Don’s Notebook April 6, 2018

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Strong payroll growth without wage pressure could be a solid combination for the stock market. But payroll growth with wage pressure might not be.

March payroll growth of 103,000 is below expectations but wage indications from average hourly earnings do show a little pressure, up 0.3 percent on the month with the year-on-year rate up 1 tenth to 2.7 percent. The unemployment rate did not move down (which was the consensus), instead holding steady at 4.1 percent.

After the close of the market yesterday, President Trump ordered his administration to consider tariffs on an additional $100 billion in Chinese goods, with Beijing saying it would counter the moves “to the end, and at any cost.” These actions put pressure on markets, and Wall Street futures dropped in overnight trading.

Federal Reserve Chair Jerome Powell is due to give a speech on the economic outlook in Chicago at 1:30 p.m. today, with his words gaining more significance amid rising trade tensions. Also on the Fed speaker calendar today is current San Francisco, and soon to be New York Fed President John Williams, who will deliver his views on the economic outlook at 4:00 p.m. in Santa Rosa, California.

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