Zero growth in the US’ August jobs data had global stocks tumble, making investors scamper to safe-haven options like treasury bonds.
Growth in non-farm payrolls came to a standstill in the country’s private sector last month, adding to the gloom. The pressure is now on the Federal Reserve to deliver some kind of monetary stimulus into the economy.
In an interview with CNBC-TV18, Ryan Detrick of Schaeffer's Investment expects the deterioration of the overall US economy to continue. But all is not lost. US President Barack Obama’s speech on Thursday about a jobs program plus the Fed's meet in the coming weeks, may hopefully show a different outcome for the month of September.
Below is a verbatim transcriptof his interview. For complete details watch the accompanying video.
Q: After the US job report, have recession fears now compounded with the data that has come out?
A: I think so. We have just been talking about the continuing deterioration of the overall US economy and this just further confirms that. Yesterday, we had a decent manufacturing number but all in all it's really kind of like two steps backwards, one step forward and today another step backwards. Jobs are such a very important part of any economy especially in the US and the fact that we had no growth last month is a rather big disappointment.
Q: What kind of a trigger is the market looking out for this? There is the ECB meet on rates that is going to take place and also President Obama and Ben Bernanke’s speech. What are your expectations?
A: The month of September, historically, if you look back at the Dow Jones, that's the only month that's got a negative 1% return but interestingly enough in the last six-seven years, September has been higher. The last five years’ average actually has been up about 2% a year. So historically, we are in a bearish time but in the shorter-term September is pretty good. We were just down 4% last month on the S&P, the worst month of August for over a decade.
So there are some positives. They were so bad last month but now we have some potential drivers coming up like Obama’s speech. Everyone is very keen on any type of QE3 or something to stimulate the economy, which might come out of the Fed meet in a couple of weeks in September. It feels like all our hopes and dreams for a rally stem from some type of stimulus. You can argue if that's good or bad, nevertheless, it is what it is and if we get some type of talk like that the market very well could have a good September.
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