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00:00Does this remind you of anything? I mean, a year ago, exactly this employment report was when we
00:06had the very large downward revision, the downside surprise, the downward revisions, and the BLS
00:12commissioner lost her job, right? So now just looking quickly, and I can't, you know, do all
00:17the details of this government education, government education was a big decline. And one
00:22of the things that happens in the summer, it can be really tough with like the school calendars.
00:26And if things slip a little bit with the seasonal adjustment, you can get some kind of squirrely
00:31numbers in terms of education. That certainly is at play for the downside miss today. That was
00:37something that was very clear in last year's numbers as well. So I don't want to, you know,
00:42dismiss this. And of course, that was a shift from we'd had a strong labor market to like, whoa,
00:47maybe it's not so strong. So I do think there is signal here, there's probably a fair bit of noise
00:51and some seasonal issues that'll look through the unemployment rate did tick down, right? I
00:56think the one thing that for the Fed that's maybe of most interest is wages coming in soft.
01:01I'm getting out my HP 12 C calculator because Constance Hunter, I wouldn't do this for Claudia,
01:06but Constance Hunter jumped in. Here's what we're going to do. Can we do this in the control room?
01:11Can we rip up the script and have Claudia and Constance together? Is that did you check with
01:16their people? Yes. And they say it's okay. Constance Hunter getting wired up right now getting
01:21folks, futures up 32. They advanced NASDAQ lifts double up eight tenths of a percent here. And
01:28the yield again, the two year yield is the most elastic in it of 4.16%. Damien, ask a smart
01:34question
01:35to Dr. Sam. Well, I figure out the three months moving average on my HP 12 C. Well, Dr. Sam,
01:42I mean,
01:42average hourly earnings down 0.1% month over month. I mean, you know, you mentioned the beige book before
01:47the break, right? And you know, what did the beige book show us? The consumers are adjusting by taking
01:51on more debt, buying less, but shopping more frequently, trading down to cheaper alternatives.
01:56Is this really wearing on them now? I mean, what does this all mean for the consumer?
02:00So certainly on the consumer side, this, this is not good news. I mean, paychecks are such a key
02:05driver of consumer spending. I'm not the only driver, but this, this is a soft, a soft reading. I think
02:11the one where, you know, the implications maybe come out the strongest for this is on the Fed side.
02:15You know, the thing that would get the Fed moving towards rate hikes, the fastest, where if there
02:21was any sign of overheating in the labor market, this is exactly the opposite of overheating. We
02:27hadn't seen wage growth really picking up, but we really hadn't seen it slowing down much. And so
02:32this really takes like the labor market isn't pushing up inflation. And frankly, if it softens,
02:38it might, it might help hold down some of that inflation.
02:41We are so advantaged. Claudia Somni, Century Advisors, and joining us now, Constance Hunter,
02:46Chief Economist, EIU, the two of them together, commercial free across America in this half hour
02:51on yield. Christina Katman of Invesco will join us here in a bit. Constance Hunter, you're over there
02:58working on the terminal, looking at the numbers. I got a 90 day average, a three months moving average
03:04subject to revision of 20,000 per month on jobs. You can give me all your academics, Claudia Somni,
03:12I don't care. Politically in America, in defense of the president, that's an unacceptable statistic
03:18for America to see a three month moving average of 20,000 jobs per month. It doesn't get it done.
03:26Well, we don't think it gets it done. I'm gonna take off my headphones. Please take it. I'm echoing
03:33in there. Oh, you're echoing. I'll put it back on to here, Claudia. But in any case, you know,
03:39last year, when we had changes to immigration, when we were deporting a number of people,
03:44there was widespread speculation that actually the monthly requirement had fallen. This year,
03:51what we saw with jobs, with payroll numbers increasing monthly, but the unemployment really
03:57not coming down significantly is that, well, maybe it's higher this year. These, this 20,000 over the
04:02last three months, and then that fall in the unemployment rate, that is not, that is not a
04:09good look for the president. You're right. And it bolsters his case to cut rates. He's going to keep
04:14beating that drum. I think this bolsters our call for a hold. This is, this is definitely a warrant,
04:21to hold. Claudia, does this study that we're seeing right now, can government officials in
04:27the Fed get out front, or are they colossally ex post, where they just have to wait for the data
04:34before they go flat or cut rates? So, I mean, policymakers never have a full picture of the
04:42economy when they make a decision. It just, it takes too long. And there's always, we always want
04:46one more piece of data, one more piece of information. But when you have enough questions,
04:50or you have enough tension, that can, that certainly can be, you know, a reason to move
04:54a little more slowly until you get a decisive signal. I mean, I don't, I don't think today's
04:59data are decisive in reshaping that we've had a largely balanced labor market so far this year,
05:04but they raise some concerns. And we'll, you know, get more on inflation. We'll see if the
05:08disinflation is sticking or not. So you get what you have, and you have to make a decision.
05:13Did you see how she did that?
05:14Yeah, she did.
05:15She did. She's such a pro. Today's data wasn't decisive. Is there ever an economist who's
05:20ever said that today's data is decisive? Damien Sassauer with Constance Hunter and Claudia Sander.
05:26Well, Constance, I mean, I'm just looking at Zofra Futures here. I mean, I see whites up a tick to
05:30a tick and a half. Reds are up two and a half, three ticks. I mean, so, you know, obviously
05:33what we're
05:34seeing here yields down price up. And is that the right, you know, is that the right reaction to this?
05:39And just how much do you think the market's going to rush to price September out of the equation?
05:44Is that what we're looking at here?
05:45I think the market will begin to price September out of the equation. I think Claudia is right.
05:50Tom, I was almost going to say to you, you never look at just one number. And of course you
05:53don't,
05:54but you preface your question on the three month moving average, right? And I think that's what
05:57we're talking about here. One piece of concern, right, is you saw the unemployment rate fall on for
06:04bad reasons, not good reasons, right? Because participation fell.
06:08Stop. People flunk exams. Who would that be, folks? Because of that, where the unemployment
06:13rates goes down for bad reasons. Discuss Dr. Hunter.
06:17Well, certainly if you see that participation rate decline, it's only one tenth, but it's enough
06:22that we saw this low growth of jobs and we saw the unemployment rate fall. It suggests to you that
06:29either there's low supply along with low demand. That is not a robust labor market situation.
06:37And, you know, I was looking before I came on last night, I was, I got buried in data as
06:43I,
06:43as I sometimes do. And if you look at the Fed's financial conditions index, they are, it suggests,
06:50it suggests that we have tailwinds. Now those tailwinds are diminishing, but it says,
06:54suggests that monetary policy is loose here. And if we have loose monetary policy and a budget
06:59deficit of 6%, and this is the best we can do, I think it begs asking some questions about the
07:06underlying economy. Yeah. I mean, look, Constance, and the equity market agrees with you. I mean,
07:10it is rallying here. I mean, they see exactly what you see. This is an excuse for them to price
07:14out rate
07:15hikes, to basically get dovish. And that is great for risky assets. And so, you know, shifting to you,
07:21I mean, Claudia, just talk to us a little bit more about what's the, I mean, does this take
07:26some of the balance out of what next week's inflation print is going to look like? I mean,
07:30what are you looking for next? What's the next big figure that you're going to lean into data-wise?
07:35Well, absolutely. The inflation data are front and center, right? And you want to see,
07:41we got a very soft inflation read for June. We don't expect that to like show up again in July,
07:46exactly that way, but you, you want to see some softness or at least getting back to
07:51something that's consistent with target, right? And, and so there'll be a lot of attention to
07:55the CPI, the PPI, the import prices. I mean, inflation is still front and center because
07:59inflation is still very far from the Fed's target. And you need, and if nothing else,
08:03you want to see it moving in the right direction. Today, we're seeing employment move in not the
08:08right direction. Maybe next week we'll get some better news on inflation. But I don't think this
08:12takes any pressure off of the CPI. And before the Fed meets again, we're going to get one more
08:16payroll and we've got next week's CPI and another one. So there's a lot of data to come.
08:21Across America, a real treat together. Claudia Sam with us today from New Century Advisors and
08:27Constance Hunter of EIU off the shock report. We're up, futures up 39. Now NASDAQ is up a solid
08:34stick, 1% on the NASDAQ futures. So even Bitcoin vaults up $700. Constance demanded that I quote.
08:43Oh yeah. 8157 on Brent crude right now in the most elastic yield, the two year of 4.15%
08:53in a solid
08:54nine basis points. I'm going to call that a ginormous move in even the 10 year in seven basis
09:00points. I want to go to your two wheelhouses. Claudia, let me begin with you with all of your
09:05deserve it acclaim over recession. We've had a pop of nominal GDP. John writing over Breen
09:12notes, consumption and investment, eight ish percent like a banana republic. Do you just assume
09:18that if we have a tepid job economy and we don't cut rates fast enough that nominal,
09:24the animal spirit comes down to a more lower normal rate?
09:32So I am concerned if the labor market isn't firing on all cylinders and certainly if it weakens,
09:39that would be an issue. And we've seen, we got recent data again. I mean, the labor share
09:43continues to drop, like the share of the income in the economy going to workers. That does not feel
09:49like a good situation. And I think to Constance's point, I worry more right now about the structure
09:55underpinning the economy than maybe the cyclical, the boom, bust, the reset. It's like, because things
10:01are moving under the hood of the labor market. And I think that's the labor force growth, population
10:06aging, what's happening with AI. So there's some really big themes that I think we should pay attention
10:12to and maybe less to the boom, bust cycle, right? Because I'm not sure that's the biggest thing
10:17happening right now. Constance, the EIU remit is a wonderful global remit. What does this jobs report
10:25signal to other central banks? I mean, it simply takes away the effervescence, doesn't it?
10:32You know, I would say other central banks are going to look much more closely at CPI data next week
10:36than they are the jobs data. Sure, agreed.
10:39But of course, it does, to Claudia's point, right, it's what's going under the hood here.
10:45And we have an aging labor market. We have an aging population. We're seeing people age out
10:52of the labor market. That is not a unique problem to the United States, right? We see this around the
10:56world. This is a challenge for central banks. And one could argue that is the biggest challenge for
11:00Japan. And one of the reasons why we have the situation in Japan where they have a very high
11:07budget deficit or debt to GDP ratio, right? And there's concern about that fiscal situation,
11:12and it was getting expressed in the currency. And we had the intervention that we had last week.
11:17So this theme of, you know, how do you grow an economy with an aging population? Does AI help or
11:25hinder that? These are existential questions, I think, that all economists, central bankers or not,
11:31are looking at when they're looking at economies right now.
11:34And yet there's a desire to keep financial conditions loose here in the U.S., like you rightly
11:38point out. I mean, talk to us about what you learned from yesterday's refunding announcement.
11:41I mean, they just, in my mind, kicked the can down the road again, right? I mean, like, so,
11:45you know, you're right to focus on fundamentals like debt to GDP here in the U.S., but the market
11:50has not paid attention to that for so long. You know, at what time, you know, did the things at
11:55least start to flash amber to you constantly?
11:57So Warsh has his task forces. We have our task forces. So there's a few things we're looking at that
12:02we felt we had to really do a deep dive. And to your point, Tom, a cross-country comparison,
12:07right up there is, is what is fiscal space? What constitutes fiscal space? When does it get
12:14tricky? Who, who, you know, obviously we see it's not uniform across countries. And so I think one of
12:22the things we have to think about here is, is what are, what is expected inflation and how does that
12:27feed into term premia? And then what's that feedback loop to funding the government?
12:32Christina Katmany on does her people are quite upset. You know, I mean, she needs more of her
12:36time. Claudia Somm, last question to you with immense respect for your academics. And it's
12:42just simply you're launching forward, I guess, into end of August, Jackson Hole, and into September
12:48as well. It's still two Americas. The political reality, Kevin Hassett with Bloomberg and the 10
12:55o'clock hour folks, Michael McKean and Danny Berger. I'm sorry, Claudia, and an economics on a jobs day,
13:02it's two distinct Americas, isn't it?
13:07There's a lot, there's a lot of division in the labor market. I mean, the division I like to focus
13:13on is this low hire, low fire economy, right? For workers who have a job, like their job, it's a
13:17good job. This is, this still is a pretty good labor market. Today's numbers notwithstanding for
13:22people trying to get back in, trying to
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