The job report overall was down, as the headline was a rise of 315,000 – 15,000 above expectations – while the two previous months were revised down by more than 100,000.
The household survey saw a job gain of 442,000, plus a large jump in the size of the labor force (786,000) pushed the unemployment rate to 3.7%.
The rise in unemployment was for very good reasons, as the participation rate rose to 62.7% – the most since March 2020.
The best news is participation from the 25-54 crowd rose to 82.8, which recaptures all but .2% of the Covid drop.
All this news is good and the icing on the cake will be that it will allow the Fed to pause their tightening policy in the next couple of months.
Today we will review where the greatest value can be found in the market and look ahead to the narrative shifting back to a Fed pivot ….
Greater Participation and Lower Earnings
Notice the chart below showing the drop in hourly earnings, which has now leveled off. So, with the participation rate rising, we could see hourly earnings continue to fall.
US Average Hourly Earnings
This report builds on the drop in the inflation rate, and I believe contributes to a pause in the tightening cycle – possibly as soon as the Oct. 21 Fed FOMC policy meeting.
Gold Miners Confirming Liftoff
The Gold Miners ETF (GDX) is right where you want it … Beaten down and battered from a strong US dollar. PLUS one-year inflation expectations that are crashing, from 550bps in June to 202bps in September, which is one of the biggest moves in decades.
Lastly, massive selling has created fear in the gold market, which is exactly what I have been waiting for.
Commodities and precious metals are responding very well to the jobs report, as they should, because this number is a step that gets us closer to the real Fed pivot.
Bring It Home
We still have September to get through, and maybe stock indexes make a new low prior to the next Fed meeting …
The global economy is in bad shape …
However, a big reason for that is the US dollar strength, which has been a wrecking ball for anyone using dollars to purchase energy.
There is no doubt the Fed is in close talks with the UK, Europe and Japan …
They must coordinate efforts to stabilize the foreign currency divergences versus the US or the global economy will sink much further.
Emerging markets, commodities and precious metals will benefit from a weaker dollar that may be ready for a correction after yesterday’s payrolls data.
Have a great weekend and as always …
Live and Trade With passion My Friend,
Griff