• Bull.




Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.

Employment Alarms Are Ringing - MSR

We'd like to make an observation from yesterday's unemployment claims data. To begin with, the claims, in absolute terms are relatively subdued. Initial claims registered at 217,000, marking an uptick of 5,000 from the preceding week's adjusted figure. That prior week was revised higher by 2,000, moving from 210,000 to 212,000. The 4-week moving average stood at 210,000, reflecting a rise of 2,000 from the previous week's adjusted mean, which itself was nudged up by 500 from 207,500 to 208,000. A count of 217K doesn't immediately suggest an employment crisis. However, should that number breach 300K, the narrative shifts, indicating potential mass layoffs and a trend among corporations to initiate staff reductions. But, we aren't there just yet.

Our second observation focuses on the fact that continuing claims haven't decreased in tandem with initial claims, instead showing a slight uptrend. The preliminary figure for seasonally adjusted insured unemployment for the week ending October 21 stood at 1,818,000, which is up by 35,000 from the preceding week's revised number. This suggests that once individuals are out of work, securing another job becomes increasingly challenging, hence the elevated continuing claims. We suspect that a decelerating Gig economy caused a surge in the labor supply. We delved into this topic in our letter dated October 12.

While there aren't glaring alarms regarding employment, cautionary signals are evident.

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Employment Alarms Are Ringing - large The Pitch Banner 11.1.2023