Month: November 2022

By Simon White, Bloomberg Markets Live reporter and analyst

Stocks will be stuck in a bear market for several more months even with a peak in Fed hawkishness.

Peak global inflation is likely here, allowing global central banks, including the Fed, to begin a gradual tempering of their hawkishness. The Fed will announce Wednesday the outcome of its rate-setting meeting, with a 75 bps hike expected. (To be clear, even while global inflation may have peaked, there are likely still several countries that will see another inflation peak later in this cycle.)

This might be taken as an all-clear for stocks and a swift end to the bear market, but current formidable headwinds and history suggest otherwise.

First, a distinction needs to be made between peak Fed hawkishness and the Fed pivot. A peak in hawkishness does not mean an immediate flip-flop to dovishness. Instead, it means the peak Fed Funds rate should stop rising – which we have seen – and be maintained. As the market starts to price this in, the front of the very steep Fed Funds curve should flatten, and the back of the curve – where the pivot is – should disinvert, taking the pivot out.

The negative correlation between the front and the back of the Fed Funds curve – pivoting around the peak in the Fed Funds rate – is very unusual. The last time was during the aggressive Fed hiking cycle in 1994, and then in again in the late 1990s.

The pricing out of the Fed pivot has implications for volatility as the relative price of crash insurance has a strong relationship with expected Fed cuts. No pivot likely means more expensive out-of-the-money S&P puts, and hence a higher VIX.

The end of the 1994 rate-hike cycle set the stage for a multi-year equity rally into the tech bubble. However, that is not the typical case. In median terms, the S&P moves sideways for about six months after the last Fed hike before putting in a pronounced rally.

Given we likely have three (perhaps more) rate moves to go before the Fed pauses – along with an increasingly likely earnings recession – any sustainable rally in equities and an end to the bear market is a way off.

The UN’s International Atomic Energy Agency Director General Rafael Grossi on Tuesday confirmed that a team of weapons inspectors is on the ground in Ukraine examining sites that Russia recently named in connection to an alleged Ukrainian ‘dirty bomb’ plot.

Russia’s UN ambassador Vassily Nebenzia submitted a formal letter to other UN Security Council members last week which charged Ukraine’s nuclear research facility and mining company was creating a bomb with radioactive material on orders from President Zelensky himself. Russia’s state news agency, RIA, had named the two sites as the Eastern Mineral Enrichment Plant in the central Dnipropetrovsk region and the Institute for Nuclear Research in Kiev.

The letter alleged that Ukrainian technicians “received direct orders from Zelenskyy’s regime to develop such a dirty bomb.” Kiev and its Western backers quickly condemned the claims as “transparently false”. 

According to the IAEA’s Grossi, “inspections had begun at two locations in Ukraine and would soon be completed. The inspections had been requested by Kyiv in the wake of the Russian allegations,” according to The Associated Press.  

The UN agency had on Sunday described the mission as follows: “The purpose of the safeguards visits is to detect any possible undeclared nuclear activities and material.”

The inspectors reportedly haven’t found anything, and the UN agency additionally briefed reporters on the following: 

The International Atomic Energy Agency has said the investigated sites “are under IAEA safeguards and have been visited regularly by IAEA inspectors,” whose mission is detecting undeclared nuclear activities and materials related to the development of dirty bombs.

“The IAEA inspected one of the two locations a month ago and no undeclared nuclear activities or materials were found there,” the agency said in a statement Monday.

Last month Russia began alleging that a ‘dirty bomb’ detonation, which would spread radioactive waste and potentially contaminate large urban areas, was being prepared by Ukrainian forces so that such a mass casualty WMD incident could be blamed on Moscow, in order to justify greater Western intervention.

The US last week pointed the finger at Moscow for allegedly preparing a ‘false flag’ event in Ukraine…

🇺🇸🇺🇦🇷🇺☢️⚛️There would be consequences for Russia if it uses a so-called “dirty bomb” or any other nuclear weapon, U.S. State Department spokesperson Ned Price said on Monday pic.twitter.com/5NlzdpKCsA

— AZ 🛰🌏🌍🌎 (@AZgeopolitics) October 25, 2022

Amid the false flag claims France ominously warned days ago that the crisis is “trending towards uncontrollable escalation” and urged the warring sides to find a diplomatic opening for peace talks. 

Via SchiffGold.com,

Despite all kinds of economic bad news, as of Friday, the Dow Jones was on pace for the best October in history. As Peter Schiff explained in his podcast, this demonstrates the fact that for now, bad news is good news, and stocks are priced for perfection in an imperfect world.

Over the past month, we saw more air come out of the housing bubble, PMI dip deeper into contraction, along with other signs of a deteriorating economy. Even the positive growth GDP print wasn’t really good news. But the markets shrugged it all off. As of Friday, Oct. 28, the Dow was up 14.4% on the month.

Peter called this a bear market correction.

He also noted that the rotation from growth to value stocks continued. This is evidenced by the losses in the NASDAQ.

Investors are moving out of hype and momentum into real value, into real dividends. And why is that happening? That is because interest rates have moved up, and so, we’re no longer pricing stocks based on a fantasy. Plus, we now have a cost of capital. There is an interest rate with which to discount future earnings.”

Peter said he thinks we’re just at the beginning of this rotation. In fact, it could last the rest of this decade. That means the indices heavy with momentum-oriented stocks have a long way to decline.

To show just how elevated markets are, Peter went back to 1995 and found the average price-to-earnings (before taxes) was 14.1. The current ratio is 19.6.

So, in order for the market to return to the normal ratio, we need another 28% decline from here. Not from the highs, but from where we are right now.”

The price-to-sales ratio also indicates an overvalued market.

Peter said the only way you can justify a market this expensive is if interest rates go back down.

The only reason we had such high multiples, whether it is price to earnings or price to sales — it was all a function of 0% interest rates. Well, we don’t have 0% interest rates anymore.”

If interest rates stay where they are, or continue to move higher, which the Fed is promising, the markets have a long way to fall to get back to normal.

But there is no reason why the markets should be priced at a normal valuation given the adverse circumstances that are now taking place. We have the highest inflation in 40 years, maybe the highest inflation ever. The Fed has a monumental task in front of it if it’s actually going to deliver on its promise to bring inflation down to 2%. So, if you believe the Fed – that they’re every bit as resolute in their commitment to bring inflation back down to 2%, and they’re going to do whatever it takes to achieve the goal, then you have to concede that the market is not going to fall to normal valuation, but a below normal valuation.”

Think about it. At times since 1995, these metrics have been lower than average. Why? Because during those times the markets were facing adverse circumstances.

Well, I can’t think of more adverse circumstances than the ones that the markets are operating under right now.”

So, we should see a market getting cheaper compared to those historical averages.

But not only is the market not cheap, not only is it not averagely or fairly valued, but it is still extremely expensive. So, we have a market priced for perfection and we have anything but perfection in the current circumstances.”

Peter said this tells him investors still don’t believe the Fed. Or they believe that the Fed will be able to quickly bring inflation back down to 2%, and then it will be able to return rates back to artificially low levels.

Because without 0% interest rates and QE, there is no way to justify the current valuation of today’s market. But if investors believe that, they are wrong.”

Peter said the Fed isn’t going to get inflation anywhere near 2%. And even if the Fed did manage to pull that off, it wouldn’t be able to return to abnormally low interest rates without inflation quickly spiking again.

Neither of those outcomes is possible. The only way the market could be correct in attributing these high valuations to today’s market is is if I’m right about what happens – that the Fed pivots and gives up the fight against inflation even though inflation never returns to 2%.”

Peter recently said it looks like the Fed has already made a “soft” pivot.

He said even under the environment he envisions, price-to-earnings ratios will still come down.

The only way to justify the current level is if the Fed is able to return to those artificially low interest rates and QE, and inflation goes back down to 2% and stays there. But as I said, that is impossible. So, there is no actual way that you could justify the current valuation of the US market. So, the actual valuation have to come down.”

In this podcast, Peter also talked about Amazon, Apple and Netflix’s disappointing earnings reports, Meta and Alphabet’s pain as advertising money dries up, the need for consumers to save no and buy later, and Elon Musk’s Twitter purchase.

Following Joe Biden’s threat to take out his powerless fury at OPEC+ head Saudi Arabia on US producers by slapping them with a windfall tax, this morning we already observed a battle royale between Hunter Biden Consulting, LLC (surely the titanic brain trust behind the White House’s ingenious scheme) and Jeff Epstein pal #1, Larry Summers (and yes, we can’t believe that we actually agree with the former for once).

If it is a fairness argument, I don’t quite follow the logic since even with the windfalls Exxon has underperformed the overall market over the last 5 years.

— Lawrence H. Summers (@LHSummers) November 1, 2022

Cartoonish Lolita Express frequent flyers aside, here is Morgan Stanley putting to bed any speculation that the latest idiocy of the White House has any hope of passing:

Windfall tax unlikely, could have negative impacts on investment. In a speech this evening, President Biden encouraged Congress to consider a windfall tax on “excess profits” in response to strong 3Q earnings from large energy companies last week. Importantly, any such tax initiative would require legislation and, in our view, would struggle to get the necessary votes (60 in the Senate as stand-alone legislation, or 50 as part of budget reconciliation). Moreover, a tax on profits could further constrain much needed investment in oil & gas at a time when spending and production are still recovering from the Covid-19 pandemic.

So if it has no chance of passing why push so hard a week before the election in hopes of appeasing the socialist fringe of the democrat party? Here’s your answer.

Authored by Lance Roberts via The Epoch Times,

There was a time when a large portion of Americans belonged to the “middle class.” It meant you could afford a decent living standard, such as owning a house and a car and had savings in the bank. When “baby boomers” reminisce about the “good ole days,” they are referring to when being middle-class was normal.

However, the American middle class has continued to contract over the past five decades. According to Pew Research, the share of adults who live in middle-class households fell from 61 percent in 1971 to 50 percent in 2021.

The shrinking of the middle class is accompanied by an increase in the share of adults in the upper-income tier, which increased from 14 percent in 1971 to 21 percent in 2021. At the same time, there was an increase in the share who are in the lower-income tier, from 25 percent to 29 percent. These changes have occurred gradually, as the share of adults in the middle class decreased in each decade from 1971 to 2011, but then held steady through 2021.

The Census Bureau clearly shows the problem in the “mean household income data” through 2021.

Source: Census Bureau Chart: Real Investment Advice.com

That dotted black line is the most important. As with the PEW Research data, looking at incomes alone obfuscates the most important part of income analysis. The question is, how much income it takes to maintain a “middle-class” lifestyle, or rather, what does it take to buy a house and a car and feed two kids?

Most importantly, and what is often not included in the analysis, is the standard of living gets “paid for” on an “after-tax” basis. When we include taxation, it becomes clear that roughly 80 percent of America is failing to support the “middle-class” lifestyle.

Source: Census Bureau Chart: Real Investment Advice.com

As we discussed recently, Harvard Business Review noted: “Besides a booming labor market, exceptionally strong household balance sheets help keep spending high. Households’ net worth is far higher than pre-COVID for every single income quintile, providing some buffer to the headwinds of inflation and dour consumer sentiment.”

Again, it is a true statement that household net worth has increased since the COVID lockdown lows. However, household net worth is predominately held by the top 10 percent of income earners, leaving the bottom 90 percent fighting over the remaining 30 percent of the wealth.

Source: St. Louis Federal Reserve Chart: Real Investment Advice.com

More Debt Isn’t A Choice

Debt is not a choice for most “middle-class” Americans.

I recently discussed “Recession Fatigue” that is plaguing more individuals, according to a BankRate.com survey. To wit: “When broken down by generation, younger adults, or Gen Zers, are more likely to experience ‘recession fatigue’ than millennials, Gen Xers, and baby boomers. In the report, ‘recession fatigue’ is primarily afflicting younger generations, leaving them unprepared to face a recession. Such data certainly flies in the face of media reports of households having ‘strong financial balance sheets.’”

With the Federal Reserve focused on combatting inflation by tightening monetary policy, the financial pressures on households will continue to increase. Given already high levels of “unpreparedness” for a recession, such approaches leaves a majority of families dependent on additional debt to make ends meet.

“According to the latest New York Federal Reserve report, credit card debt surged by $46 billion in the second quarter. As shown above, such is not surprising as consumers struggled to maintain their standard of living. The 13 percent annualized increase in new debt was the largest in more than 20 years. Moreover, aggregate limits on cards marked their most significant increase in the last decade.”

Source: St. Louis Federal Reserve Chart: Real Investment Advice.com

With the pandemic-driven savings now spent, 60 percent of Americans say they are living paycheck-to-paycheck. While consumers can supplement their disposable incomes with debt to offset rising inflationary pressures, this is not a long-term solution. The chart below, which requires a brief explanation, shows the problem clearly.

Between 1959 and 1990, individuals could sustain their inflation-adjusted standard of living with only incomes and savings. There was roughly a $4,700 surplus yearly as households had very low debt levels. However, beginning in 1990 and accelerating following the Financial Crisis in 2008, households required an increasing level of debt to “fill the gap” between what income and savings could afford and the cost of the current living standard. You will notice a brief spike in 2020-2021 as “stimmy checks” hit household bank accounts. However, that surplus has reversed to the deepest deficit on record.

Source: St. Louis Federal Reserve Chart: Real Investment Advice.com

As the “wealth gap” continues to widen between those in the top 10 percent of income earners and everyone else, the ability to maintain a “middle-class” lifestyle becomes more challenging.

The Road To Serfdom

A recent U.S. News article outlined the many forces that shape an individual’s economic class and their views of where they rank.

“When asked how they identify their social class, 73 percent of Americans said they belonged to the middle or working classes, according to an April 2022 survey from Gallup. Fourteen percent identified themselves as an upper-middle class and 2 percent categorized themselves as upper class. In determining their social class, people often don’t just think about income, experts say, but other factors, including education, location, and family history.”

However, statistics suggest that if 89 percent of surveyed individuals identify as middle to upper-class, that only leaves 11 percent of the population at the other end. However, income, debt, and net worth statistics clearly show that this is not the case.

The reality is that middle-class America continues to shrink as the rich-get-richer and poor-get-poorer. The rich can invest, save, and use very little debt to sustain their living standard, while the poor rely on debt, making long-term prosperity an impossible goal.

Furthermore, as the peasants demand “more free stuff” from the government, such requires more debt and higher taxes. Those demands then divert more capital away from productive investment leading to slower economic growth. As growth slows, businesses shift to the lowest labor costs or automation, lowering income growth for domestic workers. Such leads to more demands for “free stuff” from the government, and the cycle intensifies, pushing more of the middle class downward.

The share of annual incomes between the bottom 80 percent and the top 5 percent is evidence of that wealth transfer from the middle class.

Source: Census Bureau Chart: Real Investment Advice.com

The road to serfdom is paved with good intentions.

After decades of piling on increasing debt levels to generate economic growth, the damage to economic growth is becoming more visible. As shown, economic growth trends are already falling short of both previous long-term growth trends.

Chart: Real Investment Advice.com

The end game of too much debt, combined with an aging demographic, is the “deflationary disaster” apparent in Japan’s economy.

Of course, Japan doesn’t have a middle class any longer, either.

Update (11:18am ET): After an outage that was just over an hour long, all is well again and Canada has exited the 3rd world, however briefly:

• *TORONTO STOCK EXCHANGE, TSX VENTURE, ALPHA ARE NOW OPEN

Update (10:50am ET): after disconnecting it from the power outlet, the Canadian operators will try to restart the system at 11:10am.

As reported earlier, all trading on the Toronto Stock Exchange was halted after TMX Group Ltd. said it was experiencing a connection issue for order entries.

The exchange did not know the cause of the outage, TMX Group spokesperson Catherine Kee told BBG. She confirmed that an earlier issue affected trading in all stocks whose tickers began with the letter M through S. That would have affected shares in major companies including Manulife Financial Corp. and Suncor Energy Inc.

“I feel like I’m trading on a third world exchange,” Ninepoint Partners partner and senior portfolio manager Eric Nuttall said. “I have multiple orders for $20 million to $40 million that I cannot execute. It is unacceptable.”

* * *

With stocks suddenly in free fall, reversing all earlier gains after the stronger than expected ISM and JOLTS numbers, the first market casualty of the day came from Canada, when just before 10:00am, the Toronto Stock Exchange broke and halted trading “on all issues on all marketplaces”…

… due to what has been described as a technical issue.

developing

The Atlantic has come under fire for suggesting that all the terrible pandemic-era decisions over lockdowns, school closures, masking, and punishing an entire class of people who questioned the efficacy and wisdom of taking a rushed, experimental vaccine – for a virus with a 99% survival rate in most, should all be water under the bridge.

“We need to forgive one another for what we did and said when we were in the dark about COVID,” writes Brown Professor Emily Oster – a huge lockdown proponent, who now pleads from mercy from the once-shunned.

“Let’s acknowledge that we made complicated choices in the face of deep uncertainty, and then try to work together to build back and move forward,” she continues.

Except, they weren’t “in the dark” about Covid.  There were numerous sources pointing out the actual science that ran contrary to the mandate claims, and they were deliberately silenced by a vast media campaign.  Evidence suggests that media platforms worked in tandem with Big Tech, the CDC and the Biden Administration.  It was not a simple matter of overreaction, there was collusion to remove all counter-information.  

Nice try, Emily.

As the Daily Sceptic‘s Michael P. Senger puts it: “There’s a lot wrong here. First, no, you don’t get to advocate policies that do extraordinary harm to others, against their wishes, then say, “We didn’t know any better at the time!” Ignorance doesn’t work as an excuse when the policies involved abrogating your fellow citizens’ rights under an indefinite state of emergency, while censoring and cancelling those who weren’t as ignorant. The inevitable result would be a society in which ignorance and obedience to the opinion of the mob would be the only safe position.”

And look at that ratio:

In one epic Twitter thread, Claremont Institute Senior Fellow Matthew J. Peterson (@docMJP) excoriates Oster’s entire premise;

Hey—sorry you lost your job b/c of the vax that doesn’t work and your grandmother died alone and you couldn’t have a funeral and your brother’s business was needlessly destroyed and your kids have weird heart problems—but let’s just admit we were all wrong and call a truce, eh?

It’s too bad we shut the entire economy down & took on tyrannical powers that have never been used before in this country—looking back, you should have been able to go to church and use public parks while we let people riot in the streets—but it was a confusing time for everyone.

Hey I’m sorry we scared the hell out of you & lied for years & persecuted & censored anyone who disagreed but there was an election going on & we really wanted to beat Donald Trump so it was important to radically politicize the science even if it destroyed your children’s lives.

OK, yes we said unvaccinated people should die & not get healthcare while never questioning Big Pharma once but we are compassionate people which is why even though we shut down the entire economy we also bankrupted the nation & caused inflation. You’re welcome! Let’s be friends.

As QTR’s Fringe Finance notes, Oster’s plea for the decency that her ilk failed to offer up to most Americans during the throws of the pandemic comes at a point where the Covid narrative has been all but lost by the Democrats and the mainstream media.

There have been several recent large wins for the unvaccinated who had the constitution and backbone to stand up for themselves throughout a year of being constantly berated and ferociously scorned as second class citizens.

A majority of the media and Democrats had demanded that these people be removed from society and generally subject to scorn and ridicule. Now, in a moment that many of us knew would eventually be coming, apologies are being made around the world for how the unvaccinated were treated.

As Fox News wrote last week:

“The premier of Alberta, Canada, said she is working on a plan to pardon residents who were fined or arrested over breaking coronavirus protocols, and apologized to unvaccinated Canadians who faced ‘discrimination.’“

In New York, a Supreme Court judge recently reinstated all employees who were fired from their jobs for being unvaccinated:

The court found Monday that “being vaccinated does not prevent an individual from contracting or transmitting COVID-19.” New York City Mayor Eric Adams claimed earlier this year that his administration would not rehire employees who had been fired over their vaccination status.

* * *

The problem was not people’s ignorance of the facts, it was the organized antagonism and censorship against anyone presenting data that was contradictory to the mandate agenda. This is setting aside proclamations like those from the LA Times, which argued that mocking the deaths of “anti-vaxxers” might be necessary and justified.  After two years of this type of arrogant nonsense it’s hard to imagine people will be willing to pretend as if all is well.

The active effort to shut down any opposing data is the root crime, though, and no, it can never be forgotten or forgiven.

People are livid…

They were tossing terminally Ill people off of organ transplant lists and now call for mercy https://t.co/yRBRo5POVW

— F. Billy McMorris (@FBillMcMorris) November 1, 2022

Arizona Gubernatorial candidate Kari Lake (R) wants investigations.

.@KariLake: “I want to have a commission to investigate Covid and how it was handled in this state. And hand up any civil, or criminal charges that need to be made. Because we’re not just got to forget what happened when our lives were turned upside down.” pic.twitter.com/mzsFZn6Nv6

— Kari Lake (@KariLake) October 31, 2022

This is where I spent the last 7 months with my mother before she died alone on December 3rd, 2020. You murderous hypocrites have nothing but my undying contempt. Rot in Hell. pic.twitter.com/ZcZ9qoaDwZ

— Rollo Tomassi (@RationalMale) October 31, 2022

Resharing this. Because “let’s forgive”, right? Nope.pic.twitter.com/XVTLErPNd2

— Dr. Sydney Watson (@SydneyLWatson) October 31, 2022

As QTR further notes, many Americans whipped themselves up into such a terrified hypnotic frenzy that they found themselves clinging to big government to impose their will, advocating for the same draconian and fascist-sounding policies they always claim to be fighting against.

For example, Ramussen reported in January 2022 that Democratic voters supported the following Covid policy ideas (my annotations in bold, Rasmussen in normal text):

• Fines for the unvaccinated: Fifty-eight percent (58%) of voters would oppose a proposal for federal or state governments to fine Americans who choose not to get a COVID-19 vaccine.

• House arrest: Fifty-nine percent (59%) of Democratic voters would favor a government policy requiring that citizens remain confined to their homes at all times, except for emergencies, if they refuse to get a COVID-19 vaccine.

• Imprisonment for questioning the vaccine: Nearly half (48%) of Democratic voters think federal and state governments should be able to fine or imprison individuals who publicly question the efficacy of the existing COVID-19 vaccines on social media, television, radio, or in online or digital publications.

• Forced quarantine: Forty-five percent (45%) of Democrats would favor governments requiring citizens to temporarily live in designated facilities or locations if they refuse to get a COVID-19 vaccine.

• Stripping people of their children: Twenty-nine percent (29%) of Democratic voters would support temporarily removing parents’ custody of their children if parents refuse to take the COVID-19 vaccine. That’s much more than twice the level of support in the rest of the electorate – seven percent (7%) of Republicans and 11% of unaffiliated voters – for such a policy.

Emily Oster: let’s just forget this happened. pic.twitter.com/fL8BhvQTVp

— John Haar (@john_at_swan) October 31, 2022

Unsurprisingly, American Federation of Teachers chief Randi Weingarten, who ‘flunked the pandemic‘ by pushing for school shutdowns as long as she possibly could before parents revolted, is a big fan of amnesty.

“I’ve decided that I should be on the pardon list, if that is still in the works” pic.twitter.com/pNXoHk1d39

— Seth Mandel (@SethAMandel) October 31, 2022

One cannot help but notice that the timing of the Atlantic’s appeal for passive forgetfulness coincides with the swiftly approaching midterm elections, in which polls suggest a much greater chance of a conservative upset than Democrats previously expected.  Though the Atlantic doesn’t admit it, there is a growing political backlash to the last two years of meaningless lockdowns and mandates, and Democrats were instrumental in the implementation of both.  A large swath of the population sees one party as the cause of much of their covid era strife.  

Perhaps the mainstream media is suddenly realizing that they may have to face some payback for their covid zealotry?  “We didn’t know! We were just following orders!”  It all sounds rather familiar.

Less than a month after the most recent JOLTS report (for the month of August, recall JOLTS is 2-months delayed) showed a near record plunge in job openings – in line with Fed hopes for a slowing economy and the reality of the slowing labor market – moments ago the BLS, perhaps carried away by next week’s midterms and the relentless taps on the shoulder from various Biden appartchiks, reported that in September – some two months before the midterms – job openings shockingly soared by 437K from a (upward revised) 10.280MM in August (10.053MM pre-revision) to 10.717MM. This was the second highest monthly increase of 2022 and the highest since  the 511K added in March!

And with expectations of a notable drop back under 10MM, this was the third biggest beat of expectations on record!

According to the BLS, the largest increases in job openings were in accommodation and food services (+215,000); health care and social assistance (+115,000); and transportation, warehousing, and utilities (+111,000). The number of job openings decreased in wholesale trade (-104,000) and in finance and insurance (-83,000

Coming a time when the number of unemployed workers allegedly continue to shrink, the surge in job openings meant that we are back to 5 million more job openings (10.717MM) than unemployed people (5.753MM), just shy of the all time high 5.9 million hit in March of 2022.

This means that there were almost 2 job openings for every unemployed worker, or – alternatively – the number of workers competing for every job opening slumped again, and was down to just shy of record lows, at 0.54.

Curiously, while job openings soared, hiring tumbled and in September the BLS reported that total hires dipped to 6.082 million which was the lowest since Feb 2021. The trend here is clear: down and to the right. According to the BLS, hires decreased in durable goods manufacturing (-57,000) and in state and local government education (-40,000).

Needless to say, while last month’s huge JOLTS miss sparked a frenzied rally, today’s shocking beat is not helping risk sentiment because if anything, the Fed will have to once again come out as hawkish, as the Fed’s WSJ mouthpiece was quick to remind us.

The number of job openings in September rose by 437,000 to 10.7 million (and the August figure was revised up by 200,000).

The Fed would like to see the ratio of vacancies to unemployed workers decline, and it ticked up in September to 1.86 from 1.68.https://t.co/RwwwVqBmFp

— Nick Timiraos (@NickTimiraos) November 1, 2022