March Employment Report and Short Term Thoughts ?3

09:14 03-Apr-26

The BLS report for March came in at +178K and 4.3%.  The former number is almost triple the low end of estimates from 59K to 65K.  The latter number is lower by a tenth.  Wages rose 0.2% which is a tenth below estimates, and hours worked are also down by 6 minutes to 34.2 per week.  The Participation Rate and Employment-population ratio both dropped by a tenth to 61.9% and 59.2%, respectively.

The headline numbers confirm ADP strength that this service characterized as stabilization of a frozen labor market.  Normally the market would take that positively.  However, with no trading today, and when considered against prior reports and their revisions (February was revised down by 41K, though January was up by 34K) the wages number seems most important; the market may look past the headlines, and consider both the extreme variability from the BLS and the political impact of low end earnings that will not keep up with inflation, let alone an oil shock that has yet to fully wind its way through to consumers.  Brent/WTI backwardation shows that the global commodities market is pricing in a war effect and, given the sensitivity discussed below from our parent CrowdWisers service, stock markets could finally start doing so as well.

American equity futures fell off a cliff as Trump spoke last night, and did not recover into the open.  I'd already implied that markets were wrong to hope for anything new or meaningful there, but heightened price sensitivity from the war is combining with AI inflation concerns and pushing the deleveraging I'd warned about.

In that context, I see a legislative development in Maine as significant.  The state's House has approved a bill freezing Maine data center development to be engrossed.  Though the Senate may change and thus delay it, some version does seem likely to become law and this is likely to get more attention at that point.  Maine is of middling importance to the industry and thus investors, but it will set a precedent for other states that could prove extremely harmful to American market indexes.  

Though market indexes have rebounded in early trading, I am now wary of the full recovery going into the long weekend.  Even if tomorrow's labor report confirms yesterday's ADP data, which is uncertain given the quality of BLS surveys, next week's trading is likely to be tentative and volatile with PCE and CPI coming up on Thursday & Friday.  Thus, it seems prudent to be more wary than ever of the megacaps, yet strength in many of my recent trade note tickers serves as a reminder that the market does not trade monolithically.

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