Up Only Market Does that Thing Where It Says It’s Worried About the Economy and Trump
Photo by Public domain, via Wikimedia Commons
The Jobs Opening and Labor Turnover Survey (JOLTS) report surprised the market today, as it showed hiring activity at a decade low while increasing more than expected in December. This is not the total jobs report for the month, which will be published this Friday, but it is an important metric measuring demand for labor, and JOLTS portrays a cooling labor market. Back in August, the stock market fell hard off a colossally bad jobs report which activated the Sahm Rule that has a perfect record predicting recessions. The market didn’t crash today, but it sure did react negatively to the JOLTS report, as the future cash flow-dependent Nasdaq fell 1.8 percent while long-term Treasury yields rose about 1.4 percent, which tells the same story about the concern for the economy going into 2025.
The cooling jobs market has been an ongoing theme for a while, and while overall, economic authorities like the Federal Reserve believe the labor market is strong, it’s a fact that their interest rate hiking regime was explicitly directed at depressing wages and the jobs market. That they are now pivoting to interest rate cuts means they believe they have achieved that goal, confirmed by the jobs reports spanning the last several months.
But this JOLTS report surprised and moved the market, and one of the classic inflation indicators, the United States Ten-Year Treasury Note, produced one of those PTSD-inducing “not since 2007” headlines, as Bloomberg noted:
The US government’s monthly auction of 10-year notes drew the highest yield since 2007 after the latest economic data suggesting that the Federal Reserve is less likely to cut interest-rates again before mid-year.
The 30-year Treasury auction later this week is also expected to produce the highest yield since 2007. Inflation was not the problem in the 2008 crisis—widespread fraud and gluttonous excess was—but anything that unfolded in 2007 by definition contributed to that shitshow the following year. As a general rule, it’s not good seeing “not since the year before the largest economic crash in a generation” headlines in our current economic paradigm rattled by inflation and defined by uncertainty, just under five years removed from our last largest economic crash in a generation.
All the while we have the third-most expensive stock market in history driven by a narrative around a wildly overhyped technology made by over-valued companies like OpenAI, whose lying founder says they need one third of annual U.S. GDP in order to make his so-called world changing product actually world changing. If some big catalyst to harm the economy sprung up next year, it would be difficult to look at the current frothy conditions, with Bitcoin above $100k before today’s JOLTS report shocked some reality into the markets, and say the signs for a crash were not there.