U.S. jobs data is likely to set the tone for the North American trading day when it is released at 8:30 am Eastern. Long the single-most influential economic data point for global markets - that's stocks, bonds, currencies and commodities… everything - the non-farm payrolls report provides the first read on the health of the world's biggest economy in the preceding month. The data reveals whether companies are feeling optimistic enough to add new positions and whether new jobs will spur fresh demand for goods and services by consumers who can now depend on a paycheque. More demand for goods and services from the recently employed, coupled with rising demand from the increasingly confident consumers who already had jobs leads to rising revenue and profit and the creation of new jobs to satisfy swelling demand. A virtuous circle, in other words. The flipside, of course, is the negative feedback loop where companies trim jobs to contain costs and consumers rein in spending to stretch their dollars further. The U.S. economy is seen adding 100,000 new non-farm jobs in July, a number that sounds big in absolute terms but represents only a tiny improvement in the massive U.S. economy, a rounding error, really. The unemployment rate is expected to stand pat at 8.2 percent. A number that exceeds the median expectation by a wide margin could drive stocks higher as it ratifies the Federal Reserve's decision earlier this week to forgo the addition of new stimulus, at least for now. A number that falls well short of expectations could weigh on stocks and commodities, drive bonds higher and cast the Fed as negligent in its job-stoking duties. And if the number is in line with expectations? We'll just have to wait and see.
The European Central Bank failed yesterday to… No, wait, the ECB succeeded in… Hang on a second, the ECB fell short… No, the ECB laid out a path to stability… Yesterday, Mario Draghi, the president of the ECB reiterated that the central bank stands ready to do whatever it takes to support and protect the "irreversible" euro, falling short of some expectations but providing a new sense of optimism and direction for others. TD Securities concluded yesterday that "Draghi failed to deliver" while Goldman Sachs this morning told clients that the ECB has set out a path to lower risk over the medium to longer terms, raised its targets for European stock indices and said it was time to buy shares in companies with exposure to European sales and short companies with lots of exposure to U.S. sales. The IMF applauded the ECB while High Frequency Economics concluded that "traders and investors who expected immediate action are, and should be, disappointed." There's only one way to settle the question of who's right: BNN Thunderdome. Let's make it happen.
We have some big corporate stories to pursue and advance today. Telus reported second-quarter earnings a few minutes ago that were in line with expectations but the debate continues over its battle with its top shareholder over whether it can collapse the dual-share structure. Mason Capital won the last fight, preventing the combination of the voting and non-voting shares, but Telus has sworn to finish the job some day. Mason decided late yesterday to take the battle back to the shareholders again, calling for a meeting of the voting shareholders. We're talking to shareholders today about what they want.
Global resource heavyweight BHP Billiton says it will take a $2.84-billion US writedown on its Fayetteville shale gas assets, which it bought from Chesapeake Energy just last year. The company's Chairman, Jac Nasser, felt he had to come out today in support of CEO Marius Kloppers (who hasn't been seen in a Roughrider's jersey in I don't know how long), who was behind the acquisition. Kloppers says he will forgo his bonus this year because of the writedown and Nasser has accepted that request. The question now is whether Kloppers' act of contrition will be enough to mollify shareholders.
Agrium reported earnings this morning, agreed to sell its stake in the Medicine Hat nitrogen facility to its arch nemesis CF Industries and said it will buy back up to $900-million in stock. Is Agrium a buy, sell or a hold?
We will take a closer look at the gravely wounded Knight Capital and its efforts to find a partner or sell itself outright in a bid to survive after its near-half-billion dollar trading debacle Wednesday.
Watch the grains today as the U.S. Department of Agriculture releases data on corn and other inventories. Also watch the fertilizer stocks.