US Jobs Surge! BIG Fed Policy Error Or Gov’t Election Manipiulation? (785,000 Gov’t Workers Added In September)

It turns out that Powell’s “emergency” 50bps rate cut was – drumroll – another major policy mistake by the Fed. Or it is Presidential election interference by The Biden/Harris Administration giving Cacklin’ Kamala as talking point?

Moments ago, the BLS reported that at a time when prevailing consensus was for jobs to continue their recent downward slide sparked by the near-record annual jobs revision and several months of downbeat jobs reports, in September the US unexpectedly added a whopping 254K jobs, the biggest monthly increase since March…

… and above the highest estimate (which as noted last night was from Jefferies at 220K). In fact, the number was a 4-sigma beat to the median estimate!

There’s more: unlike previous months where we saw repeat downward job revisions, the BLS said that both prior months were revised up, to wit: the change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.

Some context: as UBS notes, the moving six-month average on nonfarm payrolls is 167k. The estimate is that 150k is about consistent with a return of the economy to trend growth. Which means that inflation is about to come back with a vengeance, just as the Fed launches its easing cycle.

Remarkably, while payrolls jumped by the most in half a year, the number of employed people also surged, rising by a whopping 430K, also the biggest one-month jump since March.

It wasn’t just the payrolls, however, which came in far stronger than estimates: the unemployment rate also came in stronger than expected, and thanks to the jump in employed workers coupled with the decline in unemployed workers (from 7.115MM to 6.834MM), it dropped from 4.2% to 4.1% (and down from 4.3% two months ago which spared the entire recession panic).

Among the major worker groups, the unemployment rate for adult men (3.7 percent) decreased in September. The jobless rates for adult women (3.6 percent), teenagers (14.3 percent), Whites (3.6 percent), Blacks (5.7 percent), Asians (4.1 percent), and Hispanics (5.1 percent) showed little or no change over the month.

And here is the rub, because in a vacuum the super strong jobs numbers would have been fantastic, the only issue is that the September blowout comes as the Fed launches an easing cycle and as wages are once again rising as we have warned for the past 3 months. Indeed, in September, the average hourly earnings rose 0.4% sequentially, beating the estimate of 0.3%, while on an annual basis, wage growth was 4.0%, up from an upward revised 3.9% and beating the 3.8% estimate.

One note here: the average workweek for all employees edged down by 0.1 hour to 34.2 hours in September, which means the hourly earnings increase is not “pure” but rather a function of denominator adjustments. In manufacturing, the average workweek was unchanged at 40.0 hours, and overtime edged down by 0.1 hour to 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.7 hours.

What sector had the biggest growth? UNPRODUCTIVE government workers! A record 785,000 government workers were added in September, pushing total govt workers also to a new record high.

The Biden/Harris Administration has given away billions of dollars to foreign nations (like Ukraine) and illegal immigrants so far this year,

– $24,400,000,000 to Ukraine.

– $11,300,000,000 to Israel.

– $1,950,000,000 to Ethiopia.

– $1,600,000,000 to Jordan.

– $1,400,000,000 to Egypt.

– $1,100,000,000 to Afghanistan.

– $1,100,000,000 to Somalia.

– $1,000,000,000 to Yemen.

– $987,000,000 to Congo.

– $896,000,000 to Syria.

– $9,000 per illegal immigrant that has entered the U.S.

And claim that FEMA has no money left for Hurricane Helene victims who have received only $750 per person. So I have plenty of reasons to have no trust or confidence in the Biden/Harris Mal-administration.

US PMI Disappoints: PMI Drops To 47.0, Lowest Since June ’23 As Prices RISE (Gold Soars!)

Washington DC Saturday Night! Or at least Monday night. 13 will get you 20, unless you are in Washington DC.

S&P Global US Manufacturing PMI 47.0 (48.6 exp, 47.9 prior) – lowest since June 2023.

Gold continues to soar!

No, not cold sores, GOLD SOARS!

Hard Landing! 10Y-2Y Yield Curve Suggests Coming Recession

Whenever the 10Y-2Y Treasury yield curve slope goes negative, it is following by positive slope … then recession. Like clockwork.

Following every recession since the 1970s, the 10Y-2Y Treasury yield curve slope has risen, then declined. This time around, the 10Y-2Y Treasury curve has remained negatively-slope long than usual suggesting a larger than normal snapback. Into a hard landing.

Democrats in particular love hard landings because that green lights them for massive wasteful spending.

Biden/Harrisnomics At Work! US Existing Home Sales Fall To Near 14-Year Lows In August (Pending Home Sales AT All-time Low!)

More evidence of how destructive Biden/Harris economic policies have been.

The NAR data show existing home sales down 2.5 percent in August to a 3.86 million unit seasonally adjusted annual rate after a small upward revision to 3.96 million units in July.

US existing home sales fell in August to near 14-year lows. Pink box.

Meanwhile, pending home sales (red line) ARE at an all-time low.

Election Interference? Fed Slashes Interest Rates By Biggest Amount In 16 YEARS (50bps) Two Months Prior To Presidential Election (Dots Plot Suggests More Rates To Come)

If this isn’t election interference, I don’t know what is.

The Fed today slashed interest rates by the biggest amount in 16 YEARS, a whopping 50 basis points from 5.50% to 5.00%. With the economy roaring along (thanks to Covid-related massive Federal spending), there was no good reason to slash rates. Other than to get Kamala (Hyena) Harris across the finish line.

The Fed’s bloated balance sheet remains bloast at 7.115 TRILLION.

The dots plot reveals more rate cuts to come. Or as the flea sang, Food Around The Corner.

Perhaps the voting members of FOMC realize how bad Harris/Walz’s economic policies are??

Fed, 25 Or 50 Bps Cut? What’s It Gonna Be?

25 Or 50 Bps Cut! What’s It Gonna Be?

With uncertainty around today’s FOMC decision (50 or 25bps) at record highs, Goldman Sachs options guru John Marshall recommends buying options to position for FOMC-day volatility.

The opportunity, he notes, is most attractive in ETFs and Single Stock options.

Options imply a +/-1.1% move in S&P 500 for the 18-Sept FOMC meeting; this compares to an average of +/-1.2% move priced into SPX ahead of FOMC meetings since the beginning of 2022.

Arguably, this is an unusually important FOMC meeting due to the expected start of a cutting cycle.

On average, the S&P 500 has moved +/-1.3% during FOMC events since the beginning of 2022, coming above options implied moves.

In the July FOMC meeting the index moved +/-1.6% vs. an options implied expectations for a +/-1.1% move.

Goldman’s economists expect the September FOMC meeting to be the start of the Fed easing cycle with a 25bp rate cut followed by two consecutive 25bp rate cuts in November and December, and an eventual terminal rate of 3.25-3.5%.

They see differing asset performances around the start of the easing cycle depending on what motivated the Fed cuts.

Goldman analyzed moves across stocks and ETFs during the first Fed rate cut in the prior 3 Fed easing cycles (18-Sep-2007, 31-Jul-2019 & 3-Mar-2020).

Rate cuts during the 2007 and 2020 easing cycles were associated with a recession while the 2019 cut was due to a growth scare.

In the tables below are the top 20 names that saw unusual moves during the prior 3 Fed easing cycles and for the 2019 cycle separately.

Financials and Tech were major movers during the beginning of the prior 3 Fed easing cycles while the 2019 cycle also saw unusual moves in Consumer Staples.

Fed Chair Jerome Powell.

Highway To Hell! US Interest To Hit $1.6 Trillion By Year End, Making It The Largest US Government Outlay (Interest Payments Crowding Out Social Safety Nets)

The US is on a highway to hell!

The US Federal government just hit a dubious landmark — $1.6 TRILLION in interest payments expected by year end. It is already at $1.2 TRILLION.

Biden/Harris’s spending spree (which Harris wants to continue).

Interest payments will crowd out other expenditures, like Social Security, Defense and Medicare.

Eternal deficits are not sustainable, especially since much of government spending rerpresents payoffs to political donors.

Interest on the federal debt this FY is equal to about half of all personal income taxes collected – we’re a nation of debt slaves.

Yes, under Biden/Harris, the US is on a HIGHWAY TO HELL.

Slippin’ Into Darkness! Unrealized Losses On Banks’ Investment Securities Increase For 11th Straight Quarter (66 Banks On FDIC’s Problem Bank List)

The US is slippin’ into darkness under Biden/Harris.

Q2 marks the 11th STRAIGHT quarter of unrealized losses on investment securities for banks, a streak never seen before. The number of banks on the FDIC Problem Bank List increased to 66 and represents 1.5% of total.

This is in addition to price Increases over last 4 years…
CPI Medical Care: +7.8%
CPI Apparel: +12.7%
CPI Used Cars: +18.3%
CPI New Cars: +20.5%
CPI Food at home: +21.4%
CPI Shelter: +23.4%
CPI Food away from home: +25.4%
CPI Electricity: +29.8%
CPI Gas Utilities: +34.9%
CPI Transportation: +38.8%
US Home Prices: +48.0%
CPI Auto Insurance: +52.4%
CPI Gasoline: +53.5%
CPI Fuel Oil: +54.9%

Don’t spill the wine, its too expensive under Biden/Harris/Powell.

Hot, Hot, Hot! Core Inflation Comes In Hotter Than Expected (50 BPS Rate Cut Likely Off The Table)

Feelin’ hot, hot, hot! Inlfation that is.

Following last month’s modest miss in CPI which sparked speculation about a 50bps cut, which was then boosted by the jobs report miss and the huge downward revision, moments ago the BLS reported that – as only a handful of Wall Street strategists warned – CPI actually came in hotter than expected at the core level, rising 0.3% MoM vs expectations of a 0.2% print, with all remaining metrics coming in line, to wit:

CPI 0.2% MoM (or 0.187% unrounded), Exp. 0.2% – in line
CPI Core 0.3% MoM (or 0.281% unrounded), Exp. 0.2% – hotter than expected
CPI 2.5% YoY, Exp. 2.5% – in line
CPI Core 3.2% YoY, Exp. 3.2% – in line

And visually, here is the headline print, where the annual CPI increase dropped to just 2.5% from 2.9%, the lowest since February 2021…

.. and the core….

…. as goods deflation is stalling and may even print positive in the coming months, while core service inflation remains the biggest driver.

That was s the 51st straight month of MoM increases in Core CPI, and a new record high.

Under the hood, used car prices fell 1.0%, moderating from last month’s 2.3% drop, while airline fares jumped 3.9%, a big reversal to last month’s bizarre -1.2% drop. Car insurance costs jumped another 0.6%, after rising 1.2%; furniture prices dropped 0.3% reversing last month’s 0.3% rise.

Perhaps more worrying is the fact that while rent inflation has flatlined, shelter inflation posted its first increase since early 2023!

August Shelter inflation up 0.43% MoM and up 5.23% YoY vs 5.05% in July
August Rent Inflation up 0.39% MoM and up 4.97% YoY vs 5.09% in July

And the first monthly increase since March 2023 highlighted:

Last, but not least, and perhaps most ominous of all, is that while inflation refuses to be “killed” even as the Fed is about to start cutting rates, Supercore CPI rose 0.33% MoM, the biggest monthly increase since April, driven by continued acceleration in transportation services, which jumped the most in 5 months.

Finally, money supply growth is reaccelerating…

Which begs the question: how long until the Fed’s next easing cycle unleashes the Arthur Burns fed:

Putting it all together:

Underlying inflation unexpectedly picked up, as core CPI increased 0.3% from July, the most in four months, and 3.2% from a year ago
Only five of the 65 forecasts in Bloomberg’s survey called for a 0.3% increase in the core CPI. Almost everyone else was at 0.2%, and four had it at 0.1%. The five were right.
Shelter prices, the largest category within services, climbed 0.5%, the most since the start of the year and the second month of acceleration, defying widespread expectations for a downshift. Owners’ equivalent rent — a subset of shelter and the biggest individual component of the CPI — rose at a similar pace.
Airfares rose a hefty 3.9% in August after falling for the previous five months while costs for energy and used vehicles fell
Risk assets pumped and dumped and bond yields rose. S&P 500 futures dropped steeply immediately after the report came out, before paring losses. The yield on 10-year Treasuries advanced two basis points to 3.66%. The dollar wavered.

And while one can stick a fork in the market’s hopes for a 50bps rate cut (odds slumped from 30% to 20%… and from 50% last Friday)…

… the question remains: will the Fed really cut rates as shelter inflation inflects higher for the first time since 2023.

After last night’s ABC Presidential debate. Where Kamala acted like she was auditioning for part in the movie “Mean Girls” and the ABS moderators acted like pure Soviet-era Russian journalists.

South Of The Border? Native Born US Workers Lost 1.4 Jobs, Foreign Born Workers Gain 3 Million Jobs

South of the boder, down Mexico way.

Since October 2019, native-born US workers have lost 1.4 million jobs; over the same period foreign-born workers have gained 3 million jobs.

Ay ay ay ay, ay ay ay ay!

The last three monthly jobs reports show aggregate job gains of 340K. Of that total 172K are accounted for by Health Care and Social Assistance and 60K by Government. Manufacturing jobs have shrunk by 34K; Professional and Business services, a 16k decline.

Biden/Harris have alliowed the US to be invaded. Under Harris, the new US national anthem will be Jesusita en Chihuahua.