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Under the (unemployment) hood

The unemployment report came out yesterday with a headline number better than expected at 3.8%. In principle, that shows great economic strength and therefore could derail the Fed plan to start cutting rates in June. If we look under the hood, however, the picture is a little less rosy. There were less full time employees and more part timers added. You can read this report thinking that employers are not hiring for the long term because we are at the end of the cycle, and they are preparing to reduce headcount which is always easier (and cheaper) when you have temps as opposed to full timers. In any event, even if the headline number does not tell the whole story, the swap market has shifted from June to September as the potential first cut. Treasury bonds are already readjusting, and equities are being led by companies that are somehow inmune to monetary policy, at least for the moment, but the #magnificent7 have been reduced to the #fabfour. There’s some movement at the top.

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