Business

Unsurprisingly, Powell did not commit to further increases. Here are five reasons the January jobs report might be too good to be true.


Traders kept in mind that Fed Chairman Jerome Powell, when he wasn’t questioned by David Rubinstein about how he made $190,000 a year, did not commit on Tuesday to be even more aggressive on interest rates with a whopping 517,000 increase in nonfarm payrolls.

Powell said interest rates will even have to move higher than the market is currently expecting “if we continue to get” a strong labor market or higher inflation reports.

There’s reason to believe, at least on the payrolls front, that the January numbers are a one-off.

Economists at Morgan Stanley point out that the January figure reflects three factors they consider temporary: unusually warm weather, resolution of California’s higher education strikes and an uptick Very strong seasonal adjustment. “Seasonal effects are a zero-sum game for the year, so it is likely that the gain in January will come at the expense of weaker printing in the first half of the year,” they said in a note published today. announced late Tuesday.

Steve Englander, head of North America macro strategy at Standard Chartered, dives into another set of metrics released by the Labor Department, the Quarterly Employment and Wage Census. This report is the subject of a new analysis from the Philadelphia Federal Reserve that was posted to Zero Hedge and then to Tucker Carlson. In summary, analysis of the Philadelphia Fed’s QCEW data shows that employment in the second quarter of 2022 was overstated by about a million.

Englander is not alleging a broad conspiracy. But he found the QCEW data, which is based on administrative data from more than 10 million establishments, to be fairly reliable, and his own regression found a risk of exaggerating 1.1 million payrolls in the second quarter. . “There’s a long way to go from the questionable deviation in Q2 2022 data to January 2023 job gains, but it raises the possibility that the NFP is more erratic than it has been in the past,” he said.

Based on such a huge dataset, QCEW takes longer to compile. The QCEW report for Q3 2022 will be published on February 22, that is in two weeks. “If the QCEW Q3-2022 release points to any degree of labor market weakness, then questions about the reliability of the NFP could be raised,” he said.

Englander further noted that the household survey – part of the employment report used to calculate the unemployment rate – also points to a softer employment picture than the payroll figure suggests. The Household Report also shows that nearly all of the jobs created in the past year were part-time.

Market

US stock futures
ES00

NQ00

was lower after a 266-point gain on Tuesday for the Dow Jones Industrial Average
DJIA.

Dollar
DXY

lower, while the yield on the 10-year Treasury note
BX:TMUBMUSD10Y

is 3.66%.

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rumor

In launching AI-enhanced Bing search, Microsoft
MSFT

show every point of market share its search engine gets a $2 billion revenue opportunity, albeit at a lower profit. Related, UK regulator says an in-depth independent investigation into Microsoft’s proposed acquisition of Activision Blizzard
ATVI

temporarily found the deal to raise concerns about cloud and console gaming.

Mexican Barbecue Chipotle
CMG
missed expectations for both earnings and sales at the same store. Uber Technology
UBER

rose after earnings forecasts were revised ahead of Wall Street forecasts.

Walt Disney
dis

earnings due after closing.

Health CVS
curriculum vitae

said they are buying Oak Street Health
OSH

for $10.6 billion, in an all-cash deal that has been rumored in recent days.

Several Federal Reserve officials are speaking, including New York Fed President John Williams and Fed Governors Lisa Cook and Christopher Waller.

Economists at Goldman Sachs said President Joe Biden’s State of the Union Address pushed back the debt limit debate, cut Social Security and Medicare “even further” and emphasized Buy America policies.

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Apple

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amazon.com

MULN

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Nio

MSFT

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