October 4, 2023 | Daily JAM, Morning Briefing |
Private payrolls rose by just 89,000 jobs in September, according to figures published today by the ADP Research Institute. That’s the fewest jobs added in a month since the start of 2021. Private payrolls climbed 180,000 in August. The results trailed all estimates in a Bloomberg survey of economists. The report is more evidence of a further slowing in the labor market. “We are seeing a steepening decline in jobs this month,” Nela Richardson, ADP’s chief economist, said in a statement. “Additionally, we are seeing a steady decline in wages in the past 12 months.” Both trends would be good news for the Federal Reserve in its fight to lower inflation. And would be positives for a financial market which has seen bond yields rise and stock prices stagnate recently in fears that inflation might be staging a come back. Good news–if, that is, the ADP numbers can be believed.
September 2, 2023 | Daily JAM, Morning Briefing |
Next week I expect the battle in the financial markets over whether or not the Federal Reserve will increase interest rates at its NOVEMBER 1 meeting to heat up.
August 10, 2023 | Daily JAM, Morning Briefing |
CPI headline, all-items inflation rose at a 3.2% annual rate in July. That was up from the 3% annual rate in June and the first increase after 12 months of steady declines. But the uptick seems mostly an artifact of higher housing costs, an item that shows a longer-term downward trend in prices. The market read this morning is, therefore, that this is continued good news on inflation and that it cements the likelihood that the Fed will stand pat on interest rates at its September 20 meeting. The CME FedWatch tool put the odds of no increase from the Fed on September 20 at 90.5% today. That’s up from odds of 86% yesterday, August 9. But if the question of what the Fed will do in September is settled (in the market’s mind at least), the issue of what the Fed will do (or say) about the future direction of interest rates remains uncertain.
June 21, 2023 | Daily JAM, Morning Briefing |
Recently former Treasury Secretary Larry Summers has been saying that the June pause in interest rates and a simultaneous increase in the end of the year DotPlot interest rate projections to 5.6% only makes sense if Fed chair Jerome Powell cut a deal with the central bank’s inflation hawks that guarantees a 25 basis point interest rate increase at the July 26 meeting.
May 31, 2023 | Daily JAM, Morning Briefing |
The latest Job Opening and Labor Turnover Survey, or JOLTs report, released yesterday, May 30, Tuesday, showed 10.1 million job openings at the end of April. That was an increase from the 9.8 million in job openings reported in March. Economists surveyed by Bloomberg had expected 9.4 million openings in April. This higher-than-expected number has, this morning, led to fears that the labor market is still stronger than the Federal Reserve would like. Which could lead to a Friday report of a stronger-than-expected jobs report for May. And a Federal Reserve interest rate increase at the central bank’s June 14 meeting.
May 26, 2023 | Daily JAM, Morning Briefing |
The personal consumption expenditures price index, the Fed’s preferred inflation gauge, rose a faster-than-expected 0.4% in April, the Commerce Department reported this morning, May 26. Core PCE inflation also rose by 0.4% in April. “This is the wrong direction for the Fed,” Diane Swonk, chief economist at KPMG, told Bloomberg. “June will depend on getting outside of debt ceiling issues but a July hike is now in play.”
April 12, 2023 | Daily JAM, Morning Briefing |
All items inflation as measured by the Consumer Price Index rose by just 0.1% in March, the Bureau of Labor Statistics reported today. That is a big drop from the 0.4% increase in February. The year-over-year all-items inflation rate fell to 5.0% in March. from 6.0% in February. Inflation is coming down and it’s coming down pretty fast, right? Well, no. The core inflation rate, which excludes energy and food prices on the theory that they are too volatile to count as “real” inflation, rose 0.4% in March after climbing 0.5% in February. The year-over-year core inflation rate rose slightly to 5.6%. So inflation is proving to be very sticky.
November 1, 2022 | Daily JAM, Morning Briefing |
The JOLTS survey from the Department of Labor showed a big jump in job openings in September. Which raised market worries that the Fed will raise interest rates tomorrow, November 2, by a hefty 75 basis points and signal that it is farther away from a pivot toward lowering interest rates than this recent rally has hoped. The Job Openings and Labor Turnover Survey showed that the number of available positions climbed to 10.7 million in September from a revised 10.3 million in August. Economists surveyed by Bloomberg were looking for a drop to 9.8 million openings.
October 14, 2022 | Daily JAM |
After climbing 2.60% yesterday, the Standard & Poor’s 500 fell 2.37% today. Same story with the Dow Jones Industrial Average–up 2.83% yesterday, but down 1.34% today. And the NASDAQ Composite–up 2.23% yesterday and down 3.08% today. And the small-cap Russell 2000–up 2.41% yesterday and down 2.66% today.
September 13, 2022 | Daily JAM, Morning Briefing |
Stocks plunged today as the Consumer Price Index inflation measure came in above economist expectations and market hopes.
Headline CPI inflation ran at an 8.3% annual rate in August. That was down from the 8.5% annual rate in July and the 9.1% annual rate in June. But above the 8.1% annual rate forecast by economists.
On the news, stocks fell steeply with the Standard & Poor’s 500 down 4.32% for the day and the Dow Jones Industrial Average off 3.94%. The NASDA Composite fell 5.16% and the NASDAQ 100 plummeted y 5.54%. The small-cap Russell 2000 was down 3.91%. I think that within a few days the reaction is likely to strike investors as excessive. The trend in inflation did still point down and it increasingly looks like June’s 9.1% in the peak. And while the hotter-than-expected inflation rate did just about guarantee that the Federal Reserve will raise interest rates by 75 basis when it meets on Wednesday, September 21, most of Wall Street had already concluded that a 75 basis-point move was locked in. So what’s the hubbub, Bub?
July 21, 2022 | Daily JAM |
Initial claims for unemployment totaled 251,000 for the week ended July 16, up 7,000 from the week before, the Labor Department reported today, July 21. Economists were looking for 240,000 initial claims. That was the highest weekly number since November 13, 2021 The slight increase in initial claims is the latest sign that the tight labor market is getting less tight.
July 7, 2022 | Daily JAM, Morning Briefing |
The market is in the processing of pricing in a recession that’s either here or close to arrival. And now the big question is whether the Federal Reserve has the will to take a longer recession to get inflation under control or will begin cutting interest rates in early 2023.
