January 31, 2023

Hardwood Paroxysm

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From the Bible according to the Federal Reserve, here’s the multiplication of double jobs

The US labor market starts in July: Nonfarm payrolls data beat all expectations by +528,000, a figure that lifted the unemployment rate to 3.5%. Wall Street is on pause from the rally, dejected by the implied result of a similar confirmation from Main Street: The bullish price cycle could continue, so much so that once the data is released, Futures re-pricing the premise of another 75 basis points for the board’s September increase.

But those who believed that stock indices and bond yields would generate an earthquake saw his fears subside within minutes. So much so that only the Nasdaq closed sharply in a negative state, Not being able to take advantage of the usual short stress on Big Tech for one day, while the Dow Jones closed the last session in the red and the Standard & Poor’s 500 index was capped in the red to 0.16%. And what made her change? mood To the market, despite those 528,000 units that rained from the sky like a cold shower on the macro indicators for the past week, the same ones that seemed to confirm the slowdown due to the only policy support hawk by Jerome Powell?

nature evangelical From those statements, too mystical to persuade pragmatists to the point of iconoclasm such as investors. These are the two graphs

Comparison of the results of the two internal surveys of the Bureau of Labor Statistics
Source: BLS / Zerohedge

show what Posilis Background: The numbers don’t add up. exactly the contrary, It is the entire American hiring trend and narrative that shows something has come to a halt at the end of March. In fact, it is essential to know that the Bureau of Labor Statistics (BLS), the government body that tracks business dynamics and processes non-farm payroll data, It bases its initial and true estimates on two internal surveys, Institution and Household. The difference is already in the name: the first refers to businesses in the non-agricultural private sector (factories and also offices and retail stores), while the second is part of the current population survey and, in fact, addresses ordinary citizens.

as you see, Since last March, the red line of the household survey on the occupancy rate has entered the flat brain chart mode, while the enterprise has continued to grow, creating an ever-widening gap that reached 1.5 million in the maps published yesterday. And the second graph makes the nature of this fundamental contradiction even clearer: In the face of part-time and full-time job losses, America has seen a real explosion of many employers. That is, citizens who do at least two jobs for a living.

By itself, the fact of double reading. On the one hand, if, on the other hand, it will emphasize the euphoric nature of the American labor market, capable of ensuring an almost unlimited supply of opportunities, on the other hand, it crystallizes not only the increasing weight of inflation on purchasing power, but also Fundamental importance of wages that arose in pandemic support plans and then abruptly withdrew, leaving many incomes (and expenses) at the mercy of a radical return to reality. Hence the contemporary explosion of revolving credit. translated, Extensive use of credit cards to make ends meet.

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Here comes the third scheme

Trend in the number of employees with multiple, full-time contracts

Trend in the number of employees with multiple, full-time contracts
Source: BLS / Zerohedge

It seems to give us the first reason for the new optimism on Wall Street, after the initial crush after the release of the non-farm payrolls: The number of citizens who can count on multiple jobs and who are both primary and secondary full-time has reached an absolute record. Hardly credible. And even less obvious as a symptom of the labor market healthy. In short, as a guess, the BLS from March onwards – Coincidentally, ever since the Fed’s narrative about the fleeting inflation has begun to lose momentum – Just focus onis being processed data from the survey of establishments, Indeed by defining a standard recruitment dynamic based on creative accounting. Just what the Fed itself needs most, Having to justify a rapid and almost unprecedented upward plan in the face of recessive macro expectations.

In short, what’s good for media headlines can’t fool the market that’s been in the market for a week now. from thereAnd the forced to deal with geopolitical variables that, rather than downturn, appear to be multiplying and getting worse every day. Finally, this graph

Comparison of average real estate prices and the number of available properties in Ada County, Idaho

Comparison of average real estate prices and the number of available properties in Ada County, Idaho
Source: The Wall Street Journal

confirms investors’ skepticism not so much and not only in the quality of BLS statistics, Regarding the true willingness/potential for the Fed to continue towards the Fed Funds target of 3.5% by the end of the year. During the pandemic, the canary in the real estate boom mine was the town of Boise in Idaho, a remote urban and human area that experienced a real demographic boom due to foreign workers. Well, last week Boise saw an average price drop of 61% of available properties and became the first in this ranking real estate discount On the map of 97 US regions.

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Furthermore it, In June and year-over-year, the number of properties on the market increased by 179% according to official data from Boise Regional Realtors.. In short, another cyclical real estate bubble in the US is coming to an end. The pin that generated this was the Fed’s policy of sprint increases. Will it really be possible to continue, at the risk that the so far controlled downturn will turn into an explosion? Looks like Wall Street isn’t betting on that.