January New
Jobs Conundrum and Outlook for the Markets
By Victor Sperandeo
with the Curmudgeon
The BLS reported on Friday that 353,000
(seasonally adjusted) jobs were added in January, which was much greater than
the 185,000 new jobs forecast by market analysts. Job gains occurred in
professional and business services, health care, retail trade, and social
assistance. Employment declined in the mining, quarrying, and oil and gas
extraction industry.
Also, the December and November new jobs numbers were revised
up from 216,000 to +333,000 and from +173,000 to +182,000, respectively. With those revisions, the U.S. economy added
an average of 255,000 jobs per month in 2023, higher than the BLS earlier
stated monthly average of 225,000.
The labor force participation rate, at 62.5%, was unchanged
in January, while the employment-population ratio at 60.2%, was little changed.
These measures showed little or no change over the year.
BLS New Job Numbers are a Disconnect from Reality:
What no one mentions is that the total number of NON-SEASONALLY
adjusted non-farm payroll jobs were actually DOWN
by -2,635 thousand from 158,261 thousand in December 2023 to 155,626
thousand in January 2024. And that December non-seasonally adjusted jobs number
was down 86 thousand from November’s 158,347 thousand. The actual job declines during this period
always occur, as the workers hired for the year-end holidays are let go by
retail employers.
DECEPTION NOTE: BLS
does not reference non-seasonally adjusted jobs in its monthly Employment
Situation reports but buries them in Table B1. Employees on nonfarm payrolls by industry
sector and selected industry detail.
-->Please
let us know if you have any idea of why they do that?
…………………………………………………………………………………………………………...
Equally
puzzling and more concerning is the huge number of business layoff
announcements for January which will continue throughout 2024.
- U.S. employers
announced 82,307 job cuts in January, up from 34,817 in December, a
136% increase, according to outplacement firm Challenger, Gray & Christmas.
- In
a You Tube video, CPA Lisa Petrova states U.S.
employers announced 83,307 job cuts in January (1,000 more than
Challenger Gray reported), the most in 10 months and a sharp increase of
136% from 34,817 job cuts a month prior. The job cuts are due to increased
input and material costs, as well as an expected decrease in consumer and
business activity.
- Companies that
announced layoffs are largely driven by the need to cut costs in an
increasingly uncertain environment. Among the companies that announced
layoffs were: PayPal – 9%, Twitch – 35%, Unity
Software – 25%, Discord – 17%, Wayfair – 13%, Brex – 20%, Riot Games –
11%, Duolingo – 10%, Blackrock – 3%, Citi Group, eBay, Google, Amazon,
Google, and many more companies.
- Google
laid off hundreds of workers in its central engineering division and
members of its hardware teams — including those working on its
voice-activated assistant. In an email to some affected employees, April 9th
will be the last day of paid work for those unable to secure a new
position within the company. The tech giant laid off thousands throughout
2023, beginning with a 6% reduction of its global workforce (about 12,000
employees) in January 2023.
- On January 30th,
UPS said it plans to lay off 12,000 employees to save $1 billion in
costs. “2023 was a unique, and quite candidly, difficult and disappointing
year,” said UPS CEO Carol Tomé during the company’s earnings call. “We
experienced declines in volume, revenue and operating profits and all
three of our business segments,” she added.
- Expect
further layoffs in 2024: 38% of business leaders
surveyed by ResumeBuilder think layoffs
are likely at their companies this year, and around half say their
companies will implement a hiring freeze. Amazon, BlackRock, Nike, Intel,
and Citigroup are among the companies which have announced plans for job
cuts this year.
- For a full list
of layoffs expected in 2024, visit Business Insider.
Victor asks Curmudgeon readers why there is this serious lack
of congruity in BLS jobs reports? Could it be
an effort to portray a much stronger jobs market, which would cause the Fed to
postpone any rate cuts BEFORE this November’s elections?
The cowbell of declining interest rates coupled with a huge
amount of “cash on the sidelines” (3-month T-bills and $6 trillion in money
market funds) could stimulate a “nuclear rally” in stocks, gold
and other risk assets which government agencies evidently don’t want to occur
at this time. Instead, Victor believes
that the “powers that be” want a Fed rate cut in June to help the Democrats win
the November elections.
It seems that U.S. government agency leaders want to prevent
a Donald Trump presidential victory, because they believe they’d be fired soon
after he takes office. Trump already accused Fed Chair Jerome Powell of being
“political” and working to help President Joe Biden get reelected. “I think he’s going to do something to
probably help the Democrats,” Trump told Fox Business Network, according to
clips from an interview with Maria Bartiromo. “It looks to me like he’s trying
to lower interest rates for the sake of maybe getting people elected, I don’t
know,” the former President added.
Market Review and Comments:
Megacap tech shares
propelled the major stock indexes higher Friday. The S&P 500 rose 1.1% to reach an
all-time high. The Dow Jones Industrial Average gained about 135 points, or
0.3%, closing at a record for the ninth time this year. The Nasdaq Composite
added 1.7%. All three indexes notched a fourth consecutive week of gains.
Shares of Meta (formerly Facebook) surged 20% after
the advertising tech behemoth reported its biggest quarterly sales increase in
two years and initiated its first-ever dividend. That added $204.5 billion to
Meta’s market value, the biggest one-day market-cap gain for any U.S. company
in history!
Amazon’s stock rose 7.9% after the e-commerce and cloud
computing giant reported revenue and profits that topped Wall Street’s
expectations.
Here are Victor’s views on the markets:
- Large cap stocks,
especially the Magnificent Seven, are headed higher with the rationale of
no recession in 2024.
- Small cap stocks
continue to lag. The Russell 2000
Index at 1,962.73 was down -0.6% on Friday and -2.5% year to date.
- Bonds continue
flat to down as they are sold on strong economic news like Friday’s BLS
job numbers.
- Gold is still in
a holding upward pattern until lower rates take place, as it is correlated
to the strong U.S. dollar.
- Commodities still
weak due to China problems with their stock market hitting new lows.
Historical Analysis of Current U.S. Political System:
Alexander Frazier Tytler was
born in 1747 (277 years ago) in Edinburgh Scotland. A judge, writer, and historian, Tytler was a
Professor at the University of Edinburgh.
He is often credited as predicting the fall of the U.S., suggesting that
America will only last 200 years according to a model known as the “Tytler
Cycle.” He understood the corrupt
world we live in better than 98% of American leaders and U.S. citizens
today.
In his lectures, Tytler expressed a critical view of
democracy in general and representative democracies such as republics in
particular. He believed that "a pure democracy is a chimera" and that
"all government is essentially of the nature of a monarchy."
Tytler wrote that a democracy is always temporary in nature;
it simply cannot exist as a permanent form of government. A democracy will
continue to exist until the time that voters discover that they can vote
themselves generous gifts from the public treasury. From that moment on, the
majority always votes for the candidates who promise the most benefits from the
public treasury, with the result that every democracy will finally collapse
due to loose fiscal policy, which is always followed
by a dictatorship.
Is that where the U.S. stands today? Do you believe (as we
do) that the U.S. seems to be sliding into a fascist dystopia at an alarming
rate?
……………………………………………………………………………………………………………
Wishing you success, good health, and good luck. Till next time…………
The Curmudgeon
ajwdct@gmail.com
Follow the Curmudgeon on Twitter @ajwdct247
Curmudgeon is a retired investment professional. He has been involved in financial markets since 1968 (yes, he cut his teeth on the 1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and received the Chartered Financial Analyst designation from AIMR (now CFA Institute) in 1996. He managed hedged equity and alternative (non-correlated) investment accounts for clients from 1992-2005.
Victor Sperandeo is a historian, economist and financial innovator who has re-invented himself and the companies he's owned (since 1971) to profit in the ever changing and arcane world of markets, economies, and government policies. Victor started his Wall Street career in 1966 and began trading for a living in 1968. As President and CEO of Alpha Financial Technologies LLC, Sperandeo oversees the firm's research and development platform, which is used to create innovative solutions for different futures markets, risk parameters and other factors.
Copyright © 2024 by the Curmudgeon and Marc Sexton. All rights reserved.
Readers are PROHIBITED from duplicating, copying, or reproducing article(s) written by The Curmudgeon and Victor Sperandeo without providing the URL of the original posted article(s).