LIVE MARKETS-Now hiring - cue the crickets: JOLTS, NFIB
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NOW HIRING - CUE THE CRICKETS: JOLTS, NFIB (1052 EDT/1452 GMT)
Data released on Tuesday added to growing evidence that a worker shortage is standing in the way of the labor market's recovery.
The Labor Department released its March Job Openings and Labor Turnover Survey (JOLTS) USJOLT=ECI, which gauges labor market churn. nAQN045BS5 nL1N2MY1CL
The report showed job openings reached 8.123 million in March - a record high - handily outpacing new hires. This, along with a drop in layoffs/discharges, suggest a tightening labor market.
Job quits inched higher. The quit rate is seen as a yardstick of consumer expectations, as workers are unlikely to walk away from a gig in times of economic uncertainty.
With demand booming as the economy reopens, the worker shortage, combined with an ongoing supply drought, appear destined to culminate in spiking inflation, which the Fed is quick to reassure will be only temporary.
Tomorrow's CPI report from the Labor Department will provide further inflation clues.
The outlook of small businesses owners grew more optimistic in April, but their inability to fill job openings reached a record high.
The National Federation of Independent Businesses' (NFIB) Small Business Optimism Index USOPIN=ECI gained 1.6 points to a reading of 99.8 in April, the highest level since the presidential election, with eight of the 10 components improving.
"Business owners now are responding to the huge progress on defeating Covid and the subsequent reopening of the economy," says Ian Shepherdson, chief economist at Pantheon Macroeconomics. "On the downside, we're baffled by the seven-point drop in the economic expectations index, which stands at a depressed -15. That looks far too gloomy."
Echoing Friday's disappointing employment report NFIB survey respondents also suggests a labor shortage.
"Finding qualified employees remains the biggest challenge for small businesses and is slowing economic growth," says Bill Dunkelberg, chief economist at NFIB. "Owners are raising compensation, offering bonuses and benefits to attract the right employees."
It should be noted that the NFIB is a politically active membership organization, and "the NFIB membership - or at least, the members who respond to the survey - skews heavily Republican," as Shepherdson points out.
Investors are in a selling mood in morning trading. All three major U.S. stock indexes are down more than 1%.
COINBASE MAY SLIDE AS RESULTS LIKELY TO MISS - NEW CONSTRUCTS (1026 EDT/1426 GMT)
Coinbase Global Inc COIN.O, the platform for trading cryptocurrencies, could tumble further after it releases results on Thursday as the company comes up short on future profit expectations, warns New Constructs in a research note.
Coinbase, which is trading around $285 a share, is unlikely to report news from its first-quarter results that would justify owning shares at current levels, said David Trainer, chief executive of New Constructs.
Coinbase's valuation implies it will exceed the combined revenue of New York Stock Exchange operator Intercontinental Exchange Inc ICE.N and Nasdaq Inc NDAQ.O, Trainer said.
Investors should expect the stock, down more than 30% from its peak of $429.54 on April 14 - Coinbase's first date of trading as a public company - to continue to underperform further and its share price could fall to $100.
Coinbase is not likely to fulfil the profit expectations baked into the stock's current valuation of $58 billion. Rising competition should reduce Coinbase’s market share and pricing power as revenue and profits at the company taper off, according to New Constructs.
"We believe the stock has more downside risk ahead," Trainer said.
U.S. STOCKS TAKE EARLY HIT, BUT BOB AND WEAVE OFF LOWS (1000 EDT/1400 GMT)
Major U.S. indexes took stinging opening hits on Tuesday, amid concerns over lofty valuations and inflation. .N
Of note, the NYSE's opening tick of -2,086 was the most negative since a -2,098 reading on June 11 of last year.
In the wake of this, the indexes are off their early lows established in the first 1 to 10 minutes or so of the session, and trying to make a comeback.
However, even with the recovery attempts, the S&P 500 growth .IGX/S&P 500 value .IVX ratio is on track for an 11th straight down day, which is longest such streak since a 12-day run of losses in September 2017.
Nearly all major S&P sectors are red, with utilities .SPLRCU and tech .SPLRCT among those taking the biggest hits. Materials .SPLRCM are the sole gainer. This as the U.S. 10-Year Treasury yield US10YT=RR pops up to the 1.63% area.
Here is where markets stand early on Tuesday:
NASDAQ 100 FUTURES: PEERING OVER A CLIFF? (0900 EDT/1300 GMT)
Since their April highs, Nasdaq .IXIC, .NDX, NQcv1 nL1N2M20YQ and tech-laden indexes nL1N2MN157, have come under increasing downside pressure.
In fact, CME e-mini Nasdaq 100 futures NQcv1 are now down around 7% from their April 16 record close and April 29 record intraday high, in just 17 and 8 trading days. nL1N2MX0YC
This in the wake of a noticeable momentum lag:
Indeed, with the mid-April futures' high, the weekly RSI failed to muster enough strength to reclaim the 70.00 overbought threshold. With this, it formed its third lower peak vs its early January high, which of course was well below its August 2020 peak. Thus, a protracted momentum divergence was in place.
With this week's slide, the futures are once again threatening a close below the 20-week moving average, which now resides around 13,300. The futures have recorded 56 straight weekly closes above this moving average, which is the longest such run since a 61-week streak from late 2016 to early 2018.
Additionally, the futures are violating the weekly support line from the March 2020 trough, which also now resides around 13,300.
Holding below these barriers, which are now resistance, while the weekly RSI threatens to fall into oversold territory, can keep the futures on the back foot, with the March trough, at 12,194.75, potentially the next big test.
Meanwhile, based on Tuesday's across the board premarket futures weakness, and now rising volatility measures .VIX, .VXN, the recent performance rift among various indexes may be about to be resolved with them all headed into a valley, together. nL1N2MT14J nL1N2MM1F5
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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)