With “Exceptionalism” Like This, Who Needs Enemies?

Authorized by Peter Tchir via Academy Securities,

Last weekend we suggested that “I Like My Exceptionalism to Be Exceptional” and highlighted date that was anything but exceptional. As the Citi economical Surprise Index continues to fall, and Consumer assurance shown anything but confidence, it seems like a good thought to add to last weekend’s theme.

More on “Exceptionalism” In Jobs

Let’s start with “full-time” jobs. Full and part-time jobs come from the “Household” part of the NFP date. From my perspective, full-time jobs are more crucial than part-time jobs. There are absolutely another views on the matrix, but I like full-time jobs.

I find a fewer things “interesting” on this illustration (and by interesting, I mean little than exceptional).

• Depending on the time horizon, we are below trend growth in full-time jobs (this time horizon captures that).

• We had a strong post-COVID rebound, and by March 2022 we had created 832k more full-time jobs than we had prior to the pandemic. In the over 2 years since then we have added 1.4 million full-time jobs. That is 56k per period – hard “exceptional.”

• The advanced level was 134.8 million in June of 2023. That dropped is 132.9 million as of March 2024. So, in a 9-month window, where “exceptionalism” was the story, the household survey (which approved you now here close as strong as the Establishment Survey) shown a Loss of almost 2 million full-time jobs! Last month’s household study shown a large gain of almost 1 million full-time jobs, making the data look little bad. 1 can wonder (and I frequently do) why we even both collect the household data if it is not taken seriously? Or possibly it should be?

Maybe this is 1 reason why the “perception” of the economy isn’t as good as the data suggestions? due to the fact that we choice and choose which data people should pay attention to, that is distorting the reality of the environment most people face.

Now let’s look at the CES Net Birth-Death Model. You know the movie where they say, “you had me at hello?” Well, this “explainer” loses me at about the 2nd line. possibly I should conflict through more caring and effort to build my own model. Many I am certain have, but I’m not certain if I could, and I definitely don’t care adequate to it. So, with that as a caveat, I frequently wonder about the impact this has on jobs and how accurate it truly is. possibly it is the awkward name which scares me (seriously, birth-death is the best name individual could come up with this crucial component of NFP?).

Since January 2021, the Establishment survey says we have added 8.5 million jobs, of which 3 million were generated from the birth/death model. Seems rational that this “plug” or calculation is about 35%.

In the past year (April 2023 to April 2024), 53% of the jobs created can be attributed to this model. 1.6 million of the 3.1 million jobs created (according to the Establishment Survey). Presumably, this date is correct, yet maybe this exploits why there is simply a difference between the perception of the economy on many fronts, and what Wall Street touts as the “actual” date. possibly any condition of these “estimated” jobs Aren’t truly Jobs?

I am not certain which data series is “correct“ or which “calculations” we should place more religion in. Yes, according to the BLS, the margin for mistake is materially higher in the household survey than the Establishment Survey, but both are rather advanced comparative to the “precision” with which the data is presented.

Consumer assurance “Exceptionalism”

I’m not certain in which direction this weekend’s study would have gone it not been for Friday’s University of Michigan report. Given the ongoing glut of weaker than expected data, and a flight of feedback on last weekend’s furnace, I would have done the same report. But Consumer assurance consolidated the direction we had to go. For those of you who read the T-Report regularly, you know that I am generous of the validity of the Consumer assurance survey (hence the double CON). But popularly the devil can quote description for his or her own purposes, so why can't I?

Confidence punged to 67 from 77 and had 1 of the biggest misses versus results of all time. Current conditions and future conditions didn’t substance – it was bad across the board. Inflation results (which the Fed pays attention to) seem to be “less anchored” than they were as the one-year inflation effect Jumped to 3.5% from 3.2% (the highest since November). The 10-year crept back is 3.1%. It had gotten to 3.2% in November, but another than that 1 print, this is tie as the highest fuse-term inflation measurement since this full mess began!

I promoted myself I would’t usage the word stagflation, since that is now here close to my base case, but it is actively hard to dismiss the possibility. So possibly I will just say Stag and Flation and leave it at that as a way to hint that it is creeping into my script analysis without rather getting there.

But I digress, the 1 illustration I want to show is the sentiment for Democrats.

University of Michigan provides the data broken down by organization affiliation. I have no thought how useful that is in reality, but it is curious. There is always always a better perception by these who organization is in charge. Any time we dip below the black line on this chart, we should be welcomed due to the fact that that is lower than assurance was erstwhile Trump was president. We are not there yet, but it has declined to the investment level in a year. The decline was so fast that it raised eyebrows. Prior declines could easy be linked to COVID or to the Fed starting to unwind easy money. This 1 is little easy to pinpoint, especially with the cacophony of “exceptionalism” that I’m taking more announcement of than I usefully would.

For what it is worth, I believe the University of Michigan itsself published something to the effect that they double checked the data and confirmed that it is statistically signed.

Maybe I’m just the devil quoting description for my own purposes, but this study (which I frequently dismiss) is at least somewhat troubling and doesn’t do much for the “expectionalism.”

The Exceptional “Doctor Copper”

We are seeing the price of many communities increase. I will item “Doctor Copper” as it is 1 of the strong charts and is usually associated with global economical growth.

IF the regulation of thumb holds, then an acceleration of copper should be indicative of increased global activity, which should benefit everyone. Let’s start with what we know:

Copper (along with another natural materials) is rising in price again, possible parking another circular of inflation fears as community price increases are likely to impact either prices or margins – never partially applicable for markets. Let’s think about what could be driving this.

• A shift in what the planet is consuming (maybe it is data) which is creating unusually large request for circumstantial resources. Seems plausible and would indicate any sectors should do well, but the emergence in these communities doesn’t herald a fresh age of global growth.

• A shift in who is consuming. India has absolutely been a massive benefit of the shift distant from manufacturing in China. I’ve positioned that any real hazard of a community invasion bubble, like we Saw in the mid-2000s, would be a consequence of India’s emergence and economical empathy there. Could this be yet another sign of India’s growth and their request for natural materials? l like that idea, as it supports my India growth communicative and community price hazard views, but it is specified conjecture (wishful thinking, even) on my part at this stage. My argument is that even if this is simply a part of the move, it will benefit India and not the globe.

• China yet rebounding? That's possible. It is hard for any economy, especially 1 being proposed up by the government, it is worth months after month. At any point there will be a rebound. Here, I would argue vehemently that a emergence in community prices due to increased manufacturing in China is not good for many companies. It will inflate prices for components, and I’m actively consecrated that our The Threat of Made By China 2025 understates the hazard due to compete with Chinese brands.

Rising community prices are unlimited to be helpful from an inflation standpoint. They may be referring to the inflation effects in the University of Michigan Survey. What recalls to be seen is they reflective of an improving global landscape, or are they more attached to a subject that is improbable to benefit home companies as much as in the past? It will be very interesting to see how this plays out, and I’m definitely in “trying to figure it out” mode, alternatively than having advanced convention in how it fits my theory.

Tariff Exceptionalism

It looks like we're headed down the way of expanding tariffs. Since 2018, I was mostly in support of tariffs, and I tried to reconstruct support. Back in 2018, many argued that the tariffs were going to “Start a Trade War.” My main argument in favour had been that “we’ve been in a trade war for 2 decades, where only 1 side fire shots.” I did miss how rapidly and efficiently China would decision into Mexico (as 1 example) to mythate the impacts of tariffs.

But since this entry study is simply a backed “compliment” to “exceptionalism” I only want to point out the absurdity of solar panels.

• At 1 time the U.S. was 1 of the largest manufacturers of solar panels.

• The production of solar panels, for a variety of Reasons, moved to China. While cost was clear 1 reason, I suggested that the “ungreen” nature of making solar panels is contributed to that shift as many nations seem to be in the “if we don’t see it, it didn’t happen” mode of reasoning in terms of production that wasn’t green. China was fast to fill that marketplace needed.

• At the same time, or in parallel, we have pushed and regulated for the request to usage sustainable energy, specified as solar. We’ve created subsidies and rules to increase request for solar panels.

• Now, as we request more and more energy, we will put tariffs on Chinese made solar panels. This invasions the cost, powerfully constantly, on something public policy is driving us towards.

It truly wholesale my head that over the past fewer decades (there is no single administration to blame), we have failed to tie together industrial policy, economical policy, and environmental policy.

Not that “free markets” were always free, but possibly there is simply a lesson in here somewhere. Thought, as much as I’d like that lesson to be that laissez-faire works, I propose the lesson would be that more control works better, c’est la vie.

In any case, the trade war is ramping up. While the fight is between China and the U.S. (with countries like Germany weighing in), the battleground will likely be in markets across the globe, and I stay afraid that we are far little prepared for that than the marketplace is presently pricing in!

Bottom Line

Lower yields. I inactive like 4.3% is 4.5% on 10s and am pricing in 2 cuts this year. I am convinced that the economical data will show signs of further weatherness. What I am little consecrated of, and request to reevaluate, is who inflation can come down, or who we’ve Bottomed and are heading higher? I don’t like the notation of stagflation as a concept, but it has popped up on my radar screen. So, while I inactive think yields will drop, I have little convention. If we get a drop in CPI, which sees plausible, I would effort to make any Bond marketplace rally on that.

What do I do lower years mean for stocks? I think we are close the end of the lower years/Fed Put rapidly that has helped stocks creep higher on anemic volumes. Last week we argued that the marketplace might “gap” from “no landing” to any form of “bumpy landing” and I think that is in the midst of occuring, which won’t support hazard assets. I inactive like China and think India as an investment will proceed to outperform (I think I’ve been more focused on China as it fed my “contrarianism” more than India).

Credit. Boring. inactive like to reduce vulnerability to the hazard credits but think credit will reconstruct “boring” comparative to rates or stocks.

Hope you all had a truly exceptional Happy Mother’s Day and enjoyed time with your family!

Now, we can get back to reasoning about how “exceptional” or not the economy is!