Premarket Stocks: There may be two ways to read Friday’s job report

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If so many positions were created, there will be two ways to read the data.

On the one hand, 728,000 jobs are incredibly strong by pre-pandemic standards. Analysts think it would probably be enough to tell Federal Reserve Chairman Jerome Powell that the economy is making “substantial progress,” allowing the central bank to move forward with plans to begin reducing purchases. of bonds at the end of the year.

Another positive sign: last week, 340,000 Americans applied for initial unemployment benefits, a low period of the pandemic era.

However, 728,000 jobs would also mark a slowdown from July, when 943,000 jobs were added, and June, which accounted for 938,000 job gains.

This could be seen as an indication that the Delta variant is weighing on the economy, darkening the outlook and making it difficult for the Fed to assess land conditions.

Economists surveyed by Refinitiv expected 750,000 jobs to be added in August, but revised their forecasts after a disappointing reading of the ADP report on private sector payrolls released on Wednesday.

If the Delta effect is bad enough, it could convince the Fed to stay afloat for longer. TD Securities said that if the US economy added only 400,000 jobs in August, its forecast “would increase the likelihood of a formalization [tapering] announcement coming in December instead of November [Fed] meeting “.

Take a look at this space: data from industries most exposed to the coronavirus situation will look especially close.

“Here I am paying special attention to restaurants, as leisure and hospitality continue to be the sector with the largest job deficit and the one that has suffered the most from the recession,” said Elise Gould, senior economist at the Institute of Economic Policy, a left-wing think tank, wrote in a blog post. “The strong growth we have seen in this sector in recent months is likely to slow down [people] reduce their social interactions in bars and restaurants “.

Investor Knowledge: You’d think Wall Street would panic if it’s clear that Delta is weighing on the number of jobs. But think about it again.

“The Delta variant of Covid-19 is softening the data and alleviating any fears [the economy] an overheating, without really challenging the issue of reopening, because (almost) everyone thinks this is a temporary challenge, “Kit Juckes, a strategist at Société Générale, told customers Friday morning.” And the Delta variant slows down the normalization of monetary policy even more. “

In other words, the rise in Covid-19 cases in the United States could turn into investors less worried about inflation and month confident that the Fed will keep the money longer. This is a recipe for stocks to continue their record-breaking trajectory, even as the virus’s outlook darkens.

China will create a stock exchange in Beijing

President Xi Jinping is making one thing very clear: in China, now all business and finance roads lead to Beijing.

The latest: Xi announced on Thursday that China will establish a new stock exchange in the nation’s capital and political center, saying it wanted to create a place for “service-oriented” and “innovative” companies, according to my colleague of CNN Business Laura He.
China will create a stock exchange in Beijing

China already has two stock exchanges on the mainland, but they are located in Shanghai and Shenzhen, far away from Beijing. The Shanghai Stock Exchange, founded in 1990, mainly hosts large-cap companies, including state-owned enterprises, banks and energy companies. The Shenzhen Stock Exchange has a larger proportion of technology companies and small or medium enterprises.

Step backwards: The measure comes as the Chinese government’s regulatory crackdown on large private companies intensifies. Beijing has been working for almost a year to curb its power and influence.

Companies have taken public action in recent days to show their loyalty to the goals of the Chinese Communist Party. Alibaba (BABA) said on Friday that it is investing $ 15.5 billion in Xi’s drive to achieve “common prosperity.”

“Alibaba has been a beneficiary of strong social and economic progress in China for the past 22 years,” CEO Daniel Zhang said in a statement. “We firmly believe that if society does well and the economy does well, Alibaba will do well.”

Alibaba’s promise comes just a week after another large Chinese e-commerce company, Pinduoduo, promised to hand over all its profits over the last quarter to the country’s rural development projects.

A bumpy week for Virgin Galactic shares

It’s been a turbulent week for actions by Richard Branson Virgin Galactic (SPCE).
On Tuesday, shares soared nearly 9% after a bullish analyst report on the state of the space tourism industry. Then came Wednesday, when the U.S. Federal Aviation Administration confirmed it was investigating Branson’s flight into space in July.

The New Yorker was the first to report that the FAA is studying the trip after warning lights appeared on Virgin Galactic’s SpaceShipTwo control panel (a sign that the vehicle was on a detour) during the trip.

Virgin Galactic will not be allowed to conduct another spaceflight until it concludes the FAA’s “mishap investigation.” Shares fell 3% on Thursday.

Notably: Branson’s flight was only the fourth space trip Virgin Galactic has completed after a tragic 2014 test flight that killed one pilot and seriously injured another. Of those four trips, at least two have had serious security issues.

The news recalls that while Virgin Galactic is now a $ 6.7 billion company (and sells tickets to those who can afford them), the viability of its business remains an open question. Investors get on board at their own risk.

Until next time

The U.S. jobs report on August posts at 8:30 a.m. ET. At 10 a.m. ET the ISM Manufacturing Index is produced, which tracks the service sector in the US.

Next week: US markets will be closed on Monday for Labor Day. After that, will the shares go down to record highs?

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