Wall Street hitting new all-time highs yet again, but it's day three of the US government shutdown, so no jobs report for September.
But the ADP reports showing private payrolls falling by 32,000 in September, the biggest drop in 2.5 years, and August data revised down to a loss of 3000 jobs and US hiring.
Plans dropped to their lowest level since 2009, even as layoffs slowed in September.
Meanwhile, the report from Challenger Gray and Christmas showing employers announced just over 204,000 hirings so far this year, the weakest pace since the Great Recession.
The jobless rate held steady at 4.34% in September, according to new data from the.
Chicago Fed joining me this morning is Steve Sosnick, chief strategist at Interactive Brokers.
Good morning, Steve, and happy Friday.
Well, the economy is not the market, we are seeing a slowing in hiring momentum, but markets are racing higher.
So do you think these gains are sustainable for the major US stock averages?
Hi, good morning, Remy.
It's great to see you as always.
They're sustainable as long as the psychology remains as positive as it is.
Right now we're in an environment where basically any piece of news can be taken as good news, you know, specifically speaking on the economy, if it's good for the economy, well then it's good for companies and therefore, For stocks, if it's bad for the economy, well, therefore, the Fed might cut rates a little faster and further, and so that'll be good news for stocks.
So ergo, everything is good news for stocks.
You can tell I'm being a bit facetious there, but that really does in some ways encompass the market's mindset and how it's interpreting news right now.
So, uh, you know, while, while you and I would normally be discussing, you know, the impact of jobs numbers on the market today, the lack of jobs numbers is, is one less impediment for the market to deal with.
And, you know, we could see from having the few, the pre-markets trade flat.
We're now seeing S&P resume, you know, you may resume your customary rally at this point.
Yeah, and Steve, you brought up a lot of important points and usually you and I are sitting here at the New York Stock Exchange sifting through the employment figures for the previous month, but economists are now turning to alternative data sources as the government shutdown blocks access to official economic reports.
But so far, what does the labor market mean for the Federal Reserve?
And if we don't get those CPI figures next week, what are your expectations?
Well, it's interesting because, you know, I think that the jobs numbers that we would normally get today are the most important numbers of the cycle, and the reason I, the reason I say that is, you know, the Fed has the dual mandate maximum stable employment, maximum sustainable employment, and stable prices.
Well, we don't get as many data points about The employment picture as we do about the price picture, you know, we really get these jobs numbers, we get, you know, some other stuff, challenger numbers, ADP numbers, you know, weekly jobless claims which are also government numbers, but there's not as much data coming in on jobs.
Slower, it's flukier in how it comes in.
In terms of price data, we already got the the core PCE deflator, which was in line for the month and actually on a very, you know, if you take it out 3 digits, it actually showed a very modest decline, although still running above the Fed's target.
But we get price data all the time, you know, you're sitting in one of the great places where price data is determined, you know, whether that's stocks or whether, you know, certainly a couple blocks away in the New York commodity pits and in Chicago's commodity pits.
So we get price data all the time and from other sources like ISM and we're going to get University of Michigan expectations numbers later today.
So.
That's why I do focus on it now.
There was a comment made by Austan Goolsbee, the Chicago Fed president, this morning, saying that we're kind of slipping on both measures that prices aren't cooperating, nor is labor cooperating.
That will provide a big question mark for the Fed, and we'll learn about that more from the minutes when they're released next week.
But we're going to be grasping at other sources of data and trying to piece together the puzzle with with some of the big pieces missing.
Yes, and Steve, we'll continue to keep an eye on the nation's capital.
The White House may make some shutdown furloughs permanent potentially even as it expands deals and investments across industries.
So turning back to market sectors, farmer getting a boost this week alongside chip stocks, and we saw shares of Fair Isaac or FICO rise.
So what do you make of all of this ahead of the weekend?
Well, you know, I think an interesting phenomenon is occurring both in drugs and chips and actually in terms of some mining stocks as well, and that is the fact that one of the most reliable ways to get a stock or a sector to rally is actually now to have the government literally, you know, sticking their hands into these, into these companies' businesses, whether it was investing in Intel, you know, which certainly got that stock.
Moving certainly, you know, the, the, the, you know, the stuff that went on this week between Pfizer and Lilly and the government, we saw it with like, you know, lithium LIC, the lithium company, rising on government, on the government shifting some of its loans to equity.
So it's a very interesting phenomenon that we're in.
And again, I think it sort of falls back on the idea that news is getting interpreted with a with a positive spin.
And I do think it's healthy that people are looking outside, you know, tech and the AI related stocks because those are incredibly crowded trades at this point with, you know, they're, they're basically the equivalent of the Tokyo subway at rush hour in terms of crowding, but they're still going to shove more people in if they can.
But I think it's healthy a little bit for the markets to be looking into other sectors and picking winners and losers based on fundamentals, which is very nice.
Well Steve, we will have to leave it there but thank you so much for joining me.
I really like that analogy that you provided.
So thank you so much and hopefully by the first Friday of November, you and I will be back here taking a look at the latest labor market report.
Thank you so much for joining us.
Thank you, Rebbe.
