If you are having difficulty seeing this email, you can view in your browser or click here to print.

• S&P futures flat, off worst levels, following a weak session on Thursday in which growth and emerging market plays underperformed. Asian markets mostly lower overnight. China closed for holiday. European markets on the defensive. Italy a laggard. Two big incremental macro headlines involved the RBI (which surprised markets by leaving rates unchanged) and the German factory order figures for Aug (which came in nicely ahead of expectations).  Treasuries extending recent weakness with some curve flattening, though yield backup fairly minimal. Dollar not doing much on the major crosses. Gold up 0.3%. WTI crude up 0.15%.
• Recent backup in bond yields still the big story. Some debate about whether it is just another blip or the start of a more meaningful bear market. Implications for risk assets also complicated by the influence of stronger economic data on the move, the late-cycle nature of the stimulus that has been a tailwind for growth and the uncertainty surrounding some key inputs for Fed policy, including the neutral rate. Bond bullish sentiment is now at 40% which has been weakening but not at oversold levels.
• US Sept jobs preview (numbers out Fri 10/5 at 8:30amET) – the Street is forecasting adds of 185K (vs. +201K in Aug) although whispers have been for a mild miss given hurricane-related effects (ADP was strong at +230K vs. the St +184K although note that the ADP methodology isn’t as sensitive to storm disruptions as the BLS).  Keep in mind the US economy only needs to be adding jobs at a ~100-130K pace to hold the UR steady and thus it would take a large miss from the 184K consensus to generate legitimate growth concerns (i.e. it would need to be sub 130K).  As has been the case for months, markets will be most sensitive to wages – the St is modeling +0.3% M/M and +2.8% Y/Y.  Recall Aug wages were "hot" (+0.4% M/M and +2.9% Y/Y) although a repeat of similar numbers for Sept (i.e. +0.4%) shouldn’t necessarily alter the Fed narrative (given the FOMC recently published fresh dots, given Powell’s recent commentary, and on back of the soft Aug CPI, PPI, and PCE).  However, a wage number of +0.5% would probably create problems for stocks and increase speculation of four ’19 dots (instead of three).  Finally, the Street is modeling an UR of 3.8% for Sept (vs. 3.9% in Aug) and a participation rate of 62.7% (flat vs. Aug).  Bottom Line: given the recent move in Treasuries and the current narrative, stocks would like a "softer" jobs report (i.e. adds <160K and/or wages up <0.3%).  It would take a very hot print to push yields much beyond present levels in the near-term (i.e. wages >0.4%).

• Usual flurry of headlines surrounding Italy, including worries about growth assumptions in budget and combative relationship between ruling coalition and Brussels. Reuters cited EU sources who said a Brexit deal is close. Nothing really new on trade. WSJ discussed how White House wants to use trade deals to discourage outsourcing and disrupt supply chains.
• Very quiet in terms of corporate news as we get closer to the unofficial start of earnings season next week. Earnings season angst has been a recent topic of discussion in press given elevated expectations, softer guidance trends and lackluster reaction to beats. Tesla CEO Musk mocked SEC in a tweet. Costco missed on EBIT with expenses a drag. NY Post said Kraft Heinz looked at Campbell's Soup , but passed on a deal.  Snapchat reportedly targeting profitability in 2019. Samsung Electronics posted decent Q3 preliminary earnings overnight but that only helped the stock to close flat in South Korea.
• Elon Musk taunt SEC in a tweet last night. On a related note, I will be filming a segment for Real Vision later today.  Stay tuned.  

Any comments, suggestions, or questions - please email info@hedgefundtelemetry.com
Occasionally, an earnings report date could change, or could be incorrect. We rely on various sources including Street Account, Factset, and Bloomberg to compile this report.    

Unsubscribe me from Hedge Fund Telemetry