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The November Labor Report - Bad News Will Be Bad News For Stocks

Seekingalpha2023-12-08

Bad news for the October labor report was good news for stocks in November as interest rates fell.Bad news for the November labor report is likely to be bad news for stocks, as it increases the ...

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All in Tesla
·2023-12-08
GFY Disney & other brands. Elon has said trying to look good on the outside but doing evil. 😞
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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe November Labor Report - Bad News Will Be Bad News For Stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-12-08 11:54 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4656302-november-labor-report-bad-news-for-stocks><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Bad news for the October labor report was good news for stocks in November as interest rates fell.Bad news for the November labor report is likely to be bad news for stocks, as it increases the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4656302-november-labor-report-bad-news-for-stocks\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4585","symbol_name":"ETF&股票定投概念","start_time":0,"source_url":"https://seekingalpha.com/article/4656302-november-labor-report-bad-news-for-stocks","article_id":"2389053270","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2389053270","pubTimestamp":1702007697,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"Bad news for the October labor report was good news for stocks in November as interest rates fell.Bad news for the November labor report is likely to be bad news for stocks, as it increases the probability of recession, and interest rates are already low.Good news for the November labor report could also be bad news for stocks, if interest rates rise.gorodenkoff The November rally The October labor report triggered a major rally in the stock market. Right before the release of the report, the S&P 500  was in a 10% correction territory. In addition, the 10-Year Treasury yield  was still close to 5%, and the 2Y Treasury  was hovering around 5%. One month later, the S&P 500 is near the year highs , 10 Year Treasury yield is 4.17%, and the 2Y Treasury is 4.58%. So, what was in the October labor report to trigger such a dramatic market reaction?","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4585":"ETF&股票定投概念",".IXIC":"NASDAQ Composite",".SPX":"S&P 500 Index","BK4588":"碎股",".DJI":"道琼斯","BK4111":"出版"},"translate_title":"11月劳工报告——坏消息将是股市的坏消息","themeId":"46778d7d42be4bfc92705f7cffd6738c","isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{".IXIC":1.1,".SPX":1.1,".DJI":1,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US2Y.BOND":0.9,"US30Y.BOND":0.9,"US3Y.BOND":0.9,"US5Y.BOND":0.9,"US6M.BOND":0.9,"US7Y.BOND":0.9},"content_text":"Bad news for the October labor report was good news for stocks in November as interest rates fell.Bad news for the November labor report is likely to be bad news for stocks, as it increases the probability of recession, and interest rates are already low.Good news for the November labor report could also be bad news for stocks, if interest rates rise.The November rallyThe October labor report triggered a major rally in the stock market. Right before the release of the report, the S&P 500 (SP500) was in a 10% correction territory. In addition, the 10-Year Treasury yield (US10Y) was still close to 5%, and the 2Y Treasury (US2Y) was hovering around 5%. One month later, the S&P 500 is near the year highs (almost 10% higher), 10 Year Treasury yield is 4.17%, and the 2Y Treasury is 4.58%.So, what was in the October labor report to trigger such a dramatic market reaction? The expectations were for 180K new jobs created, 3.8% unemployment rate and 0.3% wage growth. The actual data showed 150K new jobs created, a 3.9% unemployment rate, and a 0.2% wage growth.Apparently, the October labor report increased the probability of a soft-landing scenario - given that the labor market is gradually weakening, while the inflationary pressures from the wages are easing. This essentially caused the rush to buy stocks (SPX) and to buy bonds (TLT, SHY), which was also supported by the October CPI report.The market participants also increased expectations that the Fed would significantly cut interest rates in 2024. Specifically, the market expects that the Fed would cut the Federal Funds rate in 2024 down to 4% from the current 5.33% midrange, and that's a 5-6 25bpt cut.However, when you put it all together, there are actually many inconsistencies. Primarily, the expectations of aggressive interest rate cuts are not consistent with the soft-landing scenario. The soft-landing scenario could result in interest rate normalization, which is a very gradual decrease in interest rates, something described in the Fed dot plot. Specifically, the Fed expects the Federal Funds rate to be at 3.9% by the end of 2025, and the market essentially puts it forward to the end of 2024. The market expectations of aggressive interest rate cuts are more consistent with a recession, which is when historically the Fed cuts rates sharply. So, this brings us to the November labor report - or another piece of the puzzle.The November labor reportThe November labor report is, thus, a very important follow-up to the October labor report, given the market performance over the last month.The consensus market expectations are for 180K new jobs, which is above October's 150K level. Thus, the market does not expect that the October labor market weakening will continue in November.The consensus is also that the unemployment rate will stay at 3.9%, so no change from October. However, the market expects an uptick in wage growth month-over-month to 0.3%. Thus, the overall consensus expectation is that the October weakness will not transition to November, which includes a key inflation proxy.Trading EconomicsWhat to watch for in the November labor report?The first issue to watch is, obviously, how will the actual data compare to the consensus expectations. And again, obviously, this is impossible to predict in advance. But we can look at some high-frequency weekly data to try to speculate about the actual data.The initial claims from unemployment are a weekly data point, and it shows how many people apply for unemployment benefits. Based on this data point, the labor market remains tight as the initial claims remain very low, still hovering slightly above 200K.However, the continuing claims from unemployment have been rising sharply towards the 2M level, reaching the highest level since December 2021. This indicates that, yes, the labor market is still tight, but those who lose their jobs are having a more difficult time finding a new job.Trading EconomicsSo, the question is whether the data from the continuing claims also shows in the November labor report, for example, as a 4% higher unemployment rate?The second thing to watch is the revisions to the previous months. What happens if the October numbers get revised higher or lower? Sometimes the revisions are more important, especially during the downturns when the data usually gets revised lower. However, some attribute the October weakness to the several strikes in October, such as by the UAW. Thus, there is a chance that, in this case, the October numbers are actually revised higher.And third, and the most important thing, is the market reaction to the November labor report. If the November labor report continues to show weakness beyond expectations, this includes a number below 180K and possibly downward revisions to October numbers, how will the market respond?Short-term interest rates are already low enough, and pricing a significant Fed tightening already - actually pricing a recession already. Further, the stock market responded favorably to the October numbers because interest rates went down, so this time around the reaction could be much different. This time bad news could actually be bad news - and the stock market could fall, especially if the bad news increases the probability of a recessionOn the other hand, if the November jobs number becomes stronger than expected, which could include some up revisions to the October numbers, the interest rates could rise - putting in jeopardy the entire soft-landing thesis. In other words, good news could be bad news this time around.ImplicationsThe November labor report could be bad news for the stock market, whether it is \"good news\" or \"bad news.\" Specifically, a good labor market report could trigger an increase in interest rates, and thus push stocks lower, especially as the expected Fed interest rate cuts are repriced. A bad labor market report could increase the probability of a recession, while at the same time have limited effect on the short-term interest rates given already low levels which is bad news for the stock market, especially given the optimistic 11% earnings growth for 2024 for the S&P 500, which obviously does not factor in a recession.Thus, we are possibly in a situation where bad news becomes bad news, and also where good news is also bad news. This is actually pretty standard for a pre-recessionary period.Ultimately, the reaction could be a function of momentum - that's the only thing working for the stocks for now, and this is likely with an \"as expected\" data. Hey, nobody said this was easy.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[{"id":249688063664192,"gmtCreate":1702009105955,"gmtModify":1702013440079,"author":{"id":"3577580366301047","authorId":"3577580366301047","name":"All in Tesla","avatar":"https://community-static.tradeup.com/news/8db11f6e6a9a2a52850e734188850dc2","vip":1,"crmLevel":9,"crmLevelSwitch":1,"idStr":"3577580366301047","authorIdStr":"3577580366301047"},"htmlText":"GFY Disney &amp; other brands. Elon has said trying to look good on the outside but doing evil. 😞","listText":"GFY Disney &amp; other brands. Elon has said trying to look good on the outside but doing evil. 😞","text":"GFY Disney & other brands. Elon has said trying to look good on the outside but doing evil. 😞","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/249688063664192","repostId":2389053270,"repostType":2,"repost":{"id":"2389053270","pubTimestamp":1702007697,"share":"https://ttm.financial/m/news/2389053270?lang=&edition=fundamental","pubTime":"2023-12-08 11:54","market":"us","language":"en","title":"The November Labor Report - Bad News Will Be Bad News For Stocks","url":"https://stock-news.laohu8.com/highlight/detail?id=2389053270","media":"Seekingalpha","summary":"Bad news for the October labor report was good news for stocks in November as interest rates fell.Bad news for the November labor report is likely to be bad news for stocks, as it increases the probability of recession, and interest rates are already low.Good news for the November labor report could also be bad news for stocks, if interest rates rise.gorodenkoff The November rally The October labor report triggered a major rally in the stock market. Right before the release of the report, the S&P 500  was in a 10% correction territory. In addition, the 10-Year Treasury yield  was still close to 5%, and the 2Y Treasury  was hovering around 5%. One month later, the S&P 500 is near the year highs , 10 Year Treasury yield is 4.17%, and the 2Y Treasury is 4.58%. So, what was in the October labor report to trigger such a dramatic market reaction?","content":"<html><head></head><body><ul style=\"\"><li><p>Bad news for the October labor report was good news for stocks in November as interest rates fell.</p></li><li><p>Bad news for the November labor report is likely to be bad news for stocks, as it increases the probability of recession, and interest rates are already low.</p></li><li><p>Good news for the November labor report could also be bad news for stocks, if interest rates rise.</p></li></ul><h2 id=\"id_3947397514\">The November rally</h2><p>The October labor report triggered a major rally in the stock market. Right before the release of the report, the S&amp;P 500 (SP500) was in a 10% correction territory. In addition, the 10-Year Treasury yield (US10Y) was still close to 5%, and the 2Y Treasury (US2Y) was hovering around 5%. One month later, the S&amp;P 500 is near the year highs (almost 10% higher), 10 Year Treasury yield is 4.17%, and the 2Y Treasury is 4.58%.</p><p>So, what was in the October labor report to trigger such a dramatic market reaction? The expectations were for 180K new jobs created, 3.8% unemployment rate and 0.3% wage growth. The actual data showed 150K new jobs created, a 3.9% unemployment rate, and a 0.2% wage growth.</p><p>Apparently, the October labor report increased the probability of a soft-landing scenario - given that the labor market is gradually weakening, while the inflationary pressures from the wages are easing. This essentially caused the rush to buy stocks (SPX) and to buy bonds (TLT, SHY), which was also supported by the October CPI report.</p><p>The market participants also increased expectations that the Fed would significantly cut interest rates in 2024. Specifically, the market expects that the Fed would cut the Federal Funds rate in 2024 down to 4% from the current 5.33% midrange, and that&#39;s a 5-6 25bpt cut.</p><p>However, when you put it all together, there are actually many inconsistencies. Primarily, the expectations of aggressive interest rate cuts are not consistent with the soft-landing scenario. The soft-landing scenario could result in interest rate normalization, which is a very gradual decrease in interest rates, something described in the Fed dot plot. Specifically, the Fed expects the Federal Funds rate to be at 3.9% by the end of 2025, and the market essentially puts it forward to the end of 2024. The market expectations of aggressive interest rate cuts are more consistent with a recession, which is when historically the Fed cuts rates sharply. So, this brings us to the November labor report - or another piece of the puzzle.</p><h2 id=\"id_3325042559\">The November labor report</h2><p>The November labor report is, thus, a very important follow-up to the October labor report, given the market performance over the last month.</p><p>The consensus market expectations are for 180K new jobs, which is above October&#39;s 150K level. Thus, the market does not expect that the October labor market weakening will continue in November.</p><p>The consensus is also that the unemployment rate will stay at 3.9%, so no change from October. However, the market expects an uptick in wage growth month-over-month to 0.3%. Thus, the overall consensus expectation is that the October weakness will not transition to November, which includes a key inflation proxy.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/659e7cf47e4f518511d9198039c8f7b0\" tg-width=\"640\" tg-height=\"169\"/></p><p>Trading Economics</p><h2 id=\"id_1359534328\">What to watch for in the November labor report?</h2><p>The first issue to watch is, obviously, how will the actual data compare to the consensus expectations. And again, obviously, this is impossible to predict in advance. But we can look at some high-frequency weekly data to try to speculate about the actual data.</p><p>The initial claims from unemployment are a weekly data point, and it shows how many people apply for unemployment benefits. Based on this data point, the labor market remains tight as the initial claims remain very low, still hovering slightly above 200K.</p><p>However, the continuing claims from unemployment have been rising sharply towards the 2M level, reaching the highest level since December 2021. This indicates that, yes, the labor market is still tight, but those who lose their jobs are having a more difficult time finding a new job.</p><p></p><p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/a06302094fc095f5febf5ffabc98aef1\" tg-width=\"640\" tg-height=\"283\"/></p><p>Trading Economics</p><p>So, the question is whether the data from the continuing claims also shows in the November labor report, for example, as a 4% higher unemployment rate?</p><p>The second thing to watch is the revisions to the previous months. What happens if the October numbers get revised higher or lower? Sometimes the revisions are more important, especially during the downturns when the data usually gets revised lower. However, some attribute the October weakness to the several strikes in October, such as by the UAW. Thus, there is a chance that, in this case, the October numbers are actually revised higher.</p><p>And third, and the most important thing, is the market reaction to the November labor report. If the November labor report continues to show weakness beyond expectations, this includes a number below 180K and possibly downward revisions to October numbers, how will the market respond?</p><p>Short-term interest rates are already low enough, and pricing a significant Fed tightening already - actually pricing a recession already. Further, the stock market responded favorably to the October numbers because interest rates went down, so this time around the reaction could be much different. This time bad news could actually be bad news - and the stock market could fall, especially if the bad news increases the probability of a recession</p><p>On the other hand, if the November jobs number becomes stronger than expected, which could include some up revisions to the October numbers, the interest rates could rise - putting in jeopardy the entire soft-landing thesis. In other words, good news could be bad news this time around.</p><h2 id=\"id_3614434943\">Implications</h2><p>The November labor report could be bad news for the stock market, whether it is &#34;good news&#34; or &#34;bad news.&#34; Specifically, a good labor market report could trigger an increase in interest rates, and thus push stocks lower, especially as the expected Fed interest rate cuts are repriced. A bad labor market report could increase the probability of a recession, while at the same time have limited effect on the short-term interest rates given already low levels which is bad news for the stock market, especially given the optimistic 11% earnings growth for 2024 for the S&amp;P 500, which obviously does not factor in a recession.</p><p>Thus, we are possibly in a situation where bad news becomes bad news, and also where good news is also bad news. This is actually pretty standard for a pre-recessionary period.</p><p>Ultimately, the reaction could be a function of momentum - that&#39;s the only thing working for the stocks for now, and this is likely with an &#34;as expected&#34; data. Hey, nobody said this was easy.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>The November Labor Report - Bad News Will Be Bad News For Stocks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nThe November Labor Report - Bad News Will Be Bad News For Stocks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-12-08 11:54 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4656302-november-labor-report-bad-news-for-stocks><strong>Seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Bad news for the October labor report was good news for stocks in November as interest rates fell.Bad news for the November labor report is likely to be bad news for stocks, as it increases the ...</p>\n\n<a href=\"https://seekingalpha.com/article/4656302-november-labor-report-bad-news-for-stocks\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4111":"出版",".DJI":"道琼斯","BK4585":"ETF&股票定投概念",".IXIC":"NASDAQ Composite","BK4588":"碎股",".SPX":"S&P 500 Index"},"source_url":"https://seekingalpha.com/article/4656302-november-labor-report-bad-news-for-stocks","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2389053270","content_text":"Bad news for the October labor report was good news for stocks in November as interest rates fell.Bad news for the November labor report is likely to be bad news for stocks, as it increases the probability of recession, and interest rates are already low.Good news for the November labor report could also be bad news for stocks, if interest rates rise.The November rallyThe October labor report triggered a major rally in the stock market. Right before the release of the report, the S&P 500 (SP500) was in a 10% correction territory. In addition, the 10-Year Treasury yield (US10Y) was still close to 5%, and the 2Y Treasury (US2Y) was hovering around 5%. One month later, the S&P 500 is near the year highs (almost 10% higher), 10 Year Treasury yield is 4.17%, and the 2Y Treasury is 4.58%.So, what was in the October labor report to trigger such a dramatic market reaction? The expectations were for 180K new jobs created, 3.8% unemployment rate and 0.3% wage growth. The actual data showed 150K new jobs created, a 3.9% unemployment rate, and a 0.2% wage growth.Apparently, the October labor report increased the probability of a soft-landing scenario - given that the labor market is gradually weakening, while the inflationary pressures from the wages are easing. This essentially caused the rush to buy stocks (SPX) and to buy bonds (TLT, SHY), which was also supported by the October CPI report.The market participants also increased expectations that the Fed would significantly cut interest rates in 2024. Specifically, the market expects that the Fed would cut the Federal Funds rate in 2024 down to 4% from the current 5.33% midrange, and that's a 5-6 25bpt cut.However, when you put it all together, there are actually many inconsistencies. Primarily, the expectations of aggressive interest rate cuts are not consistent with the soft-landing scenario. The soft-landing scenario could result in interest rate normalization, which is a very gradual decrease in interest rates, something described in the Fed dot plot. Specifically, the Fed expects the Federal Funds rate to be at 3.9% by the end of 2025, and the market essentially puts it forward to the end of 2024. The market expectations of aggressive interest rate cuts are more consistent with a recession, which is when historically the Fed cuts rates sharply. So, this brings us to the November labor report - or another piece of the puzzle.The November labor reportThe November labor report is, thus, a very important follow-up to the October labor report, given the market performance over the last month.The consensus market expectations are for 180K new jobs, which is above October's 150K level. Thus, the market does not expect that the October labor market weakening will continue in November.The consensus is also that the unemployment rate will stay at 3.9%, so no change from October. However, the market expects an uptick in wage growth month-over-month to 0.3%. Thus, the overall consensus expectation is that the October weakness will not transition to November, which includes a key inflation proxy.Trading EconomicsWhat to watch for in the November labor report?The first issue to watch is, obviously, how will the actual data compare to the consensus expectations. And again, obviously, this is impossible to predict in advance. But we can look at some high-frequency weekly data to try to speculate about the actual data.The initial claims from unemployment are a weekly data point, and it shows how many people apply for unemployment benefits. Based on this data point, the labor market remains tight as the initial claims remain very low, still hovering slightly above 200K.However, the continuing claims from unemployment have been rising sharply towards the 2M level, reaching the highest level since December 2021. This indicates that, yes, the labor market is still tight, but those who lose their jobs are having a more difficult time finding a new job.Trading EconomicsSo, the question is whether the data from the continuing claims also shows in the November labor report, for example, as a 4% higher unemployment rate?The second thing to watch is the revisions to the previous months. What happens if the October numbers get revised higher or lower? Sometimes the revisions are more important, especially during the downturns when the data usually gets revised lower. However, some attribute the October weakness to the several strikes in October, such as by the UAW. Thus, there is a chance that, in this case, the October numbers are actually revised higher.And third, and the most important thing, is the market reaction to the November labor report. If the November labor report continues to show weakness beyond expectations, this includes a number below 180K and possibly downward revisions to October numbers, how will the market respond?Short-term interest rates are already low enough, and pricing a significant Fed tightening already - actually pricing a recession already. Further, the stock market responded favorably to the October numbers because interest rates went down, so this time around the reaction could be much different. This time bad news could actually be bad news - and the stock market could fall, especially if the bad news increases the probability of a recessionOn the other hand, if the November jobs number becomes stronger than expected, which could include some up revisions to the October numbers, the interest rates could rise - putting in jeopardy the entire soft-landing thesis. In other words, good news could be bad news this time around.ImplicationsThe November labor report could be bad news for the stock market, whether it is \"good news\" or \"bad news.\" Specifically, a good labor market report could trigger an increase in interest rates, and thus push stocks lower, especially as the expected Fed interest rate cuts are repriced. A bad labor market report could increase the probability of a recession, while at the same time have limited effect on the short-term interest rates given already low levels which is bad news for the stock market, especially given the optimistic 11% earnings growth for 2024 for the S&P 500, which obviously does not factor in a recession.Thus, we are possibly in a situation where bad news becomes bad news, and also where good news is also bad news. This is actually pretty standard for a pre-recessionary period.Ultimately, the reaction could be a function of momentum - that's the only thing working for the stocks for now, and this is likely with an \"as expected\" data. Hey, nobody said this was easy.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":17,"commentSize":1,"repostSize":2,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}