Morning Report: Good jobs report 1/8/16

Markets are higher this morning after a turn-around in Asian markets and the strong jobs report.

Jobs report data dump

  • Nonfarm payrolls +292k vs 200k expected
  • Unemployment rate 5% in line
  • Average hourly earnings flat vs. 0.2% expected
  • Labor Force participation rate 62.6% vs. 62.5% expected

Generally a strong report – only disappointment is lack of wage growth. The labor market continues to improve, and if this trend continues, we are probably going to see another rate hike at the March FOMC meeting.

Builder KB Home reported a big miss yesterday, which sent the stock down 15%. Revenues and EPS both were shy of expectations. The slowdown in the oil patch is moving buyers down the price curve in Texas. Margins remain under pressure due to lack of available land and increasing labor costs.

We may have a new most valuable publicly-traded company. Saudi Aramco (the state-owned oil company) is thinking about an IPO, which could value the company over a trillion dollars. With oil revenues falling, the Saudi government is looking at different ways to balance the budget.

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