๐ฌ๐จ๐ปโ๐ผ Cracks in Labor Market?
Happy Sunday from the Outer Banks in North Carolina. Iโm here for a couple more days until I fly back to California on Tuesday evening. Itโs nice and relaxing out here, if you ever have the chance to make it out here - itโs real nice to sit and be near by the ocean and just... think about life (lol).
In todayโs Sunday Primer, weโre talking about the Labor Market, the Debt Ceiling, and a touch on Oil. See below for some of my photos from the Outer Banks!
Market Report
Labor Market Update
The U.S. employment report for May released Friday showed mixed signals with both job gains and an unexpected rise in unemployment. The report saw an increase with employers adding 339,000 jobs, surpassing the forecast of 195,000, with growth in professional and business services, government, and healthcare sectors. Despite this, the unemployment rate rose from 3.4% to 3.7%, driven by more prime-age workers entering the labor force.
A rise in joblessness despite an increase in payrolls has complicated the decision-making process for the Federal Reserve who are discussing a potential pause in interest-rate hikes. The conflicting indicators might support this pause, but they could consider raising rates in July if the labor-market strength continues.
The market is currently pricing one more 25 basis point rate hike in July.
The jobs data also showed that women were at the forefront of prime-age participation, while there was a concerning downturn in employment among Black men, a potential early warning sign of issues in the labor market. Furthermore, the report highlighted that even though labor demand has been strong, there's uncertainty about its sustainability due to potential economic threats such as a credit crunch and increased layoffs.
The report also featured several other indicators of the labor market's health. The labor force participation rate remained at 62.6% with a notable increase among those aged 25-54, led by women. Average hourly earnings increased by 0.3%, though the average workweek declined to 34.3 hours, signaling potential demand concerns as employers typically reduce hours before laying off staff.
Debt Ceiling Suspended Until Jan. 2025
President Joe Biden signed a bill preventing a U.S. debt default, averting a potential economic catastrophe and scoring a bipartisan victory. The legislation, negotiated with House Speaker Kevin McCarthy, restricts federal spending for two years and suspends the debt ceiling until the 2024 election. The bill was approved by the House and Senate.
In his first Oval Office address, Biden celebrated the agreement as a testament to his โability to work across the aisleโ. This agreement was crucial to avoid a potential recession caused by default. The legislation followed weeks of negotiations between Biden and McCarthy. While receiving broad support from Democrats, the final deal faced opposition from many left-leaning lawmakers due to new work requirements for federal beneficiaries, eased energy-project permitting, and spending limitations. Despite this, the agreement received significant Republican support, allowing McCarthy to stave off challenges from Republicans who disagreed with the deal's terms.
The debt-limit bill suspends the debt ceiling until January 1, 2025, in return for capping federal spending on defense and domestic programs until 2025. These constraints could lead to a reduction in government programs if inflation continues to hover around 5%.
OPEC+ Maintains Oil Production Target
OPEC+ agreed to maintain the group's current oil-production target until the end of the year, amid disagreements over production quotas among members, particularly between Saudi Arabia and smaller African producers. Before the agreement, Saudi Arabia called for these African producers to reduce their quotas, but faced resistance as the cuts could impact their revenues. The decision to maintain production targets was made in an attempt to support crude prices as concerns rise over a possible decrease in energy demand due to a slowing global economy.
Tensions have been mounting within OPEC+, particularly between Saudi Arabia and Russia, two of the world's biggest oil producers. Russia's continued pumping of large volumes of cheaper crude oil into the market has undermined Saudi Arabia's attempts to support energy prices.
Saudi Oil Minister Prince Abdulaziz bin Salman has been playing a significant role in OPEC's big production decisions, often making calls without extensive consultation with other group members. The Prince has also been taking an interest in Wall Street short sellers, warning them ahead of this weekend's meeting.
Forecast Ahead
Big Number: $120,500,000
"Spider-Man: Across the Spider-Verse" earned an impressive $120.5 million in its first weekend at the domestic box office. This surpassed projections, marking it as the second-highest opening weekend of the year, only behind "The Super Mario Bros. Movie," which garnered $146 million. Furthermore, it claimed the spot for the third-highest opening weekend amongst all "Spider-Man" movies.
The movies are back!
Overcome the Sunday Scaries
Memes of the Week
Partnerships
If you are a brand looking to reach thousands of business leaders and investors through our two weekly newsletters, we would love to hear from you!