The bandwagon for a global economic slowdown might be increasing in size, but it doesn’t ring an alarm for a recession, according to Joseph LaVorgna, chief economist for the Americas at Natixis. On Friday, the Labor Department revealed that the number of nonfarm payrolls came in 160,000 less than that expected by economists polled by Dow Jones.
While fears of a global economic slowdown are permeating the markets, LaVorgna isn’t necessarily convinced that it means a recession is looming.
“I don’t think there’s a recession on the horizon. However, the market has to grapple with a slowing economy against the backdrop of a much weaker global environment and therefore questions about the U.S. ability to remain decoupled from the rest of the world will persist,” said LaVorgna.
Furthermore, it appears that the recent 35-day government shutdown may have had a hand in the apparent inaccuracy of the data. White House economic advisor Larry Kudlow described the latest jobs report as “fluky,” calling to question its accuracy.
“I think you have timing issues with respect to the government shutdown, winter seasonal issues,” Kudlow told CNBC. “I think it’s very fluky. I wouldn’t pay any attention to it to be honest with you.”
Related: White House Economic Advisor on Jobs Report: Don’t Pay “Any Attention to It”
Parity with Chinese Equities
As the Dow Jones Industrial Average fell as much as 200 points on Friday, Chinese equities were also feeling the pangs of a possible global economic slowdown. Declines could also be seen in the largest China ETFs based on assets under management, such as the iShares China Large-Cap ETF (NYSEArca: FXI) and the iShares MSCI China ETF (NasdaqGM: MCHI).
FXI fell almost 2 percent and MCHI retreated 2.14 percent following the latest jobs report. Despite this, however, both ETFs have been stellar performers thus far this year with FXI up 11.64 percent year-to-date, while MCHI is up 15.37 percent.
As for Chinese equities in general, their strength thus far this year is evident in the CSI 300 Shanghai Shenzhen, which is up 19.08 percent YTD. Of course, more gains could be on the way should a U.S.-China trade deal materialize in the forthcoming days.
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