US companies added substantially fewer jobs last month than analysts expected, according to this morning’s update from the Labor Dept. The 158,000 increase in private payrolls is a decent gain, but it’s well below Econoday.com’s consensus forecast for a 180,000 pop. Meantime, the slow grind lower for the year-over-year gain rolls on, echoing yesterday’s numbers from ADP. The labor market still has a fair amount of forward momentum, but the evidence is building that the peak has passed. That’s a concern at a time when the broad trend for growth has hit some turbulence.
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What does a bear market for the US equity market look like? Current conditions seem to fit the bill. The clues, after all, are piling up, including the early warning that’s still in progress via a relatively reliable quantitative tool—the Hidden Markov model (HMM). This is old news, of course, which means that it’s time to focus on early signs that the bear has run its course. Yes, it’s still early in the game on that score. But recognizing that the market’s bullish tide has probably turned leads to the obvious questions: What will a bottom look like and when will it arrive? No one really knows, but the toolkit that helped identify the start of a bear market will serve us well in the search for the seeds of a new bull market down the road.
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● Rising US layoffs hint at ebbing labor market momentum | Reuters
● US job cuts surge to 6-month high: Challenger | CNBC
● US factory orders fell sharply in Dec | AP
● Consumer Comfort Index in U.S. Little Changed Near 3-mo High | Bloomberg
● Friday’s jobs report could ease US recession fears. Or not. | WaPo
● If There Is a Recession in 2016, This Is How It Will Happen | NY Times

US private nonfarm payrolls in January are projected to increase by 210,000 (seasonally adjusted) in tomorrow’s Labor Dept. report over the previous month, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction represents a substantially lower but still healthy gain relative to the previous monthly increase.
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Financial stress in the US has been creeping up this year, based on four benchmarks published by Federal Reserve banks. One of the indexes is now signaling a “moderate” stress level for the US, although the other three metrics have yet to confirm the change. As such, the composite reading for all the indexes still reflects stress that’s average to below average. The key question is whether the gently rising trend for all the benchmarks of late will roll on in the weeks ahead?
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● ADP private-sector report suggests solid jobs growth for US in Jan | MarketWatch
● ISM: US services sector expands at slowest pace in 2 years | Bloomberg
● PMI: US services sector growth eases to 27-mo low | Markit
● US Job Creation Index dips just below record high in Jan | Gallup
● Blizzard may be behind 2.6% drop in mortgage apps | CNBC
● Global Composite PMI growth at 13-month low in January | Markit
● Toxic Loans Around the World Weigh on Global Growth | NY Times
● Florida declares public health emergency for Zika in 4 counties | CBS

US companies added 205,000 workers last month, according to the ADP Employment Report.  As expected, the gain was well below December’s advance, which was revised up to a 267,000 increase. The numbers still show that the labor market is expanding at a healthy pace, so let’s not lose sight of this fact. But it’s also clear that the trend is slowing, based on the latest downtick in the year-over-year change.
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Treasury yields continue to fall, making mincemeat of the idea that the Federal Reserve will continue to raise interest rates this year. Everything could change, of course, if the incoming economic data turns out to be stronger than expected. The main event for this week: January payrolls, starting with today’s preliminary estimate for the private sector via ADP’s data, followed by Friday’s official numbers from the US Labor Department. Meanwhile, Mr. Market has been slashing rates across the Treasury curve in the wake of revived worries about economic growth.
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● US Jan auto sales dip but stronger than expected | Reuters
● US economic confidence unchanged in Jan | Gallup
● Redbook: US retail spending +1.2% in Jan vs. year-ago level | Fidelity
● Markit Eurozone Composite PMI: growth slows to 4-mo low in Jan | Markit
● Eurozone retail sales up for 1st time in 4 months | MarketWatch
● China Service Sector Expands Most In 6 Months | RTT

Private nonfarm payrolls in the US are projected to increase by 231,000 (seasonally adjusted) in January over the previous month in tomorrow’s update of the ADP Employment Report, based on The Capital Spectator’s average point forecast for several econometric estimates. The average projection reflects a moderately lesser rise vs. December’s increase.
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