00:00This is the update on the payrolls report. 57k, the number for the month of June.
00:05The estimate was 113, a downward revision to the previous month as well.
00:09So a downside surprise on headline.
00:11The unemployment rate dropping back to 4.2% from 4.3%.
00:16And wages coming in in line with expectations 0.3% month over month, 3.5% year over year.
00:23Joining us now to explore some of the data and what it means for this Federal Reserve,
00:26Jeff Rosenberg of BlackRock.
00:28Jeffrey, welcome back to the program, buddy.
00:30Always good to do this with you.
00:31What's the initial response to this?
00:32And where do you think it leaves the conversation month-end around the labor market at this Federal Reserve?
00:38Yeah, my initial response is I think this is a great report for Kevin Warsh.
00:41I think it's a good report for the bond market.
00:43I think it takes any pressure that there might have been within the committee around the peak of inflation
00:52and policy rates being too accommodative as a result.
00:55Kind of pushes that story back.
00:57It doesn't eliminate it, but it gives him room.
00:59And I think Stephanie Roth had the same point.
01:01It gives him room for the decline in inflation that we see in the data that's coming through,
01:07particularly getting a boost from the oil price declines as well,
01:12but also finally seeing the declines in terms of the tariff pass-through and that story showing up in the
01:19data
01:20and validating, I think, Warsh's view that we can be patient here.
01:24So this helps him to be patient.
01:25And for the bond market, Jonathan, you've already had this turn in momentum from fear of the Fed hikes
01:32to the inflation is coming down, Warsh is going to be more friendly,
01:36the momentum is towards lower rates, and I think this helps to continue that momentum.
01:40Do you think that the market is overplaying the idea that the Fed is going to hike it all
01:44and that, frankly, they can just remain on hold long enough for disinflation to come in enough?
01:50I think we're seeing the market push back on the pricing of the hikes.
01:55I think that the challenge is the market is sort of dealing with the old reaction function.
02:01I felt like there was an overreaction to the dots in the FOMC statement.
02:06I think Warsh was very clear.
02:08He told us again or hinted again at Cintra, the dots are going to go away.
02:12He used the language of, yeah, people wrote down their dots with a big pencil eraser on them,
02:19but the market is still, you know, using the old reaction function.
02:22I think it overreacted to the dots and the surprise from there,
02:26and I think we still have to price some of that out.
02:28And I think today's data and, more importantly, the inflation data to come
02:32is going to help to push that expectation even further out of the market.
02:37Jeff, what's more important to you, the task forces or the earnings that we get
02:41from some of the hyperscalers in terms of the announcements of their CapEx?
02:45Wow, that's a super interesting question.
02:48I think they operate on very different timelines.
02:50I think the hyperscaler earnings, the AI story, what you just led with in terms of yesterday's news,
02:57what we're seeing this morning in Asia, that's today.
03:01That is going to drive this market today.
03:04And those are the issues.
03:06I've talked about it before.
03:07You know, the micro is the macro, AI in the macro data, AI in the markets.
03:13It is the dominant feature.
03:15I think what the task forces are about and what Warsh is about are some longer-term structural
03:22changes to the institution.
03:23I think it's highly consequential.
03:26I think it's very important.
03:27I think the really key objective here of removing the Fed as the prism through which we in the market
03:36view data and taking them out of that position that they've been in since the GFC, I think that's a
03:42much
03:43longer-term objective.
03:44It'll take a lot longer for that to occur.
03:46And that operates in the medium to long-term, whereas the AI data, the earnings, the headlines
03:52are going to be driving the markets, you know, right now.
03:55Wow.
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