Back-to-school day in Boston, opening night for the NFL, and three charts for your Thursday morning!!! LET’S GO!!!
Chart#1 – Temporary job growth rolling over: A deeper dive into last Friday’s non-farm-payroll data noted that temporary jobs appear to have peaked and are now rolling over. History says first temporary jobs go, then wage growth goes, then jobs go. All a function of higher rates and tighter financial conditions more broadly. Monetary policy works with 12-18 month lags and we’re about to start feeling the job market go slower-er.
Source: BLS Data as of September 2, 2023
Chart #2 – Personal consumption inflation on a notable downtrend, too: 15 months ago PCE inflation data was running close to 6%; today its 3% and trending down and trending down fast. Again, monetary policy and higher rates work with a 12-18 month lag. Inflation is headed lower and there’s an excellent chance the Fed is done with rate hikes for this cycle. Every crisis has an ending – this inflation crisis and the Fed’s 2021/early 2022 policy error crisis might be done.
(p.s. if you can’t sleep or are having trouble sleeping, looking at a little multivariate core trend PCE inflation data works like a charm every time).
Source: Bureau of Economic Analysis as of July, 2023
Chart #3 – And, last but not least, don’t give up on a bull market just because the dog days of August set in. In the past 70 years there have been 10 years in which the equity market had a big six months of the calendar year and then modestly retreated in August. Don’t look at the September data below – look at the September thru December data below. Investors have a habit of chasing up markets later in the year. In the words of Bill Belichick, “we’re onto September”.
Source: Carson Investment Research, FactSet as of September 2, 2023
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