GOAL IS SMOOTH
JANUARY NEWSLETTER 1
US private sector added 250,000 jobs in Dec, vs estimate of 190,000: ADP
Private sector job creation surged in December as a strong holiday shopping season pushed companies to hire more workers, ADP and Moody's Analytics says.
Companies hired 250,000 new workers to close out the year, well above Wall Street expectations of 190,000, it says.
The month was the best for job creation since March.Jeff Cox | @JeffCoxCNBCcom
Published 20 Hours Ago Updated 15 Hours AgoCNBC.com[ADP December payrolls up 250,000]
ADP December payrolls up 250,000 19 Hours Ago | 03:26
Private sector job creation surged in December as a strong holiday shopping season pushed companies to hire more workers, ADP and Moody's Analytics said Thursday.
The report helped send the Dow to break the 25,000 mark for the first time.
Companies hired 250,000 new workers to close out the year, well above Wall Street expectations of 190,000. The month was the best for job creation since March and topped the 185,000 in November, a number that was revised lower by 5,000.
The total brought 2017's private payroll growth as gauged by ADP and Moody's to 2.54 million, an average of 212,000 a month.
Job growth was broad based, as professional and business services led the way with 72,000 new positions. The education and health services sector was next at 50,000 and trade, transportation and utilities contributed 45,000. Wall Street-related payrolls grew by 19,000.
The information services sector was the only one to lose jobs, reporting a drop of 4,000.
By size, businesses with between 50 and 499 employees added 100,000 jobs while small firms hired 94,000 and large companies contributed 56,000 to the total.
"The job market ended the year strongly," Moody's chief economist Mark Zandi said in a statement. "Robust Christmas sales prompted retailers and delivery services to add to their payrolls. The tight labor market will get even tighter, raising the specter that it will overheat."
Overall, service-related companies were responsible for the balance of jobs, with 222,000 new hires. Goods-producing industries added the rest, with construction growing by 16,000 and manufacturing by 9,000.
The private payrolls numbers come a day ahead of the government's closely watched nonfarm payrolls report.
Economists expect that the U.S. economy added about 189,000 jobs in December while the unemployment rate likely stayed at 4.1 percent, according to FactSet.
Economists and policymakers at the Federal Reserve will be watching the wages component most closely. Despite a job market that appears at full employment, salaries have been slow to rise. Average hourly earnings are projected to rise 0.3 percent for the month.
PFIZER / MERCK UP
Now that 2017 has come and gone, this raging bull market is now nearing nine years old. It is also the strongest bull market that most investors have seen in a long time, if not their lifetime. While 2017 realized gains of 25% in the Dow Jones Industrial Average (DJIA) and almost 19.5% on the S&P 500, 2018 could offer another year of this rally seeing similar numbers. Investors also should not ignore that the major stock indexes outperformed every single strategist’s expectations by a wide margin in 2017.
24/7 Wall St. just came out with its annualized forecasting bias for the stock market in 2018. It looks like DJIA 26,400 and at least 2,855 on the S&P 500 are now the baseline targets for this year. For the Dow to make its targets, health care stocks will to have to do their part to help. Pfizer Inc. (NYSE: PFE) and Merck & Co. Inc. (NYSE: MRK) only make up a combined 2.57% of the Dow’s price-weighted calculation rather than a normal market cap weighting, but these two stocks provide a clear look into the health care sector as a whole.
Looking ahead to the 2018 full year, analysts expect Pfizer to return 5.71% to investors, or a total of 9.46%, including its dividend yield of 3.75%. Analysts are calling for Merck to generate gains of 15.92%, or a total of 19.31%, including its dividend of 3.39%.
Both of these stocks are top plays in the health care sector, and although they lagged the markets in 2017, Pfizer and Merck are relatively cheap compared to the markets in general. Pfizer has a forward price-to-earnings (P/E) ratio of 13.79, and Merck has a P/E ratio of 13.35.
As far as what other strategists are calling for in the broader market, Credit Suisse is now targeting 3,000 and Oppenheimer is targeting 2,900 for the S&P 500 in 2018. At the end of 2017, the forward valuation for the S&P 500 Index was 18.5 times earnings to 19.0 times expected earnings per share according to two main sources.
Coming up for Pfizer, the firm has its fourth-quarter financial results due at the end of January. Thomson Reuters is calling for $0.56 in earnings per share (EPS) and $13.72 billion in revenue. The same period of last year had $0.47 in EPS and revenue of $13.63 billion.
Merck’s fourth-quarter earnings report is expected in early February as well. The consensus estimates are EPS of $0.94 and $10.48 billion in revenue. The same period of last year reportedly had $0.89 in EPS and $10.12 billion in revenue.
ALSO READ: 2018 Bull/Bear Outlook: How All 30 DJIA Stocks Will Take the Market to 26,400 or Higher
Merck has a 52-week trading range of $53.63 to $66.80 and a market cap of $153 billion. Its weighting in the Dow is 1.56%, but the rank is roughly 36th of the S&P 500.
Pfizer has a 52-week range of $30.90 to $37.35 and a market cap of $217 billion. Its weighting in the Dow is 1.01%, but the S&P 500 rank is about 21
nstitute of International Finance reported that global debt reached over $230 trillion at the end of the third quarter. That is up $16 trillion from the end of 2016. By comparison, the U.S. national debt is $20 trillion.
The debt includes national, personal and corporate figures.
The number is shocking given that it exceeds the gross domestic product of the world’s 100 largest nations. These are led by the United States. In the second place, the United Kingdom has debt of $7.9 trillion. At number three, France has debt of $5.4 trillion. Rounding out the top five, Germany has debt of $5.1 trillion and the Netherlands has debt of $4.3 trillion.
U.S. household debt is just shy of $13 trillion. According to Reuters:
Total U.S. household debt was $12.84 trillion in the three months to June, up $552 billion from a year ago, according to a Federal Reserve Bank of New York report published on Tuesday.
The proportion of overall debt that was delinquent, at 4.8 percent, was on par with the previous quarter. However a red flag was raised over the transitions of credit card balances into delinquency, which the New York Fed said “ticked up notably.”
China’s foreign exchange reserves, the largest of any country in the world, are approximately $3 trillion.
Norway’s sovereign wealth fund, often said to be the world’s largest, has a value of $1 trillion.
Because of debate about how much debt is too much debt, whether it be national, student or credit card debt, it is impossible to say if the Institute of International Finance figure should be regarded as something of a warning. Given its vastness, there is no way to tell
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