020: Jobs Report 07-07-23

Are you ready to dissect the recent jobs report with the precision of a seasoned financial analyst? Join us in a riveting conversation as we welcome returning guest Megan Hornemann, the Chief Investment Officer of Verdens Capital Advisors. We delve into the nitty-gritty, analyzing the shortfall of the newly added jobs against expectations and the previous ADP report. We also take a look at the darker side of the picture that emerges from the downward revision of payrolls from the past two months. Yet, amidst this, we discover the sliver of silver lining in the lowering of the unemployment rate and the steady growth seen in average hourly earnings.

What does the future hold for the Federal Reserve in light of these revelations? Will we see a rate increase in July or will there be further weakness in the labor market? As we grapple with these questions, we share our thoughts and predictions, providing you with valuable insights to navigate the current economic landscape. We stay committed to exploring the balance between the bearers and the bulls, and look at the possibility of a looming recession in the next 12 months. Whether you're a financial whizz or just curious about the labor market, this episode promises to be an enlightening discussion. And remember, we are eager to hear from you at podcasts at verdancecom with your questions or comments. Get ready to be informed and engaged!

Hello, this is Megan Hornemann, the Chief Investment Officer of Verdens Capital Advisors and coming to you today with our Markets. With Megan, we're following up with the podcast that we did yesterday, which was the prelude to the jobs report, and this morning we got the official jobs report and it was a little bit more reflective of some of the weakness that we've seen in other labor market indicators, like small business optimism or manufacturing. The jobs report came out with the addition of 209,000 jobs, so it was a little bit less than expected and a lot less than that ADP report we got yesterday. But let's break this down and get through some of the details. When you look at the prior two months, those payrolls were actually revised down by 110,000. So just on that surface here, this is an actual weaker job report. So what the Fed's going to look at is the fact that the unemployment rate did lower again. You also saw that average hourly earnings, which is an inflation indicator. They were up four-tenths and now they're rising about over 4% on a year-over-year basis and this has been a consistent thing every month that they're growing about 4.4% on an annual basis.

So we think what you're going to see is that the Federal Reserve's going to have to raise rates in July, they may deliver again some very same kind of sentiment as where they'll be data dependent, because underneath some of the things in this jobs report we did see some further weakness. If it's whether the temporary workers that fell remember you'll lay off temporary workers before you lay off full-time workers and then, as I mentioned, that downward revision to the prior two months. That's a soft report there. So the Fed's going to probably have to still go in July that hasn't changed and we'll see what we get as far as some of the inflation indicators to get a better idea of what they'll have to do in September.

But for the time being the equity markets are kind of directional on this news because there was a little bit in this report for the bearers and a little bit for the bulls. We still think we'll see further weakness in the labor market for the rest of this year and make it kind of unavoidable that we'll have a recession at some point over the next 12 months. That's all I have today. If you have any questions or comments, please feel free to reach out to podcasts at verdancecom. Thank you.