(Boursier.com) — Wall Street is now expected to fall very sharply before market trading, with the S&P 500 returning 0.8%, the Dow Jones 0.5% and the Nasdaq more than 1%. The employment report for the month of September which has just been revealed is panicking the markets, since it reflects… an extremely dynamic labor market, which could undermine the Fed’s efforts to curb inflation, and therefore postpones the deadline for a potential monetary pivot.
Since the start of the week, operators have reacted very nervously to the American employment figures. Let us recall that investors had sanctioned on Tuesday the excellent JOLTS report on job openings for the month of August in the United States, then welcomed the next day the poor private employment figures for the month of September, before consolidating again yesterday on particularly resilient unemployment registrations for the week ending September 30. The ideal for the markets today was a mixed report, below expectations and reflecting a cooling of the labor market, without being so catastrophic as to revive fears of recession. The worst scenario for the markets is perhaps the one that has been revealed in recent times. The job market would therefore remain particularly tight, which does not argue for monetary easing in the short or medium term, but rather for “(even?) higher rates, for longer”.
According to the report from the US Department of Labor this Friday, job creations in the United States for the month of September 2023 stood at 336,000, compared to a FactSet consensus of 163,000 and a Bloomberg consensus of 160,000. The unemployment rate stood unchanged at 3.8%, compared to a consensus of 3.7%. American stock indices fell before the market on this news, which means that the American labor market remains extremely dynamic, to the great despair of the Fed and investors. Job creations in the private sector totaled 263,000, compared to around 150,000 consensus. in the manufacturing sector, these creations numbered 17,000, three times more than expected.
Very strong job gains in September were in leisure and hospitality, the government sector, health care, as well as professional, scientific and technical services and social assistance.
Key labor market indicators from the household survey showed little or no change during the month. The unemployment rate remained at 3.8% in September and the number of unemployed remained virtually unchanged at 6.4 million. The labor force participation rate was 62.8%, in line with market expectations.
The change in total nonfarm payroll employment for July was revised upward by 79,000, from +157,000 to +236,000, and the change for August was revised upward by 40,000, from +187,000 to +227 000. With these revisions, employment in July and August combined is higher than previously reported by 119,000 positions.
In September, the average hourly wage for all private nonfarm sector employees increased 7 cents, or 0.2 percent, to $33.88. Over the past 12 months, the average hourly wage has increased by 4.2%. The consensus was +0.3% compared to the previous month and +4.3% year-on-year.
On the Nymex, a barrel of WTI crude lost 0.2% to $82.2. An ounce of gold returns 0.2% to $1,828. The dollar index rose by 0.5% against a basket of reference currencies. On the bond markets, the yield on the 2-year T-Bond climbs to 5.12%, compared to 4.87% on the 10-year and… 5.03% now on the 30-year!
Loretta Mester, Thomas Barkin, Mary Daly and Michael Barr from the Fed spoke yesterday. Mary Daly somewhat comforted the markets and saved the end of the session, suggesting that the Fed could continue its pause in raising rates if inflation and the job market ease. Daly added that if long-term bond yields remained around current levels, then the Fed would not need to raise rates further… Note that Christopher Waller of the Fed is speaking today.
Values
ExxonMobilthe American oil giant, is said to be in advanced discussions with a view to acquiring Pioneer Natural Resources as part of an operation likely to value the shale oil and gas producer approximately… 60 billion dollars! Reuters cites sources close to the matter on this subject. The Wall Street Journal was the first yesterday Thursday to relay this rumor. Bloomberg confirms these negotiations, citing a person familiar with the matter. This could thus be the biggest M&A deal of the year, but also the biggest acquisition for Exxon in more than two decades.
The potential deal would thus be the most important for Exxon since the purchase of Mobil in 1998 for 81 billion dollars. Such a transaction would allow ExxonMobil to expand its presence in the Permian Basin in the southern United States, one of the most profitable regions of the American oil basin, indicates Reuters. The Wall Street Journal adds that the deal could be finalized in the coming days if there are no complications.
Pioneer Natural Resources capitalizes $50 billion on the NYSE. The group is the third largest oil producer in the Permian Basin, after Chevron And ConocoPhillips. ExxonMobil is the American oil leader and produces an average of 3.8 million barrels of oil equivalent per day worldwide. Darren Woods, Exxon’s chief executive, said in July that the group continued to study potential mergers and acquisitions, but would remain selective and focused on creating value.
The deal would therefore be the most important of the year, surpassing the acquisition by Pfizer from the anticancer drug manufacturer Seagen for $43 billion announced in March. It would make ExxonMobil the leading producer in the most prolific American oil basin. The transaction, although advanced, could still fail, said a Bloomberg source.
Taiwan Semiconductor Manufacturing Company published for the third fiscal quarter a less pronounced decline than expected in its sales, the demand for artificial intelligence having partially offset the difficulties in the smartphone and laptop markets. TSMC, which supplies Nvidia and Apple in particular, therefore achieved revenues of 546.7 billion new Taiwan dollars in the quarter from July to September, down 11% year-on-year, compared to a consensus of around 532 billion. new Taiwan dollars. This turnover represents the equivalent of 17 billion dollars. Demand was supported by data centers and AI. This is also a relatively positive signal for Nvidiaas TSMC is the main contract manufacturer of Nvidia’s AI accelerator chips, which can train large data models.
Levi Strauss alerted Wall Street last night regarding its annual outlook, with the denim giant lowering its revenue estimates and citing weakness in the wholesale chain. For its third fiscal quarter, ended at the end of August, the group posted adjusted earnings per share of 28 cents, slightly above market expectations, for revenues of 1.51 billion dollars compared to a consensus of 1.54 billion. . Revenues therefore disappointed, with weaknesses in Europe and North America.
For the current quarter, Levi’s says it is taking a more cautious approach in terms of forecasts. For the financial year, adjusted earnings per share are now expected to be at the bottom of the previous guidance range, which ranged from $1.10 to $1.20. The group cites buyers who are increasingly price sensitive, particularly those who are used to buying from Walmart or other Levi’s wholesale partners. For the third quarter just ended, the contrast is striking between direct-to-consumer (DTC) sales, up 14% year-on-year, and the 8% decline observed over the same period for the ‘wholesale’ channel.
You’re here has further reduced the prices of its most popular models in the United States, just days after publishing deliveries below market expectations for its third quarter. The Bloomberg agency notes that Elon Musk’s group lowered the starting price of the base Model 3 by $1,250, to $38,990, and reduced the price of the ‘long-range’ version of the sedan by the same amount. amount, at $45,990. Tesla also reduced the price of the performance version of the Model 3 by $2,250, which now starts at $50,990 according to Bloomberg reports, and by $2,000 on the long-range and performance versions of the Model Y sport utility vehicle, which cost now $48,490 and $52,490, respectively. Finally, Tesla reintroduced a cheaper version of the Model Y earlier this week.
Microsoft plans to finalize its proposed acquisition ofActivision Blizzard next week, according to ‘The Verge’, citing a source close to the plans. The source in question told ‘The Verge’ that the American software giant is considering Friday October 13 as the closing date to announce to the world that the 20-month process to buy Activision Blizzard is finally over. Reports indicate that this date will still depend on the UK’s Competition and Markets Authority, with a deadline expiring today to gather views on whether Microsoft should grant consent to proceed with the merger.
Nvidia… OpenAI, the creator of ChatGPT, is reportedly considering designing its own artificial intelligence chips, according to Reuters, and has gone so far as to evaluate a potential acquisition target for this. Reuters cites people familiar with the plans. OpenAI, however, has not yet decided to move forward, according to recent internal discussions seen by Reuters. For at least the last year, the group has reportedly discussed various options to resolve the shortage of expensive AI chips that OpenAI relies on, according to Reuters’ sources familiar with the matter.
Options considered include building a dedicated AI chip factory, working more closely with other chipmakers including Nvidia, and diversifying suppliers beyond Nvidia. OpenAI CEO Sam Altman has reportedly made acquiring more AI chips a priority. He had already publicly complained about the shortage of units, in a market largely dominated by Nvidia.