The Daily Chase: Jobs data, bank earnings mixed bag

Here are five things you need to know this morning.

Two-handed economics: Economists are famous for having a view on one hand and then having another opinion on the other. Today’s jobs data is a great example of why they need both hands. Canada added more jobs than expected in November (nearly 25,000 versus the 14,000 expected). Wage growth held firm at five per cent, which marks the fifth straight month. All the job gains are in full-time employment. Sounds robust doesn’t it? Well, let’s go to the other hand. The unemployment rate climbed to 5.8 per cent, the highest since January 2022. Hours worked dropped by the most since April 2022. These softer points compliment a picture of a no-growth economy that yesterday’s GDP print confirmed. Now it’s in the Bank of Canada’s hands. How will the recent cool down in inflation, rise in unemployment, and slowing economy factor into the rate decision next week? The market is betting the Bank of Canada is done, but with wage growth still running at five per cent, they can hardly be complacent when it comes to inflation.

Powell power: Markets aren’t making a move ahead of U.S. Federal Reserve Chair Jerome Powell speaking today. Powell is expected to speak at 11 a.m. EST and has an agenda later full of opportunities to hit back at the markets’ view that rate cuts are coming as early as the spring next year. But for those hoping for confirmation that hikes are done, Chris Low at FHN Financial warns “it is too soon to promise there will be no more hikes” in a note to clients.

BMO miss: We will watch shares of Bank of Montreal this morning after the bank missed profit expectations. The miss was due to higher expenses on its Bank of the West acquisition and a drop in wealth management profit. While expenses on the Bank of the West deal were elevated, BMO is now promising more savings, saying “synergies” will now be US$800 million compared to their previous outlook of $670 million. There is a chance the stock won’t be excessively punished for the miss because under the headline there are a lot of positives. It boosted its dividend, maintained its profit forecast for Bank of the West, provisions for credit losses were lower than expected, commercial real estate losses were minimal and capital markets were very strong.