10 Aug THE JULY LABOR REPORT WAS A POSITIVE SURPRISE
Wow! July’s jobs surprised on the upside. As noted several times most, including me, expected a downside surprise.
Non-farm payrolls rose by 1.763 million vs. the consensus view of 1.5 million. Private sector jobs rose by 1.462 million vs. the 1.2 million estimate. Prior month revisions were insignificant. The unemployment rate fell to 10.2% from 11.1%. Average hourly earnings rose by 0.2% instead of falling by 0.5%. Weekly hourly earnings met expectations.
The negative is the LPR falling to 61.4% from last month’s 61.5%. Consensus thought it would rise to 61.8%.
Some are dismissing this report stating that August will show a decline in jobs. I do not know how to respond to this remark. The reference week for July’s data (or the week the information was gathered) was the same week that Corona cases were increasing at a 2.0% rate.
I must write the data is still horrible but at least it is not as bad as projected. We are living in unprecedented times where there are no guideposts in which to follow. Unfortunately, everything is looked at in a political lens and yes Virginia everyone has a confirmation bias.
Perhaps the only certainty to write the next 90 days the vitriol and the mis information will rise to levels that have perhaps not experienced in at least a generation. In my view the election will become the over riding event for the simple reason of the massive differences between the two candidates.
One is viewed as a bore while the other is campaigning upon upending many established norms and policies.
I believe life sometimes mimics Hollywood. In some regards today is a hybrid between The Siege—a 1998 movie starring Bruce Willis as General who is charged with capturing and restoring order in NYC following several terrorist attacks—and American Presidency starring Michael Doulas that was released in 1995.
There is a great line in the American Presidency when the Chief of Staff played by Martin Sheen stating for victory to be had in November stay with the mantra of “hard on crime and soft on taxes.” Today the presumed Democratic presidential candidate is endorsing the opposite violating the age-old path to victory as per Hollywood.
Today there is A Siege reminiscent to The Siege but this siege is on Corona Virus. The premise however is the same…a massive violation of rights for a perceived greater reason.
The movie American Presidency ended with Michael Douglas retuning to the election with renewed fervor and The Siege ended with Bruce Willis falling into disgrace.
How closely will the next three months correlate to these two movies. To date there are some interesting correlations.
As written many times life is stranger than fiction and 2020 has been the year of The Black Swans, events that statistically have an extremely low probability of occurring but are constantly occurring.
Radically changing topics, markets Friday were relatively benign, basically ignoring the employment report, rising trade tensions and stimulus dissentions.
This week the economic calendar is comprised of retail sales, several inflation and manufacturing indices and sentiment indicators. What will the data suggest and how will it be interpreted?
Last night the foreign markets were mixed. London was up 0.41%, Paris up 0.20% and Frankfurt up 0.22%. China was up 0.21%, Japan down 0.39% and Hang Sang down 0.63%
The Dow should open mixed on the President’s executive action bolstered some enthusiasm. The 10-year is up 2/32 to yield 0.58%.