US jobs report blues. Figures out overnight underline the importance of tonight’s jobs report for September for the direction of US and global interest rates, and therefore markets. The jobs report will be out around 10.30pm (our time) and markets are looking for 200,000-plus new gigs and an unchanged jobless rate of 5.1%. But in something of a curtain-raiser for the report, the weekly jobless claims data for last week confirmed the enormous strength of the US jobs market. While there was a small rise in the number of people applying for unemployment benefits the first time, the weekly average of people applying for benefits so far this year is the lowest since when “Tricky” Dick Nixon was US president.

The level of new claims sank below 300,000 in early March and has stayed there for 30 straight weeks, something last seen in 1973, when the US labour force was 40% smaller. And the average weekly claims of 270,750 in the past four weeks is also the lowest since 1973. And the number of people continuing to receive benefits of 2.19 million people is the lowest since late 2000. America is booming. But those monthly surveys of manufacturing yesterday from around the world showed a definite slowing in the pace of activity in China, Europe, the UK, India, Japan and the US. Australian manufacturing activity rose in September for the third month in a row and turned out to be one of the strongest around the world last month.  — Glenn Dyer

What’s wrong with Aussie bankers? Need a new CEO for an Aussie bank? Hire a foreigner, or so it seems at the moment. New ANZ CEO Shayne Elliott, a 51-year-old Kiwi, is replacing a Pom, Mike Smith. That means that three New Zealanders will now run three of the big four banks — Ian Narev at the Commonwealth, the NAB’s Andrew Thorburn, and Elliott. Brian Hartzer at Westpac is American-born. And he replaced the South African-born Gail Kelly. Regardless where they come from, all four CEOs face the same problems over the next three years or so — demands for more capital from regulators and the approaching slowdown in home lending, which will crimp bank revenues and net interest margins. Both will be big issues, and big cost cuts can be expected in the next two years. — Glenn Dyer

There’s more to car sales than VW. The start-of-month collection of car sales figures from around the world showed a 10-year high in the US (the place is rocking) for September sales — but not VW, which could only manage a 1% lift against more than 10% for Ford, Toyota, Fiat/Chrysler and GM; VW had a big 9% rise in France, but worrying falls in Japan of 3% and a shock move this week in China which underlined the real health of the economy. China is supposed to be transitioning (like Australia) from investment-driven growth to a broader pattern based on consumption.

In Australia, car sales are doing very well — at or close to record levels. In China, sales and production are falling as consumers slow their purchases. So bad is the situation that this week the Chinese government halved the sales rate on cars with engines under 1.6 litre engines from now until the end of 2016 in an effort to halt the slide and lift demand. Up to Wednesday Chinese car sales were heading for their first fall since 2009. Now some analysts reckon the cut could boost sales by 100,000 units a month by the end of 2015. Vehicles will engines under 1.6 litres comprise 70% of China’s annual sales, so the sales tax cut is a very significant admission from the government that consumption growth is not solid. — Glenn Dyer

Diesel blues loom. Those filling up their cars for the long weekend might have noticed something odd: in many service station chains, diesel prices are close to, if not under, the price for basic unleaded fuel. It’s got nothing to do with the VW diesel engine emission scandal, but more to do with slowing demand for diesel and rising demand for petrol in many of the world’s biggest markets, thanks to solid car sales growth and rising driving distances (especially in the US). That has caused higher demand for petrol, but to make more petrol, more diesel, jet fuel and other products need to be made as each barrel of oil is cracked opened and processed into the various fuel products.

So while stocks of unsold crude oil are at or near record levels (especially in the US, Japan, Europe in China) as the sector struggles to come to terms with low prices, stocks of unsold product such as jet fuel, diesel and heating (and bunker) oil are also at record highs, especially diesel. These unsold stocks are being sold at a loss or deep discount to free up space by big refineries (especially in our region in Singapore, South Korea, Japan, the Middle East and India). That, in turn, is driving down retail prices of diesel in particular, jet fuel and heating oil stocks are harder to shift because air travel is growing (but not booming), and gas (natural and fracked) is replacing heating oil ahead of the northern winter in the US. Wholesale diesel prices are down more than 40% so far this year, while crude oil prices are down around 14%. And the Financial Times points out that the impact of the VW diesel emissions scandal is yet to impact demand. — Glenn Dyer

Peter Fray

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