Daily Economic Update: November 3, 2023

We'll see what another Jobs Day in 'merica has in store for markets (market expects +180K headline). Stocks higher, yields lower, dollar weaker, since the Treasury announcement and FOMC. Yesterday's strong productivity number and a Bank of England on hold helped add fuel to the "everything" rally, but Apple's sales forecast came in below estimates putting a little pressure on equity futures this morning.  This morning, the 2Y is up slightly but still under 5 with a 4.99% and the 10Y is 4.66%.  On the day it's Jobs and ISM Services. 

If you're a CFA Charterholder, good news, as Matt Levine wrote yesterday,   "A team of JPMorgan Chase & Co. researchers and university academics tested whether OpenAI’s ChatGPT and GPT-4 chatbots would have a chance at passing the first two levels of the exam. It typically takes humans four years to complete all three levels of the test, which can lead to higher salaries and better job opportunities.   “Based on estimated pass rates and average self-reported scores, we concluded that ChatGPT would likely not be able to pass the CFA Level I and Level II under all tested settings,” the researchers wrote in an 11-page report. “GPT-4 would have a decent chance of passing the CFA Level I and Level II if prompted.”  Levine also added: "ChatGPT could never pass the strong moral compass requirement! Or at least it could never pass the hands-on practical skills modules. No hands."

XTOD: BANKMAN FRIED GUILTY ON ALL 7 COUNTS

XTOD: Will Biden ever return the $5m donation from FTX?

XTOD: This sort of yield volatility is not normal for a security — the US 10 year government bond — that serves as an important benchmark for the financial system, domestically and beyond. 

It is also not desirable as it undermines constructive financial intermediation, harms the global financial standing of the US, and risks breaking something.

XTOD: Labor productivity is the silver bullet that would allow GDP and real wages to rise while inflation continues to fall. It is the secret not just to a soft landing, but to an economic boom. In Q3, it rose 4.7%, and unit labor costs *fell* 0.8% as a result.

XTOD: Test your knowledge with our November Investing Quiz: https://investor.gov/additional-resources/spotlight/investing-quizzes

XTOD: Peloton revenue -3.4%    Novo Nordisk revenue +38%   fat pills made superglued ipad exercise bikes obsolete

XTOD: Word is that the editors of the world’s leading publications are clocking the real risk of WWIII - finally. Here’s a piece I wrote in October 2021 arguing we were already in it then: https://lnkd.in/eMyWhxtz.   Here’s the irony. Those who are independent can see the signs and say something early because they are independent of any institution. But that independence is hard for media to comprehend. They feel safer quoting those associated with a known and respected institution. “She works for a bank so she must be ok” is the logic. But that means they get the same old group think. That’s why it takes them so long to register that WWIII is in motion. 

We are in a Hot War in Cold Places: Space and the High North

We are in a Cold War in Hot Places: Africa and The Pacific

And now we are in a Hot War in a Hot Place: The Middle East.

Now the task is to win the peace: 

XTOD: +287,000 #NFPGuesses

XTOD: Let’s talk about US consumers for a bit, shall we? How fucked are they? Pretty fucked. Certainly more fucked than what Q3 data led everyone to believe.  

1) > $ 2 T of fiscal transfers and relief programs would have vanished by YE 

2) 80% of consumers have as much or less savings than pre-COVID. Give it a few more months and literally all US consumers will be in that case, on an inflation adjusted basis.  

3) 9% of consumer debt is students loans, that’s $ 1.6 t, and repayment would be in full effect in q4, a $ 65 b drag 

4) UR is about to take-off and will lead savings rate to follow 

5) Loss of income will be compounded by years of above average inflation

6) Consumers did soldier through up until q3, but at what cost? CC balances have topped the $ 1 t for the first time ever (previous peak was some 85% of that in q3 2007). More alarming, revolving credit exploded by over $ 300 b to $ 1.3 t since q2 21. Why does this matter? CC APRs are at 50 years high 

7) Signs of stress are showing everywhere, from autos to revolving and especially Retail ABS delinquencies.

https://x.com/SullyCNBC/status/1720227406714208378?s=20

https://x.com/MarshallHayner/status/1720146967215427706?s=20

https://x.com/elerianm/status/1720159635800498294?s=20

https://x.com/juliaonjobs/status/1720074843566313879?s=20

https://x.com/SEC_Investor_Ed/status/1720078437027602655?s=20

https://x.com/DrPippaM/status/1720035848727482681?s=20

https://x.com/Prometheus_Cap/status/1720305064160436283?s=20

https://x.com/INArteCarloDoss/status/1720109104658546823?s=20