The US labor market is showing real signs of strain.
The latest jobs report showing non-farm payroll is adding just 22,000 jobs in August, a sharp slowdown, and the unemployment rate has climbed to 4.3%, the highest since 2021.
Now more industries are losing jobs and adding them, and revisions to past data reveal the slowest three month hiring trend in over a decade outside the pandemic.
Manufacturing is in reverse, hit hard by.
Ongoing supply chain uncertainty and tariff pressures.
Health care does remain a bright spot, but it may not be enough to offset broader weakness.
Well, joining me as we kick off the week is Chris Versace, CIO of Dramatic Research.
Chris, good morning and thank you so much for joining me.
Well, the August jobs report showed a sharp slowdown in hiring, and now all eyes are on this week's inflation figures.
So how are these reports shaping expectations for the Fed meeting?
There's some real issues, I think, about the speed of the economy that have cropped up, and I think that has opened the door for the Fed to deliver a rate cut in September.
But the, but the larger question though, Remy, is, will the Fed signal that they are open to As many rate cuts as the market expects, which according to the CME Fedwatch tool is clocking in around 325 basis point cuts for this year alone.
I think the CPI PPI data, if it moves higher, might take some of the wind out of that sale.
Yeah, and Chris, with the Feds shifting focus toward employment risks, could a cooler inflation inflation reading be the final push toward a cut, or do you think the bar is still higher than markets expect?
Well, I think the data's going to really tell us, Remy, you know, if we look at the ISM pricing data both for manufacturing and services and we kind of smooth it a little bit with the 3 month trailing average, you know, that data, it does suggest that, you know, inflation pressures remain elevated, setting the stage for, you know, poor CPI, poor PPI. to, you know, potentially remain unchanged on a sequential basis on a year.
When we look at it, you know, year over year, August versus July, it could tick higher and to the extent that happens, I think the market's going to have to say maybe not 3, maybe 2, maybe just 1.
That could be the issue the market has to contend with.
Yeah, and Chris, we'll be keeping a close eye on those inflation figures later this week, but tomorrow Apple is kicking off its annual fall product event, typically a big moment for tech as well as consumer sentiment.
So how important is Apple right now when it comes to market momentum and what are you watching for when it comes to the announcement?
So when we look at, you know, the S&P 500, Remy and we look at its, you know, top constituents, Apple is right there.
So you could argue that as Apple goes, you know, so too to some extent goes the market.
And tomorrow's event, I have to be honest with you, when you look at what's expected to be announced, more iPhones and other hardware looks more like iterative editions, maybe with higher, you know, price tags.
Could, you know, excite people a little bit about Apple's revenue potential, but I think for it to be a real knock it out of the park event, Apple's got to talk a little more about Apple intelligence, how they see that shaping up.
When is this AI AI-enabled Siri going to come to market?
Perhaps they tip a partnership that will help foster that.
If that happens, then I think it's a great event for Apple, a great event for the market.
Yeah, and Chris, another event that we're paying attention to the Goldman Sachs Communicopia and tech conference, which is kicking off.
So what are some insights that you're anticipating from both media as well as tech execs this week?
Well, you know, if we look at the timing for this event, Remy, we've got, you know, just a handful of weeks left in the current quarter.
And if we also take a look at the S&P 500, that's now trading, you know, north of 24 times in order for the market to move demonstrably higher, we're going to need to see earnings expectations at a minimum reaffirmed for.
Balance of the year, but you know, more likely raised in order to drive the market substantially higher, and I think a lot of folks will be keying in on what is said at this conference because we'll have companies like Microsoft and Nvidia presenting to the extent that they, you know, reaffirm their expectations or raise their outlook, that could be a good thing for the market.
Well Chris, a lot to keep our eyes on in addition to the daily headlines coming out from the nation's capital.
So as always, thank you so much for joining us as we kick off a new trading week.
Thanks, Remy.
