Markets slip as jobs opening inch higher showing a robust labor market

Dow edged lower by 5, decliners over advancers better than 3-2 & NAZ retreated 68.  The MLP index fell 2 to 266 & the REIT index declined 2+ to 380.  Junk bond funds slid lower & Treasuries were about even so yields hardly budged.  Oil was fractionally higher to the 77s & gold rose 7 to 2051.

AMJ (Alerian MLP Index tracking fund)

US job openings unexpectedly rose in Dec to the highest level in 3 months, underscoring the resilience of the labor market even in the face of higher interest rates.  The Labor Dept said there were 9M job openings in Dec, an increase from the upward revised 8.9M openings reported the previous month.  The foecast expected a reading of 8.7M.  "The report boils down to no news is good news," said Robert Frick, corp economist with Navy Federal Credit Union.  "Job openings are still a healthy level above those seeking work, and the other numbers remain where a healthy labor market should find them. While openings did tick up, the increase is well within the margin of error."

US job openings rise in December to highest level in 3 months

The IMF nudged its global growth forecast higher, citing the unexpected strength of the US economy & fiscal support measures in China.  It now sees global growth in 2024 at 3.1%, up 0.2 percentage points from its prior Oct projection, followed by 3.2% expansion in 2025.  Large emerging market economies including Brazil, India & Russia have also performed better than previously thought.  The IMF believes there is now a reduced likelihood of a“hard landing,” an economic contraction following a period of strong growth, despite new risks from commodity price spikes & supply chain issues due to geopolitical volatility in the Middle East.  It forecasts growth this year of 2.1% in the US, 0.9% in both the euro zone & Japan, & 0.6% in the UK.  “What we’ve seen is a very resilient global economy in the second half of last year, and that’s going to carry over into 2024,” the IMF's chief economist, Pierre-Olivier Gourinchas, said.  “This is a combination of strong demand in some of these countries, private consumption, government spending. But also, and this is quite important in the current context, a supply component as well ... So very strong labor markets, supply chain frictions that have been easing, and the decline in energy and commodity prices.”  The latest official figures showed the US economy tearing past expectations in the 4th qtr, with growth of 3.3%.  China has faced a host of issues over the last year, including a disappointing rebound in post-pandemic spending, concerns over deflatio & an ongoing property sector crisis.  The gov has rolled out a host of stimulus measures in response, contributing to the IMF's upgrade.  However, the IMF's forecasts remain below the global growth average between 2000 & 2019 of 3.8%.  Higher interest rates, the withdrawal of some fiscal support programs & low productivity growth continue to weigh.  But restrictive monetary policy has led to inflation falling faster than expected in most regions, which Gourinchas called the “other piece of good news” in this report.  The IMF sees global inflation at 5.8% in 2024 & 4.4% in 2025.  In advanced economies, that falls to 2.6% this year & 2% next year.  “The battle against inflation is being won, and we have a higher likelihood of a soft landing. So that sets the stage for central banks, the Federal Reserve, the European Central Bank, the Bank of England, and others, to start easing their policy rates, once we know for sure that we are on that path,” Gourinchas said.  “The projection right now is that central banks are going to be waiting to get a little bit more data, they are going meeting by meeting, they are data dependent, confirming that we are on that path. That’s the baseline. And then if we are, then by the second half of the year we’ll see rate cuts,” he continued.  While central banks must not ease too early, there is also a risk coming into sight of policy remaining too tight for too long which would slow growth & bring inflation below 2% in advanced economies, Gourinchas added.

IMF upgrades global growth forecast, citing U.S. resilience and policy support in China

UPS (UPS) fell short of revenue estimates, reporting drops in shipping volume, both internationally & domestically, in its 4th-qtr earnings report.  The company also announced 12K layoffs as part of an effort to align resources in 2024.  The workforce reductions will save the company about $1B in costs, CEO Carol Tomé said.  “2023 was a unique, and quite candidly, difficult and disappointing year. We experienced declines in volume, revenue and operating profits and all three of our business segments,” Tomé added.  For the last 3 months of 2023, UPS was $1.87, compared with $3.96, a year earlier.  Adjusting for 1-time items related to pensions & intangible assets, EPS was $2.47.  Revenue declined 7.8% to $24.9B from $27B last year.  The company reported a 7.4% drop in average daily volume domestically & an 8.3% decrease internationally.  Tomé said the intl softness was “heavily weighted” in Europe, coupled with freight complications in the Red Sea region, as well as the Panama & Suez Canals.  UPS's 2024 outlook expects revenue of $92-94.5B, with an adjusted operating margin of about 10% to 10.6%.  The stock sank 12.66% (8%).

UPS announces 12,000 job cuts, says package volume slipped last quarter

UPS feels the global economy & its dreary report sends a negative signal to the stock market.  It could be mentioned in the Fed's meeting which is going on presently.  In addition, profit taking would be in order following the stock market's rally.

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