🥣 The “goldilocks” jobs report

Tuesday, September 6, 2022 by Robinhood Snacks |
Breakfast temp: just right (Paul Bersebach/Getty Images)

Breakfast temp: just right (Paul Bersebach/Getty Images)

Breakfast temp: just right (Paul Bersebach/Getty Images)

Breakfast temp: just right (Paul Bersebach/Getty Images)

Last Week’s Market Moves
Dow Jones
31,318 (-2.99%)
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3,924 (-3.29%)
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11,631 (-4.21%)
Bitcoin
$19,983 (-1.12%)

Hey Snackers,

TSA had a field day when it had to check an unusual flier through security: a bald eagle. Just don’t ask him to take off his talons (#hawk-ward).

Friday's well-received jobs report wasn't enough for the major US indexes, all of which closed down 3% or more last week ahead of the Labor Day holiday weekend. Stocks did a U-turn on Friday after Russia indefinitely suspended natural-gas flows to Europe — and stoked energy fears.

A few quick q’s for you! We might be surfacing some relevant products in the future and are curious to hear what categories you’re most interested in learning about. If you’d like to share your thoughts, check out our two-minute survey.

Werk

Post-Labor Day labor update... While you were packing coolers and beach towels for the unofficial "last weekend of summer," the Labor Department was packing stats. The August jobs report showed slowing job and wage growth — but a still historically strong labor market.

  • The US added 315K jobs, slightly lower than expected and the lowest monthly gain since April 2021. FYI: in July the US gained 526K roles.
  • The unemployment rate jumped to 3.7% from 3.5% in July, mostly because more people started looking for work.
  • Average hourly earnings grew 5.2% from a year earlier, slowing from July's pace.

Investors are eating the porridge... Some are calling this a "goldilocks" report because it's not too hot, not too cold (but juuust right). While the labor market is cooling, job growth is still way higher than prepandemic levels, and unemployment is just off its half-century low of 3.5%.

  • Bad news = good news in this inflationary economy. Investors were relieved jobs didn’t come in too hot, which could compel the Fed to be more aggro with rate hikes.
  • Terrible news = bad news. Investors were relieved labor didn’t slow too much, suggesting the Fed’s flation-fighting hasn’t gone too far (yet).
  • Still: While job openings outnumber available workers nearly 2-to-1, layoffs are making headlines. Ford, T-Mobile, Wayfair, and Snap have all announced cuts.
THE TAKEAWAY

Pain’s more bearable when it’s predictable… This report keeps the Fed on track to raise interest rates by 0.75 or 0.5 percentage points this month. Fed chair Jerome Powell said he plans to keep hiking till inflation’s under control. While gas and food prices have come down, they’re still near 40-year highs. JPow did warn there’s economic and labor-market pain ahead. It takes time for all the consequences of higher rates to manifest, but expectations of pain could help reduce market shocks.

Zoom Out

The great American battery boom… Companies are investing billions in the US battery biz, and it’s all for EVs: last week Honda and LG Energy announced plans to build a $4.4B US EV battery plant, Toyota pledged an extra $2.5B to its US battery factory, and Bosch said it'll spend $200M to build fuel cells in South Carolina. GM, Stellantis, and Hyundai have committed billions to made-in-USA batteries, taking advantage of billions in EV funding through President Biden’s infrastructure and climate bills to gain juice in the e-race.

Congress has crypto q’s… The SEC's not the only one demanding answers from crypto's top players. Last week the House Committee on Oversight and Reform sent letters to FTX, Binance, and Coinbase asking how they’re protecting customers from scams (industry-wide, $1B+ has been reported stolen since 2021). The committee also hit up regulators and the Treasury Department to find out what they’re doing to keep consumers safe. Reply due date: September 12. Meanwhile, a bill to regulate stablecoins is heading to the CA governor's desk. Legislators may be done sitting on the sidelines.

Events

Canned peas FTW… Budgets are tight, but America still has to eat. Kroger had a record year in 2021 and sales jumped again last quarter as buyers kept stocking up on fresh veggies despite hot prices. Kroger’s online sales have doubled in the past two years, and its shares have risen 7% this year while the S&P 500 has slid 18%. But soaring grocery prices have made it seem (relatively) less inexpensive for some to dine out, which could push some shoppers to ditch grocery stores for fast-food joints. We’ll see if inflation is biting Kroger’s profits when it reports Friday.

Lots of balls in the air… It’s a big week for pro sports. The NFL season kicks off Thursday and the US Open finishes Sunday. But today a lot of athletes earn more off the field: Serena Williams, who just played her final match, has earned $95M in career prizes — and $350M from sponsors. Billionaire LeBron James has earned twice as much from investments and endorsements as he has from his NBA salary. As the celeb-prenuer trend intensifies, Serena, LeBron, and NFL stars like Aaron Rodgers have also launched their own VC funds.

ICYMI
  • Yoda: Disney’s reportedly exploring a Prime-style membership to give Mickey fans special perks and cross-sell its offerings across streaming, merch, and theme parks.
  • Suds: Bed Bath & Beyond shares tanked last week after the cash-needy retailer said it would slash costs by closing 150 stores and cutting 20% of workers.
  • Fluffy: Petco and Chewy said pet owners aren’t trading down on fancy foods for their furries. Despite #flation, owners are splurging on gourmet meals (think: doggy Clif bars).

What else we’re Snackin’

  • Rekt: El Salvador's crypto-loving president made bitcoin a national currency last year. After he reportedly bought $100M worth of BTC (now down 60%), analysts worry it could bankrupt the country.
  • Sped: The Fed's getting faster. The US central bank has a summer 2023 launch date for its nearly instant FedNow payment system. The long-awaited update should make transfers and paychecks available 24/7.
  • Pop: Experts say China's property market, which accounts for up to 30% of its GDP, might implode as real-estate prices tank. Still, analysts say a full-fledged economic meltdown is unlikely.

Snack Fact of the Day

The International Space Station is closer to Earth than San Francisco is to LA (and there’s way less traffic)

This Week

  • Tuesday: Earnings expected from UiPath and GitLab
  • Wednesday: Earnings expected from Nio, GameStop, and Asana
  • Thursday: Jobless claims. Earnings expected from Zscaler, DocuSign, FuelCell Energy, and National Beverage
  • Friday: Earnings expected from Kroger

Authors of this Snacks own: bitcoin and shares of Disney, GM, AT&T, Ford, and Snap

ID: 2410552