Morning Report: Surprising drop in payrolls

Vital Statistics:


Last Change
S&P futures 2908.5 0
Eurostoxx index 377.44 -2.24
Oil (WTI) 74.56 0.25
10 year government bond yield 3.23%
30 year fixed rate mortgage 4.93%


Stocks are flat after the jobs report. Bonds and MBS are down


Jobs report data dump:

  • Payrolls up 134,000 (way below expectations)
  • Unemployment rate 3.7%
  • Labor force participation rate 62.7%
  • Average hourly earnings up 0.3% MOM / 2.8% YOY

Definitely a bond-bullish jobs report, with payrolls and average hourly earnings below expectations. The global sell-off in bonds continues, which appears to be dominating. Yet another jobs report where ADP and the BLS get completely different readings. The unemployment rate is the lowest since 1969.


While the business press is focusing on the unemployment rate, which is hitting the lowest since the late 60s,  the labor force participation rate seems to be stuck at just under 63%. That ratio (and the employment-population ratio) should be moving higher. Yes demographics (the retiring baby boom) explain some of it, but as people live longer, people should be working longer as well. It probably should go higher, but in the meantime highly paid baby boomers are being replaced by lower earning Millennials, which helps explain why average hourly earnings are moving up at an unsatisfying pace.


labor force participation rate


Beware of narrative changes. Good news is now bad news. Good economic news now is a negative for stocks because it means rates are going higher. FWIW, higher rates will be negative for some sectors and benign for others. But yes, REITs and utilities which were prized for their dividend yields during the ZIRP years are now going to be under pressure. The homebuilders will be sensitive to this as well, however they shouldn’t be. There is enough pent-up demand for housing that they should be able to pump out volume for years to come. As long as rate are rising for the right reasons (stronger growth encourages investors to take more risk) and not the wrong reasons (inflation on the horizon) then it should be a non-event for stocks. That said, money market instruments, which were eschewed by investors during the ZIRP years, are going to re-take their share of the investment dollar.



68 Responses

  1. So the culprit behind why the new Star Wars movies suck is apparently the Russians.


    • Russians have managed to eliminate free will, diabolical!


    • The left believes culture is simply too important to be left to the hands of mere markets…

      Liked by 1 person

      • But they also want the money. What to do, what to do.


        • They’re all-in on the “you’ll like whatever we tell you to” mindset. Proselytizing is most important…


        • Unfortunately, as long as there is freedom of choice, you can tell people they are supposed to like a product all day long and only a small percentage will spend money on what they don’t like. Just ask New Coke!


        • It isn’t about money. How long has the NBA carried the money-losing WNBA?

          Liked by 1 person

        • You make a good point. But they have to have a product to continue to carry it.

          And when it comes to movies, you have to have the big popcorn films to support the 3 Billboards and Crash dramas and Michael Moore documentaries. You can’t keep turning tentpoles into polemics against the audience and continue to get their money. And you’re not going to make up the difference in already low-money independent and Oscar fare.


    • More interesting than the study itself is the way people desperate to explain why “The Last Jedi” underperformed box-office expectations by as much as $200 million seized on and magnified the findings.

      Maybe that’s the official word, but Force Awakens made $2 billion dollars. Last Jedi made $1.3 billion. I’d say it underperformed by $600 million. Maybe $500 if we’re being charitable.

      Rogue One made $1 billion dollars–good performance for an “off brand” Star Wars movie.

      Solo made $393 million. Or a drop off of $700 million dollars between “off brand” Star Wars releases. No negative tweets from a handful of Russian trolls (or even many more angry tweets from whiny fanboys) explains the poor performance of Solo, except that Disney is diluting and deconstructing the brand, to poor economic results.

      The Force Awakens was to Star Wars pretty much as the prequels were Star Wars. Exciting that it was happening, though the results were disappointing.

      The Last Jedi was to Star Wars as New Coke was to Coca Cola. Except, in this case, it was an intentional subversion of everything fans loved about the brand, instead of an honest, if profound, mistake.

      The last official Star Wars film is coming. I’m projecting it hits between $600 million and $700 million. A little better if the movie itself is actually really good, a little worse if it’s lower quality than Force Awakens.

      Not sure if I’ve been in to it on here before (probably have) but a huge chunk that $2 billion was old fans wanting to share it with their children, people who became fans in the late 80s and 90s wanting to re-experience the magic or share it with their friends or young children, etc., etc. TLJ did a Very Bad Thing by wasting and pissing on Luke Skywalker simultaneously.

      But the worse thing they did in terms of direct economics is remove Luke, Han, and Leia. The core of the original trilogy. They also got rid of one of the only interesting characters from Force Awakens, Snoke, without explanation. Phasma also seems to be out of it, but I really don’t care, that was always a toy merchandising character.

      But they are reaching the end of the trilogy without any of the substantial characters from OT Star Wars, and with most of those that remain almost entirely neglected in the first two films (C3P0 and R2D2 were pretty much invisible in both films: only Chewie has played an active role). In addition, TLJ ended without giving any reason to want to see the next film even if they liked this one. It was a story about almost nothing that was completely tied up at the end, with Han and Luke both dead and under-utilized, and Carrie Fisher having passed away making the idea of anchoring the 3rd film around Leia problematic at best.

      Lucasfilm and JJ are going to try and address this: the 3rd film will feature flashbacks featuring Luke that might, hopefully, illuminate why his character complete transformed from Return of the Jedi to TLJ. Those flashbacks will feature heavily in trailers and ad campaigns, I predict.

      My guess is, too little, too late. Still, basically ending a trilogy in the 2nd movie seems like Elon Musk levels of financial irresponsibility.

      Colin Treverrow was going to direct the 3rd film, but was fired over disagreements with Lucasfilm. This disagreements were that he wanted the 2nd film: A) not to kill Luke and B) not to kill Snoke.

      I think they would have better off if they had listened to Colin.


      • I forgot to mention, Lando is being brought back for the 3rd one. Probably primarily to feature in the ad campaign. Which is smart. But again, too little, too late. Unless JJ is up to performing miracles. Which I kind of doubt.


      • “The last official Star Wars film is coming”

        They are making another trilogy after this one.

        The other problem which gets to the crux of the political fight is being more concerned with ‘representation’ than good writing, directing, or acting.


        • Supposedly. It’s being developed but already it seems Rian Johnson’s unaffiliated trilogy that he was going to get is “on hold” for now.

          But the last official Star Wars film is coming, no matter what comes after. Episode 9 is the end of the Skywalker saga (as it turns out, 8 was, really, but I guess that depends on what they do with flashbacks and Leia). But after that it’s the end of the 9 movie cycle for what started out in 1977 as Star Wars.

          I don’t see a future series with Kylo Ren and Rey or other new secondary characters being anything but more Star Wars universe cash-grabs. And frankly I don’t see Disney blindly investing in another 3 movie trilogy immediately if Episode 9 underperforms TLJ significantly.

          which gets to the crux of the political fight is being more concerned with ‘representation’ than good writing, directing, or acting.

          Because representation becomes the main bullet point ONLY when they think writing, directing, and/or acting isn’t. When they don’t think they have a classic on their hands, they want to make critics racists or Russians and focus on how progressive they are, as opposed to what a gripping and engaging product they put out.

          See “A Wrinkle In Time” which Time tried to pre-sell as a Modern Classic, the contemporary heir to Wizard of Oz. When it was nothing of the kind. The story and direction was weak, the acting was not great, and it just wasn’t a very engaging film. So all the press about it was about how representative and diverse it all was.


  2. Follow up to yesterday’s link about the fake peer reviewed articles.

    This is no longer parody:

    ““Feminist and poststructuralist critiques have demystified the substantive content of mainstream Western scientific practice, revealing the ideology of domination concealed behind the façade of ‘objectivity,’” he claimed. “It has thus become increasingly apparent that physical ‘reality,’ no less than social ‘reality,’ is at bottom a social and linguistic construct.””


    • “Sokal Squared doesn’t just expose the low standards of the journals that publish this kind of dreck, though. It also demonstrates the extent to which many of them are willing to license discrimination if it serves ostensibly progressive goals.”

      people can’t be surprised by this. it’s like they’ve never met any of these kooks with Ph.D.

      on that note, i’m visiting with the college guys this weekend. there will be no social media.

      Liked by 1 person

      • people can’t be surprised by this.

        Serious conservatives surely aren’t. Serious liberals and progressives *also* surely aren’t surprised, but they just don’t see a problem with it. Equality and egalitarianism are just smokescreens for what I think is a fairly large percentage of the left, and almost certainly the near totality of the academic left.

        It’s about intelligent and superior people choosing who has power, which classes are serfs and proles, and how low a rung on the societal ladder they are required to occupy. And, of course, also deciding who is allowed to say what and when, and what concepts or ideas are completely forbidden from discussion.

        Liked by 1 person

    • So what conclusions can we draw from that about climate change science?


      • if the models simply extrapolate past population growth rates and energy consumption patterns, they are useless.

        Also, if the models consistently fail to predict future temperatures, then that is an important thing to consider.

        Anyone can come up with a model that describes the past. Certainly in the trading world, most strategies with great-looking backtested results end up failing miserably when implemented.


        • But if everything, including math and science, are social constructs and represent no deeper truth, then even that doesn’t matter. The truth is at the end whatever we want it to be, so long as there’s a victim group in it somewhere.


        • I have a sneaking suspicion that Econ is headed that way


  3. This guy has absolutely no, zero, common sense

    Liked by 1 person

    • Kos is a place for like-minded tribalists to get together, praise themselves and their fellow tribe-members, and to condemn the Scary Other in all those other Bad Tribes. Then possibly pick parasites off of one another.


    • Area Woman Believes Brett Kavanaugh Moderate, Despite His Wild Theory That Democrats Are Working With The Clintons And Soros To Get Him Kicked Out Of Washington

      In what way is that a theory? Much less a “wild” one? That Soros is working with the Clinton’s? Maybe that’s a theory. Although “wild” would be a stretch.

      Maybe “Soros” instead of saying “with Soros-funded activist” groups?

      everyone is seeing @SenatorCollins for who she is right now. Never ever ever use that word “moderate” to describe her again. Who she is on full display

      Meaning: everything is contextual. The next time she votes with Democrats, she’ll be a good and thoughtful moderate again. The idea that it serves them to attack their best useful idiots because they went the wrong way this one time . . . seems questionable to me. I don’t think it’s a good idea for them.

      Brett Kavanuagh is watching Susan Collins and is cracking open a beer.

      That sounds like a healthy and normal human reaction.

      Burn in hell, Susan.

      We must take back the Senate from rape enablers. Give today.

      Man, I sure hope these people get control of government and all of our lives AS SOON AS POSSIBLE. It will be GREAT!


  4. In retrospect, Flake letting the left cry it out was a masterstroke. They overreached…


  5. Hard not to think of that Blasey broad as the perfect exemplar of The Resistance. Upper middle class professional liberal broad. In hindsight, it’s almost too on the nose. Will be interesting to see how her “exposure” came about.

    Liked by 1 person

  6. The NHS is now experimenting with group consultations for general practitioners. Calls them “fun and efficient.”

    Liked by 1 person

    • This article is absolutely fascinating and an inevitability as fas as I can see. Labor is always the biggest cost in business and I don’t see the NHS and whatever style of single payer we get here, radically upping MD salaries to attract more people into family practice. I’m guessing we’ll be forced to see MA’s at some point as our family practice caregiver. It will take a VERY serious condition just to step up to see a ya-know-dick PA, and even then it’ll be in group sessions. Don’t worry though, it’ll be “fun and efficient”.


  7. I was wrong, I was convinced up until last night that Kavanaugh wouldn’t be confirmed.


  8. Sublime.


  9. This one made me laugh.


  10. Take that, white bitchez!


  11. I blame Sarah Palin’s crosshairs ad.


    • Eating. Themselves.

      The tweet was criticizing Republicans and conservatives dancing in the end zone after the Kavanaugh confirmation.

      So of course the left criticizes him for praising a dead white man from England.

      Of crouse, anybody should have seen the mistake. “Bro, do you even virtue signal?”


      • The other ironic thing here is that progressives are always lamenting that they can’t find a “fighter” to stand up to the Republicans.

        Perhaps their own approach to politics and leadership self selects those types of people, (i.e. Churchill) out of the process.

        Even better, by expelling Churchill from the canon of statesmen, they automatically cede him to the right. Along with Theodore Roosevelt, et al.

        Liked by 1 person

        • I’ve found history is very fungible for those folks, most of the time. They adopt and reject whoever is convenient at the time, the make whatever bad guys right wingers and whatever heroes they find liberals or progressives so they are always “on the right side of history”.

          It becomes harder, however, when they disown both Hitler and Churchill.


    • reading that thread is fascinating. apparently, only the Red Army was needed to defeat the Wehrmacht.

      Liked by 1 person

  12. Adding insult to injury for progressives?

    “New Supreme Court Justice Brett M. Kavanaugh has made good on his pledge to hire women to serve as his law clerks, becoming the first justice to have an all-female staff.”

    Liked by 1 person

  13. I wonder if Elizabeth Warren does a Ghost Dance on Columbus Day?


    • As I wrote after the enactment of Brexit, and then again after Trump’s victory, unless and until the establishment classes of the world’s democracies begin to cease blaming everyone else and instead engage in serious self-critique, we’re going to have far more Brexits and Trumps – and far worse ones. As I wrote in June, 2016, after Brexit passed:

      This seems fairly obvious to me, but apparently, it’s not.


  14. This is a bad idea, even for Trump:

    “In front of a room full of reporters, television cameras and Republican lawmakers at 7:00 p.m. Monday, the president will stand next to Kavanaugh and present him to the nation as one of the crowning achievements of his first two years in office.”

    Liked by 1 person

  15. Find it hilarious that the left is now anti-Senate… Every time they lose they want to tear up our system…

    Liked by 1 person

    • The tribalists always do. Democracy is only acceptable when their side wins. There are folks on the right of the same mind, but of course they don’t own the media and academia are are thus largely marginalized.


    • just a few years ago they were going to have 60 seats, impose their will, and that was going to prove how sound the system is.

      Liked by 1 person

  16. Thanks Bernie:

    “Why Some Amazon Workers Are Fuming About Their Raise”


    • “But it was also ending monthly attendance and productivity bonuses, known as the Variable Compensation Plan”

      yes, but you’re equal now. so, you’re welcome.

      /Socialists 2020

      Liked by 1 person

    • I read the Amazon blog post. I recall them saying that the bonuses would be paid in cash, not stock. Nothing about ending the bonuses..


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