THE DAILY EDGE (9 November 2016)

WSJ headlines:

• Republicans Keep Control of Senate Republicans won a series of hard-fought Senate races to clinch control of the chamber next year, defying expectations on a night of unexpected GOP strength to solidify their complete control of Congress.

• Donald Trump’s Stunning Win Upends U.S. Economic Forecasts President-elect Donald Trump’s surprise win is set to force U.S. economists to rip up their forecasts as the world’s largest economy sails into uncharted waters.

• U.S. Businesses Face Uncertainty Donald Trump’s surprise victory leaves large U.S. businesses bracing for revamped trade pacts and a potential crackdown on overseas operations, but the promise of lower corporate tax rates at home.

• What Trump’s Win Means for the Fed Donald Trump’s electoral victory could upend Federal Reserve officials’ plans for raising short-term interest rates next month and usher in a level of political pressure on the central bank not seen in decades.

• Longer-Dated Bonds Fall on Trump Spending Bet Longer-dated U.S. Treasury bonds sold off as investors bet on a Donald Trump administration boosting fiscal spending.

• Donald Trump Win to Upend Trade Policy The president-elect is set to upend American trade policy and could open a phase of combativeness with major trading partners that would drive up the price of imported goods and rumble through the U.S. economy.

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  Donald Trump Win Gives GOP Fuel to Slash Taxes Donald Trump’s victory emboldens Republicans to complete one of the party’s core missions: slashing tax rates on individuals and businesses.

• Donald Trump’s Victory Brings Uncertainty Abroad

Bloomberg headlines:

• Victorious Donald Trump Is the Devil Wall Street Doesn’t Know

• Welcome to the Great Unraveling of the Global Convergence Trade

• Market Turmoil Eases as Investors Weigh Trump’s Plan for Economy

• BlackRock Says Market Turmoil May Keep Fed on Hold in December

• OPEC Deal Becomes More Urgent, Harder to Agree On

• What Trump means for Canadian prosperity

• Italy’s Next in the Crosshairs for Anti-Establishment Wave

Seven Donald Trump policies that could change the US

1. Trade: Mr Trump is against the proposed Trans-Pacific Partnership deal and calls for fundamental changes to the Nafta pact with Mexico and Canada. He has also threatened to impose punitive 45 per cent tariffs on goods from China, stoking fears of a trade war.

2. Foreign policy: Mr Trump would dismantle or at least restructure Mr Obama’s deal with Iran. Mr Trump has said he is open to both Japan and South Korea developing nuclear arsenals. He seems to want a closer relationship with Russian President Vladimir Putin.

3. Healthcare: Obamacare reforms must be “released and replaced”.

4. Tax policy: Mr Trump has pledged to cut taxes across the board. No American business shoukd pay more than 15% in taxes. The top rate of tax would fall from 39.6%.

5. Supreme Court: Mr Trump faces relatively easy confirmation of his pick by a Republican Senate and he may also have the opportunity to replace some of the relatively elderly complement of liberal judges.

6. Climate change: Mr Trump has vowed to “cancel” the Paris climate agreement, which built on a deal Mr Obama struck with China. He also says he would stop all US payments for UN global warming programmes.

7. Immigration: Mr Trump has campaigned on his pledge to build a wall on the Mexican border, called for a ban on Muslim immigration and the deportation of 11m unauthorised immigrants. However, he has subsequently made more ambiguous statements, promising instead “extreme vetting” and declining to clarify his precise plans for undocumented immigrants.

U.S. JOLTS: Job Openings Improve While Layoffs Decline Sharply

The total job openings rate increased to 3.7% from an unrevised to 3.6% in August. It remained down. however, from the record high of 3.9% in July. The private sector job openings rate held steady at 3.9%, a three month low. In the government sector, the job openings rate fell sharply to 2.2%, the lowest point since March versus an upwardly revised 2.3%.

The job openings rate increased in most major sectors of the labor market. (…)

The actual number of job openings improved a slight 0.6% (2.4% y/y) to 5.486 million following a 6.5% decline in August. Private-sector openings gained 0.9% (2.2`% y/y) to 4.987 million, but remained the lowest level this year. (…)

The layoff and discharge rate set a record low of 1.0% in September, down from 1.3% twelve months earlier. The private sector rate plummeted to a new low of 1.1%, while the government sector rate eased to 0.5%. Total layoffs declined 20.0% y/y. Private-sector layoffs fell 21.1% y/y, while government layoffs eased 2.8% y/y.

The total hires rate eased to 3.5%, and remained down from February’s high of 3.8%. The private sector hiring rate fell to 3.8%, and remained below the high of 4.2% reached in February. (…)

The number of hires declined 3.5% (-1.0% y/y) to 5.081 million in September. It was the lowest level since May. Private sector hiring fell 3.5% (-1.9% y/y) as jobs in leisure & hospitality declined 9.7% (-5.5% y/y). Construction employment fell 8.0% (-4.3% y/y) while factory sector hiring declined 1.8% (-3.6% y/y). Professional & business services improved 0.5% (1.8% y/y) and jobs in retail trade experienced a 2.5% increase (3.6% y/y). Government sector hiring declined 3.9% (+12.3% y/y).

More JOLT charts here.

NFIB DATA SHOWS UNCERTAINTY PARALYZING SMALL BUSINESS OWNERS

Small business owners are rattled by uncertainty and unable to decide whether to expand, whether to hire, or whether to make other important decisions that might boost the economy, according to the National Federation of Independent Business (NFIB) Small Business Economic Trends report, released today.

“The data contained in this report shows record levels of uncertainty among small business owners, and it is tied directly to the election,” said NFIB President and CEO Juanita Duggan. “The result is economic inertia, with business owners unwilling to make the business decisions that would jumpstart the economy.”

The NFIB Small Business Optimism Index ticked up a meager 0.8 points to 94.9. Five of the 10 components posted a gain, three declined, and two remained unchanged in October. Nearly half of the respondents cited taxes or regulations and red tape as their “Single Most Important Business Problem.”

That’s clear evidence, according to Duggan, that government action is a big obstacle to economic growth.

Of those who think the current period is a bad time to expand substantially (56 percent), a record high 39 percent blame the political climate, second only to economic conditions.

US companies report bad news on election day Hertz shares drop by nearly half after car rental company slashes profit guidance

Hertz: –34%, CVS: –11.8, D.R. Horton: –5.4%

• Leading US subprime lender’s shares plunge nearly 40% OneMain reins back growth amid a spike in delinquencies

Shares in OneMain Holdings, America’s biggest subprime lender, crashed almost 40 per cent on Tuesday after the company said it was reining back on growth amid a spike in delinquencies. (…)

OneMain said that 2.7 per cent of its core loans were between 30 and 89 days’ delinquent, up from 2.4 per cent at the end of the second quarter, and indicated that the trend should continue. The company cut its guidance for full-year profits for 2016 and 2017 by about a fifth and one-third, respectively. (…)