The Markets Need a Good Jobs Report in March

3 Mar

The markets have seen positive overall returns off of some very dubious data. So can the markets extend their position and see further growth or are we now prime for a market pull-back and a decline is on the cards? The February employment report could carry a double whammy for markets and the economy unless it meets high expectations .

The next jobs reports are due in next few weeks, with the US on Friday and UK normally mid-month. Good results are necessary to take the markets higher.

The direction of oil and energy prices are another big factor for the markets. Oil in the past week rose above $110 per barrel, but slipped back down to under $107 on Friday. Developments related to Iran, and a meeting on Monday between President Barack Obama and Israeli Prime Minister Benjamin Netanyahu, could have serious implications.

economists and strategists suggest there is a strong link between employment and the consumer’s ability to cope with rising fuel prices, which have been racing higher since December 2011. . 

 

Outlook

Europe stays in the headlines as markets watch whether private investors decide to accept Greece’s debt restructuring terms by Thursday. Greece’s bailout hinges on the decision, and there is speculation it could result in default.

The fact there may be a credit event in Greece should not come as a big surprise. There is a serious risk that Greece may default, triggering a credit event, but that the impact is unclear and is dependent is markets fear a contagion or chain-reaction through other Eurozone countries but it’s expected.

The European Central Bank’s liquidity program is likely to keep pressure on interest rates. The positive effect of the liquidity program on the euro has taken place and now we get the actual negative impact of lowering interest rates through the euro zone.

The U.S. economic data was conflicted with slightly weaker durable goods and ISM manufacturing data, a further round of Quantitive Easing (QE) is unlikely, Fed Chairman Ben Bernanke’s Congressional testimony on Wednesday and Thursday highlighted continued concern about the economy and no reference or indication of QE.

A key for the week is whether we see good employment figures, say 200,000 plus (non-farm) and if concerns diminish on oil and energy prices (a drop here would help)..

 

The Iran Situation

The US has warned Iran to stop developing a nuclear bomb and warned if such a development was underway the United States would attack and terminate such developments. This is ahead of the meeting with Israeli Prime Minister Benjamin Netanyahu, Barak Obama has warned Israel against a pre-emptive strike on Iran.

One of the biggest worries in the markets is that the Iran situation will fan oil prices higher, which threatens to undermine a fragile global recovery.

Big in the energy world this coming week is the annual five-day CERA Week Energy Conference, which starts Monday in Houston..

 

What Else to Watch

  • Investors will also be focused on the Super Tuesday primary elections in 10 US States, which may help identify a clear front-runner for the Republican (GOP – Good Old Party) nominee to challenge President Obama.
  • Polling was held Friday in Iran’s first national vote since the 2009 elections, that led to protests against President Mahmoud Ahmadinejad.
  • Vladimir Putin was expected to win back the presidency of Russia, despite an active opposition. .

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