Daily update
Daily update
- Last Friday’s employment report was wrong—because it always is. The tendency in 2021 was for the payrolls number to be revised significantly and positively. Payrolls will also miss those engaged in the explosion of small business startups from late 2020 onwards. It is worth remembering that US supply of goods is at an all-time high—and someone must be working to provide that record level of supply.
- There is a small risk worth noting. Lower income US households have generally spent their savings windfall, and now depend on employment income. If after revisions and accounting for self-employment the pace of job creation has slowed, this will slow the pace of demand growth in the economy.
- Geopolitics is creating some noise around tensions between Russia and Ukraine, with the NATO secretary general warning that the alliance is prepared for “armed conflict in Europe.” Markets generally do not price in extreme tail risks, especially when of a military nature.
- The data calendar is quiet—markets do not react to European unemployment data. Final November wholesale inventory data from the US is not normally market moving either, but it should show higher inventory levels before omicron hit (giving an insurance policy against any supply disruption).
