Julius Baer in talks with Santander over Venezuela business: sources

ZURICH (Reuters) – Swiss private bank Julius Baer (BAER.S) is in talks about transferring its Venezuelan book of business to Spain’s Banco Santander (SAN.MC) as Baer reorganizes operations in Latin America, sources close to the situation have told Reuters.

Baer said in October it was closing its branches in Peru and Panama as part of its effort to focus on larger markets in the region such as Mexico, Brazil and Argentina.

A source familiar with the situation, who asked not to be identified, said on Saturday that talks with Santander over Baer’s Venezuelan book of business were under way but had not yet been concluded.

Last month, another source told Reuters on condition of anonymity that Santander was talking to Julius Baer about taking over some of the Swiss bank’s clients in Venezuela.

A third source said a potential deal would not involve the transfer of any portfolio or assets, but rather come as referral agreement where the Spanish bank could access Baer’s clients.

A spokesman for the Spanish bank declined to comment.

Switzerland’s Neue Zuercher Zeitung newspaper reported on Saturday that Baer had ended ties in April with hundreds of clients in Venezuela with less than $1.5 million each in assets, and that the remaining clients there had more than $20 million each in assets.

Santander has not operated in Venezuela since agreeing in 2009 to sell its stake in Banco de Venezuela to the country’s government for 1.05 billion euros ($1.19 billion).

Baer’s possible exit from Venezuela follows legal proceedings involving a former executive in Latin America. The bank itself has not been charged with any wrongdoing.

Matthias Krull, a former Julius Baer Panama vice-chairman, was sentenced to 10 years in U.S. prison in October after pleading guilty for his role in a billion-dollar scheme to launder money embezzled from Venezuelan state oil company PDVSA [PDVSA.UL].

Reporting by Michael Shields in Zurich and Jesus Aguado Gonzalez and Carlos Ruano in Madrid

Red-hot U.S. jobs market drives some to seek cooler options

POCATELLO, Idaho (Reuters) – When Sean Luangrath joined Pocatello, Idaho-based Inergy Solar a few years ago, the plan was to move the portable solar battery maker to his home base of Salt Lake City so he could build it with easy access to Silicon Slopes’ tech talent and venture capital.

But when the new CEO looked at the labor costs, he ditched that plan and decided instead to rely on labor drawn from local colleges and the nearby Idaho National Laboratory. By next year he plans to double the payroll to 50 employees as he moves the company’s manufacturing operations from China back to eastern Idaho.

Laungrath says he likes being the relatively bigger fish in a relatively smaller pool. “There’s less competition for doing stuff like this in this neck of the woods.”

But Luangrath’s decision also reflects the reality of a U.S. labor market that is by some measures the hottest in decades.

The national unemployment rate held steady last month at 3.7 percent, a 50-year-low, figures released by the U.S. Labor Department showed Friday. And though job gains fell short of expectations, at 155,000 in November they were still twice what some estimate is needed to keep up with population growth.

Wages are also up 3.1 percent nationally in the 12 months to November, Friday’s report shows, though that masks much faster growth in bigger cities, especially those with tech-heavy labor pools.

Four of the top 10 counties with the biggest wage gains in the second quarter of 2018 were in the greater San Francisco Bay Area, recent data from the U.S. labor department shows.

And across the country many labor markets are so tight it is pinching companies’ growth, according to anecdotal data released by the Federal Reserve last week. The Federal Reserve Bank of Minneapolis, for instance, reported that “labor availability was widely seen as the biggest obstacle to short-term growth.”

Scarce labor pushes up wages, and “wage gains are likely to continue rising through 2019,” said Andrew Chamberlain, chief economist at online jobsite Glassdoor. But, he said “it’s a very diverse wage picture across the U.S.”

And that has created openings for some companies willing to branch out.

A little over a year ago, executives at ecommerce company Fivestars realized they had a problem: the job market in San Francisco was getting too hot, and the customer support staff they would need for their next bout of expansion were nowhere to be found.

So they headed for El Paso, Texas.

By October the online retail marketing firm had hired 65 employees in the border town, about a quarter of their total workforce.

Labor there is not only less expensive, explains vice president of business operations Matthew Curl, but it is easier to hire and keep people. In San Francisco, it had recently taken him two months to hire just one customer support agent, who then left within a week for a slightly better paying job.

El Paso is “everything we’d hoped: a stable labor market with experienced people that know what they are doing,” he said.

El Paso’s average weekly wage grew 2.4 percent in the second quarter of 2018, to $733, U.S. Labor Department figures show.

Slideshow (2 Images)

That compares to a 4.4 percent increase in Salt Lake, to an average weekly wage of $1,010, and a 9 percent rise in Silicon Valley’s San Mateo, to an average weekly wage of $2,357.

With growth like that, more companies may try to solve their hot labor market woes with a move to a cooler spot like the El Paso desert.

Indeed, the trend may already be happening: early this month Curacubby, a Berkeley, California-based startup that automates billing for schools, announced it will open an office in El Paso in January.

Reporting by Ann Saphir; Editing by Dan Burns and Diane Craft

Uber makes confidential filing for long-awaited IPO

NEW YORK/SAN FRANCISCO, (Reuters) – Uber Technologies Inc has filed paperwork for an initial public offering, according to three people with knowledge of the matter, taking a step closer to a key milestone for one of the most closely watched and controversial companies in Silicon Valley.

The ride-hailing company filed the confidential paperwork on Thursday, one of the sources said, in lock-step with its smaller U.S. rival, Lyft Inc, which also announced on Thursday it had filed for an IPO.

The simultaneous filings extend the protracted battle between Uber and Lyft, which as fierce rivals have often rolled out identical services and matched each other’s prices. Uber is eager to beat Lyft to Wall Street, according to sources familiar with the matter, a sign of the company’s entrenched competitiveness.

Its filing sets the stage for one of the biggest technology listings ever. Uber’s valuation in its most recent private financing was $76 billion, and it could be worth $120 billion in an IPO. Its listing next year would be the largest in what is expected to be a string of public debuts by highly valued Silicon Valley companies, including apartment-renting company Airbnb Inc and workplace messaging firm Slack. Ongoing market volatility, however, could alter companies’ plans.

The IPO will be a test of public market investor tolerance for Uber’s legal and workplace controversies, which embroiled the company for most of last year, and on Chief Executive Dara Khosrowshahi’s progress in turning around the company.

Khosrowshahi took over just over than a year ago, and has repeatedly stated publicly he would take Uber public in 2019. In August, he hired the company’s first chief financial officer in more than three years.

Together, Uber and Lyft will test public market investor appetitive for the ride-hailing business, which emerged less than a decade ago and has proven wildly popular, but also unprofitable.

Uber in the third quarter lost $1.07 billion and is struggling with slowing growth, although its gross bookings, at $12.7 billion, reflect the company’s enormous scale. Its revenue for the quarter was $2.95 billion, a 5 percent boost from the previous quarter. Its bookings grew just six percent for the quarter.

Uber has raised about $18 billion from an array of investors since 2010, and it now faces a deadline to go public.

An investment by SoftBank that closed in January, which gave the Japanese investor a 15 percent stake in Uber, included a provision that requires Uber to file for an IPO by Sept. 30 of next year or the company risks allowing restrictions on shareholder stock transfers to expire.

Uber has not formally chosen underwriting banks, although Morgan Stanley and Goldman Sachs are likely to get the lead roles, sources told Reuters. Lyft hired JPMorgan Chase Co, Credit Suisse and Jefferies as underwriters.

The Wall Street Journal reported Uber’s filing earlier on Friday.

HISTORY OF SCANDAL

Becoming a public company will bring a heightened level of investor scrutiny and exposure to Uber, which suffered a string of scandals when the company was led by co-founder and former CEO Travis Kalanick, who resigned last year.

The controversies included allegations of sexual harassment, obtaining the medical records of a woman raped by an Uber driver in India, a massive data breach, and federal investigations into issues including possibly paying bribes to officials and illicit software to evade regulators.

Khosrowshahi and his leadership team have worked to reset the workplace culture and clean up the messes, including settlements with U.S. states over the data breach and with Alphabet’s self-driving car unit, Waymo, which had sued Uber for trade-secrets theft.

Uber today is a different company than the vision its founders pitched to early investors, which helped it become the most highly valued venture-backed company in the United States.

After concessions in China, Russia and Southeast Asia, where Uber sold its business to a local competitor, and the prospect of another merger in the Middle East, Uber is far from being the dominant global ride-hailing service it set out to be.

Still, Uber operates in more than 70 countries, while Lyft is in the U.S. and Canada, although the smaller company is plotting a global expansion.

Uber has also added a number of other businesses, which are growing but have yet to show sustainable profits, in a bid to become a one-stop mobility app. Those include freight hauling, food delivery and electric bike and scooter rentals. Meanwhile, its self-driving car unit is costing the company about $200 million a quarter, according to investors, but Uber’s program has retrenched since one of its autonomous cars killed a pedestrian in March.

Writing by Heather Somerville. Additional reporting by Ismail Shakil in Bengaluru; Liana Baker and Greg Roumeliotis in New York; Editing by Sandra Maler Simon Cameron-Moore

China calls on Canada to free Huawei CFO or face consequences

BEIJING/OTTAWA (Reuters) – China warned Canada on Saturday that there would be severe consequences if it did not immediately release Huawei Technologies Co Ltd’s [HWT.UL] chief financial officer, calling the case “extremely nasty.”

Meng Wanzhou, Huawei’s global chief financial officer, was arrested in Canada on Dec. 1 and faces extradition to the United States, which alleges that she covered up her company’s links to a firm that tried to sell equipment to Iran despite sanctions.

The executive is the daughter of the founder of Huawei.

If extradited to the United States, Meng would face charges of conspiracy to defraud multiple financial institutions, a Canadian court heard on Friday, with a maximum sentence of 30 years for each charge.

No decision was reached at the extradition hearing after nearly six hours of arguments and counter-arguments, and the hearing was adjourned until Monday.

In a short statement, China’s Foreign Ministry said that Vice Foreign Minister Le Yucheng had issued the warning to release Meng to Canada’s ambassador in Beijing, summoning him to lodge a “strong protest.”

Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said Saturday there is “nothing to add beyond what the Minister said yesterday”.

Freeland told reporters on Friday that relationship with China is important and valued, and Canada’s ambassador in Beijing has assured Chinese that consular access will be provided to Meng.

When asked about the possible Chinese backlash after the arrest of Huawei’s CFO, Prime Minister Justin Trudeau told reporters on Friday that Canada has a very good relationship with Beijing.

Canada’s arrest of Meng at the request of the United States while she was changing plane in Vancouver was a serious breach of her lawful rights, Le said.

The move “ignored the law, was unreasonable” and was in its very nature “extremely nasty,” he added.

“China strongly urges the Canadian side to immediately release the detained person, and earnestly protect their lawful, legitimate rights, otherwise Canada must accept full responsibility for the serious consequences caused.”

The statement did not elaborate.

“There will probably be a deep freeze with the Chinese in high-level visits and exchanges,” David Mulroney, former Canadian ambassador to China, said on Friday.

“The ability to talk about free trade will be put in the ice box for a while. But we’re going to have to live with that. That’s the price of dealing with a country like China.”

Meng’s arrest was on the same day that U.S. President Donald Trump met in Argentina with China’s Xi Jinping to look for ways to resolve an escalating trade war between the world’s two largest economies.

“We are tracking the developments of this case and refer you to the filings in the Supreme Court of British Columbia,” said a U.S. State Department official, speaking on condition of anonymity.

The news of Meng’s arrest has roiled stock markets and drawn condemnation from Chinese authorities, although Trump and his top economic advisers have played down its importance to trade talks after the two leaders agreed to a truce.

A Huawei spokesman said on Friday the company has “every confidence that the Canadian and U.S. legal systems will reach the right conclusion.” The company has said it complies with all applicable export control and sanctions laws and other regulations.

Reporting by Ben Blanchard in Beijing and David Ljunggren in Ottawa; Editing by Alexander Smith and Nick Zieminski

Exclusive: Odebrecht Peru agrees to plea deal with Peruvian authorities over bribery scandal

(Reuters) – Brazilian builder Odebrecht’s Peruvian unit has signed a deal with Peruvian authorities to pay a multimillion dollar fine that will allow it to continue operating in the country in return for providing evidence about officials it bribed, three sources related to the matter told Reuters on Saturday.

Two sources said the fine would amount to approximately $182 million to be paid over 15 years. It would also admit that it paid bribes to win six contracts related to four infrastructure projects, they added.

The third source said Odebrecht would pay a total of some $200 million and the deal would include reference to a fifth project for which it has already admitted paying bribes.

Odebrecht has been at the center of Latin America’s largest graft scandal since admitting in a 2016 plea deal with U.S., Brazilian and Swiss authorities that it had bribed officials in a dozen countries to secure public works contracts, including $30 million in bribes in Peru.

The three sources told Reuters that the plea agreement with the Peruvian authorities was signed in the early hours of Saturday, after 12 hours of final negotiations between representatives of the prosecutor’s office, the attorney general’s office and Odebrecht in Peru.

The agreement allows Odebrecht to continue operating in Peru in exchange for its executives giving evidence against Peruvian officials and politicians who allegedly received bribes over almost 20 years.

Odebrecht’s representatives in Peru declined to comment.

After Brazil, Peru has seen the greatest fallout from the Odebrecht scandal. All four of its most recent former presidents, and its opposition leader, are under investigation in connection with payments from Odebrecht. All deny wrongdoing. [L2N1XB2F7]

In the agreement, Odebrecht accepts it paid bribes in relation to six contracts, two sources said.

Two involve the construction of a road linking Brazil and Peru during the government of former President Alejandro Toledo, between 2001 and 2006, while two more relate to the construction of Lima’s Metro under former President Alan García (2006-2011), they added.

Two more involved the extension of a coastal road in Lima and construction of a highway in the Andean city of Cusco.

A final contract, referenced by the third source and for which it has already admitted paying bribes, relates to a road project in the Ancash region north of Peru.

“The 15 years’ time frame was established for the payments because Odebrecht is technically bankrupt,” one of the sources said.

Peruvian prosecutors are expected to begin questioning several Odebrecht executives in Brazil in January, including the former head of the firm in Peru, Jorge Barata.

Reporting by Marco Aquino; Writing by Aislinn Laing; Editing by Susan Thomas

Iran agrees to OPEC oil cut, focus shifts back to Russia

VIENNA (Reuters) – Iran gave OPEC the green light on Friday to reduce oil output by around 0.8 million barrels per day from 2019 after finding a compromise with rival Saudi Arabia over a possible exemption from the cuts, an OPEC source said.

Tehran has emerged as a key sticking point for a deal but sources said the difficulties were now in the past and OPEC was refocusing on talks with non-member producers led by Russia to reduce supplies and prop up oil prices.

“Yes, Iran agreed in principle,” the source said.

OPEC will propose that non-member producers contribute an additional 0.4 million bpd to the cuts, the source said. “It will be stamped when the non-OPEC meeting is done.”

The Organization of the Petroleum Exporting Countries was meeting in Vienna for a second day running, before discussions with its non-OPEC allies scheduled for 1400 GMT.

Saudi Arabia faces pressure from U.S. President Donald Trump to help the global economy by refraining from cutting supplies.

An OPEC output reduction also would provide support to Iran by increasing the price of oil.

(Graphic: Who might agree to an OPEC crude supply deal? – tmsnrt.rs/2Ru61od)

Possibly further complicating any OPEC decision is the crisis around the killing of journalist Jamal Khashoggi at the Saudi consulate in Istanbul in October. Trump has backed Saudi Crown Prince Mohammed bin Salman despite calls from many U.S. politicians to impose stiff sanctions on Riyadh.

U.S. special representative for Iran Brian Hook met Falih in Vienna this week, in an unprecedented development ahead of an OPEC meeting. Saudi Arabia first denied the Hook-Falih discussion took place but later confirmed it.

“U.S. political pressure is clearly a dominant factor at this OPEC meeting, limiting the scope of Saudi actions to rebalance the market,” said Gary Ross, chief executive of Black Gold Investors and a veteran OPEC watcher.

OPEC’s battle to coax Russia to cut oil output as the US ramps up: tmsnrt.rs/2RzCE3J

Difference in OPEC oil output between Nov 2018 and Oct 2016: tmsnrt.rs/2RqgBMS

RUSSIAN DILEMMA

The price of crude LCOc1 has fallen almost a third since October to around $60 a barrel as Saudi Arabia, Russia and the United Arab Emirates raised output to offset lower exports from Iran, OPEC’s third-largest producer. [O/R]

The price decline prompted OPEC and its allies to discuss output cuts, and Saudi Energy Minister Khalid al-Falih said on Thursday possible reductions by those involved ranged from 0.5-1.5 million bpd.

OPEC crude production in November – Reuters Survey: tmsnrt.rs/2RqgctQ

A reduction of 1 million bpd would be acceptable and so far was the main scenario, Falih said, but he added that Russia needed to commit significant volumes.

Russian Energy Minister Alexander Novak met with President Vladimir Putin in St Petersburg on Thursday and returned to the Austrian capital on Friday morning.

A Russian Energy Ministry source said Moscow was ready to contribute a cut of around 200,000 bpd – more than the initially suggested figure of 150,000 bpd.

Slideshow (8 Images)

Oil producers’ budget-balancing act: tmsnrt.rs/2QfNS0J

Russia, Saudi Arabia and the United States have been vying for the position of top crude producer in recent years. The United States is not part of any output-limiting initiative due to its anti-trust legislation and fragmented oil industry.

On Thursday, U.S. government figures showed the country had become a net exporter of crude oil and refined products for the first time on record, underscoring how the surge in production has altered the supply equation in world markets.

Additional reporting by Ahmad Ghaddar and Alex Lawler; Writing by Dmitry Zhdannikov; Editing by Dale Hudson; Graphics by Amanda Cooper

U.S. job growth slows; monthly wage gains miss expectations

WASHINGTON (Reuters) – U.S. job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Federal Reserve in 2019.

The Labor Department’s closely watched monthly employment report on Friday came against a backdrop of a steep sell-off on Wall Street and a partial inversion of the U.S. yield curve, which have stoked fears of a recession.

Stocks have been mostly hurt by uncertainty whether a 90-day truce agreed by U.S. President Donald Trump and Chinese President Xi Jinping over the weekend will hold and lead to a lasting easing of trade tensions between the world’s two largest economies.

Nonfarm payrolls increased by 155,000 jobs last month, with construction companies hiring the fewest workers in eight months, likely because of unseasonably chilly temperatures.

Some of the moderation in hiring in November could be the result of a shortage of qualified workers. But it also fits in with other data showing a rise in layoffs in recent weeks and a decline in a measure of services sector employment in November.

Data for September and October were revised to show 12,000 fewer jobs added than previously reported.

Economists polled by Reuters had forecast payrolls increasing by 200,000 jobs in November. The unemployment rate was unchanged at near a 49-year low of 3.7 percent.

Average hourly earnings rose six cents, or 0.2 percent in November after gaining 0.1 percent in October. That left the annual increase in wages at 3.1 percent, matching October’s jump, which was the biggest gain since April 2009.

Companies also reduced hours for workers. The average workweek fell to 34.4 hours from 34.5 hours in October. The employment report could heighten fears about the economy’s health and lower the probability of the Fed raising interest rates more than once next year.

Financial markets are pricing in one rate hike from the Fed in 2019, compared with expectations for possibly two rate hikes a month earlier, according to CME Group’s FedWatch program. The U.S. central bank is expected to increase borrowing costs on Dec. 18-19 for the fourth time this year.

Fed Chairman Jerome Powell last month appeared to signal the central bank’s three-year tightening cycle was drawing to a close, saying its policy rate was now “just below” estimates of a level that neither cools nor boosts a healthy economy.

Minutes of the Fed’s November policy meeting published last week showed nearly all officials agreed another rate increase was “likely to be warranted fairly soon,” but also opened debate on when to pause further hikes.

Wage gains were moderate despite online retail giant Amazon.com Inc (AMZN.O) raising its minimum wage to $15 per hour for U.S. employees last month because of tightening labor market conditions.

Soft October data on the housing market, business spending on equipment as well as a jump in the trade deficit to a 10-year high have heightened fears the economy is slowing.

Growth forecasts for the fourth quarter are around a 2.7 percent annualized rate. The economy grew at a 3.5 percent pace in the third quarter.

Job gains have averaged 170,000 per month over the past three months. The economy needs to create roughly 100,000 per month to keep up with growth in the working-age population. Employment growth could slow further in the months ahead. The number of Americans applying for unemployment benefits is near eight-month highs.

General Motors (GM.N) has announced plans to cut up to 15,000 jobs in North America next year, which will affect some assembly plants in the United States.

Hiring last month was almost across all sectors. Retail employment increased by 18,200 jobs, likely boosted by an early Thanksgiving. Transportation and warehousing payrolls rose by 25,400 jobs, probably driven by seasonal hiring.

However, an unusually cold November slowed hiring at construction sites. Construction employment rose by only 5,000 jobs after companies added 24,000 workers to their payrolls in October.

Manufacturing employment increased by 27,000 jobs last month after rising 26,000 in October.

Reporting by Lucia Mutikani Editing by Andrea Ricci

Instant View: U.S. November payrolls lower than expected

(Reuters) – U.S. job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Federal Reserve in 2019.

KEY POINTS:

* Total payrolls rose 155,000 vs 200,000 estimate and downwardly revised 237,000 prior (original 250,000)* Private payrolls rose 161,000 vs 200,000 estimate and upwardly revised 251,000 prior (original 246,000)

* Unemployment rate unchanged at 3.7 pct vs 3.7 pct estimate

* Average hourly earnings rose 0.2 pct month-to-month vs 0.3 pct estimate and downwardly revised 0.1 pct prior (original 0.2 pct)

* Average hourly earnings rise 3.1 pct year-over-year vs 3.1 pct estimate and unrevised 3.1 pct prior

* U-6 rate rises to 7.6 pct vs 7.4 pct prior* Labor force participation unchanged at 62.9 pct

* Household survey: Workforce grew by 133,000; employed rose by 233,000; unemployed fell by 100,000

MARKET REACTION:

STOCKS: SP e-mini futures ESv1 pare losses, point to little change at the opening bell

BONDS: 2- US2YT=RR and 10-year US10YT=RR Treasury yields rise slightly from prior levels; 10-year yield around 2.9 pct; 2s at 2.76 pct; 2-10 spread just above 13 basis points

FOREX: The dollar index .DXY weakens modestly

RATE FUTURES: Fed funds contract for January 2020 FFF0 unchanged in price; implied fed funds effective rate at expiry 2.63 pct vs current effective rate of 2.20 pct

COMMENTS:

JOE SALUZZI, CO-MANAGER OF TRADING, THEMIS TRADING, CHATHAM, NEW JERSEY:

“At this point people are more concerned about the Fed. So this gives more ammunition for the Fed not to move and for the Fed to kind of pull back. Well, that’s a good thing. It’s that fine balancing act that we always look for, that kind of Goldilocks mentality. I think that number is actually a good number where it shows that is there is a positive jobs number, but it’s not too good.”

BRYCE DOTY, SENIOR PORTFOLIO MANAGER, SIT FIXED INCOME ADVISORS, MINNEAPOLIS:

“The headline number is definitely weaker-than-expected. It makes me think that we are not seeing more hiring is due to the scarcity of labor. It’s just tougher and tougher for employers to find people.

“We had some knee-jerk reaction to the data. Bond yields are going back up after a brief drop. I think the number is not as weak as it initially looks. I think the economy is going to continue to be strong. There will be a slowing in growth from a blistering pace.

“This is not going to stop the Fed from hiking on Dec. 19th.  I think they will raise raises two more times in 2019 to get closer to 3 percent and continue to normalize the balance sheet. By March, they will get the fourth-quarter GDP and we will probably get strong readings on year-end holiday spending. The wage growth number we are seeing should push up the CPI rate.”

BRUCE BITTLES, CHIEF INVESTMENT STRATEGIST, ROBERT W. BAIRD CO, SARASOTA, FLORIDA:

“That number (155,000 jobs) is a favorable number for the markets. The fact we had a shortfall in the jobs that could be related to a lot of things, certainly what’s going on in California with the fires, but this will be well received by the markets as it’s another sign that the Fed could back pedal on raising rates.”

KEN POLCARI, MANAGING PRINCIPAL, BUTCHERJOSEPH ASSET MANAGEMENT, NEW YORK:

“What the market is expecting now is that the weaker jobs report we got today is going to further give Powell cover to go slower on his rate increases and what he might say next week after the Fed meeting. That’s why you’re seeing the market rallying.

“I don’t think the market’s going to rally 800 points but you’ll probably see a positive finish.”

SCOTT BROWN, CHIEF ECONOMIST AT RAYMOND JAMES IN ST. PETERSBURG, FLORIDA:

“The headline payroll number was a bit disappointing but it’s not a big miss relative to expectations. It wasn’t a really strong report. It is still consistent with the Fed raising short term interest rates, but I think the main theme here is that investors are expecting the Fed to be even more gradual, a little bit more cautious in raising interest rates in 2019.

    “The futures are still down but not down quite as much. Obviously there are a lot of things going on besides the short term job numbers. I still think you have that sense of anxiety. We are going to see continued volatility depending on the news we get on trade policy over the next couple of weeks.

    “Particularly this time of the year you look for retail and couriers numbers which was pretty good, stronger than recent years. That suggests it’s going to be a good holiday shopping season.

    “Wage numbers were little bit less than anticipated but still the trend is higher. Doesn’t suggest that the Fed needs to slam on the brakes here and its consistent with the theme that the Fed will be more cautious in raising interest rates next year.”

MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ, NEWPORT BEACH, CALIFORNIA:

“In terms of a snapshot for the economy, and while somewhat softer than consensus expectations, this is a solid November jobs report that goes counter to talk of recession.

“Encouragingly, wage growth continues just above 3 percent and job creation is averaging 170,000 over the last three months. As regards to longer-term issues, the rather sluggish labor participation rate remains a concern suggesting skill mismatches is an issue.

“The report is not soft enough to deter a December rate hike but it will contribute to a downward revision in central bankers’ policy guidance for rate hikes in 2019.”

SUBADRA RAJAPPA, HEAD OF U.S. RATES STRATEGY, SOCIETE GENERALE, NEW YORK:

“This is kind of what I was expecting in the sense that there was some asymmetry in market reaction, ie if there was a strong number the market would discount it, but a weak number, or even a slight miss in the headline, is going to be perceived as a weakness and a rally in bonds, so that’s kind of the market reaction we’re seeing post payrolls.

“The number itself is pretty much in line with past prints, 155,000 I don’t see as a huge miss, it’s below consensus. It’s still overall a very good number and it reaffirms the trajectory we’ve experienced in 2018, so it shouldn’t really have an outsized impact either on broader markets or even the cash markets. I think this is probably just a knee-jerk reaction after the headline print.”

“To me this is a status quo number, I wouldn’t read this as the Fed should be slowing down next year. There might be a lot of other reasons why we might consider a pause in 2019, but I just don’t see today’s data as being a catalyst for that.”

Americas Economics and Markets Desk; +1-646 223-6300

Oil surges 5 percent as OPEC agrees output cut

LONDON (Reuters) – Oil prices jumped more than 5 percent on Friday as big Middle East producers in OPEC agreed to reduce output to drain global fuel inventories and support the market.

Benchmark Brent crude oil LCOc1 rose $3.26 a barrel to a high of $63.32 by 1355 GMT. In early trade, Brent had fallen below $60 when it looked as if oil exporters might not agree.

U.S. light crude CLc1 rose $2.62 to a high of $54.11 a barrel before slipping to around $53.90.

Prices fell almost 3 percent on Thursday after the Organization of the Petroleum Exporting Countries ended a meeting in Vienna with only a tentative deal to tackle weak prices. Talks with other producers were held on Friday.

Oil prices have plunged 30 percent since October as supply has surged and global demand growth has weakened.

But Iran gave OPEC the green light on Friday to reduce oil output by around 0.8 million barrels per day from 2019 after finding a compromise with rival Saudi Arabia over a possible exemption from the cuts, an OPEC source said.

OPEC is seeking support from non-OPEC Russia for supply cuts. Russian Energy Minister Alexander Novak returned to Vienna on Friday after discussing the issue with President Vladimir Putin.

A Russian Energy Ministry source said Moscow was ready to contribute a cut of around 200,000 bpd and sources said other non-OPEC producers could contribute a further 200,000 bpd of output cuts, bringing an overall cut to 1.2 million bpd.

“(A cut of) 1.2 million bpd, if implemented promptly and fully, should be enough to largely attenuate, but not eliminate, expected implied global inventory builds in the first half of next year,” BNP Paribas strategist Harry Tchilinguirian told Reuters Global Oil Forum.

“Given how much expectations were downplayed yesterday, this comes as a welcome surprise for the market,” he added.

OPEC, Russia U.S. crude oil production: tmsnrt.rs/2QdhkVc

Oil output from the world’s biggest producers – OPEC, Russia and the United States – has increased by 3.3 million bpd since the end of 2017 to 56.38 million bpd, meeting almost 60 percent of global consumption.

The surge is mainly due to soaring U.S. oil production C-OUT-T-EIA, which has jumped by 2.5 million bpd since early 2016 to a record 11.7 million bpd, making the United States the world’s biggest producer.

U.S. turns into net exporter of oil: tmsnrt.rs/2QiW7cA

Reporting by Julia Payne and Christopher Johnson in London and Henning Gloystein in Singapore; Editing by David Holmes and Edmund Blair

Futures cut losses as jobs data eases rate hikes fears

(Reuters) – U.S. stock futures recovered from slight losses to trade flat on Friday after data showed a slowdown in U.S. jobs growth in November, pointing to fewer future rises in interest rates.

The Labor Department’s report showed nonfarm payrolls increased by 155,000 jobs in November, lower than economists’ expectation of 200,000.

“The report is not soft enough to deter a December rate hike but it will contribute to a downward revision in central bankers’ policy guidance for rate hikes in 2019,” said Mohamed El-Erian, chief economic adviser at Allianz in Newport Beach, California.

“In terms of a snapshot for the economy, and while somewhat softer than consensus expectations, this is a solid November jobs report that goes counter to talk of recession.”

Wall Street has been weighed down this year by worries ranging from China-U.S. trade tensions to climbing U.S. bond yields and peaking corporate profits, all of which have fanned concerns about economic growth.

Federal Reserve Chairman Jerome Powell, however, said late Thursday that the U.S. economy continued to expand and emphasized the strength of the labor market.

The markets closed slightly lower on Thursday, pulling back from a tumble after the arrest of the finance chief of Chinese telecom equipment maker Huawei Technologies Ltd [HWT.UL] raised fears that the move could escalate a trade war between the United States and China.

The early selloff on Thursday saw more than 1,300 NYSE and Nasdaq stocks hitting new 52-week lows – the highest since January 2016.

At 8:58 a.m. ET, Dow e-minis 1YMc1 were up 11 points, or 0.04 percent. SP 500 e-minis ESc1 were down 0.25 points, or 0.01 percent and Nasdaq 100 e-minis NQc1 were down 10.75 points, or 0.16 percent.

Reporting by Shreyashi Sanyal in Bengaluru; additional reporting by Jennifer Ablan; Editing by Saumyadeb Chakrabarty