On the July Jobs Report

114,000 net payrolls misses the consensus, but it’s right on our model estimate. Payroll gains were lower in April at the dawn of a very strong quarter for growth. The unemployment rate rose almost entirely due to a welcome expansion of the labor force. It triggers the Sahm Rule recession indicator – just barely – but only using rounded monthly numbers, not accurate unrounded ones. Recession dread is back. We think it is partly the psychological result of recent capitulation we have observed after years of fighting the strength of the Magnificent Seven. The extraordinary political environment encourages questioning previously unquestioned assumptions – and that’s never good in a bull market for tech stocks. Immigration remains strong. Job-finding remains high-probability, and job separation remains low-probability. Elevated claims are the same as last year during a boom quarter, and far below historic norms. Nothing here will deflect coming Fed rate cuts.