Morning Report: Strong jobs report

Vital Statistics:

S&P futures4,147-44.75
Oil (WTI)75.65-0.11
10 year government bond yield 3.49%
30 year fixed rate mortgage 5.98%

Stocks are lower after the strong jobs report. Bonds and MBS are down

The economy added 517,000 jobs in January, which was way above expectations, while the unemployment rate inched down to 3.4%. The labor force participation rate the employment-population ratios were unchanged and remain below pre-pandemic levels. November and December payrolls were adjusted upward by 71,000.

Leisure and hospitality added the most jobs (+128,000) however employment in this sector remains below pre-pandemic levels. Professional and business services and health care were also big contributors to job growth. Average hourly earnings rose 0.3% month-over-month and 4.4% year-over-year.

The growth rate in average hourly earnings is declining, however we are still above pre-pandemic levels.

Needless to say, this report will be too strong for the Fed’s liking. This explains the reaction of stocks and bonds to the report. The Fed wants to cool the labor market and so far it hasn’t gained any traction. The unemployment rate has broken below pre-pandemic levels and is now back at the lowest in over 50 years.

PennyMac Financial Services reported that origination volumes in the fourth quarter were $23 billion, down 12% from Q3 and 41% from a year ago. For the year, PFSI originated $109 billion, which was down 54% compared to 2021. In terms of profitability, servicing carried the load, offsetting the losses in the production segment.

Production margins fell to 55 basis points from 99 in Q3 and 119 basis points a year ago. The decline in margins was driven primarily by origination mix – consumer direct fell dramatically while correspondent remained stable. Delinquency rates ticked up again, but remain below pre-pandemic levels.

The ISM Services Index rebounded in January after contracting in December.“Business Survey Committee respondents indicated that capacity and logistics performance continue to improve. Although responses varied by industry and company, the majority of panelists indicated that business is trending in a positive direction. Employment was unchanged for the month. Some companies still find it difficult to fill open positions, while others are facilitating staff reductions.”

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20 Responses

    • And they can’t read or interpret poll questions:


      Q: Some people claim that the coronavirus vaccine never actually worked to slow the spread of the virus. Do you agree or disagree?

      Agree: 37%
      Disagree: 51%
      Don’t know enough to say: 10%
      Unsure: 3%

      It’s not the 37% that disappoints here—that was predictable. But 51%? Really, only a bare majority of registered voters think the vaccines worked?”

      The question asked wasn’t whether “the vaccines worked”. It was whether they slowed the spread of the virus. What the vaccines did was reduce the death rate.


      • I’m not 100% convinced they did that, I think the mutations were less deadly, the treatment algo’s improved and the most vulnerable survivors had built up antibodies from previous infection(s). Any belief in the shots seem more an act of faith at this point.


    • “If this poll accurately reflects voters’ basic mindset on matters of science, sovereignty, and justice, then Democrats have a lot of truth-telling to do over the next year in preparation for the ‘24 presidential contest.”

      Good luck with that. I assume the left is lying at this point.


  1. For the longest time my combined heating and electricity bills were very stable and rarely exceeded $350 combined. Under Biden they’ve hit $487.


  2. I’m guessing that this isn’t the first Chinese balloon overflight and someone in NatSec got frustrated and leaked it.


  3. Ezra discovers the downsides of regulation:


    • I love Austan Goolsbee thinking this is a Scooby Doo mystery.


    • now apply that to health care. and be shocked at the cost.


      • What’s interesting is that we had a significant spurt of increase in the late 80’s/early 90’s that distanced us from the Europeans re individual costs but in terms of increases per patient since then we more or less are even with them.


        • Anyone have any sense of what the real story is with this Chinese balloon? The media story makes no sense at all to me.


        • I think Blinken was meeting going to go to China and announce some sort of idiotic global warming horseshit and in typical fashion, China sent over some spy balloons with the thinking that idiotic global warming horseshit is important to Biden and the West and therefore we would ignore it so as not to derail whatever the moronic announcement was going to be. It became public because people saw it. Nothing will happen other than a couple of month delay in announcing whatever global warming horseshit they were going to announce. China will keep sending balloons over but at a higher altitude.


  4. This guy is truly sucking the marrow out of life!


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