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CHART OF THE DAY: Jobs Growth Migrating South for Winter

Editor's Note: Below is a brief excerpt and chart from today's Early Look written by Hedgeye U.S. Macro Analyst Christian Drake. Click here to learn more.

 

"...From a rate of change perspective, payroll growth will continue to slow from here. 

 

The why is relatively straightforward:

 

  1. Employment growth is hostage to the law of large numbers and as the base gets bigger, an accelerating growth rate implies an ever increasing number of jobs.  On an NFP base of 145M, the numbers get unreasonable quickly (i.e. you start needing to add 700K … 900K … >1M workers net on monthly basis to maintain the growth curve).
  2. Diminished slack and a tighter labor market.  As the expansion matures and labor supply tightens, there are simply less people to hire and more competition."

CHART OF THE DAY: Jobs Growth Migrating South for Winter - CoD NFP YoY


McCullough: What One Of The World's 'Most Brilliant' Investors Told Me About Janet Yellen

 

In this excerpt from The Macro Show, Hedgeye CEO Keith McCullough discusses what one of the world's most brilliant investors told him about Fed chair Janet Yellen, interest rates and Friday's Jobs Report. 

 

Subscribe to The Macro Show today for access to this and all other episodes. 

 

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Cartoon of the Day: Once Upon A Time...

Cartoon of the Day: Once Upon A Time... - Fed cartoon 09.01.2016

 

"With Q3 GDP tracking at 1.1%, Housing -1.2% (Existing Homes), Productivity down another -0.6% (worst 3 quarter streak since the 1970s) and Auto Sales down mid to high singles (GM and F -5-8% AUG)… And the Fed wants to hike on that data?," Hedgeye CEO Keith McCullough wrote today.


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Poll of the Day: Which Event Below Is Among The WORST In U.S. Market History?

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Is The Yellen Fed Truly "Data Dependent"?

Takeaway: To hike or not to hike, that is the question all Fed officials are pondering at the moment. Let's look at the data.

Is The Yellen Fed Truly "Data Dependent"? - Yellen data dependent cartoon 11.18.2015

 

"What's really changed, economically, since stocks crashed last time?" Hedgeye CEO Keith McCullough wrote earlier today. "Dovish (not hawkish) Fed." In short, the only thing keeping stocks up at this point is bad economic data and the perennial hope that Yellen will get dovish once again.

 

On that front and For those of you keeping score...

  • Q2 GDP: 1.1%
  • July Existing Home Sales (90% of Housing): -1.6%
  • GM and Ford Sales -5-8%

 

This is all clean cut rate hike "data," right?

 

It gets worse. Add another terrible economic data point to that list today with an ISM print of 49.4 in August. Quick quetsion: Is the Fed out to lunch with its hawkish outlook?

 

You bet.

 

Is The Yellen Fed Truly "Data Dependent"? - ism manufacturing

 

To hike or not to hike, that is the question all Fed officials are pondering at the moment.

 

You know where we stand on that.

 

However, With all this ugly data, one thing is certain...

 


The Best Case For Stocks & Bonds Is A Bad Jobs Print

Takeaway: Worse jobs print = No Rate Hike = Stocks ↑ = Bonds ↑

“Markets can handle 25 bps” (heard in DEC 2015 and AUG 2016)– in other news SP500 closed down -0.12% in AUG after having 7 down days in the last 9 on rate hike fears; can markets handle another hike into a slow-down? Perversely, best case for stocks/bonds is a slightly worse jobs print (no hike)  - gotta love super #LateCycle labor data.

 

Here's a video with my take on "What Happens To Stocks If Friday’s Jobs Report Bombs?"

 

 

Editor's Note: The snippet above is from a note written by Hedgeye CEO Keith McCullough and sent to subscribers this morning. Click here to learn more. 


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