The US job market is starting to crater...
With consensus expecting only a modest drop from the reported September 9.553 million job openings, what the BLS reported moments ago instead was a stunning collapse of 617K job openings to just 8.733 million, the lowest since March 2021. This was a 6-sigma miss to the consensus estimate of 9.3 million... Source: www.zerohedge.com, Bloomberg
2024 is expected to be a year of interest rate cuts
Here's what's currently priced in markets of who does what when. Source: Bloomberg, David Ingles
As highlighted in the Kobeissi Letter and in the chart below from Tavi Costa >>> Annualized interest expense on US Federal debt is nearing $1.1 TRILLION
To put this in perspective, 2023 defense spending was $821 billion. This means the US is on track to spend 34% MORE on interest expense than defense spending. In 2023, the US government produced $4.4 trillion in revenue. This means that 25% of receipts in the entire 2023 are equivalent to Uncle Sam's annual interest expense. Rising rates and falling tax revenue are both occurring at the same time. A tricky combination
WHO HOLDS AMERICA' DEBT?
Source: WinSmart, The DailyShot
The Fed's preferred measure of inflation (Core PCE) moved down to 3.5% in October, the lowest since April 2021
The Fed Funds Rate is now 1.8% above Core PCE, the most restrictive monetary policy we've seen since 2007. Source: Charlie Bilello
The German labor market is now sending out alarm signals despite the shortage of skilled workers
Germany’s unemployment rate unexpectedly rose to 5.9% in November, the highest level in 2.5 years. Joblessness increased by 22k. Source: Bloomberg, HolgerZ
Eurozone inflation cooled more than expected, putting 2% target in sight:
Headline CPI rose 2.4% YoY in November down from 2.9% in October. Core CPI, which excludes volatile components like fuel & food, moderated for a 4th month to 3.6% from 4.2% in October. Markets are now pricing 1st ECB rate cut to take place at the April meeting. Source: HolgerZ, Bloomberg
Futures are now showing a ~45% chance that FED rate CUTS begin as soon as March 2024
There's also a growing (but small) chance that rate cuts begin in January 2024, at 4%. Prior to the most recent CPI inflation data, the base case showed rate cuts beginning in June 2024. There was also a 50% chance of another rate HIKE in 2024. This has been a quick turnaround... Source: The Kobeissi Letter
