Veteran deal-making banker Jean-Yves Fillion has talked closely to enough big name CEOs during his 35-year career to sense when something is a bit off.
Now would be one of those times.
“The trade war is a concern. There is this uncertainty. It’s very hard to predict,” Fillion, BNP Paribas U.S. CEO, said on Yahoo Finance’s The First Trade.
“In spending a lot of time with CEOs daily, weekly their level of confidence remains very strong on the day to day. They are very active, very committed. It’s a good business dynamic,” explained Fillion. “Where I see some hesitation is when we start speaking about the medium term. I believe it’s being driven by more outside factors — uncertainty linked to geopolitical factors and social tensions.”
Everywhere one looks at the moment, the yawning effects of the Trump administration’s trade war on China are becoming apparent. Whether investors want to believe that’s the case or not is a separate issue. But there is no denying the U.S. economy has geared down just as the heat around the trade war has turned up.
For instance, the U.S. added 130,000 jobs in the month of August. Wall Street expected 160,000, with some estimating a gain closer to 200,000. Downward revisions to the prior two months of jobs data were received.
Retail employment declined 11,000. Manufacturing employment continued to be under pressure amid weakening business out of China.
Private employment rose a modest 96,000.
“The momentum is clearly slowing,” Renaissance Macro strategist Neil Dutta said.
The ho-hum jobs report comes on the heels of plunging consumer confidence figures, further weakness in manufacturing purchasing manager indexes in the U.S. and tempered outlooks on capital expenditure spending by CEOs. This week alone brought a material sales warning from global economic bellwether JetBlue (JBLU).
The saving grace in the minds of some on Wall Street? August’s softish jobs report means the Federal Reserve is very likely to cut interest rates by 25 basis points again at its September 17-18 meeting.
Welcome back to the bad news is good news backdrop for the markets. CEOs will unlikely embrace that narrative.