NOT GOOD | Jobs Report Way Worse than Expected | Fed

jobs data is coming out right now we are

waiting for jobs dad expecting 230 and

we got 209 it comes in soft oh wow okay

well the Market's gonna like that I was

hoping it'd be stronger but okay change

in private payrolls comes in at 149

instead of 200 000. that's also soft the

uh average hourly earnings oh no that's

not good it comes in at point four

versus point three that's not great

average hourly earnings year over year

comes in at 4.4 versus 4.2 the labor

force participation rate is 62.6 the

unemployment rate stays uh or actually

does come in at 3.6 as expected I don't

love that see that's actually the

opposite of what I would have preferred

to have seen I would have preferred a

stronger jobs report with lower average

hourly earnings gains but no we actually

got to take up an average hourly

earnings and a weaker report so you know

the stock market is actually going up on

this which is just like stupid but uh

okay uh then we actually got a downward

revision last time oh interesting and uh

we got a downward a negative revision

here on uh wage gains for last time so

not great we got uh a 0.3 was the prior

average hourly earnings uh wage growth

level that we had that went to 0.4 okay

well at least we didn't go up we

basically are stable at 0.4 which

roughly aligns with what you see in the

ADP report but this is a lot weaker than

the ADP report for um

the prior payrolls report of 339 that

got adjusted down to 306. so got a

downward revision here as well and then

you've got the average hourly earnings

year over year that got revised up

to 4.4 versus the 4.3 that we had so in

English what just happened here well you

actually got weaker job you got a weaker

jobs report the private ADP report came

in strong but they measure things

differently than the

official Bureau of Labor Statistics

generally the BLS report is the one that

everybody really cares about and the FED

really cares about though the ADP report

can be a little bit of a fact check tool

for us what I really like looking at in

the ADP report is the hourly earnings we

like to see hey what's going on with

average hourly earnings and yesterday's

ADP report was actually pretty great job

stayers had paid or gains of about 6.4

percent job Changers at about 11.2

percent these are year over year numbers

but those numbers were all falling right

insistently falling we did get on the

unfortunate news that in this PLS report

you are stable at about 0.4 on wage

gains we'd like to see that come down

0.4 is unfortunately consistent with 4.8

percent inflation for on a yearly basis

uh that is not great because 4.8 on a

yearly basis is well above the three

percent Target that the FED has for wage

growth note that is not two percent

didn't misspeak it is three percent is

the fed's wage growth Target but uh

we're sitting at about 4.8 right now so

it is less than what it has been in the

past but it's just not

we'd prefer three uh right or 3.6 anyway

so uh non-farm payroll increased 209

000. a lot of estimates here coming out

that uh you're going to see negative

payroll prints soon and that is

recessionary negative numbers are

recessionary so you want this to be

positive

um

all right

this news release presents statistics

from two monthly surveys the household

survey and the labor force participation

survey via the establishment survey

household survey data all right let's

see says six million unchanged here 3.6

percent unemployment rate has ranged 3.4

to 3.7 since March of 2022

uh White unemployment declined 3.1

percent adult men 3.4 women 3.1

teenagers 11 black six percent uh Asian

uh 3.2 Hispanic 4.3 little changed

long-term unemployed a little changed

labor force participation 62 6 4th

consecutive month in a row

part-time employment for economic

reasons increased by 452.

reflecting an increase in the number of

persons oh look at this whose hours were

cut due to slack or business conditions

so you're getting more people working

part-time right now because their hours

are getting cut now this is a new line

right here I don't believe we've seen

this in the prior labor reports for

economic reasons individuals who would

have preferred full-time employment but

were working part-time because their

hours have been reduced or were unable

to find full-time jobs folks keep in

mind this is the first Miss that we've

gotten since April of 2022 first Miss

since April 2022. that's uh what is that

13 14 15 15 months all right let's keep

going here

all right the number of persons not in

the labor force were currently won a job

was 5.4 million in June little change

from the prior month these individuals

were not counted as employed or

unemployed rather

because uh they're not actively looking

for a job fine get get off the chair and

go look for a job

well that'd be Ben Muller for it anyway

among those not in the labor force who

wanted to jump the number of persons

marginally attached to labor force was a

little changed at

uh let's see here that's fine 1.4

million these individuals wanted and

were available for work fine uh The

Establishment survey was the 209 000.

okay let's see here not Farm employment

was an average of 278 per month over the

first six months of 2023 lower than the

399 average per month of 2022. now

that's important so last year we're

trending at basically 400 000 jobs

this year we're trading at 278 000 jobs

however now we're down to 209

so uh Wall Street here is saying this is

not the best picture for the FED

unemployment rate falling with

participation rate uh

uh holding steady and wages up a bit

signaling uh somewhat

that you still need tightening but you

this is what you know some of the

commentary here but

you've got that average uh um

average wage gain at point four percent

which again is like hey

it's still not fully biting the feds

work here

average work week lengthened a bit to

34.4 hours it's interesting

to some extent what you're finding is uh

if if hours are going up but more people

are working part-time are you putting

more work on the people that you're kind

of keeping around right that that is

interesting

so okay uh let's see here first yeah

okay okay we got that we got that that's

uh okay I'm just looking at commentary

here as well

keep in mind that after the blowout

surge in private sector payroll

suggested by the ADP report this

payrolls figure is quite a lot softer

than the market would have expected yeah

no kidding it's so bizarre the stock

market's actually going up on this

whatever anyway employment in the

government increased by 60 000 in June

fine uh Healthcare added 41 000 we've

got social assistance adding 24 000

construction 23 000. you've got 15K uh

on average in

construction you're up above that at

twenty three thousand in June employment

and residential trade contractors

continued up so construction continues

to go home builders are really pushing

numbers uh right now it's it's pretty

remarkable let's see what Nick T is

saying as well uh while I pull up what

Nick T is saying I have a feeling what

he's going to say is that you should

check out the coupon on building your

wealth link down below and uh the fact

that you can now Shadow us again when we

go hunt for Real Estate I'll link down

below if we travel you travel with us if

we're local you're local with us so

check that out okay so Nick T quickly

just to see his commentary the U.S

economy added 209 000 jobs in June a

revision subtracted 110 000 the

unemployment rate ticked down to 3.6

from 3.7

uh this gives you here some of his

charts private sector payroll growth

three-month average here's your

three-month average plummeting which

isn't great because remember a labor is

a lagging indicator so these you know

when this starts going down you really

start knocking on the door of of uh

recessionary concerns not fantastic I

don't I don't I don't love it when that

number goes down so I actually would

have preferred a stronger report here

but oh well you can always get you what

you wear man employment and Leisure

Hospitality was little changed according

to this employment report that I just

also find someone hard to believe but

okay this marks the third consecutive

month of little employment change for

leisure and Hospitality in other words

people who are going to be employed by

Leisure and Hospitality are already

employed which is very different from

that ADP survey but okay shows you the

volatility of the data employment in

professional and business services

little change 21k retail trade negative

11k over here at retail trade uh

employment continued to decline at

building material and garden center and

Supply dealers as well as in furniture

motor vehicle parts added 6K jobs

Transportation down 7K a little changed

little change in oil gas manufacturing

I.T finance activities quarrying and

others

here's your average hourly earnings

33.58

that is a bump again of uh 0.4 percent

on a month over month basis you've got

the prior revision which we've already

reviewed uh now let's go ahead and get

the uh

the actual households data as well so

they always make this a little funny to

get but we can get this

household data there we go

labor force change from May to June

133 000 if I'm reading this right hold

on let me put this in I always have just

in full transparency there's there's so

many charts they give you here I always

have trouble reading this so I'm gonna

just take a breath here and we're gonna

look at this one slowly together but

it's important because remember you have

two surveys you have the establishment

survey which is uh your uh hey uh

employers how many employees you got you

know and then they count how many people

they have on payroll

and then you have the uh uh household

survey which is like

you know the BLS calling uh households

saying yo you got a job they're like yo

yeah I got a job

well the problem with that difference is

the payrolls one could count that same

person multiple times so it tends to be

a little higher

right here in the household survey

oh yeah what do we have here well oh

okay okay yeah see I always get to be

careful with this the civilian labor

force increased 133 000 but the employed

portion of that labor force increased

273 000. so

you did have gains in both of them uh

about above 200 000. but the payrolls

was actually 209 which is interesting

because usually payroll is higher so

payrolls was 209.

households 273.

well I guess it just depends on who

you're calling and that's why this is

why you generally like to use averages

when you're looking at these particular

charts

which you could jump on over uh as we've

seen to the Wall Street Journal via Nick

t or they also give us tables here but

this gives you an example on screen now

what it looks like when when you get a

little bit more of a charter Trend uh

and then of course you can you can churn

this out as a three month average as

well which just helps us get a little

bit of a better understanding since the

numbers are a bit volatile

so if I go for let's see here

and I want to grab a little bit more

information here

okay there we go okay so looking at the

rest of this report job levers see this

is actually a good

thing right here you generally don't

want to see job levers jumping uh much

29 000 is acceptable so that's great

because job Believers implies that

people are voluntarily leaving

and uh they're leaving because they

think they can get a better job but if

you're part-time for economic reasons uh

in you know increasing 452 000 that's uh

that's quite a big bump could only find

part-time work 124 slack or Biz slow

business work 308 000. uh these numbers

trending up see how we've been

June 2022 and we have April May June

okay so last year is here and then April

May June so you can see some volatility

in the numbers over here it kind of

looks like we've gone down to up

uh for these numbers here compared to

last year we're definitely above these

though so only able to find part-time

work because of slow business that's

starting to really increase right here

I'd be paying attention to this quite a

bit that's that's a good one to pay

attention to okay let's see what else

the suits are saying

and then we'll take a look at Market's

reaction as well as rates so

uh some commentary here that this report

probably won't mean much for the fad

that it would really take an employment

report below a hundred thousand to get

the FED to consider actually pausing

but it you know what it probably is

going to do is it's probably going to

start reducing the odds of uh

uh a second hike

this might kill the second hike odds uh

we're probably still going to get that

July one even though I disagree with

that idea of this sort of pause start

nonsense uh it's probably what's going

to happen

uh let's see here

okay we saw that participation rate was

unchanged pickup and manufacturing

employment really I didn't see that

maybe because of all the spending on EVs

and Battery plants is the suggestion

here I'm not convinced by that let me

see here manufacturing I thought was

stable Manufacturing

uh yeah I don't know where they're

reading that it says here little change

for manufacturing so I don't know why

I mean it must have been a small pickup

if they're noticing a pickup somewhere

okay and again remember this is a

lagging indicator

uh

you also have a

service oh that's interesting

help a temporary help service payroll so

temporary help

uh with uh with your business actually

ticked down again also another leading

indicator

okay let's see

okay let's look at treasury yields just

to get a little bit more Market reaction

note that a bounce back in the household

survey Gage Rose by 273 000 in June in

May there was a 310 000 job plunge that

was a big contradiction

so volatile on a month-over-month basis

the data okay so now all of a sudden the

market is green though you're up 39 bips

on the NASDAQ 12 VIPs on the s p

Dows up four

and phase up 0.07 Tesla's up what 0.28

over here

interesting

uh and then what we have is we look at

bonds we're actually still seeing the

10-year at with strength at up 1.9 basis

points sitting at 4.06

if we look at the five-year break even

it's ticked down a teeny little bit to

2.22

the terminal rate is still sitting at

5.41 so still a little bit of price

again

the second rate hike anything above

5.375 would be pricing in a little bit

then you've got 91 8 is still your

expectation 91.8 percent for

uh the next hike

and still sitting at 27 percent

for uh September excuse me so okay

that is pretty good let me quickly see

what else what other kind of commentary

it looks like we're getting

uh uh let's see here

no no other really good commentary other

than this was the lowest uh and first

Miss on a jobs report since April of

last year pretty remarkable and again

Market positive about this let me just

reiterate why I'm not so positive about

this the concern obviously is if wages

are going up by the tune of about point

four percent that's your your overall

wage set

and you continue with strong let's

assume we continue with strong hiring in

uh Leisure or hosp uh you're probably

going to be in a place where

spending in Leisure and hospitality is

going to blow up and so there is this

risk over the next three months and it's

a short-term risk it's not going to be a

long-term risk I I don't believe but I

think there's a three-month risk that

you end up with elevated wage gains

uh low employment reports

uh sticky or even slightly Rising core

thanks to travel inflation right

uh and then a Fed

that's somewhat starts getting nervous

that core inflation is rising and low

employment sticks around which is

somewhat I hate to say it

stagflationary this is what you don't

want I do think you have this short term

three-month risk thanks to uh really

summer travel here and summer spending

so I I do think that creates some

potential short-term headwinds for

stocks

even if it's just the fear

that this could happen uh it's not it's

not good because it it's gonna lead the

FED to talk even dirtier to us it's not

just a matter of the hike of one or two

hikes it's it's the dirty tuck now I

want you to know this when it comes to

AI

time is what's going to make you money

and if you can prove that value to an

employer you'll always be able to be

employed so this is another way of

making sure that you don't get replaced

but

foreign