Job growth continued at a tepid pace in August

REVIEW AND PREVIEW:

Job growth continued at a tepid pace in August, with nonfarm payrolls increasing by just 130,000, thanks in large part to the temporary hiring of Census workers, the Labor Department reported Friday. Wage growth remained solid, with average hourly earnings increasing by 0.4% for the month and 3.2% over the year; both numbers were one-tenth of a percentage point better than expected. – Jeff Cox, “Job Growth Falls Short of Expectations as August Payrolls Rise June 130,000,” September 6, 2019.

Temporary tariffs fired as first shots are now looking permanent and at higher rates than initially advertised.  Opposing countries have shifted buying plans, with long-term implications.  Company supply chains have been dislocated, and they will never go back to their pre-trade war conditions, as post-trade war long-term risks will remain in the psychology of business executives and have to be managed through supply-chain diversification.  Tariffs are a tax on trade, and regardless of who pays the tax; trade is hurt.  Thus, global trade is slowing, and as global trade slows, so does global economic growth – Bluford Putnam, “Trade War: Everything Has Changed,” September 4, 2019, https://www.cmegroup.com/.

It was another noteworthy week for financial markets, as equities continued their advance following mid-August lows, while metals made new multi-year highs on Wednesday, September 4, and then sold off sharply into the end of the week. Last week was also noteworthy because the Euro currency fell to its lowest level since May 2017 and T-Notes soared to their highest mark since September 2016.

U.S. Dollar-based assets, like treasuries and stocks, continue to be the most desirable place in the world to invest these days, which is probably a reflection – and result – of the economic policies adopted under President Trump in 2017 through much of 2018, when his party (Republicans) held control of all three branches of government for the first time since 1929-1930. However, the recent breakout of precious metals and U.S. treasuries to their multi-year highs is also a likely acknowledgment of the growing uncertainty in world finances caused by the more recent policies initiated by this same executive administration since late 2018. As much as investors are seeking dollar-denominated assets right now, they are also seeking what they perceive as a “safe haven,” or even a “hedge”, in the face of the trade disputes and currency wars that have erupted in the past year.  World businesses now find it necessary to realign their supply chains and adjust their business operations due to the increased tariffs involving the

U.S. and China. And all of this is occurring – escalating – as we approach the third and final passage of the Jupiter/Neptune waning square on September 21.

As mentioned above, most world equity markets continued to rally last week. In Europe, all four indices we track rose to their highest levels in 5 weeks. The Zurich SMI was the most interesting as it reached 10,076 on Friday. Its all-time high is 10,091, which was achieved on July 3.

It was much the same in Asia and the Pacific Rim, with some slight differences. The Shanghai Composite Index, for instance, soared to 3015 on Thursday, its highest price since July 4. As recently as August 6, it was making multi-month lows at 2734. Thus, it is up over 10% in just one month. The Hang Seng index of Hong Kong, the Japanese Nikkei, and the Australian ASX also rallied to their highest levels in five weeks. However, the Nifty Index of India is doing the opposite. It is falling again, and near to its 7-month low that was posted on August 23 at 10,637.

The U.S. markets also rallied to their highest levels since posting lows on August 6 or August 15 (in a case of intermarket bullish divergence that some indices made their lows just before our August 9 two-star geocosmic critical reversal date and others made it a week after).

In other markets, Bitcoin and cannabis stocks enjoyed sharp rallies last week. Bitcoin soared to 10,982 on Friday, an increase of $1600 from its low of 9312 one week ago on August 30. Canopy, one of the more popular cannabis stocks, rallied to 28.15 on Friday, nearly 25% off its low of the prior week. Still, cannabis stocks are down sharply from their highs of late April. But with several states soon to implement recently passed medical and marijuana initiatives, the outlook seems promising.

 

SHORT-TERM GEOCOSMICS AND LONGER-TERM THOUGHTS

“On one hand, while the manufacturing and manufacturing-linked data is moderating and providing an ample amount of ammunition to stimulate, the employment and the price stability and inflation-based data doesn’t,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management. “Inflation actually may be bouncing back a little bit from what had been a lot of deflationary fears earlier in the year.” Shalett said the conflicting economic signals plus Trump’s criticisms have put the Fed in a difficult position, where it risks either looking stubborn by not cutting aggressively or political by moving faster than it has indicated would be necessary under current conditions. – Jeff Cox, “The Fed is Expected to Cut Rates on a Quarter Point and that may not Satisfy Markets,” September 5, 2019.

We are in the midst of several contradictory geocosmic signatures. The major aspect looming ahead is that third and final passage of the Jupiter/Neptune waning square on September 21. Between September 8 and 14, both the Sun and Mars will make a mutable T-square to the Jupiter/Neptune square. Last week, September 2-4, Venus did the same. This may be the geocosmic explanation as to why stock prices are rallying, for one of the often-mentioned themes of this aspect is false hopes and wishes, leading to “irrational exuberance.” In the mundane realm, this no doubt pertains to the announcement last week that trade talks between the U.S. and China will resume. However, such optimism has been misplaced before, and so we shall see if this time will be any different under the Jupiter/Neptune contact. With both the Sun and Mars forming a square to Jupiter this week, and Jupiter symbolizing exaggeration, we could see very strong price moves either way. If “irrational exuberance” dominates, the direction will continue to be up. But if the Saturn stationary direct of September 18 starts to dominate, the mood could quickly shift to hysteria and panic, which is the other side of Jupiter and Neptune when reality strikes, and hopes and wishes turn to disillusionment and disappointment.

Regarding the prospect of an October meeting between the U.S. and China, one period to keep a close eye on will be September 12-22, when the transit of Mars in Virgo will make a T-square to President Trump’s natal Sun/Uranus in Gemini, in opposition to his natal Moon in Sagittarius (he was born under a lunar eclipse). Will he be able to control his impulse to strike out at the Chinese just before the next meetings get underway, thereby leading the Chinese to cancel the talks, as they have made it quite clear that they demand respect and civility to move forward with negotiations? It is a pattern that has soured these talks in prior instances. That is, just before the meetings take place, the U.S. finds it necessary to issue sharp rebukes to China, as if this is some sort of strategy designed to get a favorable outcome. In effect, it undermines the hopes and wishes of the world for a positive outcome. No agreement has resulted from these tactics, and it is doubtful such tactics would result in an agreement this time either. In fact, initiating this pattern again could very well result in a sense of finality – the termination – of any future talks before the 2020 election. But then again, maybe that is the goal of these tactics in the first place.