저자: Kevin · 외국인
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ADP 민간 고용 27.8만명으로 예상을 크게 상회했지만 임금 상승률은 둔화되어 인플레 완화 신호로 해석. 5년 BEI가 2.09%로 저점, 시장은 6월 동결과 연내 금리인하를 반영 중. 다만 Macy's는 가이던스 하향으로 리테일 둔화 우려. 전반적으로 경기침체 우려가 완화됐다고 주장.
다듬은 글
very strong ADP report now this is not the official jobs report but it is the private jobs report that we like to use as sort of a tool for saying hey is the uh is the public reports being honest with us or are we getting tricked uh and uh well let's just say 278 000 pretty dang hat uh this is very similar to almost the joltz data that we saw yesterday suggesting hey oh you know if you think the economy is slowing down hold your horses there might be parts of the economy that seem to be slowing down as we know we know that the freight economy is in a recession we know that Macy's just reported a Slowdown in uh in guidance for the rest of the year they actually had a pretty good earnings report overall but they did report a Slowdown and that slowdown LED them to drop another 10 percent uh now to some extent that might not be a terrible surprise a lot of people were fleeing to Macy's during this during the pandemic and the this idea that retail stores could keep this boom Going uh maybe maybe not something that that was realistic although Nordstrom's still doing pretty well so some differences but this hiring some folks say is seasonal for travel for the summer uh some folks say look this is just a company by company difference and you don't have to be terribly worried about what's going on with uh with the overall economy and if you just look at the jobs data kind of reiterates that now what we'll do is I will go through the actual ADP report but what I'd also like to do is reiterate some of the things that are going on with uh with the Federal Reserve and expectations for the FED because we just hit the lowest level of the five-year break-even expectations at the same time as getting this ADP jobs report which is odd we would think that wait a minute how how are we continuing to see inflation expectations plummet the way they are and and no matter which way you slice it the reality is inflation expectations are plummeting inflation expectations uh now down on the five-year break even at uh if 2.09 this is the first time I've been able to say 2.0 uh for uh well basically uh 14 months and uh my belief is that once that five-year Break Even Falls to about 1.6 that's what we're going to end up getting interest rate Cuts now again I want to go through this ADP jobs report but first I think it's going to be quite interesting to look at this five-year break even and then we'll go through the details of the ADP report so I'll put the five year break even up on screen here it'll just take me a second let's say share screen I just need to click window and it's going to be this one and there it is okay look at this five year break here so this is the actual five-year chart of it this is the one year chart of it what's remarkable at that one year chart is look at that 2.094 two as of just last seconds here as I took a peek at this this is incredibly low uh the lowest level finally that we've ever had uh here this chart showing you the last 12 months and then of course if we look at the last uh five years you can see uh we are still higher than where we were after the pandemic here's your pandemic lobe uh sort of on the left side here and before the pandemic the last time we cut before the pandemic would have been over here in December 2018 and you can see that level was sitting right around 1.6 when we last cut last cut was roughly here November December period here in 2018 and uh or at least the FED had some form of a pivot right uh and so we're still ways to go from there but clearly on the right Trend which is uh which is fantastic so now let's uh let's take a peek at the ADP jobs report I do want to always start with inflation data when it comes out though and uh this is this is great a five-year Break Even POV uh and it's some of the lines that uh you know once we get to that one sixth level fed could be in a pretty decent position to actually cotton uh but we're not there yet so uh what do we have here so this is the ADP employment report annual pay was up 6.5 this is probably the most important segment in my opinion to look at is that annual pay section what we don't want to see is a runaway of this median change in annual pay uh we want to see this uh a stable right a stable or maybe potentially rising at uh at a reasonable level somewhere between three to four percent is generally what steam consistent with two percent inflation so you don't actually need two percent uh wage growth to have two percent inflation hey uh the last time uh Jerome Powell touched on it uh he recommended a three percent wage gain so obviously seeing uh wages rise 6.5 is still relatively strong you see that for job stayers the increase was 6.5 percent that's down from 6.7 in May and for job Changers that gain was 12.1 down a full percentage point from April that's actually fantastic so you're seeing a good slow down here you're still seeing wage gains which is good for for employees every time I mention this people they go Kevin what you don't want people to make more money no that's not what I'm saying what I'm saying is we don't want this to run at uh at uh unsustainable level because then it'll ultimately be worse for everyone in the economy uh so uh this is good this is consistent with this decline in inflation potentially consistent with a pause as well now I'd like to see where these jobs are coming from because this is 100 000 jobs over expectations uh and we also had a slight Revision in the previous report but only by about five thousand jobs so it doesn't matter too terribly much what matters here is that we beat by about a hundred thousand and so what do we have well we have manufacturing that came in at negative 48.
some folks suggest yeah well we are in a manufacturing recession if you look at the Chicago manufacturing uh some of the leading indicators at least in the Chicago region it's this is very consistent with with a weakening in manufacturing it could just entirely be related to people buying less stuff natural resources mining construction doing very well uh actually quite well here you can see mining up ninety four thousand uh construction of sixty four thousand then we get to service providing and look at that Leisure and Hospitality boom 200 000 job gains in Leisure and Hospitality education seeing a decline of twenty nine thousand we are going into the summer uh though that is bundled up with health services financial activities probably your your investment bankers mergers and Acquisitions and otherwise a lot of actually what happens here in New York a negative 35 000 i t negative 15 000 and we're still at least based on some anecdotal interviews that I'm doing with individuals in the uh in the I.T space we're not seeing companies that have started with uh layoffs actually returned to hiring again and I think that inflection point will be quite important I was hoping that maybe artificial intelligence would lead to an initial inflection where we would start seeing a return to maybe some hiring again I know that sounds wild some people like Kevin why why with AI would companies be hiring more and I'll explain that in a moment but we have not started to see any of that inflection at least based on uh what we're seeing in not only these reports given that information is still here negative at fifteen thousand but also just anecdotally and talking to individuals working for various different tech companies and why this is important or why I believe there could be more hiring because of AI is strictly because of the belief that companies don't want to be left behind so I have this belief that companies will recognize this AI boom and make more Investments to make sure they don't fall behind and that they can preserve their moat for as long as possible I do believe that artificial intelligence Narrows down the mode of companies substantially but by hiring people potentially within the AI space maybe they could catch up now there is another belief that people would simply just be repositioned with inexisting companies into AI teams that would not lead to net new hiring in fact that would be consistent with uh potentially continued job loss uh in information and technology and and so at least tentatively from this ADP report that's what we're seeing now remember this is the private report we do have the public report that comes out tomorrow tomorrow morning at a 5 Authority in the morning we will see the uh uh the official jobs report come out now the official jobs report just to give you a forecast before we continue going with this report here the official jobs report tomorrow is looking at a 195 000 jobs report with 164 for private uh payrolls unemployment rate taking actually up to 3.5 percent from 3.4 percent if we get anything like the report that we just got in the ADP report wow we are uh yeah we're not going to be able to say we're really trending towards a recession anytime soon uh the employment can really keep us out of recession so to some extent this is a good thing for avoiding recession especially if uh wages are low uh well I shouldn't say wages are low wages are growing at a slower rate that's that's the best way to phrase that now we did just get uh productivity reads as well we got non-farm productivity we were expecting negative uh 2.4 percent for the first quarter we actually got negative 2.1 percent so a bit more productive than we were expecting and here's another really good indicator you ready for this one unit labor costs for the first quarter we're expected to be six percent and annualized year-over-year rate and instead we got 4.2 percent very solid report that's a solid report showing more strength again with less inflation more strength less inflation means no stagflation no recession that's good for now obviously things could change again we saw that with with the Macy's earnings uh we we could get a complete flip-flop uh and I'll go through some of the numbers for Macy's uh in just a moment as well but looking at initial jobless claims we get initial jobless claims of 232 000.
those right along expectations of about 235 000 with continuing claims actually coming in slow slightly lower than expected and the revision is relatively nominal okay so continuing with the ADP report let's use the correct button here oh by the way today is June 1st that means this evening we do have that uh price increase uh set to go into effect uh for the programs on building your wealth as well as the uh building your income with the productivity course and building your income course which is uh how to make more money and get sh19 done faster uh the AI lectures drop soon we actually have that moved for the 6th of June some incredible quality ide and then uh with that price increase uh for the final pre-sale ending tonight so take a look at those link down below so uh okay where do we have what are the regions where we're seeing some of this pain look at this this is really incredible almost exclusively we have a Slowdown in the South with some in the mountainous region of the west but you have massive growth in the Pacific the Midwest and the Northeast now that's actually very interesting South Atlantic East South Central West South Central complete losses over here I wonder if this is a bit of a reversal of what you saw during the the pandemic where during the pandemic you saw people essentially move from uh in New England or or maybe California over to Texas and Florida and now you're seeing somewhat of a reversal this is actually going to have large real estate implications as well so I'd like to pay attention to this from a real estate point of view that wait a minute isn't this interesting that we are seeing this almost job creation in areas that weren't doing so well in the pandemic boom and now in a post-pandemic area the areas that were some of the biggest recipients of the pandemic boom are actually seeing some of the biggest weakness in job growth that's something to pay attention to something else to pay attention to look at this the hiring is almost exclu actually it has exclusively been unlike small Enterprises and medium Enterprises with if you take out the larger of the medium medium sized Enterprises you can see most of the hiring is actually a business is between 1 and 249 employees whereas 250 plus employees barely any hiring and your largest employers losing or shedding employees fascinating all right pay gains we've reviewed uh here are some pay gains by industry and we've seen this slow down here now consistently continue which again it's a good thing this is a good thing we want people to make more money yes but we do not want this to accelerate at uh some unsustainable level so again we're comparing to the ADP report uh or the prior release of the ADP report uh this is this is fantastic so um very good again a stronger ADP report with less inflationary concerns leading likely to this five-year Break Even slowing down to the lowest level that we've seen in uh quite frankly the last year uh you would have to actually even more than that you would to get this low of a five-year Break Even you have to go to January 2021 we are actually at the lowest level of inflation expectations for the market in two almost two and a half years that's remarkable 20 at about four months to two years 28 months or so that's remarkable now when you look at Macy's uh it is worth I think looking at Macy's in context of the broader economy though you know somebody asked me it was a course member asked me in the course member live stream the other day oh what about Macy's uh and I said yeah you know well I I'm not a big fan of retail but uh I'll say um uh anecdotally I've been to a few Macy's with the family and and they always seem to live with slow here recently it was due total anecdotal comment but it's interesting to see that line up with uh what some of the numbers were coming out of Macy's Macy's gross margin actually improved a little bit to 40 on gross margin which is incredible and their earnings were actually better than expected but it wasn't this quarter that people cared about it was the rest of uh which which is really you know now in the past it's the last quarter that they're reporting now uh the current quarter and the forecast for the rest of the year were the red flag in fact Macy specifically cited macro economic impacts to the consumer as well as markdowns to address excess inventory spring inventory Macy's fell as much as 12 in the pre-market they are forecast for the year on adjusted EPS was at a midpoint of about 2 95 they were expecting a midpoint of closer to about 380.
that's almost a complete one dollar reduction in eps in in their forecast for the year and citing additional incremental clearance markdowns as well to get through some of the inventory they have this is not an inflationary report once again and again I I do believe that most of us are of the mindset now that okay we finally agree yes inflation is finally going away that doesn't mean prices are going down it just means the rate of of pricing growth has substantially slowed uh and maybe they'll start going down at least in specific Industries retail might be one of those and yes uh the argument is that hey you realize like if you have negative inflation uh in certain industries such as uh whether it's disinflation or just straight up deflation and let's say retail or or like Freight that could also lead to an earnings recession this is true but I think we have to segment out which Industries might be going through that earnings recession in the future versus which have already gone through it I think the argument can be made that the chip sector for example which is why I have a heavy allocation to it uh I can believe that you can make an argument the chip sector has already seen its earnings recession which was really more of your June through January earnings recession so we'll see but uh this I find uh very very interesting this is this overall I think this is actually a very good news set of data we've got the NASDAQ presently down just 10 basis points in the pre-market Market opening in about 50 minutes you've got the s p data uh actually up 0.07 uh and the Dow down 15 basis points oil is basically flat on the day and you've got the 10-year treasury rotating down again to 3.62 so overall and broadly less inflationary fears better uh results on the overall economy likely consistent with the belief that the Federal Reserve will indeed pause yes they're going to you know make us be on our toes and make this argument that well well well you know even if we pause now we might end up hiking again in July I think it's bullcrap in fact after the Federal Reserve leaked this uh well leak to the Wall Street Journal I mean some of them have been talking about it but once you hear the leak in the Wall Street Journal usually it's like all right that's that's what you need to start pricing in as soon as that Nick T piece came out yesterday guess what happened inflate or the expectations for a Fed rate hike flipped again remember how we were at basically a two-thirds expectation that we were going to get another rate hike as soon as that article came out the expectations flipped we're back to two-thirds likelihood based on market pricing that we're going to pause this is relatively consistent with the argument that Jerome Powell has made and it's consistent with the belief that we're gonna get our Pawns in June which is great that's in two weeks uh and uh short of like some kind of really scary inflation report this ADP report is not scary it is consistent with a pause which is fantastic news now I would like to share this screen with you right here no it is not a reiteration that prices for the courses I'm building your wealth and making more money and the AI segment are going up tonight so join them tonight and if you need a bundle up email us at staff meet kevin.com this instead is a a graph that shows that's known as the world interest rate monitor now I think it's a very interesting graph because it's also slightly complicated to understand uh and I I'm going to provide the simplest explanation for it so a simple explanation of this tool is basically saying that right here is the highest we expect interest rates to go now the market does not have to be perfect with this this terminal rate right here is actually slightly above the uh the level of 5.25 our current interest rates are actually at this level where I've created this this box that's where interest rates presently are and you can see there's a little bit of the market that thinks we still have a chance of a July hike just a little bit that little bit of excess Orange right there is the pricing in of a July hike however you could see right after July we go straight down we expect our first cut to start getting priced into the market right here this is December you can see the market well I mean I guess you can't see what the market previously priced in because I don't have that chart up but the market previously priced in rate Cuts as soon as September that is now moved over where you see these rate Cuts here we're coming in December we the market is expecting us to be in that 4.95 range which would be consistent with about one rate cut and coming January the market is pricing in about a 4.75 midpoint here which would be consistent with about two rate Cuts uh which is fantastic that that would be great and and Market seems to be anticipating this uh now the market does still believe that there's this chance of a recession in the second half I personally believe with some of this this hot jobs data we're getting the likelihood of a recession is uh probably going to be a lot closer to a uh a q1 of 2024 argument we're going to start seeing economists Kick the Can down the road on this idea of a recession and if they kick the can down the road then what ultimately is likely to happen is we could avoid a recession entirely so the further we go the better so I'm very excited about that uh now I don't want to be overly optimistic I want to be realistic with data however I I do believe that we're being realistic uh based on just the data that we we see coming in right now uh I think it's safe to say that we are uh making a very clear argument for uh well ultimately strong economy continuing for the rest of the year again it's not going to be every segment just like what we talked about with Macy's it's not going to be every segment but overall I'm optimistic and I think we have a reason to believe that that optimism is somewhat Justified
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