E=MC...Oh No! Jobs Report Shocks Markets Like a Photon Hitting a Photoelectric Plate!

A Universe of Uncertainty

Greetings fellow thinkers! It appears even the most brilliant minds can be caught off guard much like when I first pondered the implications of my own theories. The latest whispers from the economic cosmos specifically the ADP report reveal a rather unsettling anomaly: a contraction in private sector hiring. A decrease of 33,000 jobs mind you! It's like discovering that the speed of light isn't constant after all. Economists those diligent stargazers of the financial world were expecting an increase of 100,000. One must wonder is the universe playing a cosmic joke on us?

Spooky Action at a Distance (From Reality?)

Now before we all start bracing for a recessionary black hole let's remember the ADP report isn't always the most reliable predictor. It's like using a broken clock to measure the passage of time – occasionally correct but mostly a source of confusion. As they say "The only sure thing about luck is that it will change." May's initial ADP figures were significantly off from the government's later report. So perhaps this is merely a statistical hiccup a quantum fluctuation in the grand scheme of things. After all the real test comes with the government's nonfarm payrolls report where the expectation is a gain of 110,000 jobs. Let us keep our minds open but not so open that our brains fall out!

Service Sector Gets Served... A Loss!

Where did these jobs vanish to you ask? Primarily the service sector. Professional business services and health and education took the brunt of it shedding jobs like a tree shedding leaves in autumn. Meanwhile the goods producing sector saw a slight uptick. It seems some areas of the economy are experiencing a bit of gravitational pull while others are floating freely. Makes one wonder if we should look at tweaking our economic model in the same way I looked at tweaking Newtonian Physics to find the theory of relativity.

Regional Relativity

The Midwest and West are experiencing the most significant job contractions while the South seems to be relatively unscathed. Perhaps they have discovered a new previously unknown economic force that keeps them afloat. It is like some regions are experiencing time dilation while others are stuck in the past. Businesses with over 500 employees are actually seeing growth while smaller businesses struggle. Size matters it seems in the economic universe as well as in the realm of theoretical physics perhaps.

Income Inequality: A Constant?

Annualized income growth is slowing down both for those staying in their jobs and those switching. The rate of pay increase is slowing which is never a good sign. As they say "The definition of insanity is doing the same thing over and over and expecting different results." Perhaps we need to rethink our economic policies because even the best minds can get stuck in a rut if they don't challenge the status quo but I've said too much already.

Markets Defy Gravity (For Now)

Despite all of this the S&P 500 is up for the year. The markets are behaving as though they are immune to the laws of gravity. Investors can be so optimistic especially when the markets move up so sharply. As I always say "Two things are infinite: the universe and human stupidity; and I'm not sure about the universe.” Let's hope this optimism is well founded and the economy doesn't decide to prove my point in the negative.