showed an acceleration in private payrolls on Wednesday, while the number of Americans filing new claims for unemployment benefits has remained under 300K for four straight weeks.
Peloton (PTON) fell off the exercise bike late Thursday as shares cratered 30% to $60 in AH trading. The company slashed its annual revenue forecast by as much as $1B ($4.4B to $4.8B vs. a prior view of $5.4B), and cut estimates for subscribers and profit margins. It was also impacted by the unusual year-ago comparisons, as well as widely-reported supply chain problems and commodity cost pressures.
What happened? As people return to the gym following a pandemic hiatus, demand for Peloton equipment is not what it once was. Even before the update, the stock was down about 40% YTD (and tumbled 4% in the session prior to earnings). The softer than anticipated start to Q2 challenged visibility into near-term operating performance and lead Peloton to subsequently "recalibrate" its fiscal year outlook.
Back in August, the company hurt its profitability by cutting the price of its original bike by $400. Peloton further joined a chorus of corporations slamming Apple's ad-related privacy changes, which have made it more difficult to target shoppers. Attempts to scale back costs won't begin to show up for a quarter or two, while the firm hopes to be profitable before EBITDA by fiscal 2023.
Response from Peloton: "We remain convinced that the growth opportunity for Peloton is substantial and this informs our decision to prioritize accessibility and household acquisition over near-term profitability, particularly as our industry-leading net promoter scores and retention rates support a very strong consumer LTV (lifetime value) and unit economics."
The Biden administration has unveiled the details of its private sector vaccine mandate, which was first announced in September. Companies subject to the rules must guarantee that employees who aren't vaccinated against COVID produce a negative test at least weekly and wear a mask in the workplace. Employers are also not obligated to provide or pay for the tests, only if collective bargaining agreements require them to do so.
Bigger picture: The directive will apply to businesses with 100 or more employees, covering 84M workers nationwide. Employers who don't adhere to the requirements could face penalties of up to $13,653 for each reported violation, while the Occupational Safety and Health Administration will also check on compliance through company record-keeping and some in-person inspections. The mandate will come into force on Jan. 4, a month after a different vaccine directive goes into effect for federal contractors.
"Vaccination requirements are good for the economy," President Biden wrote in a White House statement. "While I would have much preferred that requirements not become necessary, too many people remain unvaccinated for us to get out of this pandemic for good."
Statistics: 37% of unvaccinated workers say they would leave their jobs rather than comply with a jab or testing mandate, according to the Kaiser Family Foundation. Another 46% would get tested weekly, while 11% say they would get the shot (6% don't know or refused to answer the poll conducted between Oct. 14-24). The mandate comes after a record 4.3M workers quit their jobs in August, the highest turnover in 20 years, and amid widespread concerns about supply chain bottlenecks and an economy that's still in recovery mode.
New York had been weighing legislation to ban Bitcoin (BTC-USD) mining for three years (so it could run an assessment on greenhouse gas emissions), but the times have quickly changed. On Thursday, New York City mayor-elect Eric Adams announced that he'll take his first three paychecks in Bitcoin once he takes office in 2022. "NYC is going to be the center of the cryptocurrency industry and other fast-growing, innovative industries! Just wait!" he said via tweet.
Upping the ante: The declaration comes two days after Miami mayor Francis Suarez said he'll take his next paycheck in 100% Bitcoin. Last month, Suarez proclaimed that Miami should become "the crypto capital of the world," saying he'd issue a request for a proposal to enable the city's residents to pay fees, and maybe someday taxes, in Bitcoin. The policies have already begun to attract investment, with startups, venture capital and crypto exchanges relocating or opening additional offices in the city.
Go deeper: Bitcoin 2021, the largest conference focused on Bitcoin, took place in Miami this summer. The event was sold-out with a crowd of 12,000 attendees, and thousands more participating throughout the coastal metropolis. While Miami has been trying to attract Bitcoin miners to make use of the region's nuclear power, New York has been another popular destination due to its cheap upstate energy prices and chilly climate (19.9% of the U.S. Bitcoin hashrate is in the state).
In Asia, Japan -0.6%. Hong Kong -1.4%. China -1%. India closed.
In Europe, at midday, London +0.4%. Paris +0.4%. Frankfurt +0.1%.
Futures at 6:20, Dow flat. S&P +0.2%. Nasdaq +0.5%. Crude +1% at $79.62. Gold +0.1% at $1795.60. Bitcoin flat at $61736.
Ten-year Treasury Yield unchanged at 1.53%
Today's Economic Calendar
What else is happening...
Surprise! Bank of England defies expectations by deciding not to raise rates.
OPEC sticks with planned gradual oil production hike, defying U.S. pressure.