Economy

Popping the hood on Non Farm Payrolls Report

Posted 02/07/2020 9:13AM CTJohn Caruso

On the surface, this looks like an outstanding NFP Jobs Report.  But what concerns us, is the pace of growth in this data is slowing.  If you “pop the hood” on the Jobs data and it’s another year-over-year rate of change slowdown in NFP.  You’re reading this and thinking to yourself, what is he talking about?  Well this is what we’re talking about…

Rate of Change of Jobs Growth continues to decelerate….

UNEMPLOYMENT CONTINUED:

-Slowdown in people hired

-Slowdown in hours worked

These 2 components ultimately translate into slower production which is ultimately a major component of GDP growth. 

Market Reaction:

The Bond market gets it – 10yr yields are dropping this morning (again) to 1.58% – 30yr Bonds up over a full handle (+1’04) and the 10yr Notes trading up +14 points

Stocks: Russell 2000 (Small Caps) down -1.0% this morning; SP500 -0.45%; NASDAQ -0.58%

Gold: +5.50 to 1575.50

Our overall view of the US Economy is that we’re very late cycle.  The peak of the US growth cycle was Q3 2018 just prior to the market  massacre that took place in Q4 2018.  Our call is for US GDP rate of change growth is expected to continue to decelerate from here. 

Our suggested market positioning for a Growth Slowing/Inflation Slowing Environment:

Top “Longs”
Long US Treasuries
Long US Dollars (until the Fed signals more stimulus via rate cuts and repos)
Long Gold

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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