On the July Jobs Report
US MACRO, US FED, OIL: A third-in-a-row big surprise, with net payrolls not only confounding expectations, but standing starkly at variance with all the other contemporaneous labor statistics. But we think it is at least directionally correct, and should be taken as a useful antidote to recession fears that have been building up over the last couple weeks. Q2’s weak GDP report was all inventories – just as we expected. And the sharp correction in oil remains a bull-market correction, with little risk that prices will slip back to the Q1 lows when they threatened to cause a recession. These squirrely numbers aren’t enough make us change our minds on the Fed – no rate hike until at least December, and probably not even then.