Morning Report: Payrolls surprise to the upside

Vital Statistics:

S&P futures4,454-15.2
Oil (WTI)92.051.83
10 year government bond yield 1.90%
30 year fixed rate mortgage 3.83%

Stocks are lower this morning as rates rise. Bonds and MBS are down.

There were 467,000 jobs created in January, according to BLS. The unemployment rate ticked up to 4%, and the labor force participation rate rose to 62.2%. Average hourly earnings increased 5.7% YOY. The employment-population ratio rose from 59.5% to 59.7%. The payroll number is surprising given what we saw from ADP (a drop of 200k) so I am not sure which one will prove to be correct. Given the Omicron surge, my gut says that ADP makes more sense and this report will be revised down.

The bond market was clearly leaning the wrong way going into this report, as the 10-year yield rose from 1.82% to 1.9%. Mortgage backed securities are lagging the move a touch, as is typical on big moves in the bond market.

The homeownership rate ticked up slightly to 65.5%, according to the Census Bureau. Median asking rent is on the march higher, which represents rising home prices and record low vacancy rates.

The ISM Services Index declined in January. The Business Activity sub-index dived 8 points, while costs are rising. Labor and materials shortages remain an issue. Some of the comments from respondents include:

  • “Costs have escalated to what we believe are unsustainable levels. Available labor is nonexistent, so we have cut staffing and are taking on fewer projects temporarily in an attempt to reduce cost. Outsourcing where possible. We are not optimistic at this time.” [Construction]
  • “Challenging operating conditions remain the same to start the new year. Our biggest service providers seem to be rebounding from labor shortages or are managing their way through them. We will be forced to upgrade some equipment that is less reliant on labor.” [Agriculture, Forestry, Fishing & Hunting]
  • “Business activity is increasing, but professional labor continues to be in short supply. Virtual work is preferred by clients.” [Finance & Insurance]

43 Responses

    • For something like COVID I think most rational epidemiologists understood that lock downs could only potentially have one positive effect: flattening the curve. That’s why, before everyone went fucking crazy, that was what they talked about: flattening the curve. They didn’t say “no one will get COVID”. Hell, “slow the spread” was practically a slogan. Not “prevent the spread–slow the spread. Because that was the who impetus, not irrational, behind lockdowns.

      And it probably did slow the spread. It was never going to prevent it, but the problem is that if hospitals are nowhere near overwhelmed, there’s no argument for lockdowns–and there never has been.

      And everyone knew it and it was the argument given at the outset. Flatten the curve, slow the spread.

      And it may have done that. In any case, the amount of actually overwhelmed hospitals was fairly small and most of the excess-capacity emergency facilities that were set up barely got used. So even if it slowed the spread, that was probably not necessary in most cases.

      But the “flatten the curve” thing that was so important to getting us to lockdowns seems to have been entirely forgotten. Now they are behaving as if lockdowns cure disease. As if they prevent you from ever getting it, ever. Which I’m pretty sure was not the argument of epidemiologists at the outset and wouldn’t be now (except those whose social credit depends on towing the party line at any given time).


  1. The Republicans are stupid for having the RNC censor Cheney and the other guy over the January 6 committee participation. Just let them lose their upcoming elections.


    • What’s the drawback? I’d just as soon have them expelled from the caucus.


      • Not sure there is a drawback to them, which is part of the problem, IMO. Unless censuring them is going to take away a comittee assignment they shouldn’t have it’s kind of pointless.

        But then most everything congress does is kind of pointless. Well, except for ego-stroking, attention-whoring, and insider-trading.


      • You make them victims and martyrs and give them unneeded attention.

        Better have them sent packing by the voters than somehow “suppressed” by the party.

        The best thing the Republicans can do about the January 6 committee in Congress is ignore it. Among other things that aligns them with the voters.

        “We surveyed this, and the independents in the focus group confirmed it. Their voters feel ignored, disrespected, in some cases, betrayed. Hell hath no fury like a voter scorned.

        But I think the greatest challenge is the disconnect in priorities. And the best example of this— there was simply no interest in January 6.

        The interest was economic. The interest was quality of life. The interest was personal safety.”

        That’s ideal for Republicans. Drawing more attention to it is just shooting themselves in the foot. Let the Democrats re-litigate the past.


        • You make them victims and martyrs and give them unneeded attention.

          Victim and martyrs to whom? Will it change one vote?

          That’s ideal for Republicans. Drawing more attention to it is just shooting themselves in the foot. Let the Democrats re-litigate the past.

          That’s presupposing it will influence any voters to change their vote, on that I disagree.


        • Additive. Cumulative amongst other disappointments are inside-baseball focus. Not necessarily a big deal by itself but in combination with other things could change a few votes or demotivate some potential voters. Not sure how much this “I have drafted this resolution about how I don’t like your ugly face” stuff really helps them politically. They should have a suitably condemnatory answer at the ready if asked but otherwise ignore it.

          Liz Cheney has historically been a reliable conservative vote and voted with Trump more than some other Republicans so … a lot of this seems overwrought. Let the voters decide if she dies in this hill or not. And if she comes up with some patriot act to jail Trump supporters forever, attack that. But whatevs.


        • I agree. At best it’s valueless at worst it’s a negative.

          Or at best it’s a +1 when there are plenty of +10s out there to hammer. I don’t give a shit about Cheney or censures. Feels a little like wasting time and effort.

          Have no particular love for Cheney. But I feel like the Republicans have better things to focus on. They want to hold the DOJ responsible for how they are prosecuting the Jan. 6th rioters that’s fine but censuring Cheney is a waste of time and energy.

          Removing her from her leadership role made sense to me—she was spending all her energy on attacking Trump and relitigating Jan. 6th. Which wasn’t really her job as leadership.


        • jnc:

          You make them victims and martyrs and give them unneeded attention.

          Make them victims and martyrs in whose eyes?

          By participating in the committee, they are providing a veneer of bi-partisan legitimacy to what is obviously a highly partisan Star Chamber process, in direct defiance of the position taken by the party they ostensibly belong to. It seems a little nuts to me if the party didn’t seek to discipline them in some way.

          And to be clear, I am not saying they should be disciplined for their opposition to Trump or their overwrought views and characterizations of Jan 6. They ought to be disciplined for undermining the party and its leadership with regard to the formation of the Jan 6 Committee. Indeed, if their claimed concerns about Jan 6 were genuine, they would presumably welcome an actual bi-partisan investigation into it, not the sham that has been orchestrated by the leader of the opposite party.


        • And they’re also rejecting the January 6 argument just as completely.”

          From an NYT editorial about a focus group of suburban moms, a key democratic constituency.

          That’s why the RNC censure will have zero negative electoral impact, expelling both from the Republican caucus won’t have any negative impact either.

          And they’re also rejecting the January 6 argument just as completely.”


    • censored or censured?


  2. There’s no guilt like NYT liberal guilt:


    • everything about the Escalade felt poorly suited to someone like myself, the bookish newspaper columnist who frequently rails against the cultural dominance of cars and so on

      I’m so smart and yet humble, while also being virtuous and moral, and felt I needed to mention this in the NYT.

      And yet here I sit, pining for the 2021 Escalade in Dark Moon Blue Metallic that I drove during a two-week, 2,400-mile family road trip through Arizona and Nevada over the winter holiday.

      This is like Facebook-attention-seeking narcissism in the NYT. Look at me! Look how great my life is. Look how smart I am! Look what I did. My life experience is so rich. LOOK AT ME!

      I fell for these digital charms. I have driven many faster and more fun cars than the Escalade.

      I’ve done so much in my life, and I can be adventurous and daring!

      If most cars become as comfortable, convenient and luxurious as this one — while growing ever larger — what hope is there that we might ever reduce our dependence on these monstrous machines

      And care soooo much about the environment.

      And so on. This isn’t guilt, this is an inventory of how smart and good the author is. And deep. “Luxurious prisons”, indeed.


    • Powered by 93 octane narcissism.


  3. This is pretty good:


    • We knew that was coming.


    • The damage that will do to Spotify is huge. But I suppose they can’t see that.


      • The stock is down 11% since Jan 31.

        And their ESG stockholders are going to push for it. Plus the indexers, since they are in the business of minimizing tracking error which means their incentive structure is completely different than a typical fund manager. They don’t have to care if the underlying company is a winner or a loser. They just have to hold 2.54637521% of it in their MidCap index fund. So nowadays, you probably have a blocking minority for the left on every corporation in America.


    • Yup. Rogan apologised for a non-offense. He toast.


    • Yep. This is correct:

      “Rogan seems like a nice enough guy, but he clearly doesn’t understand what’s going on here. None of his detractors are acting in good faith, and he’s making a mistake thinking he can appease them. They want to destroy him because they view him as a political threat, not because they have legitimate concerns. It’s that simple, and he doesn’t cease to be a political threat to them just because he put out an Instagram apology.”


  4. And they call Trump a fascist.

    “Delta Air Lines asks Justice Department to help set up national ‘no-fly’ list of unruly passengers”


  5. There’s that “i” word again:


    An earlier version of this article quoted Ottawa Police Chief Peter Sloly as saying, “This is a threat to our democracy. There’s a nationwide insurrection,” and “This is madness.” Sloly was at that moment reflecting on the comments of Diane Deans, chair of the Ottawa Police Services Board, though he later said he concurred with the sentiment. This version has been corrected.”


  6. JFC, imagine having to manage pussies like these?

    Imagine feeling obligated to keep them employed and to have to try and placate them.

    I can’t decide what’s worse, that he feels like an idiot doing it but does so anyway or that he actually is sincere. To me, this signals it’s time to dump investment in this group.


    • “While I strongly condemn what Joe has said…”

      I want to know exactly what it is he is condemning. Someone should make him be explicit. But if it is true that Rogan took the shows down himself, it seems like even he is rolling over.

      Cowards, all of them.


      • Given the size of the contract, I would assume that there are provisions for what to do in the event of something like this. He probably has to apologize in order to get paid out if Spotify dumps him


      • I don’t have trouble with Joe’s apology or even pulling the episodes (although, given the size of the operation, I would have had–or would get–someone to go through the episodes and bleep the offensive language be retain the discussion).

        But if that’s how he wants to do it, don’t have a problem with it.

        What I do have a problem with is that, while sincerely apologizing, there’s an obligation to point out the people doing this stuff are not remotely acting in good faith. That they are people who likely have said the same and worse, probably much more often where it’s not helped by context, who are using this as a blunt instrument of power. Even if you sincerely feel there’s a point there, you need to point out your critics are not acting in good faith and are engaged in a propaganda campaign.


Be kind, show respect, and all will be right with the world.

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