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The Fed, Economic Outlook, Jobs and US-China Trade Talks

The Fed, Economic Outlook, Jobs and US-China Trade Talks

On Friday the Nonfarm Payrolls for May were released and the 75,000 report was well below the 180,000 expected and of course this low number kicked off more speculation with regards to the next rate decision. The March job report was revised lower from 189,000 to 153,000 and April was lowered to 224,000 from 263,000 for a total reduction of 75,000. The Labor Department release of just 75,000 for May prompted a big Wall Street name, Stanley Druckenmiller to suggest the the Fed would pivot to a rate cute mode.

According to CNBC, where he was interviewed, Mr Druckenmiller said that this weak jobs release would  put the Fed on “clear easing path by July.” Note that this May release was the second time in four months that jobs increased by less than 100,000, a signal that the labor market was weakening. Our view is that the US will not cut rates soon, as the Fed needs more data to make a decision.

Note that the US-China trade headlines that for over 8 months focused on trade tensions have weighed heavy on stock markets, while the US and China economies have been showing signs of slowing – with expectations of the US economy fading to 2.0% for 2019 and China approaching the 6.2% level. More on these topics in the coming weeks.

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