Trading Strategy

The Fed needs to see one thing in Friday's big jobs report: 'further improvement'

On Friday morning, (8:30am Eastern Time), the Bureau of Labor Statistics will release the employment report for October.

This report will be a good indication of how comfortable the Federal Reserve might be with actually raising rates at its December meeting.

Here’s what Wall Street is expecting:

Nonfarm payrolls: +182,000

Unemployment rate: 5%

Average hourly earnings month-on-month: 0.2%

Average hourly earnings year-on-year: 2.3%

Average weekly hours worked: 34.5

Change in manufacturing payrolls: -4,000

The Fed needs to be confident that, as it has said repeatedly, there is "further improvement" in the labor market and that the slowdown in jobs growth during the summer wasn't indicative of a new, negative trend for the US economy.

On Wednesday, Fed chair Janet Yellen reminded markets that a December rate hike was "a live possibility" as she testified before the House Financial Services Committee. This comment is part of why Friday's report, the first of two before the Fed's December meeting, is quite important.

In a sense, markets are back where they were just before Fed's September meeting when every data point appeared almost like a road block that had to be cleared. The difference is that during this run-up to the December meeting, the Fed has been more aggressive about prepping markets for a hike should the data line up.

Economists also expect the unemployment rate to drop to 5% for the first time since April 2008.

That's a level most economists consider to be “full employment”, one hurdle that the Fed is likely to want to clear before raising interest rates.

If all goes well, and the U.S economy will show signs of further improvement, we can expect the USD to rise against the EUR. This is a good chance for traders to make profits from the USD/EUR pair on Friday. 

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Europe predicts massive wave of refugees will keep on flowing to the continent.

The European Union is predicting that 3 million more migrants could arrive in the 28-nation bloc by the end of next year, with the refugee emergency already providing a serious test of EU capacities to provide shelter and welcome the new people.

More than 700,000 people have come to Europe seeking sanctuary or jobs so far this year, overwhelming reception centers and border authorities.

EU autumn economic forecasts released on Thursday show that based on current migrant entries and a "technical assumption" about future flows, arrival rates are unlikely to slow before 2017.

The EU's executive Commission said that "overall, an additional 3 million persons is assumed to arrive in the EU over the forecast period."

The Commission says the refugee crisis has resulted in additional government spending but that it could have a small, positive impact on European economies within a few years.

However the EU said the real impact on national budgets is difficult to predict, given a lack of complete and reliable data about exactly who is arriving in the bloc and whether they are staying.

Most people are arriving in Europe through Italy and Greece, while Hungary and Austria have been affected by heavy migrant flows. Germany and Sweden are also feeling the impact.

Those nations, among others, want the EU to apply its budget rules with flexibility, taking into account Europe's biggest refugee emergency in well over half a century.

The Commission said Thursday that Sweden, which has the highest share of refugees per capita, is likely to feel the economic impact most, perhaps 0.5 percent of its gross domestic product this year.

Other hard-hit migrant transit and destination countries are likely to see an impact of 0.2 percent of their GDPs in 2015. While acknowledging the potential short-term impact, the Commission did not clearly state whether it would be flexible on budget policy.

However a senior EU official said on Wednesday that some flexibility might be allowed "taking into account well-specified costs and for a limited period of time."

"This has been an asymmetrical shock for some member states," said the official, briefing reporters on condition that he not be named.

As long as any help is "one-off, short-term," members of the euro single currency bloc would agree to it, he said.

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Facebook stock hits all-time high, again.

Facebook Inc posted surprisingly strong profit and revenue growth as the world's largest social network grew even larger, with a rise in mobile users and advertising that lifted its stock to an all-time high.

The company reported audience numbers that suggest it is set to take on mainstream media as an advertising force, helping investors to overlook Facebook's huge spending on hiring and building data centers.

Facebook now has 8 billion video views per day from 500 million people, compared with 4 billion views in April.

And Facebook's website and Instagram photo-sharing app, which opened up its platform to all advertisers in the third quarter, account for more than 1 in 5 minutes spent on mobile devices in the United States, Chief Operating Officer Sheryl Sandberg said.

"In the medium to long run, we believe that we're not competing between Facebook and Instagram. We're competing with other forms of media," Sandberg told analysts on a conference call after the earnings report.

Facebook had 1.55 billion monthly active users as of Sept. 30, up 14 percent from a year earlier. Of these, 1.39 billion used the service on mobile devices.

"Growth is happening across the board and we're of course looking for a lot of growth in the future in emerging markets," Sandberg said in an interview. "We're also pretty focused on helping bring the next set of people who are not online, online."

Ad revenue grew 45.4 percent to $4.30 billion, with 78 percent of that coming from mobile versus 66 percent in the year-ago quarter. "Part of the upside came from Instagram. The Instagram monetization engine has been turned on really rapidly for the coming quarters and years," said Arvind Bhatia, an analyst with SterneAgee.

Facebook did not disclose Instagram's ad sales figures. But the app is expected to bring in $595 million in mobile ad revenues this year, while its ad revenue is projected to grow to $2.8 billion by 2017.

Facebook's huge $3.0 billion spending, up 68 percent from the third quarter last year, did not seem to worry investors or analysts. "I think the investors would like the company to continue to invest given that the opportunity is pretty large," said Shyam Patil of Susquehanna Financial Group.

The stock rose about 5 percent to an all-time high of $109.34 in extended trading, before paring gains to about 4 percent. It closed earlier at $103.94.

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Twitter Inc. is doing all it can to start changing its bad run in recent months.

The Company has replaced the star-shaped “Favorite” button with the heart-shaped “Like” button. The news was reported on Tuesday, and the change has been credited to the company's aim to make the platform more user-friendly for newcomers.

Twitter’s Product Manager, Akarshan Kumar wrote: “The heart is more expressive, enabling you to convey a range of emotions and easily connect with people. And in our tests, we found that people loved it.”

The change had been requested by majority investor Chris Sacca, in June. In a blog post titled “What Twitter Can Be,” Mr. Sacca outlined various issues that the company has faced recently. He also came up with his own solutions to those problems.

The investor recommended removing the Favorites button, and using a Like button instead. He stated the same thing that the company noted in its post today: “It is now clear from across the Internet and throughout the world of apps that the heart is universally understood and embraced.” Mr. Sacca also pointed out that the use of the heart button on Twitter’s video-streaming app Periscope had received positive feedback from users.

The micro-blogging social network has not given credit to the investor for initiating this change. By adopting this policy, the company is somewhat following arch-rival Facebook Inc. (NASDAQ:FB), which uses its own thumbs-up button for likes.

The company has rolled out the changes only a few weeks after announcing that co-founder Jack Dorsey would head the company as its permanent CEO. The new chief has committed to accelerate user growth by making more positive changes to the core product. As part of these changes, Twitter users should also expect to see an extension of the 140-character limits on tweets.

In contrast, Facebook still remains one step ahead of the change with its proactive approach. Earlier in August, the company said that it would be adding six new buttons to accompany the like button that include “Angry,” “Sad,” “Wow,” “Yay,” “Haha,” and “Love.” For now, these buttons are available only in Spain and Ireland, but users all over the world can expect to see them soon.

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Auto makers in the U.S. said car sales rose by a double-digit percentage in October, driven by the month having five weekends and continued strong demand for larger vehicles amid low oil prices.

Overall, car sales are on track to reach their highest October sales volume since 2001. General Motors Co. said the seasonally adjusted annual selling rate for light vehicles reached an estimated 18.2 million units in October.

GM led the Big Three, posting a 15.9% jump to 262,993 light vehicles sold in the month, which surpasses the estimate for 12% growth from car research firm Edmunds.com.

Fiat Chrysler Automobiles NV recorded a 14.7% leap, propelled in part by searing demand for the auto maker’s Jeep brand, and was above the 14% estimate. Ford Motor Co.’s 13.4% growth in sales, came in a bit lower from expectations for 14.2% growth.

Car shoppers continued to drive away in larger, pricier vehicles amid low interest rates, cheap fuel and a stronger economy. The October numbers also were helped by another weekend in the month versus last year.

Nissan Motor Co. finished the month 12.5% higher than last year at 116,047 light vehicles. Overall sales of Nissan crossovers, trucks and SUVs rose 26% for an October record as Rogue sales shot up 70% and the Murano crossover jumped 25%.

Fiat Chrysler—which recorded its best sales for the month since 2001—sold 195,545 vehicles, compared with 170,480 for the month last year, extending the Italian-U.S. company’s sales-gains streak to 67 months.

Jeep brand sales spiked 33%. Eight Fiat-Chrysler vehicles posted their best October ever: Dodge Charger, Dodge Challenger, Dodge Journey, Jeep Cherokee, Jeep Compass, Jeep Patriot, Jeep Wrangler and Ram ProMaster.

Overall, U.S. auto sales are expected to increase 12% year-over-year to 1.43 million vehicles. Compact utilities are expected to hit their third month as the top segment with 40% growth. “Exploding popularity” of small utility vehicles means small and midsize cars are losing market share. The firm estimates market share for both smaller-car segments will drop more than a full percentage point.

Volkswagen AG is seen as a black mark on the month following fallout from its emissions scandal.

October could be the last month Volkswagen’s Audi sales remain untainted. On Monday, the Environmental Protection Agency slapped additional Clean Air Act violations on the German auto maker, widening the scandal to thousands of more diesel-powered vehicles, including multiple Audi models.

“In this year of booming auto sales, no auto maker should be relieved to see flat year-over-year performance, but this may be the best that Volkswagen can hope for this month,” said Edmunds.com analyst Jessica Caldwell. “Until VW starts down a road to recovery by informing owners of a specific fix to their diesel vehicles, the company is likely to make far fewer sales than this surging market would otherwise deliver to them.”

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Instagram star exposes why life on social media is far from the real thing

Model Essena O'neill said that going to scenic places and taking pictures just to get likes and compliments is not life.

Australian model Essena O'neill has more than half a million followers on Instagram and around 260,000 subscribers on YouTube. She had the life most people living in the digital age envied, yet she has decided to quit social media, and while doing so, she exposed the real stories behind the seemingly-perfect life she flaunted online.

"Social media is not real life," she decried.

The 19-year-old model, who earned her living through brand-sponsored posts and online advertisements, shared a raw and emotional video blog on her YouTube page, explaining the real reason why she is quitting social media.

"I am quitting social media to tell everyone, anyone that I was miserable. I had it 'all' and I was miserable," she said, adding that she decided to do it for her younger self who didn't get to live life because she was too focused on concocting a perfect life online that would be the envy of many.

O'neill added that she didn't get to live her real life, by just being with people and talking to them, because she was too busy "living in the screen and wishing that people would value" her.

She added that going to scenic places and taking pictures just to get likes and compliments is not life.

"You want to be valued and loved, but you also want to be free. You don't have to go on social media to connect. You don't have to prove your life on Instagram for it to be a good life."

To those dreaming of building a career by blogging, she gave this advice: "I have everything to lose by doing this. But to the majority of the people without a career on social media, you have nothing to lose and everything to gain."

She said that she was prompted to expose the social media industry when she turned off her smartphone for a week and that she didn't recognize herself when she wasn't connected to the digital world.

"There were so many things I could have done with my time. I could have just enjoyed, [but instead] I threw away real connections. I was, somehow, showing people that likes and views equal worth," thus she decided to create the movement "Let's Be Game Changers."

She added that the movement is bigger than her and what she is doing is a statement that real life isn't through screens. "You don't have to do anything but explore what excites you."

In an Instagram post, her edited caption revealed that she was then paid $400 to post a photo of her wearing a dress from a clothing brand when she only had 150,000 followers, but those with more than half a million followers, online brands pay up to $2,000 per post.

She asked for support, because her exposé and decision to leave the industry left her broke, adding that she can't even afford to pay her rent anymore.

Click here to watch the full video:

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