Below is a breakdown courtesy of our good friend Peter Boockvar, Chief Investment Officer at Bleakley Advisory Group. He breaks down the key data released today which include ADP job numbers, the ever widening trade deficit, and the ECB’s statement this morning.

This post was taken off of Peter’s The Boock Report website. Click here to visit the site and follow along with all the other data and news.

ADP said the private sector added a net 183k jobs in February, not far off from the estimate of 190k. Due to benchmark revision over the past 12 months, January was revised up by 87k to 300k but that was given back over the prior months in 2018. Of note, small companies slowed their hiring with those with less than 20 employees shedding 8k jobs, the first time jobs here were trimmed since December 2016. ADP said “There was a sharp decline in small business growth as these firms continue to struggle with offering competitive wages and benefits.” For the jobs picture overall, Mark Zandi added this, “The economy has throttled back and so too has job growth. The job slowdown is clearest in the retail and travel industries, and at smaller companies. Job gains are still strong, but they have likely seen their high watermark for this expansion.”

The services sector added 139k vs more than 200k in the two prior months and is the 2^nd least since last April. The goods side contributed 44k with construction hiring totaling 25k and manufacturing adding 17k.

Bottom line and smoothing out all the revisions, the 3 month average in job gains is still a solid 244k vs the 6 month average of 218k and 12 month average of 220k. If Zandi is right though and the slight upward trend in jobless claims is a tell, assume job hiring trends are closer to the 200k level than what was seen in December and January. The ADP figure today is about right in line with what the private sector estimate is for Friday’s BLS report at 180k. Lastly, keep in mind that jobs data typically lags.

The December trade deficit widened to $59.8b, about $2b higher than expected and November was revised up by $1b. This is the widest trade deficit since October 2008. Exports fell 1.9% m/o/m to the least since February 2018 and reflecting the global slowdown. Imports rose 2.1% m/o/m but after falling by 2.8% in November. Bottom line, a 10 yr high in the trade deficit will lead to a trimming of Q4 GDP estimates.

TRADE DEFICIT

Bloomberg News is reporting that “ECB officials are poised to cut their economic forecasts by enough to justify another bout of loans for banks, according to people with knowledge of the matter.” These loans are in the form to Targeted Long Term Refi Operations and will mostly be used to refi what is coming due next year. The ECB meets tomorrow and they already have a balance sheet that is 40% of GDP and of course NIRP. There is really not much more they can do to deal with an economy that is slowing to almost flat line. As this is not unexpected, the euro is little changed but the inflation cut is sending European bond yields lower. The German 10 yr bund yield is down by 3 bps to just .14%. This in turn is leading to a rally in US Treasuries with the 10 yr yield approaching 2.70%. The ECB is now in a desperate situation.