To The Moon

It was with mixed emotions as I witnessed US market drowned in a sea of red, on the first trading day of August 2025.

On the one hand, I half expected D-day to arrive because with the S&P 500 or Nasdaq or both indexes keep charting new highs consecutively, is just so surreal.

On the other hand, to witness one’s holdings get “reduced” is just brutal.

One of the culprits, confirmed by media was US Non-farm payroll report (July 2025), released before trading began on Friday.

Non Farm Payroll.

The reported data was pure disaster.

US job growth slowed more than expected and prior month's report was revised sharply lower, indicating US labour market may be starting to crack. (see below)

As per US Bureau of Labour Statistics (BLS), for July 2025, employers added just 73,000 jobs.

That tally is less than the expected 106,000 and June 2025’s initial count of 147,000.

The bigger surprises were the revised numbers for May & June 2025.

They were down by a combined 258,000 from previously announced levels:

• For June 2025, the numbers were revised to a mere 14,000 jobs from initial readings of 147,000 - a difference of -133,000.

• For May 2025, the numbers were revised to just 19,000 jobs from initial readings of 139,000 - a difference of -125,000.

The last time there was such a huge revision to the change in employment over the prior 2 months was in April 2020 - at the height of Covid pandemic.

Worryingly, revisions have been consistently negatived in 2025, with the Labour Dept lowering its initially reported job count every month through June.

I have tried to look for official report on how things could have been so wrong, but there were zero press coverage on the specifics, wonder why.

Unemployment Report.

US unemployment rate ticked up to 4.2% in July, in lined with expectations. (see above)

In addition, long-term unemployment heated up also:

• Average weeks unemployed jumped to 24.1, the highest level since April 2022.

• At the same time, the level of those out of work for more than 27 weeks climbed to 1.82 million, the most since December 2021 and about one-quarter (or 25%) of all the unemployed.

Jobs Breakdown.

New jobs have also largely been concentrated in the (a) health care and (b) social assistance sectors - meaning job opportunities have not been broad-based, economists said.

The two sectors combined accounted for some 94% of the job growth in July 2025.

Details - on the rise.

In July, health care added +55,000 jobs, above the average monthly gain of 42,000 over the prior 12 months.

Over the month, job gains occurred in:

• Ambulatory health care services (+34,000).

• Hospitals (+16,000).

Social assistance employment continued to trend up in July (+18,000), reflecting continued job growth in individual and family services (+21,000).

Details - on the decline.

Federal government employment continued to decline in July by -12,000 jobs.

YTD employment is down by -84,000 since reaching a peak in January 2025, before Elon Musk’s Department of Government Efficiency (DOGE) began paring down the jobs rolls.

Professional and business services lost -14,000.

** Note : employees on paid leave or receiving ongoing severance pay are counted as employed in the establishment survey.

Economists’ postulations.

Like it or not, many economists have ‘linked’ US fallen jobs to tariff policies initiated by Trump.

• Trump’s on-again-off-again approach to tariffs creates uncertainty for businesses, leading many to pull back on hiring, they added.

• Furthermore, tariffs when kept in place for the long term, generally raise prices for consumers and pressure profits for many businesses by raising their input costs, they said.

According to Indeed (North America), Director of economic research, Laura Ullrich:

• It is hard for people to make a decision or change in the face of so much uncertainty.

Tariff policy compounds other headwinds, eg. immigration policy that has reduced the number of available workers, cuts to the federal workforce and government spending, and higher interest rates.

High degree of stagnation.

Economists also said that there are other concerning signs in the US job market.

For example, US labour force participation rate fell to its lowest level since 2022, noted Thomas Ryan, Economist at Capital Economics.

This is “potentially further evidence of Trump’s immigration crackdown keeping undocumented migrants away from the labour market, even though they remain in the country.

CME Fedwatch.

According to Navy Federal Credit Union, Chief economist, Heather Long:

• US labour market is deteriorating quickly.

• The weak Jobs report, including dramatic revisions, could provide incentive for the Fed to lower interest rates when it next meets in September 2025.

According to CME Group data, futures traders have raised the odds of a cut in September to 80.3%, up from 40%. (see below)

Latest CME Fedwatch - as of 01 August 2025

The Fed Reserves.

On 31 Jul 2025, if you listened to post FOMC meeting conference, you would have heard Fed chair Jerome Powell mention the Fed’s dual mandate at least 3 times during the 45-minute session.

The Fed remains laser focus on achieving (a) maximum employment and (b) price stability.

Now that one of the goals is shaken, immediate reaction points to a possible interest cut in September 2025.

On 01 Aug 2025, in an interview with CNBC, Atlanta Fed President, Raphael Bostic tried to temper expectations, saying:

• The current situation is about slowing down in the US economy.

• The challenge (now) is to understand - (a) how long the slowdown will last and (b) if it could cause other problems, in the process.

• In the face of ‘unknown’, he will continue to work on the challenges in the coming 2 months before the Fed’s September meeting.

• Although Bostic does not vote on interest rates in 2025, he can still give his opinion at meetings. He has said before that he supports only one interest rate cut in 2025.

My viewpoints: (mine only)

I see, US Federal Reserves two mandates as conflicting in nature, where:

• Low unemployment can push inflation higher.

• While efforts to control inflation can raise unemployment.

The litmus test for US Fed will come in mid-August when US’s July 2025 Consumer price index (CPI) report is due.

It was not too long ago, during Fed chair Powell press conference on 7 May 2025, that he said the Fed could face “difficult tradeoffs” in the coming months that involved allowing some increase in unemployment in order to keep inflation in check.

As we know, interest rate was left unchanged in May 2025.

In the meantime, other ‘less’ important economic reports released in the week beginning 03 Aug 2025, could hopefully provide inferences and insights on whether inflation is indeed returning.

Less buying, more reading up and monitoring, until inflation report is out.

Constantly reminding myself, investment is a marathon, not a sprint. Patience !

Remember to check out my other posts. (See below). Help to Repost ok, Thanks.

Must Read: Click on below titles to access. Repost to share, Like as encouragement ok. Thanks.

• Is Palantir (PLTR) a Buy, Sell or Hold ? Mon, 04 August. Idea post.

• Is Inflation Returning To US Market Soon ? Fri, 01 August. Picked post.

• LVMUY, when luxury is NO longer luxurious ? Thu, 31 July. Picked post.

• Do you think this week’s Quarterly Earnings will help US market to rally back some wins ?

• Do you think inflation will continue to creep up on US economy when next CPI inflation report is out, spelling more gloom in the months ahead ?

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