Latest / Markets with Megan: A Quick Financial Markets Update / Investor's Guide to the October Jobs Report | Episode 067 | 11-03-23

Transcript

Investor's Guide to the October Jobs Report | Episode 067 | 11-03-23 · Markets with Megan: A Quick Financial Markets Update

• 0:04
  Speaker 0: Hello, this is Megan Horneman, the Chief Investment Officer for Verdence Capital Advisors.
• 0:08
  Speaker 0: We're coming to you today with our regular segment of Markets with Megan, and we want to talk about the jobs report that we got this morning.
• 0:14
  Speaker 0: This is the report that comes out the first Friday of every month.
• 0:17
  Speaker 0: It tends to be a market mover.
• 0:19
  Speaker 0: It's something the Fed is looking very closely at when it considers monetary policy as well.
• 0:24
  Speaker 0: So let's dig right into what we got out of the report and then discuss why both stocks and bonds are rallying on this today.
• 0:31
  Speaker 0: First of all, the jobs.
• 0:34
  Speaker 0: We had 150,000 jobs reported that were added in October.
• 0:38
  Speaker 0: It was a little bit weaker than expected, but the prior two months were revised down by about 101,000.
• 0:44
  Speaker 0: The unemployment rate ticked up to 3.9 percent, so we're now up after that low of 3.4 percent.
• 0:52
  Speaker 0: The hourly earnings one of the things the Fed looks at for wage pressures and wage inflation.
• 0:58
  Speaker 0: They actually rose 4.1 percent on a year-to-year basis, so a little bit weaker than it was in the prior month.
• 1:05
  Speaker 0: Now the markets are rallying on this.
• 1:07
  Speaker 0: Why?
• 1:07
  Speaker 0: This is a report where you saw the unemployment rate tick up and job growth slow.
• 1:12
  Speaker 0: The markets are rallying because they're figuring the Fed is going to say that they're done raising interest rates.
• 1:19
  Speaker 0: They'll continue to remain on pause in December as well, and some of that expectation of them hiking is being priced out of the market.
• 1:26
  Speaker 0: So you're seeing yields fall on that and you're seeing stocks rally.
• 1:30
  Speaker 0: Now let's get into what this means.
• 1:33
  Speaker 0: Going forward.
• 1:34
  Speaker 0: We've talked a lot about how the employment market is a lagging indicator.
• 1:38
  Speaker 0: We are starting to see this weekend.
• 1:41
  Speaker 0: We're starting to see some of those cracks emerging.
• 1:44
  Speaker 0: If you look at something like the work week, typically employers will cut the work week before they actually cut employees.
• 1:51
  Speaker 0: That was weaker as well.
• 1:53
  Speaker 0: If you look at another report that came out today, which is on the ISM services sector, the service sector has really been holding the economy up for quite some time.
• 2:02
  Speaker 0: If you look at the employment component of that, that's drifting lower and almost in what we consider contraction territory.
• 2:10
  Speaker 0: So it was an okay report.
• 2:12
  Speaker 0: Markets are rallying.
• 2:14
  Speaker 0: Sometimes bad news is good news for the markets because they're expecting that the Fed can come in and save the day.
• 2:19
  Speaker 0: But let's also remember that the Fed made it very clear on Wednesday that cuts are nowhere near.
• 2:25
  Speaker 0: They're even in discussion and most likely this is just the Fed on hold higher rates for longer.
• 2:32
  Speaker 0: So we don't want to buy into some of these major reactions on such big data days.
• 2:36
  Speaker 0: We'll continue to assess all of these economic indicators that we get.
• 2:40
  Speaker 0: We'll be back and give you some more information as we see data that's worth commenting on.
• 2:45
  Speaker 0: If you have any comments or questions, please feel free to reach out to podcast at Verdence dot com.
• 2:49
  Speaker 0: Thank you.