US Unemployment Report Out: An Analysis
The Fed is being validated once again.
We see a jobs report that shows the resiliency of the US economy. Couple that with the elevated levels of inflation and we can see how the Fed will stay the course.
In this video I discuss how this is all fitting together and how I foresee things unfolding.
▶️ 3Speak
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Summary:
In this video, the speaker discusses the recent unemployment report in the United States and its impact on the markets. He touches on the Federal Reserve's focus on inflation and unemployment data, emphasizing that they are running the Phillips curve. The speaker shares his belief that inflation is transitory, comparing the current situation to the 1970s. He also talks about the correlation between energy costs, food prices, and commodities, highlighting that commodities have been on a bull run since 2016. The speaker concludes by suggesting that the current job data reaffirms the Fed's belief in their approach, aiming to maintain price stability.
Detailed Article:
The speaker starts by addressing the recent unemployment report in the United States, mentioning the creation of well over 200,000 jobs in the US economy. Despite not delving into the specifics of the report, he notes the market's significant reaction, with the Dow surging over 500 points at one juncture. He highlights the Fed's primary focus on inflation and unemployment data, suggesting that they are strictly adhering to the Phillips curve in their analysis.
Expressing his view on inflation, the speaker believes it to be transitory, aligning with the Fed's initial assessment. Drawing a comparison to the inflation crisis of the 1970s, he asserts that the current situation is not as severe due to its shorter duration. He brings attention to the impact of energy prices on household budgets, emphasizing the link between energy costs, food prices, and commodities.
Discussing the commodity market, the speaker notes a bull run since 2016, cautioning that such trends can persist longer than expected, drawing parallels to other asset markets like cryptocurrencies and equities. He underscores the trading dynamics of commodities, mentioning the importance of supply and demand factors and future contract activities influencing market behavior.
The speaker touches on the nuances of employment data in the US, alluding to the seasonal adjustments made that can impact the interpretation of the numbers. While acknowledging the smoothing effect on the data, he subtly hints at potential bias in handling outliers where high side outliers might be disregarded more frequently.
The video concludes with the speaker reinforcing the Fed's conviction in their strategy based on the latest job data, aiming to achieve price stability. He suggests that despite current control measures, the direction of the economy can shift rapidly due to the unforeseen impact of fear and other external factors. The speaker signs off, leaving the audience with a reminder about the dynamic nature of economies and the potential for rapid transformations.