Welcome back today! We have a Bureau of Labor Statistics a labor report coming out and the expectations are as follows: We're expecting 200 000 jobs. The prior release was 261 000 jobs on the non-farm payrolls report private payrolls 185 expected. Last was 233 Unemployment rate expected to stay stable at 3 7. And of course, the very important number the month over month average hourly earnings change.

The survey is 0.3 See what happens? This is one of the remaining two reports before the FED meeting and it comes out within the next five seconds and then we'll go on over to the docs. This will be big for the FED meeting. It'll be one of the pieces. Here it is.

Oh wow, that's not good actually. Uh, we got 263 000 jobs. The survey was two hundred thousand unemployment rates Oh God Yeah, okay, not good. Average hourly earnings Terrible coming in at 0.6 not good I'd expect red after this now.

non-farm payrolls again coming in at 263 versus the 200 000 expected. So still strong labor reports so not a good labor report. Going into this and that average hourly earnings move uh up to 0.6 is higher than the 0.4 we had before, higher than the 0.3 expected. The Uh previous revision or the previous report was actually revised up in average hourly earnings to from point four to point five.

The previous report did have a slight down Revision in actually I know I'm sorry reading that wrong. It had an upward Vision in the amount of jobs and the prior report was at 261. We're at 284 now. so the prior report was revised up in average hourly earnings and the amount of earnings.

Uh, and the actual release here Uh does indicate still strong hiring again coming in at 263 000 versus the 200 000 expectation. Uh, so hot on uh, pretty much all accounts here. You're hot on the revision, You're hot on the inflationary number, You're hot on the Uh. the the total actual number here of uh, uh of of jobs again 263 versus 200.

Uh. expected. This is this is a big deal because uh, you know the Federal Reserve in their last meeting in November Uh, had Uh had had none of these last four reports. That's the Uh October, CPI, the November CPI, the Uh October jobs, and the November jobs numbers.

These are now the November jobs numbers and we have one report left to go. The CPI report coming out on the 13th of December right before the 15th Fomc meeting. This is strong. You know this.

Uh, and look at this again. Still sitting at Uh Leisure and Hospitality. It's still that excess spending. uh From you know, not only the holdup of people not having spent during the pandemic, but uh, or travel during the pandemic, but you're still seeing that explosion here in Leisure and Hospitality.

Now it is possible that's the last shoe to drop, but you know Healthcare and government spending here as well. Employment declined in retail trade, in transportation and warehousing. but yeah, this is. it's still.

uh, it's still rough. Let's see. household survey measures: Labor for Status: Okay, let's see what we have here: Household survey data: Uh, all right. Unemployment rate change Unchanged at 3.7 percent in November and has been in a narrow range of 3.5 to 3.7 percent since March Number of employed folks Essentially unchanged Unemployed folks essentially unchanged at 6 million.

Among the major worker groups, you've got the various different Uh unemployment rates here: White: uh, adult, uh unemployment rate at 3.2 percent, the adult man 3.4 percent Woman: 3.3 percent Blacks: Five, Seven: Hispanics Uh, 3.9 Asians 2.7 among the employed number of permanent job losers: Rose by 127 000 number of long-term unemployed relatively unchanged Labor force participation Rate: uh at 62.1 percent, little changed from November Okay, uh yeah, this definitely keeps some pressure on the FED number of person employed part-time 3.7 million not in the labor force was little changed at 5.6 Okay, so little changes in some of the other Uh data. So here's that 263 bump uh in jobs right here in line with average growth over the last three months. we're trying to see that come down right? Average growth is sitting at 282 trying to see that come down. Uh, you know reasonably here, it's not I wonder how much of this is temporary though? You know that? That would be very interesting to to see how much of this is temporary.

Uh for seasonal employment? Uh, and how much of it is adjusted in November Our notable job gains occurred in Leisure to hospitality Leisure Hospitality added 88 000 jobs in November including 62 000 in food services and drinking places uh employment Hospitality Leisure is below its pre-pandemic February 2020 level Uh, So so here they're making the remark that look, if a lot of these gains are coming in employment and Hospitality It's worth noting that that we still are missing about a million jobs and this is for I think think Airlines For example, you just don't have enough people at the airport to help Airlines move efficiently right now in November employment and Health Care Rose by 45 000 with gains in ambulatory Health Services Okay, here's some of the breakdowns of these in: November Other Industry: Services Rose 24 000 Uh, fine. Local Government 32 000 Social Assistance 23 000 So that's government. Construction jobs continued an uptrend I'm actually surprised that construction went up here. We were expecting to be negative in construction information: Rose Seventeen thousand I mean 19 000.

you've got actually a decent broad base of of gains here now. I mean these low levels of gains though. Isn't that terrible? Uh, it's It's not a bad thing to have. Uh, these lower levels.

What's bad? Is that that, uh, that average hourly earnings moving up point six percent. Uh, you know that's uh, that's that's high. That puts you at 7.2 percent for wage gains, 7.2 percent. for wage gains, you compare that to to inflation? It's It's almost where inflation is.

You could be in, uh, you know, approaching a a wage style spiral. So, uh, not great, not great. Employment Showed a little change over the month. Average hourly earnings Rose A point? Six percent? Yeah, not great at all.

Average hourly work week for all employees on uh, private non-farm payrolls declined to 34.4 hours. Man I Wish my average hourly work week was 34.4 hours. Uh. Average work week for all employees decreased uh to 40.2 Overtime declined to 3.1 Fine.

All right, anything else. Uh wow, No, that's uh. let's get a little bit of reaction, but this is a this is a little hot. Uh, we'll get uh, both.

Bloomberg reaction. And let's go ahead and pull a reaction here. Um, yeah. stock market definitely falling on this.

Uh, you know the CPI report ultimately is the most important. that CPI report comes out in um, 11 days. But it's not to minimize that. You know this is a problem.

It's It's still a challenge to get employees, especially in Leisure and hospitality. And and that's what's driving the bulk of these gains. Uh, we saw that in the ADP report as well. So briefly listening over here.

they are strong and they are higher and that is what the FED is going to be paying attention to. Jay Powell Said it this week. Wages hold the key to inflation and right now wages are turning inflation up, not down even in the ADP data. We saw a little bit of the needs, but it's an ease from a really high level.

Wage growth is still double digits from where it was last year, uh, before and before the pandemic. So we have to keep an eye on wages. but they're not going up for the great reasons you suggest Joe for because of growth because of productivity. they're going up because of Labor shortages that people are still sitting on the sidelines and that there is not enough labor to meet the demand in key sectors.

those consumer facing sectors that were hardest hit by the pandemic. Yeah, and that's what's so interesting. And it's not that you want to explain this away because this, this is, you know, not great. I Mean this is this is a report that uh, you know, as as Bloomberg here says, upsets the W Apple cart right? and it.

And it shows that there's still there's still so much hiring going on and so much strength in hiring that that maybe things can't be that bad. But the question is, how long does that last? You know going into November uh, you know and catching up with with that hiring in restaurants and Retail and and travel these are these are a big deal. Uh I Want to see? Let's see here. Uh.

Monthly revisions result from additional reports received from businesses And government agencies. Since the last published reports and the recalculation of seasonal factors in accordance with the usual practice, the unemployment situation released for December 2022 is scheduled for Jan six. We'll incorporate annual revisions and seasonal data. Uh, you know it'd be interesting to see if we can grab the unadjusted report for this, because there you know, the adjustment for seasonal work would be very interesting.

Uh, part-time data and such not seasonally adjusted. Here we go. Curious. So total? Hmm.

All right. Well, I'll keep poking around on this. Uh, let me pull this quickly as well. So Bloomberg Obviously talking about let's see here: two 10 year yields rise more than 10 basis points.

Average hourly earnings came in much higher than expected. Yes, they did. We have another very strong report. Yes, we do.

Uh, we have. Hmm. Okay, give me one moment here. let's go here for a moment.

Well, one thing is not a sport. I'm not seeing any of the layoffs that have been announced I see pretty good strength in the information in Tech sectors, right? Also, Nila's report on Wednesday had a big decline in manufacturing, which is also in line with some of the Ism. and I think if I'm not mistaken, Nearly you talked about the idea that maybe we're not capturing in this what's happening now, but might in future months. I I Just would point out this is a very bad report for the Federal Reserve It's going to report the Federal Reserve to do more if you look at what's happened in the FED funds Futures markets.

Uh, the peak rate has now surged I think the last I looked at was 12 14 basis points just this morning back up towards five percent. It shows that people aren't listening to the to Powell they're hearing what they want to hear. But let me just ask. Neila By the way, that has been the story of the last.

Hear what they They hear what they want to hear See No Evil Hear No Evil Told you it was good and people like bye bye bye not to make fun of but that was not a bye bye bye speech. Okay, first of all, yeah I Want to ask Neila your report. We give it a lot of respect. We don't quite know how to deal with it because you're only three months live with the new methodology.

Uh, but this report today is not picking up a lot of the weakness we've heard from Challenger and Job Cuts Not picking up the layoffs we've heard about in Tech and not picking up some of the weakness that you have in your report. Do you want to respond to that right? We're seeing interest rate sensitive sectors like manufacturing really feel the brunt of the FED policy. Uh, it's not playing out in service sector yet, but it is playing out in Goods producing sectors and we continue to see that weakness. And I expect that will continue.

Look the problem with Fed Policy now when it comes to the housing market, which is where it's been most transparent, Is it not only hits demand, it's hitting Supply You can see that in the home builders which have basically came out and said that there is a housing recession because of higher financing costs. So you translate that through to not just housing, but all Goods producing sectors that are dealing with higher input prices as well as higher wage uh, prices, higher labor costs. And you get some weakness there that is worth paying attention to. but it's being drowned out by the strength in the service sector is what's happening in in fixed income markets right now.

Um, that is a uh, what do you want to call an El Capitan uh, uh, face right now. if you look at the tenure yeah, which is really reversing itself sharply I was going to ask Neil of this, but I'll ask you Rick is there any world or what does the world look like where input costs are under control? Uh, a lot of things are under control. Let's pull off this for a moment. Okay, so Bonds Moving on.

This a lot. A big move. 10 basis points. We're still down a lot.

Financial Conditions have have definitely loosened. We're still sitting at 3.65 Three percent. Uh, that's substantial. That's where we were in in August September Substantially lower than where we have been.

So even though obviously the direction of of the market movement here is clear I Think the market also realizes there could be some form of a lagging effect in this jobs report. especially given this 10 basis point jump in the 10-year treasury is not actually that much and it's already kind of wearing away. Uh, now it's under 10. Then it is very interesting to me that uh, when we look for negatives, we see negative jobs here in areas of wholesale trade, retail trade, transportation and warehousing, temporary help services.

This is a lot of where we're seeing that that initial kind of I feel like layoff work uh, temporary Help Services the information sector, but you still had more seasonally adjusted net hiring uh in Tech over here? Uh, yeah. but but seasonally adjusted? Where you are seeing the loss is that manufacturing and trade? uh, and temporary help if I can get non-adjusted be interesting just because I Feel like this post-pandemic era making these adjustments is not exactly the easiest thing to do. And so that's why I'm trying to find not seasonally adjusted by category. What we have is here by sex by veteran status.

Uh, there we go by occupation. Okay, got it. Uh, not seasonally adjusted. These are the unemployment rates employed that doesn't give us a change.

How interesting? I'd like to get a change, but um anyway. uh yeah. look strong report. No matter how you slice it, it's definitely something that's going to be.

uh, something that adds that upward pressure to the Federal Reserve Oh, I Got it? Okay, here we go. So no again, you know this is the report I'm looking at here I Was really hoping there would be a section where it would give us a change in uh in November but it's just kind of giving us an aggregate total and it doesn't compare to the prior month. So I'll play with this a little bit. Maybe I'll try to get the last PLS report.

But really, what I'm looking for is is: here's the unadjusted change. and for example: in in information: I mean we could do it really quick and information we're sitting at. What do we have here? We're at 57 000 in thousands. Okay, so a number of unemployed? Well, that's unemployed anyway.

But I mean we could look at that as as relative to the other report. Uh, all right. BLS Report: October We'll do that really quick. I'll pull that up Well, while we pull that up, let's take a listen in over here.

Sarah Betsy Tyler Uh, raise your hand. Who would? Who wants to? uh, wants to weigh in on all this? because uh, we've said a lot. Shelter prices would start to show a rollover. What we're learning is that wages are sticky.

But the key risk Professor 2023 is really that recession risk. And how do you build recession resilient portfolios just from an investing point of view you look for Quality You look for companies that are growing their dividends. uh, companies in the infrastructure space that are backed up by utilities and waste management. Outside of Publix, you can look at private credit that tends to be more resilient into downturn and fixed income.

I Know it looks tough today, but we still do think a lot of the pain is priced in. you can get Equity like returns out of fixed income, high quality investment grade portfolios. It just is a dismal science Betsy That it's like the economy is not cooperating going into a recession. What do we got to do? I Mean it's just a dismal way to to do things.

Yeah, I Think that's a good one to to hit it on? there is it's It's definitely not the report you're looking for. especially. It looks like the majority of the jobs were concentrated in Services You're sitting at 1000 or 184 000 jobs last month, and the Employment Jobs report provides another dose of reality for the markets which have gotten ahead of themselves on another bed pivot narrative. Yeah, well, we'll see.

We'll see how lagging the Jobs report is because uh, after that, uh, after that shift in the yield curves and Powell uh a few days ago I Think the uh, the the Looking Forward is a little more important than Looking Backward But we'll see how uh Powell ends up explaining this away in uh, 13 days. I'm sorry in 11 days. or maybe he doesn't But in the meantime, markets will be a little tentative on this. uh and I expect some quietness going into CPI uh the CPI read anyway like I personally wouldn't be going for big call options between now and uh and the CPM and uh, you know, really, it's interesting that that rally there in bonds for a moment is uh uh is.

Let's see here: hold on. Yields uh were as high as uh uh, 0.13 To the upside, for a moment, you've already lost half of that. Uh, about your 0.08 Now now you're sitting at a 10 year of 3.6 when it comes to stocks, not seeing as much of a recovery on Tech Tech You're seeing a negative. Yeah, we went down about two and a half percent.

Now we're sitting at about uh 2.01 s p sitting at about negative 1.46 these stocks sitting a little lower. But those those yields uh, are are evaporating those yield gains. which could be a way of the market. at least the bond market indicating yeah, look at I mean they're just evaporating.

Uh, it could be a way of the bond market saying no, You know what, We get it. this is backward looking, seasonally adjusted or not. Uh, we realize there's there's still a a shortage of workers I Think the biggest bullish piece out of this entire report if if you were looking to be bullish because it's a bearish report. okay, I'm not trying to make light of that, but if you're looking for something bullish irrational, it's right here.

because this report tells you that. look, yeah, we're still gaining in jobs, but we're also well underemployed in Leisure And Hospitality by the tune of a million jobs, that just to get to where we were in 2019 could literally be another 11. What? 12 months, 12 months, 12 more months of of high job gains in Leisure And hospitality to get back to a level where we were three years ago? That's insane. I Mean, think about that for a moment.

Usually we have more employment in Leisure and Hospitality over time just to get to break even from three years ago, we probably have another year worth of hyped job gains in this sector. But you know this is that. that potential bullishness is offset by this issue of well, wait a minute though. Why are we seeing manufacturing come in at plus 12 000 or plus fourteen thousand when the ADP report was negative? Yeah, Well, the ADP report is like, always wrong.

Uh, you know, sometimes it gives you a trend, but here you go. it's wrong again. Uh, but uh, it's another measure. It's another survey.

and at least if it starts showing cracks. maybe those cracks will start showing up here. but not yet. So uh, that's a little bit disappointing as well as the uh, the information.

and Technology aside. so I'm gonna pay close attention personally to the change in yields which honestly is evaporating again. Now it's uh, now it's just sitting at 0.063 What I would do if I were you is I would watch this number right here to the end of the day. Uh, because again, this this jobs report was rough.

This was a very strong jobs report coming in at 263 versus an estimate of 200 000 and an upward Revision in the past, and an average boost of hourly earnings to 0.6 versus the expectation of 0.3 or the last of 0.4 which got revised up to 0.5 Not good, not good. So I'm going to be watching that yield curve and look at again plummeting and so I find it very, very interesting. Let's actually click on this that despite this strong report here, we're seeing yields on the day. We should see a spike in a plummet.

Let's see here: Uh I Don't think it gives us the day chart this early. No, it doesn't It doesn't get CNBC doesn't give us the day chart this early. but uh, you? you would expect to see some form of a large Spike uh, you know, somewhere around 15 basis points. We've almost gotten rid of all of that.

and I think the Bond Market is looking through this. uh, the the the stock market is not yet though. Uh okay. let's see here if there is any change yet that we could see would be interesting.

Uh, in the terminal rate expectations and the expectations for a rate hike next? uh uh. in two weeks from now, we shouldn't really see any big change. Uh yeah okay we I mean nominal change here. odds of a 50 basis point hike.

Now sitting at 71 versus 80. Yesterday we were at 19 for a 75 BP hike? That's now sitting at about 29 percent and terminal rate. Do we have an update on the terminal rate? Terminal rate? Uh yeah. Fed terminal rate popped a little bit.

Yesterday we were down to just about five. Now we're back to about 5.12 in expectations and let's see if we can get the five-year break even an update five year Break Even Uh, rotating down a little bit under 2.5 sitting at 2.49 So uh yeah. look and then you do have two surveys here, right? You have the household survey and you have the uh regular establishment survey. Uh, the household surveys has been coming in week.

Uh Time After Time it's it's not your your headline data that that would pay attention to a lot but um it's gonna be interesting. Let me see if I can compare it to last quickly. No. all right anyway yeah, not the best.

I would personally say watch the Bond market look at that almost I mean this: I'm gonna I'm having entertainment watching this. Almost all of the gains on the 10-year are gone after this report. almost all of it gone. Look at that.

We're up three basis points now on the 10-year and then we're flat with yesterday, which these plummeted yesterday. And sure enough, look, look what's happening. The Bond market is explaining this away and the stock market's coming back. It's really interesting.

This is uh uh. you know I think people are looking through this report. they realize this one bullish aspect. and there really is only one bullish aspect.

Uh and uh, that's this box right there and that's it. So we'll pay attention to that anyway. All right folks, Thanks so much for being here. We'll see in the next one.

Appreciate y'all Bye.