“You Can’t Take the Same Action As Everyone Else And Expect To Outperform” — Howard Marks

1. US Companies Added 63,000 Jobs in February, ADP Data Show — Private-sector payrolls increased 63,000 in February after a downward revision to the prior month, according to ADP Research data out Wednesday. The median estimate in a Bloomberg survey of economists called for a 50,000 advance. Federal Reserve officials generally see the job market as stabilizing, which should allow them to keep interest rates unchanged in the near future so that they can focus on stubborn inflation. Policymakers this week have said it’s too soon to assess how the war in Iran will impact the US economy. The advance in hiring was led by education and health services, which has been responsible for the majority of job creation in the last year. Construction and information also added to payrolls. The strongest hiring was seen in the South as well as at businesses with fewer than 20 employees.
2. BlackRock Slashed Another Private Loan Value From 100 to Zero — The roughly $25 million loan to Infinite Commerce Holdings, a so-called Amazon aggregator that buys up online sellers of products from spa treatments to light bulbs, is now worthless, BlackRock TCP Capital Corp. reported in fourth-quarter filings released last week. The fund had marked the junior debt at 100 cents on the dollar in the third quarter. The moves add to mounting concerns over defaults and underwriting standards in the $1.8 trillion private credit market. The industry’s huge bet on software companies threatened by AI has led to unprecedented redemption demands by jittery investors. Blackstone Inc. announced on Monday it would allow investors to redeem a record 7.9% of shares from its flagship private credit fund.
3. China Signals New Era of Slower Economic Growth — China signaled that the world’s second-largest economy is entering an era of slower expansion, setting a target for gross domestic product growth of between 4.5% and 5% this year.
It is the lowest target set since at least the 1990s and follows three years in which officials called for growth of “around 5%.” If China’s economy were to expand at a pace below 5% this year, it would be the slowest growth reported by the country in more than three decades, other than during the Covid-19 pandemic years.
4. U.S. Loses 92,000 Jobs in Widespread and Unexpected Downturn — Nonfarm payrolls fell 92,000 last month, one of the largest declines since the pandemic, after a strong start to the year. While some of the downside was expected in advance, like a temporary dent from striking healthcare workers and a potential hit from bad weather, a wide array of industries cut jobs in the month. Job report from the Bureau of Labor Statistics suggests companies may be starting to follow through on a series of previously announced layoffs. And a recent trend in productivity gains illustrates how spending on artificial intelligence has allowed some firms to get by with leaner staffing. The figures could refocus the Fed’s attention on the jobs market as it assesses how long to hold interest rates steady. Policymakers have been more attuned to inflation lately — even before the US-Israeli war on Iran sparked concerns among investors about price pressures.

The week ahead — Economic data from Econoday.com: