“C Plus” America, “C Plus”

may jobs report

Yesterday, I expressed concern about this morning’s jobs report. After reading the report, I feel like I just drank a lukewarm Corona. It’s too good to be considered bad. But it’s too bad to be considered good. When it comes to reports like this, I don’t read the news. I read the actual report from the Department of Labor. You should do the same, because reading about it in the mainstream media will leave you misinformed.

Here’s the New York Times:

“Hiring accelerated in May, with the government reporting on Friday that employers added 559,000 workers, about twice the previous month’s gains.”

That is the “lede” of the article. The first sentence. I know it’s called the “lede” because I – for some reason still confusing to me – majored in journalism as an undergrad. The first sentence frames the article.

And, based on how you frame that sentence, it will set the tone for the rest of the article. As a reader, you will infer this tone, and your brain will shape how you receive the rest of the information laid out in the article.

Notice how this lede is written? It’s pretty positive, right? It states that “hiring accelerated.” It states that the nation added a big number – 559,000 new jobs. And, it says that it was TWICE – or DOUBLE – the previous month’s gains. In the following sentence, it states that the unemployment rate fell to 5.8%.

US Jobs Report Small Talk

Boy, it sounds like GREAT news. If you’re a person who just reads the first two or three sentences of the article, what could you possibly take away that is negative? Most people only read the headlines – and for this article, it was “The U.S. added 559,000 jobs in May, adding to hope about the pandemic recovery.”

So, read the headline and the first three sentences, and you’re telling people at cocktail hours that everything is fine. And anyone who says otherwise must just be against the Biden administration or cheerleading for a downturn. No. This was a C-Plus jobs report.

C-plus. As in, just good enough. Average. Weak. Not worthy of praise or high fives. C-plus, as the refrigerator broke, and there are still two lukewarm beers left. We’re going to drink them anyway, but we’re not going to really enjoy them, are we?

You see, I know that this article is framing lackluster news. But three graduate economics and finance degrees later, I better read more than three sentences. Here’s the reality…

A C-Plus Jobs Report

According to Bloomberg, hiring picked up, but the figure reported was well under the 675,000 new jobs expected. This article doesn’t even mention that estimate. You have to scroll a few stories down even to find that figure.

The U.S. is still 7.6 million jobs short of where it sat before the pandemic started. And we have a massive glut of job openings that Americans are not filling.

What else? The only reason the jobs figure doubled compared to April is that the previous month’s figure was wrong. In April, the U.S. only created 278,000 jobs.

Economists had expected 1 million jobs.

Listen, I’m happy that we see job expansion. But I’m apprehensive about a media that doesn’t take the time to explain the actual macroeconomic situation.

Too much information is left out. And this type of underreporting leads people to make financial decisions without enough data to support their actions.

We have a VERY LONG way to go before our jobs market looks anything remotely close to what we saw before the pandemic started. And – the Federal Reserve knows this.

Why is the market rallying today? Because it knows that lackluster job reports like we saw over the last two months will not lead to any near-term tapering on interest rates.

But that doesn’t solve the bigger problem about inflation – something that Dr. Bauer alluded to today in his issue of Haven Investment Letter.

Travels Again for a Special Occasion

I am traveling to Baltimore this weekend to celebrate my father’s 80th birthday.

I have only known him since he was about 40 years old. And having just turned that age, I can look at what he’s done in the last four decades and be optimistic about the future.

He was an executive at McCormick & Company and had some of the greatest stories about Corporate America in the 1970s and 1980s. I’ll track down a copy of some of the funniest ones and share them with you in the future.

Trust me; they’re fabulous. I’ll share my favorite with you on Monday, his birthday.

I’ll also talk about using cash-secured puts a bit more. Finally, if you’re interested in owning Apple at a lower price today, I have a trade for you. Dr. Bauer will be talking about Apple this weekend. Given that it’s such a popular stock to own, you must read his analysis.

Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.
Garrett Baldwin
Garrett Baldwin
Garrett Baldwin joined Godesburg Financial Publishing as Chief U.S. Markets Analyst in early 2021. A Johns Hopkins-trained Economist, he’s worked with hedge funds, venture capital firms, angel investors, and economic advisors to the U.S. government. Baldwin specializes in market anomalies and alternative investments. He’s written extensively on momentum, value, insider buying, and other unique strategies that provide investors that elusive edge.

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