Jobs Report

Hey everyone and thanks for jumping back Into the macroverse Today we're going to talk about the most Recent jobs report if you guys like the Content make sure you subscribe to the Channel give the video a thumbs up and Also check out into the crypto various Premium uh into the you Can get access to a lot of the charts That you see me frequently talk about on The channel Let's go ahead and jump in now we're Going to break this report down uh as we Go but just to give you the sort of the 30 000 foot view approach the Unemployment rate moved higher from 3.4 Percent to 3.7 percent so we did at Least see some softening of the labor Market in terms of the unemployment rate However we also added I believe around 339 000 new jobs which of course came in Very hot and Implies that the labor market is Relatively tight Now you might wonder what's the point of Talking about the unemployment rate uh You know this you know how does how does This affect markets we've talked about This before you know during times like What we're in right now and what we've Been in for it for quite some time the The markets can climb the wall of worry Until there's a sufficient reason not to

Okay so you have plenty of things that We can worry about right we we can worry About You know the debt ceiling the regional Banking crisis which could have Theoretically turned into something Bigger had the FED not intervened you Also have the TGA needing to be refilled Uh the idea that liquidity is getting Sucked out of the system of course we're Going to have student loan repayments And whatnot right the whole idea is that The list goes on and on right as to what There is to worry about and of course The markets like climbing the wall of Worry however there is one thing that Has a decent history of causing market Downturns right and that is a severe Loosening of labor market conditions now Of course the the Federal Reserve and Jerome Powell would like to achieve what They call a soft Landing Now a soft Landing would be the ability To bring inflation back down to the two Percent Target without a material Increase in the unemployment rate now They are forecasting a you know some Move higher in the unemployment rate but I think they're hoping that it won't go Up too much higher right like it might Go to four and a half percent or Something but I don't really think they Want to see a go to say six percent or Seven or eight percent or anything like

That so the question of course is can The FED achieve a soft Landing Now History shows that the likelihood of Achieving a soft Landing is not very High now we might sit here and say well You know the s p hunt the S P 500 is Actually at the same valuation today That it was back when we first started Getting the rate the rate hikes right if You think about it we got the First Rate Hike back in in March Of of 2022 I believe And you will see in fact that if you go All the way back to March we're at the Same valuation so we just added you know Basically 500 basis points to you know To interest rates and the s p during That time remains relatively unchanged Now we went down quite a bit and then we Came back up but it could immediately Give the illusion like nothing's wrong And there's a chance as always that a Soft Landing could be achieved however Wherein still lies the issue that I Think we have to consider as investors Is that Inflation is still running hot right Core inflation is still at a relatively High level and so there's no clear Evidence yet that the FED has achieved Their goal and until they do achieve Their goal then I imagine the general Mantra which has been right higher for Longer okay so the unemployment rate is

Coming in at 3.7 percent now is that Relevant is that a relevant number if You zoom in I mean it is it is a fairly Significant move higher in only one Month however we were also at the same Level back in Um October of 2022. so you know to some Degree this is still well within the Range that we've been in since early 2022. you can see that we really saw the Unemployment rate going down throughout 2021 it's been sort of stabilizing here Between 3.4 percent to 3.7 percent for Basically the last year or so maybe even Slightly longer and so really this is Not necessarily a major red flag for the On for the labor market just yet right It could turn into one if this continues Moving to the upside but at this point It's not clear evidence in and of itself That the labor market has significantly Loosened up all right and of course one Of the reasons why again we talk about This is because if it were to loosen up That would likely bring on a recession Right but you've had people talking About recession now for the last 8 18 Months or so but you you simply do not Have a recession when the unemployment Rate is as direct lows now of course the Counterpoint being that it's normally Once it hits these historic lows for That business cycle that you will see it Move back up and go into a recession

Right but it still means that when You're when you're down at these levels You're not typically in a recession Right it doesn't mean that one's not Coming at some point in the nebulous Future but what it normally means is You're not in one at that time okay Now you can actually break the Unemployment rate down uh into into Different sectors I mean right now we're Just looking at at everyone over 16 Years of age but you could even look at Say full-time workers and see where that Is and that actually recently moved up From 3.3 percent to 3.6 percent you Could look at part-time workers which is Has not really moved up a whole lot I Mean it moved from 3.6 percent to four Percent but just to give you some Reference back in November it was at 4.4 Percent so part-time work part-time Workers unemployment rate Still Remains Relatively low at only four percent and Of course you could break this down into Into some other and into other ways as Well right you could look at the Unemployment rate for people only over The age of 55 if you want and in that Case if we were to zoom in uh you can See that it actually was a significant Move to the upside from 2.3 percent to 2.8 percent this is the highest level That it's been at since April of 2022 Okay and then if we maybe look at one

More We can look at maybe the unemployment Rate for people between the ages of 25 And 54 to see where that's actually Coming in and you can see that it Actually remains relatively low at only 3.1 percent so there is some softening Of labor market conditions however I Don't really think at this point it's Enough to really justify a recession Okay again it doesn't mean that one's Not coming eventually but again the sort Of the recession timing is is something That's very difficult to predict you Have no idea really when the labor Market is going to show that softening It could take months before before you See that or longer right before you see Anything like that transpire now I also Wanted to talk about a few other things One of which of course is the fact that We had a pretty hot Job openings Report right so in in terms of where we Where we've seen job openings come in You can see in fact that total non-farm Was at 10.1 million So pretty significant level now in the Grand scheme of things when you look at This you can see that it has been moving Down it has not been linear though so is This just a stochastic process of it Moving down or is this starting to show Some renewed strength because maybe the

Stock market has been showing renewed Strength and if the markets are doing Well then perhaps people don't feel like They need to lay people off as much I Don't know but until until we see until We get a little bit more data I mean It's hard to just take one data point to The bank I mean even over here you can See we increases two more months or over Over the span of two months and then we Still just ended up coming down and Putting new lows remember one of the Reasons we talk about job openings is Because it's be it's because there's so Many job openings I think that have been Able to absorb all of the you know all The workers that have been getting laid Off right so if you're a worker and You've been laid off there are a lot of Job openings still available and so you Could argue that that is one of the Reasons why the unemployment rate remain So low right Now when you look at this you can see That we we're still not even really back To Trend okay and it and you might not Really see the liver Market loosen up in Terms of the unemployment rate until This actually gets back to Trend or Below Trend with 10.1 million total Non-farm job openings that's not really At this point considered to be a you Know significant loosening of labor Market conditions now if you look at say

Like the year-over-year percentage Change it certain it certainly looks Right like it looks pretty bad Um but you also have to recognize that We are starting from a fairly high level Okay now we can break this down and Figure out you know what where what Sectors are adding jobs and what sectors Are losing job openings and if you Actually look at say like the Manufacturing sector you can see that it Actually lost job openings over the last Month and if you were to look at the Year over year percentage change it's Not heading in a good direction it if You were to look at durable goods you Could see that it also lost jobs over The last month or so and if you look at The year-over-year percentage change you Can also see that it's not really Heading in a great Direction But you could look at other sectors like Construction and see that it actually Went back up from 315 000 all the way Back up to around 383 000. you could look at Um you could look at uh total total Private and see that it went up from 8.96 or sorry from 8.71 million to 9.14 Million now again when you look at the Year over year percentage change it Still doesn't really look that great but It does show you that some sectors are Adding jobs while other sectors have

Been losing them one that I believe has Added a significant amount I believe is The Arts entertainment and Recreation so You can see in that area oh just maybe Not over this last report but just in General since November we've had we went From 164 000 job openings all the way up To 243 000 now it's pulled back slightly To 237 000 but this was a pretty big Move to the upside in a you know in a Relatively short period of time Leisure And Hospitality actually ticked down in This recent report and if you were to Look at say professional and business Services it moved down and I believe There was one other that I I wanted to Um take a look I can't remember which One it was Um Uh maybe maybe I already covered it Because I'm not really seeing maybe it Was just professional and business Services that I that I wanted to take a Look at you know that one also has been Has been moving down if you look at the Year of a year percentage change right It's not really doing anything great but It does show you that there's some Sectors that have been adding and some Sectors that have been removing job Openings okay and of course as long as Inflation is well above the fed's Target Right if you were to go look at say core Inflation Euro for year as long as it's

Up here It would be very premature to celebrate A soft Landing right how can you Celebrate a soft Landing just because The s p is back to where it was when the FED started hiking rates when they still Haven't really accomplished their Objective of getting inflation back down To two percent now that's not to say That a soft Landing is impossible right Anything's possible and it's always Possible that there's enough liquidity In the system sort of absorb all of the All of the QT but there is still an Issue here of the FED has raised rates To five percent to five point two five Percent and core inflation is still at 5.54 percent Right So you could argue that they need to get The FED funds rate potentially above Core inflation to have a meaningful Impact now right now markets are are Sort of suggesting that the fed's going To pause at the next meeting I believe The last time I looked it was about 70 Chance of a pause 30 chance of a hike But the market is thinking that they Might hike in July so I don't really Know I mean if it were me if I if if They're gonna hike I think they should Just go ahead and do it right let like Let's not continue to live in uh as much As let's let's try to get inflation out

As quickly as we can Um you know and and one of the reasons I Say that is because when you look at What happened in the 70s just look at What inflation did like look at what Core inflation did back over here I mean It it moved up and then we came back Down but the fed pivoted too early and Then it just went up again and and you Can look at what the S P 500 did right Like it wrecked both sides it wrecked The bears but then it just wrecked the Bulls and put in a new low and and That's why I go on about this right like It's not that the s p can't go up we Know that it can I mean like it Generally will climb the wall of worry Until it has a sufficient reason not to Do so but The issue is that if we get into a Period where the FED just does not have The courage to do what needs to be done Then you could see inflation just come Right back in the next cycle and and Then even though you might put in a Slightly higher high you end up putting In a slightly lower low and that doesn't Even include when you adjust those Returns for inflation so you might be Under the illusion that you know if you Bought over here in 1966 that you might Be slightly up by the year 1979 right 13 Years but adjusted for inflation you Would actually likely be down quite a

Lot during that period and it's these Types of periods that are really brutal For markets and they're also brutal for The economy in general because people Just you really start to not be able to Afford things in the same way that you Used to who now goes to the grocery Store and it feels like you go in and What used to maybe only cost you a Hundred dollars now costs you two or Three hundred dollars okay so we want to Hopefully avoid a decade of inflation But the only way we're going to avoid That Is to get inflation down as quickly as We can so that it doesn't become Entrenched like it did in the 1970s Right And then you just basically get you know A year or two where the Bulls are right A year or two where the Bears are right And when you look back on it 10 years Later you can see that really no Progress was actually made in the S P 500 which is kind of a sobering reality Right you put in a high you put in a low You put in a higher high you put in a Lower low and then a higher high and Then a lower low and look at the time Period between these this was 1960. so This low here was in 1966 the next low Was four years later in 1970 the next Low was four years later later in 1974. It's kind of interesting because we know

The the Bitcoin Cycles tend to operate About every four years or so and so Normally when Bitcoin puts in new highs It's you know it's it you would think Like late 2024 early 2025 if it's going To follow the context of History right But if it follows what happened in the 1970s then that could be a very nasty Environment to be in History shows us the way that you really Get inflation back down is to induce A recession right in the 1980s they Actually had to induce two of them Because I think they you know they kept Doing the stop and go right like QT QE Um Or you know raising interest rates Lowering interest rates before really They should have and and I think once They finally once the FED finally Admitted to themselves that they needed To just deal with it They induced a hard Landing Inflation came down And then we had a decade of economic Expansion right so That's the that's sort of thing that I Have on my mind it's not you know you Know can that can the s p continue to Climb the wall of worry of course it can It's just you know when can we get to a Period of say like a decade of expansion Like this and I find it difficult to Believe that we could get back to

Something like this until inflation has Come back down in a more sustained way As long as it's up here at five and a Half percent it's kind of hard to get on The board with the idea that you know That that s the S P 500 is going to give You know great returns over the next Five years now if we can get core Inflation back down to more reasonable Levels then I think you have a a more Bullish case but I do think that is at Least something that we have to contend With it's not to say that you know risk Assets can't go higher even in the 1970s You can see that the s p was able to Push higher you know and and you know we Had a high in 68 we put in a higher high In in 1973 but again the issue is that We ended up just going down and putting In new lows because we just kept getting Sessions because we kept having to deal With inflation okay So that is is is of course something That I I think we have to consider and Then the other thing I wanted to mention Is we also can look at the unemployment Level by reason for unemployment and one Of these that are I I suppose is Worthwhile to look at is the permanent Job losers so people who are permanently Losing their job that's actually been Going up In a material way right I mean if you Look at this it's not just hanging out

Hanging out at the lows it is starting To move up Right and I mean over here you can see It really started to move up right it Was a 1.49 million and we had a Recession once it reached about 2 Million here it bottomed at around 1.2 Million and now it's about 1.59 million But it is starting to move up and and if This continues then you could start to See it reflected in in some of the other Areas and if you were to look and say Like the year-over-year percentage Change you can see that this has in fact Gone positive now just because it goes Positive does not mean you're in a Recession as you can see by the last two Examples of it but the issue is if it Stays like this for a long period of Time then it could really start to have Some type of effect on on the Unemployment rate and you could also Look at at say new entrance to the labor Force as well To see you know see really what that Looks like you know are people Unemployed because they're you know Their their new entrance into the labor Force right now it still is pretty low But it is slowly starting to move higher And arguably if if the uh if the student Loan repayment stuff forces people to go Back to work Um you know you you could see this

Continue to move higher but remember in You know there's all this stuff to worry About right but at the end of the day The only thing that really matters when It comes to the labor market right is When does it actually soften up when do You see the unemployment rate go up if You look in history right the the s p Can climb the wall of worry and it likes To do that but where it has trouble Climbing the wall of worry is when the Unemployment rate starts to go up right When that goes that's usually when the Market starts to find weakness again Okay so until that goes it would be of Course premature to assume that Um you know that the s p can't just Continue to climb the wall of way right I mean it would be premature to assume That it would also be premature to Assume that we've already achieved a Soft Landing just because the FED is is Potentially at a at a potential pause Okay in fact if you were to go look at Interest rates Oftentimes right if we were to go look At say the effective fed funds rate and Overlay the S P 500 on this you'll see That you know oftentimes the FED will Raise they'll pause the market might Rally some but then at some point the Market will find weakness If the Fed Doesn't start cutting soon enough right That's what they often do they go too

High they'll pause but then at some Point because they haven't lowered rates And the market is screaming for them to Lower rates normally it takes something Catastrophic for it to happen for them To want to lower rates and then they're Forced to Pivot one of the reasons that Might make them pivot eventually is a Material Rising unemployment rate but I Don't really see any reason in the pivot And my Pivot I mean actually start Cutting as long as you have core CPI Coming in at over five percent I mean Really as long as it's over three or Four percent it's hard to imagine They're going to Pivot uh maybe they Would at three percent if the Unemployment rate gets really bad but It's just it's difficult to imagine the FED wanting to start cutting anytime Soon If if you still have an unemployment Rate that's you know below four percent You have core CPI that's about five Percent there's just not really a Compelling reason and and I and I think That's where we currently stand with all This so you know we have the job support It the the total non-farm payroll came In pretty hot Right so from that from that stance be a Con the labor market is relatively tight The unemployment rate moved up to 3.7 Percent showing some softening but it's

Still going to take many more months of Data to confirm anything about that data Point and so this is just a very a very Very long process right the the business Cycle does not just take place over a Couple of days I think if you're in Crypto we want everything to just come At us very quickly and you want to see The market change very very quickly but The reality is that the business cycle Can take years to develop and so the you Know the interest rates have been raised Significantly We know that it can take upwards of a Year for those to fully be felt in the U.S economy we're just now getting into That phase the market is climbing the Wall of worry because the unemployment Rate is still relatively low And if you were to go take a look at at Say initial claims while they have been It at somewhat elevated levels compared To where they were say last year they Still haven't really moved up In a material way I think really in Order to see the unemployment rate Really start to go you need to see that You would need to see these like the the Three hundred thousand four hundred Thousand Mark I believe before you Really start to see the unemployment Rate move I mean you know over here it Was you know I mean you could see this Right it was at 300 000 and moving

Higher all the way up to around 400 500 000. here again right it was three Hundred thousand four hundred thousand And so on and so forth with it only at 230 000 it still does show you that the Labor market is relatively tight and Then if you were to go look at continued Claims You know it saw a pretty big move up Back in in late 2022 and early 2023 but Over the last few weeks it has more or Less leveled off okay so when you look At say the year-over-year percentage Change obviously it doesn't really look That great it is starting to get into That positive territory and normally That corresponds to a recession but Again it started at a pretty low level And so I think there has been you know Some element of wiggle room in it and And for that reason the you know the the Unemployment rate Still Remains uh Relatively low okay so that's Essentially my synopsis of of the labor Market in general it is relatively tight Yes there have been people that have Been laid off but there's still plenty Of job openings the FED is still a long Way from achieving their objective of Two percent inflation so it would be Premature to assume that they've Achieved a soft landing and until we Ultimately get the you know the Resolution of the yield curve and until

We get back to two percent inflation It's going to just be an outstanding Question right and I mean I think people Want to know the answer now But the question mark remains until the FED gets back to their objective they Will likely continue to put pressure on The U.S economy and and oftentimes it Takes a recession to bring inflation Back down in a material way the only Question is of course is how long does It take us to get there you know does it Happen in say three months six months 12 Months 18 months right that's the hard Part and so that's why we we talk about The macroverse occasionally just keep an Eye an eye on eye on the macroeconomic Conditions right is the labor market Softening up maybe a little bit but it Still has a long way to go before I Think it has Um you know some type of material effect On on financial markets the other thing To consider is that of course markets Can correct right I mean you could have A 10 correction in the S P 500 you could Have a five percent correction in the S P 500 even with low unemployment rate You can have Corrections for other Reasons besides the labor market but in Order for you know the s p to Potentially see a new low I think it Would it would likely have to come on The back of of the unemployment rate

Going up in a material way or it could Be on the back of of some major Geopolitical event but it seems silly to Try to plan for those because there's so Few and far between so you can't just go Through life right constantly being Worried about a geopolitical event so I Don't really think it's worthwhile to to Put too much weight on that I think the Main things to think about of course are The unemployment rate And and inflation right and I mean Inflation isn't as big of a deal right Now because it has been at least going Trending in the right direction but if The FED say we're to Pivot back to QE Before they should and inflation were to Come back again like a double Peak like The 1970s then inflation does become an Issue again because then the market has To then all of a sudden price in a lot More rate hikes just like they just like They have in decades past of high Inflation if you guys like the content Make sure you subscribe to the channel Give the video a thumbs up and again Check out into the cryptiverse premium At into the I'll see you Guys next time bye


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