Jobs Report Mixed, Now Time For CPI

June CPI Report will be released on Wednesday

Author

Mark Roussin
July 10, 2023

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Market Talk ⏪

We always begin with 5 important topics from the week prior and/or related to the week ahead for investors to be mindful of.

  1. Mixed Jobs Reports. The private payroll report from ADP on Thursday showed that the private sector created 497,000 jobs in June, far outpacing the estimated 267,000. Leisure and hospitality was the leading sector, adding 232,000 jobs in June. An interesting stat was the fact that companies with fewer than 50 employees were responsible for most of the job growth, adding 299,000 positions. Firms with more than 500 workers lost 8,000 jobs, while mid-size companies contributed 183,000. On Friday, the Labor Department reported June job creation of only 209,000, trailing the 240,000 expected, far different from the ADP report. This was the slowest month of job creation since December 2020.

  2. Unemployment remains largely unchanged, but wages slowing. Unemployment for the month of June decreased only 0.1% during the month of June to 3.6% according to the Department of Labor. Wages have been a closely watched metric for the Federal Reserve, and in June, average hourly earnings increased 0.4% MoM and increased 4.4% YoY. However, wages continue to trend lower since January of 2022.

  3. US Industrial activity remains weak. Manufacturing PMI for the month of June dropped to 46.0, down from 46.9 in May. The June PMI data marks the eighth consecutive month below the 50 threshold, which is the longest such stream since the Great Recession.

  4. Auto Manufacturers all reported solid Q2 volumes. Tesla reported 466,140 deliveries for Q2, and production of 479,700 vehicles. This is the 5th consecutive period of higher volume production. GM delivered 691,978 vehicles in the U.S, beating estimates. Toyota sold 568,962 vehicles in Q2, beating estimates. Ford sold 531,662 vehicles in Q2, beating estimates.

  5. US Bond yields continue to rise. Over the past few weeks we have seen bond/treasury yields rise in the US. Yields have now hit their highest point in more than three months after the release of the jobs report. The proof that the labor force and economy seem to be doing ok, increase the likelihood of the Fed hiking rates yet again at the end of this month. The CME group now estimates a more than 90% chance of a rate hike in a few weeks.

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US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

On the short week last week, the Fear & Greed Index did not move al that much as it remained in Extreme Greed territory, which continues to be concerning. Currently, the index has a reading of 78, which is in line with the prior week reading of 80.

Earnings on Deck 💰

Q2 earnings season officially kicks off this week with a few Big Banks and UnitedHealth getting things started.

Dividend News 📝

Here are some notable analyst upgrade/downgrades from the previous week:

  • No upgrades or downgrades on the short week last week

Economic Data This Week 📆

Monday

  • Fed Vice Chair Michael Barr speaks

  • Wholesale inventories (May)

Tuesday

  • NFIB Small Business Index (June)

Wednesday

  • Consumer price index (June)

Thursday

  • Initial jobless claims (week ended July 8)

  • Producer price index (June)

Friday

  • Import/export prices (June)

  • Consumer sentiment (July preliminary)

Other Resources 📺

If you have not done so yet, check out my growing YouTube community of more than 28,000 like-minded investors where I publish weekly videos focused on building wealth through investing.

Here is the latest video I released: 4 Cheap REITs To Take Advantage of:

Here is another video I put out last week: Better To Buy SCHD or JEPI?

Here are a few others of my latest videos:

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Have questions? You can email me directly at [email protected].

Happy Investing!

Mark

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