American Bears: Just Throw In The Damn Towel!

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Inverted yield curve.

Sub 50 ISM Data.

10-year yield under 2%.

Lower job openings.

Wait, some of this sounds familiar to me.

Back in 2016, when the 10-year yield was under 2%, oil was down, ISM data was fading the market was down, I dared the American bears to time stamp their 2016 recession call. Let’s just say they failed badly.

I have stressed this for years, the American bears can’t read data correctly, and the 2nd half of 2019 when people misread the Inverted yield curve, Sub 50 ISM data, December jobless claims spike, and lower job openings just proves my point again.

Only 3 of my 6 recession flags are up, and until all 6 are up, no recession talk here. 

https://loganmohtashami.com/2019/10/15/recession-flag-watch-update/

In 2019 I was looking for job growth to slow noticeably, but still stay is a very healthy range.

“I expect job creation numbers to fall but stay in the range of 137,000 – 157,000 per month.”

https://loganmohtashami.com/2018/12/29/2019-economic-housing-predictions/

After the benchmark revisions, the job market, while falling in 2019 from the initial above 220,000 trends, is still a beat in my mind. 2018 jobs data falling to 193,000 is not a shock. I do expect some more negative revisions in the future, but nothing too dramatic.
However, in context with the expansion, 2018 jobs data was robust. The PMI recession and recovery in 2016-2018 does show itself in the BLS data clearly.

An excellent job follow always @nick_bunker

 

Cycle Jobs total

For 2020 I wrote:

“I expect job numbers to fall to 98,000- 124,000 once you exclude census workers from the data.  The job markets look very healthy.”

https://loganmohtashami.com/2019/12/28/2020-economic-housing-forecast/

A great start to the year today, just be mindful this type of level can’t be sustained as we haven’t had a year like 2015 for 4 years in a row. That is not a bad thing, it just shows our limits as a country. As long as twitter finance is arguing about what full employment looks like, this is the biggest first world problem to ever have in a record-breaking expansion.

Today’s job report was solid, with 225,000 jobs created with slight positive revisions from the previous 2 months. Not bad at all, and the longest job expansion ever recorded in history continues at 112 months. The previous record was at 48 months.

From BLS:
https://www.bls.gov/news.release/pdf/empsit.pdf

“Total nonfarm payroll employment rose by 225,000 in January, and the unemployment rate was little changed at 3.6 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in construction, in health care, and in transportation and warehousing”

From BLS:
https://www.bls.gov/charts/employment-situation/employment-by-industry-monthly-changes.htm
Feb Jobs

Yes, Boeing, Coronavirus, and other events and headlines can keep the 10-year yield low, even under 1.60%. However, don’t confuse this with an epic crash. Also, it can impact the rate of growth as well in 2020, especially in the first half of the year. We aren’t going to see the level of agriculture purchases from the Phase 1 deal until China can handle this outbreak.  So, for my bearish friends, be patient, and let the data come to you, don’t jump the gun like you always do.

More on that topic here: 

From Boeing to Brexit: 7 major storylines that could send mortgage rates even lower

I leave you with some charts and enjoy the weekend, it’s going to be a headline-driven year for sure.

From Doug Short:
https://www.advisorperspectives.com/dshort/updates/2020/02/07/january-jobs-report-225k-new-jobs-better-than-forecast
Feb jobs and stocks
e93eeb019eacd2cd8d69be5ca1d46503

Be mindful the U6 rate went only due to higher levels of labor force growth, a positive.
Feb U6 6.9

Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his Facebook page https://www.facebook.com/Logan.Mohtashami and is a contributor for HousingWire.

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