Connect with us

International

February Nonfarm Payrolls Preview, But Does Anyone Care

February Nonfarm Payrolls Preview, But Does Anyone Care

While today’s job report will be of far lower importance with geopolitics, war, stagflation…

Published

on

February Nonfarm Payrolls Preview, But Does Anyone Care

While today's job report will be of far lower importance with geopolitics, war, stagflation and commodity hyperinflation taking precedence, investors will nonetheless watch the latest job data due at 830am for clues about the next move from the Federal Reserve.

Consensus expects the February jobs report at 8:30am ET to show nonfarm payrolls increase of 423k vs 467k in January, with the Bloomberg crowd- sourced whisper number slightly lower at 401k. Notably, the pace of hiring is expected to confirm Fed’s assessment that the labor market is strong enough to withstand rate hikes. The unemployment rate is expected to decline to 3.9%.

As Newsquawk notes, Indicators of labor market activity have been constructive in February. ADP’s gauge of payrolls surprised to the upside (although analysts have been dismissing the predictive significance of the data), initial jobless claims and continuing claims data both eased in the survey week vs January levels.  Survey data continues to allude to tight labor market conditions, which will support wage gains; the Fed’s Beige book said firms were increasing compensation to attract workers, especially in low-wage positions, but with only mixed success.

Traders will use the February jobs data to inform the debate on how the Fed will normalize monetary policy: money markets had priced a 50bps increment rate hike at the Fed’s March meeting, and had penciled in seven rate hikes this year, but following the Russian invasion of Ukraine, markets have coalesced around a 25bps incremental move, and see around five hikes in 2022. However, with the Biden administration making inflation its ‘top priority’, many suggest the Fed will have to stay in inflation fighting mode; accordingly, the central bank will be data dependent about future policy moves, including the increment of rate rises.

Here are the main things to watch:

POLICY DEBATE: Traders will use the data to inform the debate on how the Fed will continue to normalise monetary policy in the months ahead. Up until recently, money markets were pricing in seven 25bps rate rises from the Fed in 2022, and had expected the central bank to lift rates by a 50bps increment at the March 16th meeting. However, the Russian invasion of Ukraine has put central bankers in a more cautious mood; now, money markets are pricing around five Fed rate rises this year, and see a 25bps incremental hike in March. Chair Powell – and some other Fed Governors – have retained the option of using a 50bps move; Powell said that if the Committee were to hike rates by 25bps for three consecutive meetings and it transpired that was not enough, it could raise rates more quickly. Additionally, there is also a degree of political pressure to keep the Fed in inflation fighting mode; President Biden in his State of the Union address emphasized that tackling inflation was his ‘top priority’. This comes as some argue that the inflation dynamics have significantly soured consumers' view of the economy: a recent poll found that more than half of respondents believed the US was in a recession or depression, despite GDP growing 5.7% in 2021 and the economy adding more than 6mln jobs.

HEADLINE: The consensus looks for +400k nonfarm payrolls in February (range: 200-730k, prev. 467k); the unemployment rate is seen falling by one-tenth to 3.9%. The ADP’s gauge of payrolls surprised to the upside in February (475k vs exp. 388k), while the prior month's data saw a significant upward revision (from -301k to +509k). The ADP data has drawn criticism from many market analysts, however, which back fits the official payrolls data; the official January BLS data saw an upside surprise which analysts said underpinned January’s revision higher. “It makes no sense to care about this number or react to it,” Pantheon Macroeconomics said, “it is statistically insignificant as an indicator of the official payroll numbers when compared to the Homebase numbers and mean-reversion,” and Pantheon added that “the revisions can be huge, rendering the initial estimates meaningless.” Meanwhile, initial jobless claims data for the week that coincides with the traditional BLS survey week fell to 249k vs 290k for the January data reference week, while continuing claims data declined to 1.576mln from 1.651mln.

BEIGE BOOK: The Fed's latest Beige Book notes that employment increased at a modest to moderate pace. Widespread strong demand for workers remained hampered by equally widespread reports of worker scarcity, though some Districts reported scattered signs of improving labour supply. Many firms had difficulty maintaining their staffing levels due to high turnover, exacerbated by COVID-19 disruptions in January, though workers and firms recovered more quickly than during previous waves. Firms continued to increase compensation and introduce workplace flexibility to attract workers—especially in historically low-wage positions—though with only mixed success. Respondents also said that they expect the tight labour market and consequent strong wage growth to continue, though a few Districts reported signs of wage growth moderating.

BUSINESS SURVEYS: The employment index within the ISM manufacturing survey registered 52.9, 1.6 points lower than January; the services ISM is released after this note goes to publication. Markit's gauge of manufacturing activity noted that although the sector had rebounded after Omicron, output remained heavily constrained both by ongoing raw material supply bottlenecks and labour shortages; the data-compiler said that the decline in virus case numbers should help to alleviate labour shortages into the spring. And Markit's services PMI saw private sector employment expand further in February, taking the current sequence of job creation to 20 months; Markit said the increase was the strongest since last May.

ARGUING FOR A STRONGER THAN EXPECTED REPORT:

  • Public Health. After reaching new highs in December and early January, covid infections fell sharply in the last week of January and throughout the month of February. While January payroll gains were much larger than expected, Omicron nonetheless weighed on the January report. As shown in Exhibit 1, payroll growth was below trend by 66k in industries where workers are generally paid by the hour (salaried workers generally have sick-leave benefits and would continue to be counted in the payroll statistics even if missing work due to covid). Additionally, the household survey indicated 762k people missed work due to covid (mom sa). the Omicron payroll drag was somewhere between these two estimates, and Goldman assumes 200k such workers returned to work by the February survey week.

  • Dining activity. Dining activity rebounded sharply in February—more than recovering its Omicron-driven declines in December and early January. Coupled with the rise in ADP’s estimate of leisure and hospitality jobs, expect a significant contribution from leisure-sector payrolls (Goldman's estimates embeds a rise of around 200k).

  • Big Data. High-frequency data on the labor market generally indicate strong growth in February employment (see Exhibit 3). Note that we adjust the Google and Household Business Pulse series for their January errors—at face value the February changes would be consistent with multi-million job gains

  • ADP. Private sector employment in the ADP report increased by 474k in February, above expectations for a 375k increase and consistent with strong growth in the ADP panel.
  • Employer surveys. The employment components of business surveys generally increased in February. Goldman's services survey employment tracker increased 1.0pt to 53.9 and our manufacturing survey employment tracker increased 1.2pt to 57.4. The Goldman Sachs Analyst Index (GSAI) edged down by 0.2pt to 68.0 in February, and the employment component declined by 4.2pt to 64.3. Job cuts. Announced layoffs reported by Challenger, Gray & Christmas decreased by 8% month-over-month in February after decreasing by 18% in January (SA by GS).

ARGUING FOR A WEAKER THAN EXPECTED REPORT

  • Education seasonality. Education weighed on job growth during the fall, likely because some janitors and support staff declined to return for the new school year. Expect a similar drag in the February report following the end of winter breaks. Assume a 100k drop in education payrolls.
  • Vaccine mandates. The vaccine mandates for healthcare workers announced by the Biden administration apply to roughly 2-3mn unvaccinated workers. These mandates began to be enforced in January and February, and may have weighed on healthcare job growth in the jobs report.
Tyler Durden Fri, 03/04/2022 - 08:20

Read More

Continue Reading

Government

Chinese migration to US is nothing new – but the reasons for recent surge at Southern border are

A gloomier economic outlook in China and tightening state control have combined with the influence of social media in encouraging migration.

Published

on

By

Chinese migrants wait for a boat after having walked across the Darien Gap from Colombia to Panama. AP Photo/Natacha Pisarenko

The brief closure of the Darien Gap – a perilous 66-mile jungle journey linking South American and Central America – in February 2024 temporarily halted one of the Western Hemisphere’s busiest migration routes. It also highlighted its importance to a small but growing group of people that depend on that pass to make it to the U.S.: Chinese migrants.

While a record 2.5 million migrants were detained at the United States’ southwestern land border in 2023, only about 37,000 were from China.

I’m a scholar of migration and China. What I find most remarkable in these figures is the speed with which the number of Chinese migrants is growing. Nearly 10 times as many Chinese migrants crossed the southern border in 2023 as in 2022. In December 2023 alone, U.S. Border Patrol officials reported encounters with about 6,000 Chinese migrants, in contrast to the 900 they reported a year earlier in December 2022.

The dramatic uptick is the result of a confluence of factors that range from a slowing Chinese economy and tightening political control by President Xi Jinping to the easy access to online information on Chinese social media about how to make the trip.

Middle-class migrants

Journalists reporting from the border have generalized that Chinese migrants come largely from the self-employed middle class. They are not rich enough to use education or work opportunities as a means of entry, but they can afford to fly across the world.

According to a report from Reuters, in many cases those attempting to make the crossing are small-business owners who saw irreparable damage to their primary or sole source of income due to China’s “zero COVID” policies. The migrants are women, men and, in some cases, children accompanying parents from all over China.

Chinese nationals have long made the journey to the United States seeking economic opportunity or political freedom. Based on recent media interviews with migrants coming by way of South America and the U.S.’s southern border, the increase in numbers seems driven by two factors.

First, the most common path for immigration for Chinese nationals is through a student visa or H1-B visa for skilled workers. But travel restrictions during the early months of the pandemic temporarily stalled migration from China. Immigrant visas are out of reach for many Chinese nationals without family or vocation-based preferences, and tourist visas require a personal interview with a U.S. consulate to gauge the likelihood of the traveler returning to China.

Social media tutorials

Second, with the legal routes for immigration difficult to follow, social media accounts have outlined alternatives for Chinese who feel an urgent need to emigrate. Accounts on Douyin, the TikTok clone available in mainland China, document locations open for visa-free travel by Chinese passport holders. On TikTok itself, migrants could find information on where to cross the border, as well as information about transportation and smugglers, commonly known as “snakeheads,” who are experienced with bringing migrants on the journey north.

With virtual private networks, immigrants can also gather information from U.S. apps such as X, YouTube, Facebook and other sites that are otherwise blocked by Chinese censors.

Inspired by social media posts that both offer practical guides and celebrate the journey, thousands of Chinese migrants have been flying to Ecuador, which allows visa-free travel for Chinese citizens, and then making their way over land to the U.S.-Mexican border.

This journey involves trekking through the Darien Gap, which despite its notoriety as a dangerous crossing has become an increasingly common route for migrants from Venezuela, Colombia and all over the world.

In addition to information about crossing the Darien Gap, these social media posts highlight the best places to cross the border. This has led to a large share of Chinese asylum seekers following the same path to Mexico’s Baja California to cross the border near San Diego.

Chinese migration to US is nothing new

The rapid increase in numbers and the ease of accessing information via social media on their smartphones are new innovations. But there is a longer history of Chinese migration to the U.S. over the southern border – and at the hands of smugglers.

From 1882 to 1943, the United States banned all immigration by male Chinese laborers and most Chinese women. A combination of economic competition and racist concerns about Chinese culture and assimilability ensured that the Chinese would be the first ethnic group to enter the United States illegally.

With legal options for arrival eliminated, some Chinese migrants took advantage of the relative ease of movement between the U.S. and Mexico during those years. While some migrants adopted Mexican names and spoke enough Spanish to pass as migrant workers, others used borrowed identities or paperwork from Chinese people with a right of entry, like U.S.-born citizens. Similarly to what we are seeing today, it was middle- and working-class Chinese who more frequently turned to illegal means. Those with money and education were able to circumvent the law by arriving as students or members of the merchant class, both exceptions to the exclusion law.

Though these Chinese exclusion laws officially ended in 1943, restrictions on migration from Asia continued until Congress revised U.S. immigration law in the Hart-Celler Act in 1965. New priorities for immigrant visas that stressed vocational skills as well as family reunification, alongside then Chinese leader Deng Xiaoping’s policies of “reform and opening,” helped many Chinese migrants make their way legally to the U.S. in the 1980s and 1990s.

Even after the restrictive immigration laws ended, Chinese migrants without the education or family connections often needed for U.S. visas continued to take dangerous routes with the help of “snakeheads.”

One notorious incident occurred in 1993, when a ship called the Golden Venture ran aground near New York, resulting in the drowning deaths of 10 Chinese migrants and the arrest and conviction of the snakeheads attempting to smuggle hundreds of Chinese migrants into the United States.

Existing tensions

Though there is plenty of precedent for Chinese migrants arriving without documentation, Chinese asylum seekers have better odds of success than many of the other migrants making the dangerous journey north.

An estimated 55% of Chinese asylum seekers are successful in making their claims, often citing political oppression and lack of religious freedom in China as motivations. By contrast, only 29% of Venezuelans seeking asylum in the U.S. have their claim granted, and the number is even lower for Colombians, at 19%.

The new halt on the migratory highway from the south has affected thousands of new migrants seeking refuge in the U.S. But the mix of push factors from their home country and encouragement on social media means that Chinese migrants will continue to seek routes to America.

And with both migration and the perceived threat from China likely to be features of the upcoming U.S. election, there is a risk that increased Chinese migration could become politicized, leaning further into existing tensions between Washington and Beijing.

Meredith Oyen does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Read More

Continue Reading

Government

Is the National Guard a solution to school violence?

School board members in one Massachusetts district have called for the National Guard to address student misbehavior. Does their request have merit? A…

Published

on

By

Every now and then, an elected official will suggest bringing in the National Guard to deal with violence that seems out of control.

A city council member in Washington suggested doing so in 2023 to combat the city’s rising violence. So did a Pennsylvania representative concerned about violence in Philadelphia in 2022.

In February 2024, officials in Massachusetts requested the National Guard be deployed to a more unexpected location – to a high school.

Brockton High School has been struggling with student fights, drug use and disrespect toward staff. One school staffer said she was trampled by a crowd rushing to see a fight. Many teachers call in sick to work each day, leaving the school understaffed.

As a researcher who studies school discipline, I know Brockton’s situation is part of a national trend of principals and teachers who have been struggling to deal with perceived increases in student misbehavior since the pandemic.

A review of how the National Guard has been deployed to schools in the past shows the guard can provide service to schools in cases of exceptional need. Yet, doing so does not always end well.

How have schools used the National Guard before?

In 1957, the National Guard blocked nine Black students’ attempts to desegregate Central High School in Little Rock, Arkansas. While the governor claimed this was for safety, the National Guard effectively delayed desegregation of the school – as did the mobs of white individuals outside. Ironically, weeks later, the National Guard and the U.S. Army would enforce integration and the safety of the “Little Rock Nine” on orders from President Dwight Eisenhower.

Three men from the mob around Little Rock’s Central High School are driven from the area at bayonet-point by soldiers of the 101st Airborne Division on Sept. 25, 1957. The presence of the troops permitted the nine Black students to enter the school with only minor background incidents. Bettmann via Getty Images

One of the most tragic cases of the National Guard in an educational setting came in 1970 at Kent State University. The National Guard was brought to campus to respond to protests over American involvement in the Vietnam War. The guardsmen fatally shot four students.

In 2012, then-Sen. Barbara Boxer, a Democrat from California, proposed funding to use the National Guard to provide school security in the wake of the Sandy Hook school shooting. The bill was not passed.

More recently, the National Guard filled teacher shortages in New Mexico’s K-12 schools during the quarantines and sickness of the pandemic. While the idea did not catch on nationally, teachers and school personnel in New Mexico generally reported positive experiences.

Can the National Guard address school discipline?

The National Guard’s mission includes responding to domestic emergencies. Members of the guard are part-time service members who maintain civilian lives. Some are students themselves in colleges and universities. Does this mission and training position the National Guard to respond to incidents of student misbehavior and school violence?

On the one hand, New Mexico’s pandemic experience shows the National Guard could be a stopgap to staffing shortages in unusual circumstances. Similarly, the guards’ eventual role in ensuring student safety during school desegregation in Arkansas demonstrates their potential to address exceptional cases in schools, such as racially motivated mob violence. And, of course, many schools have had military personnel teaching and mentoring through Junior ROTC programs for years.

Those seeking to bring the National Guard to Brockton High School have made similar arguments. They note that staffing shortages have contributed to behavior problems.

One school board member stated: “I know that the first thought that comes to mind when you hear ‘National Guard’ is uniform and arms, and that’s not the case. They’re people like us. They’re educated. They’re trained, and we just need their assistance right now. … We need more staff to support our staff and help the students learn (and) have a safe environment.”

Yet, there are reasons to question whether calls for the National Guard are the best way to address school misconduct and behavior. First, the National Guard is a temporary measure that does little to address the underlying causes of student misbehavior and school violence.

Research has shown that students benefit from effective teaching, meaningful and sustained relationships with school personnel and positive school environments. Such educative and supportive environments have been linked to safer schools. National Guard members are not trained as educators or counselors and, as a temporary measure, would not remain in the school to establish durable relationships with students.

What is more, a military presence – particularly if uniformed or armed – may make students feel less welcome at school or escalate situations.

Schools have already seen an increase in militarization. For example, school police departments have gone so far as to acquire grenade launchers and mine-resistant armored vehicles.

Research has found that school police make students more likely to be suspended and to be arrested. Similarly, while a National Guard presence may address misbehavior temporarily, their presence could similarly result in students experiencing punitive or exclusionary responses to behavior.

Students deserve a solution other than the guard

School violence and disruptions are serious problems that can harm students. Unfortunately, schools and educators have increasingly viewed student misbehavior as a problem to be dealt with through suspensions and police involvement.

A number of people – from the NAACP to the local mayor and other members of the school board – have criticized Brockton’s request for the National Guard. Governor Maura Healey has said she will not deploy the guard to the school.

However, the case of Brockton High School points to real needs. Educators there, like in other schools nationally, are facing a tough situation and perceive a lack of support and resources.

Many schools need more teachers and staff. Students need access to mentors and counselors. With these resources, schools can better ensure educators are able to do their jobs without military intervention.

F. Chris Curran has received funding from the US Department of Justice, the Bureau of Justice Assistance, and the American Civil Liberties Union for work on school safety and discipline.

Read More

Continue Reading

Government

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

Published

on

Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

Read More

Continue Reading

Trending