Headline payrolls solidly beats estimates coming in at +272K and showed an increase in average hourly earnings running at 0.4% MoM and 4% YoY. Despite that the unemployment rate creeped higher as the household survey was soft. As expected seasonal factors and the divergence in the household and establishment surveys offers something for any narrative about the economy you feel like creating. Yields immediately shot higher following the report but equities held onto a winning week (thanks AI).
We enter this FOMC week with the 2Y at 4.90% and the 10Y at 4.44%. After pulling rate cut expectations forward to July, following the jobs report, it seems like many analyst are pushing back their expected timing of the first rate cut to September or November. We'll see what the latest Fed "Dots" show. Central Bank divergence will remain a buzz word.
It would be worthwhile not to lose focus on elections, wars, world trade, etc. as we can tend to get myopically focused on U.S. data.
On the week ahead Wednesday is the main event with CPI and the FOMC.
Monday: nothing major in data, 3Y Auction
Tuesday: small biz optimism, 10Y Auction
Wednesday: CPI, FOMC
Thursday: Jobless claims and PPI, 30Y Auction
Friday: Bank of Japan decision (Thursday night) UofM consumer sentiment
XTOD: On June 7, the #GDPNow model nowcast of real GDP growth in Q2 2024 is 3.1%: https://bit.ly/32EYojR #ATLFedResearch
XTOD: They really are losing the plot on how to manipulate the numbers: not only a crash in full-time workers, but Household Survey was DOWN 408K, vs 272K establishment survey.
The gap between the two surveys has never been bigger
XTOD: The household survey could be too low. Is designed to measure ratios based on a survey (what fraction of people surveyed unemployed etc.) not to measure levels (what are the total number of people). With immigration levels could be off....Overall, however, past evidence strongly suggests that a Bayesian should place little to no weight on the household survey in estimating employment levels. The payroll survey is much, much better for that purpose.
XTOD: When have you done 'enough'? Just as clients can experience 'lifestyle creep' as earnings increase, so too can advicers experience 'service creep' as their businesses grow… The key is understanding that it's okay to stop stacking on additional services.
XTOD: To paraphrase both Greg McKeown and Jim Collins: look for single decisions that remove hundreds or thousands of other decisions. This was one of the most important lessons Jim learned from legendary management theorist Peter Drucker. As Jim recounted on the podcast, “Don’t make a hundred decisions when one will do. . . . Peter believed that you tend to think that you’re making a lot of different decisions. But then, actually, if you kind of strip it away, you can begin to realize that a whole lot of decisions that look like different decisions are really part of the same category of a decision.” Much like my startup vacation/retirement in 2015, I’m now asking myself across the board: what can I categorically and completely remove, even temporarily, to create space for seeing the bigger picture and finding gems?
XTOD: “Bad times, hard times, this is what people keep saying; but let us live well, and times shall be good. We are the times: Such as we are, such are the times.” — Saint Augustine of Hippo
https://x.com/AtlantaFed/status/1799106174509273399
https://x.com/zerohedge/status/1799060881730670835
https://x.com/jasonfurman/status/1799101282407596208
https://x.com/MichaelKitces/status/1799169541991219431
https://x.com/tferriss/status/1799486600075731368
https://x.com/Mythos_Man/status/1799251496044810335
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