Breaking down the November jobs report


3.7%, BACK TO YOU. MARIA: EDWARD THANK YOU SO MUCH, THE NUMBERS WEAKER THAN EXPECTED WE WERE EXPECTING 200,000 JOBS STEPHANIE POMBOY REACTION.>>IF YOU THINK THESE LOOK WEAK GIVE IT A MINUTE, MY — WHEN WE GET INTO IS FIRST QUARTER YOU ARE GOING TO SEE DRAMATIC SLOWDOWN IN ALL ECONOMIC DATA FOR A VARIETY OF REASONS OBVIOUSLY SEASONALLY FIRST QUARTER TENDS TO BE WEAK YOU ARE GOING TO LOSE A LOT OF TAILWINDS THAT ARE CURRENTLY SUPPORTING ECONOMIC GROWTH. FROM POST HURRICANE REBUILDING, TO J CURVE FEBTS ASSOCIATED WITH TARIFFS IN OTHER WORDS, COMPANIES IMPORT NOW GOODS THAT THEY EXPECTED WERE GOING TO BECOME MORE EXPENSIVE ON THAT END TARIFFS JANUARY 1, BEHIND SCENES THE FED HAS BEEN WINDING DOWN BALANCE SHEET, THE ECB AND BOJ CONTINUING TO AND AN ENDS IN EARLY PART NEXT YEAR SO I THINK, YOU KNOW WE GOT TO ACCLIMATE TO WEAKER NUMBERS ALONG THE LINES WHAT WE ARE SEEING IN TERMS OF HEADLINE REPORT TODAY, BECAUSE COME FIRST QUARTER, THESE NUMBERS ARE GETTING SOFTER FED TRYING TO KIND OF LAY GROUNDWORK FOR PAUSING RATE HIKES.>>A DO YOU THINK THAT IS THE CASE BECAUSE RATE HIKES ARE SLOWING THINGS DOWN, IS IT JUST A LENGTHY OF RECOVERY? WHAT SPECIFICALLY HAS YOU THINKING THINGS ARE GOING TO SLOW DOWN SO MUCH IN THE COMING YEAR.>>I THINK THE RATE HIKES HAVE BEEN AN ONGOING DRAG THAT WAS MASKED BY STIMULUS FROM TAX CUTS THIS YEAR I THINK IN 2018, THE FISCAL STIMULUS STORY STOLE SHOW, 2019 I THINK MONETARY STRAIGHTEN IS RESTRAINT IS THE STORY IN 2015 FED STARTED RAISING RATES CONSUMER FELT TIGHTENING CREDIT CARD RATES WENT UP PERSONAL LOAN RATES UP THEY HAVE BEEN EXPERIENCING THE FED TIGHTENINGEN THE CORPORATION BOND MARKET SECTOR DIDN’T HAVE ANY EFFECT FROM FED TIGHTENING UNTIL RECENTLY, NOW STARTING TO FEEL IT INCREASING YIELDS SPREADS CORPORATE MARKETS STARTING TO INCREASE INTEREST EXPENSE THERE BUT BEHIND SCENES WIND DOWN OF THE FED BALANCE SHEET HAS BEEN DRAINING REFERS FROM BANKING SYSTEM SLOWING CREDIT CREATION IN GENERAL, AND CREDIT IS THE FUEL FOR THIS ECONOMY, SO IT IS YOU KNOW, A TAIL WIND HEADWIND BEHIND SCENES NO ONE NOTICED BECAUSE TAX CUTS FOR A PERIOD THERE OVERWHELMED IT BUT COMING INTO JANUARY OF NEXT YEAR OBVIOUSLY THE TAX CUTS EFFECT FALLS AWAY.>>THE ADMINISTRATION WILL PUSH BACK THE ADMINISTRATION WILL SAY YOU KNOW WHAT, THIS HAS A LONG RUNWAY, THE TAX CUT BENEFITS WE WILL SEE WHAT DO YOU THINK.>>WELL, I MEAN, A LOT OF PEOPLE ARE EXPECTING THE ECONOMY TO SLOW IN 2019 IN PART NOT ONLY BECAUSE THE TAX CUTS WANING BUT SOME SPENDING AS FAR AS TODAY’S REPORT I WOULD CALL IT GOOD NEWS BAD NEWS REPORT LET’S NOT FOR BET 3.7% UNEMPLOYMENT RATE IS EXCEPTIONALLY LOW VERY GOOD NEWS FOR THE ECONOMY, THE 155,000 PAYROLL NUMBER A LITTLE ON SOFT SIDE NOT EXTREMELY SOFT IT IS NOT SCREAMING MASSIVE SLOWDOWN OR RECESSION IT IS SOFT ENOUGH FOR THE FED TO CONTINUE THIS IDEA THAT MAYBE THEY ARE GOING TO SLOW DOWN THE PACE OF RATE DECREASES, BUT, YOU KNOW, THE SOFT PAYROLL NUMBER SUGGESTS THAT THE SLOWDOWN A LOT OF PEOPLE HAVE BEEN TALKING ABOUT MIGHT BE STARING US IN THE FACE.>>CHAIR WILLS.>>A I HAVE TO AGREE WITH STUFF STEPHANIE DAGEN BROUGHT UP YESTERDAY THAT ROCKER WASLOOKED WITH RESPECT TO CREDIT SURVEY.>>LOAN APPLICATIONS DOWN .2 PERCENTAGE RATES LOW REJECTION RATES DOWN 5.7 RZ PASSAGE POINTS, 7.5% FROM 5.7% A YEAR AGO FROM 4 PERCENT A YEAR EARLIER THAN THAT DEEPER THE MORTGAGE STUFF SCARY SCARY, THE FED SEES THIS ALSO SPEECH POWELL GAVE LAST NIGHT GOES TO WHAT DAGEN SAID JAY POWELL UNDERSTANDING THIS HAS BEEN UNEVEN RECOVERY CLOSING REMARKS HE SAID WHILE THE ECONOMY IS STRONG HE OVERALL WE RECOGNIZE SOME COMMUNITIES HAVE YET TO FEEL THE FULL BENEFITS OF THE ONGOING EXPANSION, SO I DON’T THINK 3.1% RAGE INCREASE GETS THEM TO MOVE I THINK HE UNDERSTANDS IF THEY DO MOVE, THE VERY PEOPLE HE IS CITING RIGHT IN HIS SPEECH LAST TONIGHT, WON’T GET ANY BENEFITS THAT HE SEEMS TO WANTS THEM TO HAVE. MARIA: HOURLY EARNINGS UP 2/10 OF A PERCENT IN THIS REPORT YOUR REACTION.>>YOU’VE GOT WAGES UP THAT IS A GOOD STAY ON UNEMPLOYMENT STEADY 3.7 IS A VERY GOOD STABLE NUMBER. THE WORKFORCE PARTICIPATION RATE ALSO UNCHANGED, A SLIGHT MISS IN TERMS OF JOBS CREATED, BUT I THINK THAT YOU ARE EXACTLY RIGHT JON TO SAY GOOD NEWS BAD NEWS I AM LOOKING AT DOW JONES LEAD U.S. EMPLOYERS SLOWED PACE OF HIRING IN NOVEMBER BUT WAGE GROWTH MATCHED HIGHEST RATE NEARLY A DECADE UNEMPLOYMENT HELD AT VERY LOW LEVEL, SO THERE IS SOMETHING FOR EVERY ONE, I THINK. MARIA: YOU WANT TO GO DOWN MIDDLE YOU SAID, YOU SAID EARLIER WE WANT DOWN THE MIDDLE.>>THIS IS CLOSE TO THE MIDDLE OF THE FAIR WAY LITTLE SOFT SIDE BUT IMPORTANT TO REMEMBER WE DON’T NEED A LOT OF JOB GROWTH TO KEEP THAT UNEMPLOYMENT RATE STEADY AT 3.7%, THAT IS A GREAT UNEMPLOYMENT RATE FOR AMERICAN WORKERS MEANS THERE ARE A LOT OF JOBS OUT THERE FOR PEOPLE TO GET, SO SLOWING IN PAYROLL GROWTH, ISN’T SUCH BAD NEWS AS ONE THAT STAYS AROUND 150,000 RANGE, IF BELOW 00,000 GET WORRIED.>>WHERE ARE JOBS RIGHT NOW?>>YOU KNOW, THE JOBS RIGHT NOW, ARE CERTAINLY IN ENGINEERING, HEALTH CARE SECTOR CONTINUES TO DO WELL, BUT I THINK THE INTERESTING DYNAMIC WITH THIS REPORT THE WAGE GROWTH DID COME OUT STRONGER, BEING UP 3.1% AND I ACTUALLY THINK DUE TO UNEMPLOYMENT BEING SO LOW, WE COULD CONTINUE TO SEE WAGES CONTINUE TO MOVE ALL THE WAY THROUGH 2019. BECAUSE EMPLOYERS STILL HAVE A STRONG DEMAND, IN MANY SECTORS IN MANY INDUSTRIES. THEY ARE REALLY LOOKING FOR THAT SKILLED TALENT, AND BEING FORCED TO DO TWO THINGS MARMARA FORCED TO PAY PEOPLE MORE, AND THEY ARE ALSO BEING FORCED TO OFFER TRAINING AND SKILLS ONGOING TO THEIR EMPLOYEES TO GET THEM TO THE LEVEL OF WHERE THEY NEED THEM TO BE, THAT IS ALL LEVELS OF THE ORGANIZATION, SO I ACTUALLY THINK IT IS A GOOD REPORT, PROBABLY CONTINUE TO SEE MORE OF THIS BUT I REALLY BELIEVE THAT WAGES ARE GOING TO CONTINUE TO IMPROVE THROUGH 2019 EVEN IF WE SEE OTHER ECONOMIC INDICATORS SLOW DOWN.>>THEREIN LIES THE WORRY, BECAUSE YES YOU’VE GOT A NUMBER THAT IS PROTECTED, AS FAR AS MARKETS ARE CONCERNED YOU ARE SEEING THIS MARKET COME BACK AFTER DOWN SHARPLY BUT WHAT JOHNNY IS TALKING ABOUT HAS TO HIT PROFIT MARGINS SLOWDOWN MARKET UP 7 POINTS DOW JONES INDUSTRIAL AVERAGE AFTER DOWN 100 POINTS EARLIER. DAGEN: IN ADDITION TO RISING INPUT COSTS FROM NUMBER OF AREAS INCLUDING TARIFFS, THAT SAID WE STILL HAVE MANUFACTURING PAYROLLS UP BY 27,000 ABOVE EXPECTATIONS, OF JUST 20,000. THAT WAS ONE SPOT TO NOTE ALSO IF YOU LOOK AT CONSTRUCTION JOBS, OF ALL THE TALK WE HEARD, LITERALLY FOR YEARS, ABOUT THERE NOT BEING ENOUGH HOUSING SUPPLY CONSTRUCTION JOBS ONLY UP 5,000, OBVIOUSLY WEATHER FACTORS THAT GO INTO CONSTRUCTION BUT YOU HAVE SEEN DISCUSS A OF HIGHER INTEREST RATES BECAUSE OF HIGHER MORTGAGE RATES, THROUGHOUT THE YEAR, IF WEAKENING IN HOUSING MARKET HOME PRICES, NOT HOME PRICE GAINS ARE SLOWING EXISTING HOME SALES DECLINED, FOR 8 STRAIGHT MONTHS, SO THAT IS WHERE YOU WANT TO LOOK AT INDIVIDUAL SECTORS FOR SIGNS OF WEAKNESS I THINK THAT 5,000

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