Questions confidence in January jobs print and implications for wage growth given labor market tightness signals.
Host
Jim Bianco
Expresses confidence in January jobs number despite seasonal adjustment concerns, noting even with revisions it remains strong.
Jim Bianco
Notes disconnect between modest job growth (15,000/month) and strong GDP growth (2.5-2.7%) and stock market performance (+17%), attributing this to market belief in supply-side constraints from lower immigration.
Jim Bianco
Argues that if job growth continues at 100,000+ per month, wage growth and wage inflation will follow, citing Fed Chair Powell's comment that labor supply growth has effectively halted.
Asks about market trade implications given expectations for July rate cut and whether this leaves 10-year yields vulnerable and cyclicals positioned to benefit.
Host
Jim Bianco
States that broadening of stock market into cyclicals (non-AI sectors) is a big winner with current economic data.
Jim Bianco
Argues market perpetually prices next rate cut four months away, but if data continues strong (high 2s/low 3s inflation, 2%+ GDP), rate cuts won't materialize in near term.
Asks about Torsten Slok's (Apollo) provocative view that rate hikes could be part of conversation by year-end.
Host
Jim Bianco
Agrees with Slok's argument, stating if economy continues current trajectory with inflation sticky around 3%, it would be fair to start talking about rate hikes as neutral rate could be close to 4% vs current 3.5%.