Positive for COVID-19 – the new about President Donald Trump’s trumps everything, even the critical jobs report. The worrying news about the leader of the world’s most powerful country has been grabbing the headlines. Yet as seen earlier in the week, investors’ immediate concerns are around the next fiscal relief package.
Optimism about a Republican-Democrat deal boosted stocks and pessimism sent it down. Trump’s bombshell tweet about contracting coronavirus is sucking the energy in Washington and may scare elderly members of Congress from engaging in negotiations. Many of them are septuagenarians like the president.
September’s Non-Farm Payrolls add further depress the chances of a deal. Why? Politicians are mostly interested in the headline unemployment number, which dropped to 7.9% – below a round number and also better than estimated. They probably disregard the fact that this encouraging news is driven by a fall of 0.3% in the participation rate.
That 7.9% figure also masks the downbeat headline figure. America gained 661,000 positions last month, fewer than 850,000 expected, and only partially compensated by an upwards correction in August’s numbers.
If the economy is doing well, Republican fiscal hawks may feel no urge to splurge additional cash. That is what happened last month – the robust NFP prompted the GOP to lower its offer to under $1 trillion. They later offered $1.5 trillion after weak retail sales statistics and other signs of a slowing recovery.
Overall, the report is somewhat disappointing but the headline unemployment rate compounds Trump’s illness and may further weigh on stocks. The safe-haven dollar has more room to gain in response to the publication.
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NFP Analysis: Stocks set to fall as sub 8% jobless rate lowers chances for stimulus
