12/06/23 09:17 AM EST

Pressure Building for Powell & Fed...

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.

Today’s bonus chart deals with the Fed’s policymaking in reaction to their second mandate of full employment.

Last week’s continued unemployment claims data climbed to 1.9 million. Additionally, in yesterday’s JOLTS data, we saw openings for October drop to 8.73 million, which is the lowest since May of 2021 — the ratio of openings to unemployed workers is 1.3 vs. 1.5 prior. For reference, 1.2 was the ratio pre-pandemic. Prior month, JOLTS were revised lower to 9.3 million as well.

Danielle DiMartino Booth has wisely pointed out that 50 states have higher unemployment year-over-year. Texas is the notable exception. Going back to 1976, when we've seen 50 states with higher unemployment, nine out of nine times, it led to subsequently disappointing NFP reports. With 2023 the year of the negative revision, it may require more time than usual to recognize this slowdown.

Today’s chart implies that Jay Powell will need to cut as early as Q1 of 2024.

Learn more about the Market Situation Report written by Tier 1 Alpha.