Page One

Briefing.com Summary:

*Crude oil futures prices escalate on Qatar energy minister's warnings about risks of Gulf producers stopping shipments within days and oil potentially topping $150/bbl

*The February employment report was a disappointment, highlighted by a sizable decline in nonfarm payrolls.

*Talk of stagflation is going to be part of the market narrative.

There is another oil slick today, and stock prices are sliding because of it. WTI crude futures are up 8.2% to $87.64 and Brent crude futures are up 5.6% to $90.17, driven by a warning from Qatar's energy minister that Gulf producers could stop oil shipments within days and that oil could hit $150/bbl in coming weeks if oil tankers can't get through the Strait of Hormuz.

The commutative property of these warnings is the same as yesterday: they are stoking concerns about inflation risk and a global economic slowdown that includes a recession in the range of possibilities. That worry can flip in a hurry, though, with a pullback in oil prices. The problem is that market participants are having difficulty seeing that right now in the fog of war that is being clouded by reminders that Iran hasn't seen the worst of things yet with respect to the U.S. strikes.

Adding to the fog this morning was a disappointing employment report for February—disappointing at least in terms of nonfarm payrolls, which declined by 92,000. Revisions for December and January combined were 69,000 lower than previously reported. The bright spot was average hourly earnings, which jumped 0.4%, leaving the year-over-year increase at 3.8% versus 3.7% in January, and real earnings on a positive trajectory.

The key takeaway from the report, however, is that it muddles the economic view for the Fed, too, with its twin planks of negative job growth and higher wage inflation. Accordingly, look for the Fed to sit on its policy hands, unwilling to cut rates for now as it also contends with the spike in oil prices and the uncertainty of the Iran war.

Separately, talk of stagflation is likely to be part of the market narrative, and that kind of talk can be tough to hear for the stock market, which is also digesting an unimpressive retail sales report for January.

Total retail sales were down 0.2% month-over-month (Briefing.com consensus: -0.1%) following an unchanged reading for December. Excluding autos, retail sales were flat (Briefing.com consensus: 0.2%) for the second straight month.

The key takeaway from the report is that sales activity was disrupted by the winter storms, so the result isn't as disappointing as it looks, which comes through in the fact that nonstore retailer sales were up a robust 1.9% month-over-month.

Currently, the S&P 500 futures are down 88 points and are trading 1.3% below fair value, the Nasdaq 100 futures are down 383 points and are trading 1.5% below fair value, and the Dow Jones Industrial Average futures are down 633 points and are trading 1.4% below fair value. The 2-yr note yield is down one basis point to 3.59%, and the 10-yr note yield is up two basis points to 4.16%.

Notable headlines from the February Employment Situation Report:

• February nonfarm payrolls declined by 92,000 (Briefing.com consensus: 60,000). The 3-month average for total nonfarm payrolls decreased to 6,000 from 50,000. January nonfarm payrolls revised to 126,000 from 130,000. December nonfarm payrolls revised to -17,000 from 48,000.

• February private sector payrolls declined by 86,000 (Briefing.com consensus: 78,000). January private sector payrolls revised to 146,000 from 172,000. December private sector payrolls revised to -7,000 from 64,000.

• February unemployment rate was 4.4% (Briefing.com consensus: 4.3%) versus 4.3% in January. Persons unemployed for 27 weeks or more accounted for 25.3% of the unemployed versus 24.7% in January. The U6 unemployment rate, which accounts for unemployed and underemployed workers, decreased to 7.9% from 8.1% in January.

• February average hourly earnings were up 0.4% (Briefing.com consensus: 0.3%) versus a 0.4% increase in January. Over the last 12 months, average hourly earnings have risen 3.8%, versus 3.7% for the 12 months ending in January.

• The average workweek in February was 34.3 hours (Briefing.com consensus: 34.3) versus 34.3 hours in January. The manufacturing workweek dipped 0.1 hour to 40.1 hours. Factory overtime was unchanged at 3.0 hours.

• The labor force participation rate decreased to 62.0% from 62.1% in January.

• The employment-population ratio decreased to 59.3% from 59.4% in January.

--Patrick J. O'Hare, Briefing.com