What will the Bureau of Labor Statistics serve up in 15 minutes?
More confusion sown by post-pandemic era noise in the Birth-Death Model and Seasonal Adjustment factors?
Or a clean trend towards a slowing employment situation, reflective of the latest ADP and JOLTS data? #JobsDay
And we have our answer. For the month of May 2024:
Non-farm payrolls: 272,000 (229,000 private)
Unemployment Rate: 4.0%!
Hourly Wages: +0.4%
Hours: 34.3 flat
Revisions: -10,000 in April
Let's look under the hood now and see what led to this...

Post-intervention #SVB 🧵:
1/n The Fed stepped up last evening and fulfilled a central bank's primary reason for existence - to stop bank panics by acting as lender of last resort and providing ample liquidity. This made all the more easier by the fact that the majority of...> 2/n...assets held by SVB were the debt of, or debt guaranteed by, the government itself. They now have made clear an already implicit backstop at par on those assets (and if it wasn't implicit to you, you haven't been paying attention this past quarter century). But this move...>

#SVBCollapse 🧵
1/n There's a lot of conflation out there between the absence of mark to market accounting on US government bonds and the fact that SVB took losses on its bond portfolio when it sold a few billion to raise cash to accommodate withdrawals.
There's no great mystery> 2/n The book value of a bank's US government (risk-free) portfolio will always be recovered in full through their maturity (unless purchased at a humongous premium, which is extremely rare). The market value of a portfolio, of course, dances around with prevailing interest rates>

Funny thing about the Fed's trying to whip inflation by raising the policy interest rate: If it doesn't result in a job-killing recession, it creates MORE INFLATION. Here's why... (cc. @stephaniekelton) @StephanieKelton Let's say that last week one had $200,000 in 2 year Treasuries mature that had been acquired (at a small discount, admittedly) a year ago when one was concerned that equities had peaked and were in the midst of a slide (and there was this war in Ukraine brewing).

🧵 on the coming Commercial Real Estate crisis:
1/n
It is a mistake to view the present state of global real estate through the analytical lens of earlier crises.
In the 1987 - 1993 era, overbuilding spurred by tax incentives and excessive leverage was...2 bloomberg.com/news/features/… 2/n
...the driver of collapse (especially after the 1986 tax act ripped the tax benefits away).
Coming into the Global Financial Crisis, CRE was over-leveraged as a result of lax credit rating standards and property valuations then, as now, being forced down by Fed tightening.>

A 🧵 on the oh so crazy @CathieDWood and $ARKK.
1/n I bought into her top 10 wealth destroying actively managed ETF (Morningstar) this morning at $29.50 as an experiment.
One might think from the below chart that Cathie has been all hat and no cattle.
With huge hype from... 2/n (ex) Bloomberg's @Matthew_Winkler in 2020, ARKK hit nearly $140 a share and has lost nearly 80% of its then value.
Cathie was (is) selling a concept she calls "disruptive innovation" claiming that she can spot those with real disruptive technology and business models and...

#CPI The headline today is of course core slipping back to 0.3% MoM and all items falling back to 7.7% YoY on basis effects. But let's have a look behind the headlines... Core goods are now decisively DEflating - down -0.4% MoM - as global supply chains are reopening in earnest and demand is slackening. The only real stubborn price pressures remaining in core goods are in new vehicles and some related parts. The chips issue still the culprit.

#CPI
And the answer is:
Headline: ZERO M/M
Core: 0.3%
The end is nigh! That headline reading was with food UP 1.1% in July, offset by energy falling -4.9% on the month. (Energy commodities -7.6%)

1/ A Critique of the July Employment Situation Report (long thread, but important):
As you are likely aware, the Household Survey and Establishment Survey components of the report have been diverging in recent months to relatively historic extremes. 2/ People are not reporting themselves as employed to the degree that employers are reporting that they have restored or created jobs.
Here's what I believe may be happening. First, some basics:
The establishment survey counts a job as a job no matter how few hours were worked.

#BLS #NFP estimates for July hover around 270K, but recent estimates have proven dramatically unreliable to the downside.
At some point, the opposite will be the case.
With unemployment claims rising, let's see if this is the month? NFP shock at +528,000 jobs created or restored.
Average hourly earnings up 0.5%.
This was NOT the month for a retrenchment, to say the least.
More to come....

It is #CPIDay and all (CP)eyes in the markets and at the Fed are on US inflation data due in 5 minutes. The focus will be on M/M core goods and core services. May M/M Headline #CPI up whopping 1.0%
M/M Core up 0.6%
Lets dive in to see what caused this broad based spike upwards:

Core inflation came in a good deal softer than the 0.5% M/M expected (by others), at 0.3% M/M. While food and energy are on fire, goods prices - less food and energy - are in retreat FALLING -0.4% M/M. Services are the story today. But shelter price growth actually retreated. Shelter price growth - rent of homes and owners equivalent rent of homes in particular - is lagging data but was expected to start kicking up higher this month. Instead, rent growth subsides to 0.4% M/M from 0.6% the month prior and OER stays at 0.4%.

The end of the "wage price spiral" meme (sorry @LHSummers) has added to the rally in US treasury bonds already spurred by safe-haven seeking related to the horrors abroad. 10-year now yielding less than 1.75%.
American low wage/low-hours jobs are being taken up out of necessity. That the lower income workers would need to return was obvious. Pressures on professional services wages resulting from trying to lure into the office workers who had seen their spending power go up by not commuting/living elsewhere and eroded by short-term inflation, was noise.

#BLS #NFP Distracted Jobs Day to you.
Hard to pay attention with what is going on abroad.
Fed's move is known, and constrained by market reaction to the above.
A glance will be had at wage and income growth.
Headline number will likely underperform consensus.
But no one will care Here we go:
Non farm payrolls up by 678,000
Private sector 654,000
Unemployment 3.8%
Boy was I wrong. More to come.
Hourly wages were flat though!

UKRAINE: WHERE IS RUSSIA'S ACHILLES HEEL?
A Thread
1/15
In most every global conflict - offensive or defensive, military or economic - western governments seek to game out the likely reactions of adversaries.
We assume the Russians engage, at some level, in a similar exercise.
> 2/15
The "game over" for most responsible governments is, of course, global nuclear war. So all actions - military or economic - risking escalation to that point are viewed as potential steps towards the unthinkable.
>>

Good #BLS #NFP Jobs Day.
Below are my pre-report observations on what to look for.
Stay tuned for quick analysis and, thereafter, the @jobqualityindex data related to today's report.

https://twitter.com/DanielAlpert/status/1479433415640457221

Non-farms payrolls up 199,000
Private sector up 211,000 (loss of government workers)
Unemployment rate falls to 3.9% as labor force increases by only 168,000. LFPR flat at 61.9.
Stay tuned for additional analysis, but this is miserable data.

The complex dynamics of today's Employment Situation Report:
1) We are still in a "re-hiring" phase, not a jobs creation phase (the jobs have been out there for months). So the key data point will be labor force participation. If the jobs number is strong and LFP rises...>> >>...that will likely mean the return of workers previously sitting on accumulated federal transfers needing to become re-employed, the unemployment rate remaining stable (or even rising) and wage pressures decreasing this year.
2) Probably too early for the December data...>>

#NFP Expecting a strong number today. The headline will not be impacted by the loss of government education jobs we saw in September and I expect private sector to show far more strength with the ending of supplemented unemployment benefits now fully filtered through the data. #NFP As a result of the above, I see the number as likely to exceed expectations of 450K to 475K, with a decent shot of well-exceeding that range. But the test week was the week ending October 17th, and activity has increased measurably after that with improving COVID data.

1/10
THREAD: There's No "Great Resignation"
There's this idea that a post-pandemic "labor shortage," yielding wage inflation, is caused by disinterest in work.
A good example of the "paralysis of aggregates" I spoke of in this @Bloomberg podcast this week:
bloomberg.com/news/articles/… 2/10
That's an easy snap judgment to arrive at when you correlate the malaise related to these 19 months of plague with the fact that, in the aggregate, millions of workers have, in fact, not yet returned to their jobs:

Good Jobs Day everyone. Today we see if the slow pace of reduction in continuing (not initial) extended and supplemented unemployment claims is again reflected in the #BLS data for June. Estimates for job growth of ~600K private and ~700K total sound reasonable, but its dicey. If we get a big jump in jobs, we should see a slump in wages as most of the jobs seeking worker are low-wage/low-hours jobs. And they are not likely the type to draw in people off the bench from either the unemployed OR those who have left the labor force:
nytimes.com/2021/06/01/opi…

Good Jobs Day morning! Hopefully we will see a renewed acceleration in the restoration of jobs during May. But after we dissect the data at 8:30am EDT. the remaining question will be which sectors still have not returned to prepandemic employment levels?
Answer: Mostly low income We know that the re-employment gap is mostly in the low income sectors (below) because there are many workers receiving unemployment benefits exceeding incomes from their old jobs.
What we don't know is whether all their old jobs are really still there!
nytimes.com/2021/06/01/opi…