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Jobs data shows the truth about the labor market

Follow the trend to understand Friday’s jobs data, which showed 339,000 jobs were created in May while the unemployment rate increased.

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We’ve had some odd job reports over the years, but the key is to always follow the trend. That’s especially important with Friday’s data, which showed 339,000 jobs were created in May even while the unemployment rate increased.

As someone who wrote that we should get job openings toward 10 million in this expansion, I am always mindful of my other labor talking point. If COVID-19 didn’t happen, the total employment numbers in the U.S. today should be between 158 million and 159 million, or in a weaker labor market growth scenario, between 157 million and 158 million.

Today, we stand at 156,105,000, so I think we are still in make-up mode until we reach a range acceptable to a fast economic recovery.

That’s why the jobs data has beaten expectations 14 months in a row. What the U.S. has that other countries don’t is a massive young workforce. While population growth is slowing here, we have the demographic muscle that other countries don’t have — if we didn’t have that, our economic discussion would be different.

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Now let’s look at the labor market on all fronts from the data we got this week to get a comprehensive view of the labor market today. On Friday the BLS reported job growth came in at 339,000, with positive revisions, while the unemployment rate went higher, as there was a drop in self-employed workers.

From BLS: Total nonfarm payroll employment increased by 339,000 in May, and the unemployment rate rose by 0.3 percentage point to 3.7 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance.

Hours worked have fallen in the last few months, and wage growth is slowing. The fear of 1970s-style inflation was that wages could grow out of control in a tight labor market. In theory, 2022 and 2023 are tight labor markets and wage growth is slowing down. This trend should continue for the next 12 months as well.

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Here is a breakdown of that data for those aged 25 and older:

  • Less than a high school diploma: 5.7% (2 months ago, 4.8%)
  • High school graduate and no college: 3.9%
  • Some college or associate degree: 3.2%
  • Bachelor’s degree or higher: 2.1%.

The noticeable data line here is that the unemployment rate for those without a high school education is up almost 1% from two months ago.

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Here is the breakdown of the jobs created this month, another big month for the government, which typically doesn’t continue at this pace. Construction labor has held up very well, even though housing permits have been falling for some time. The backlog from COVID-19 has been a jobs program for the U.S. as we are still slowly growing the housing completion data.

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So the BLS jobs report is still pushing along, while wage growth is slowing down. Jobs Friday is one piece of the labor pie — we have two other data lines that we always need to keep an eye on to know the health of the labor market: job openings and jobless claims.

As the only person on Earth who talked about job openings data getting to 10 million in this recovery, I am surprised that job openings data is still around that mark. But that is off the recent highs of 12 million.

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At this point of the economic expansion, I am putting more weight on jobless claims data than job openings (JOLTS). For me, the Fed doesn’t pivot, or the 10-year yield doesn’t break under 3.21%, until jobless claims break over 323,000 on the four-week moving average, and that isn’t happening either.

As we can see below, the Gandalf line in the sand has held up the entire year, even though it was tested many times.

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As we can see below, the jobless claims four-week moving average is still far from breaking over 323,000. I chose that number using many different variables as I think when we crack about that level, it will be noticeable to everyone — even the Fed — that the labor market has broken.

From the St. Louis Fed: Initial claims for unemployment insurance benefits increased by 2,000 in the week ended May 27, to 232,000. The four-week moving average declined, to 229,500.

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It’s important to understand the labor dynamics of this economic expansion. We had such a shock in the economy with COVID-19 and a strong labor market recovery that the make-up labor demand, which doesn’t get talked about much, is a significant reason we still see healthy numbers.

Also, it’s essential to understand the demographic difference now and what we had to deal with after 2008. The Baby Boomers are leaving the labor market, and every month that happens, they need to be replaced if demand is growing. This is why having a healthy number of younger workers not only helps with that but also provides replacement consumers, as those who leave the labor market tend to consume a bit differently than younger workers.

At this stage of the economic cycle jobless claims is the data line that matters most. Once jobless claims break above 323,000, then and only then I believe we can talk about a Fed pivot — first in their language and then possibly with rate cuts.

The Federal Reserve is scared to death of the 1970s inflation, and they genuinely believe that breaking the labor market is the best way to prevent that type of inflation from happening. As a country, we are fighting against a group of people stuck in the wrong decade with their economic mindset on inflation.

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One-third of all CFTC crypto enforcement actions took place this year — Chairman Behnam

CFTC Chairman Rostin Behnam told an audience at the Financial Industry Association Expo about the agency’s activity in the crypto space and its need…

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October 2, 2023

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CFTC Chairman Rostin Behnam told an audience at the Financial Industry Association Expo about the agency’s activity in the crypto space and its need for modern legislation.

United States Commodity Futures Trading Commission (CFTC) Chairman Rostin Behnam highlighted his agency’s activity in the cryptosphere and the need for up-to-date legislation at the Financial Industry Association Expo 2023 event in Chicago. He described the CFTC Enforcement Division’s efforts as a “nonstop drumbeat.”

In the text version of his keynote address to the industry group, Behnam recounted the $6 billion his agency collected in penalties in fiscal year 2023. He added:

“45 of those [enforcement] actions this fiscal year involved digital asset-related misconduct, representing over 34% of the 131 such actions brought by the commission since 2015.”

Behnam singled out the “precedent-setting litigation” his agency won against Ooki DAO, which resulted in the closure of the decentralized autonomous organization and netted a $643,542 penalty. In its default judgment against Ooki DAO, the U.S. District Court for the Northern District of California found that the DAO was a “person” under the Commodity Exchange Act (CEA) of 1936.

Behnam returned to the CEA when he discussed the agency’s future direction. “The cornerstone of our latest era is disintermediation brought about by groundbreaking technology: DeFi, AI and standard WiFi,” he said, but:

“The limits in the CEA established in essentially another era create real barriers to engaging in rulemakings and policy that is necessary to our mission, but just beyond our scope.”

Furthermore, those limits force the agency “to engage in increasingly resource-intensive quests for assurances that we are acting within the bounds of our intended remit.”

Vertical integration — an “outgrowth of electronification and the promise of DeFi” — is occurring throughout financial markets and leading to regulatory concerns, and “customer protections mean something different now,” according to Behnam.

Related: CFTC commissioner calls for crypto regulatory pilot program

Behnam’s statements contrasted sharply with Securities and Exchange Commission Chair Gary Gensler’s position that existing financial legislation “has been quite a benefit to investors and economic growth over the last 90 years” and should not be tampered with.

Behnam also indirectly addressed limitations on the CFTC’s enforcement authority. “To suggest that […] we must wait until victims suffer and cry out for help to be proactive […] undermines our mission and purpose,” he said. “I have continued to advocate for additional authority in the crypto space,” he later added.

Magazine: Cleaning up crypto: How much enforcement is too much?

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Volatility Shares cancels ETH futures ETF launch, ‘didn’t see the opportunity at this point in time’

The company’s co-founder and president, Justin Young, told Cointelegraph in an email that plans to launch at a later date were “TBD.”
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October 2, 2023

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The company’s co-founder and president, Justin Young, told Cointelegraph in an email that plans to launch at a later date were “TBD.”

Volatility Shares, a financial firm offering a range of exchange-traded fund (ETF) products, canceled its plans to launch an Ether (ETH) futures ETF on Oct. 2, citing changes in the market. 

In an email with Cointelegraph, the company’s co-founder and president, Justin Young, confirmed the cancellation:

“You are correct — we did not launch today. We didn’t see the opportunity at this point in time.”

However, when asked if the company still planned to launch an ETH futures ETF at a later date, Young responded, “Of course,” adding that “plans are TBD.”

Ether futures ETFs track the prices of ETH futures contracts — agreements to trade the asset at a specific time and price in the future. Essentially, they allow investors to be involved in ETH trading without having to actually hold any of the cryptocurrency.

Related: SEC continues to delay decisions on crypto ETFs: Law Decoded

Volatility Shares was previously positioned to be the first firm to offer an ETH futures ETF. The United States Securities and Exchange Commission was expected to approve the first such product on Oct. 12, but concerns over the previously impending Oct. 1 U.S. government shutdown reportedly prompted the SEC to move the timeline for approval up.

As of Oct. 2, several firms have begun trading ETH futures ETFs, including Valkyrie, VanEck, ProShares and Bitwise.

As Cointelegraph’s Turner Wright recently wrote, “Bills for the good or ill of digital assets would be halted amid a shutdown, and financial regulators, including the Securities and Exchange Commission and Commodity Futures Trading Commission, would be running on a skeleton crew.”

In a twist, the U.S. government managed to avoid the shutdown by passing a stopgap measure to keep services funded through Nov. 17, with the Senate voting 88-9 to pass the measure. U.S. President Joe Biden signed it into law immediately.

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Class-action suit filed against Binance for alleged harm to FTX before its collapse

A California resident is suing Binance and its CEO for tweets last November that, according to allegations, led to the collapse of the rival exchange….

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October 2, 2023

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A California resident is suing Binance and its CEO for tweets last November that, according to allegations, led to the collapse of the rival exchange.

A class-action suit was filed against Binance.US and Binance CEO Changpeng Zhao on Oct. 2 in the District Court of Northern California alleging various violations of federal and California law on unfair competition for attempting to monopolize the cryptocurrency market by harming its competitor FTX. The suit was brought by Nir Lahav, who is identified only as a California resident. 

At issue are posts made by Zhao on Twitter (now X) in early November on the eve of FTX’s collapse. The posts were made in conjunction with the decision by the defendants to liquidate their holdings in the FTX utility token FTT on Nov. 6. The plaintiffs estimated that Binance owned up to 5% of all FTT tokens.

Suit filed against Binance and Changpeng Zhao. Source: CourtListener

The following day, Zhao stated in a Twitter post that Binance had signed a letter of intent to acquire FTX, but it backed out of that deal one day later. According to the suit:

“Zhao publicly disseminated this information [on the withdrawal of the acquisition offer] on twitter and other social media platforms to hurt FTX Entities that ultimately lead to a rushed and unprecedented collapse of FTX Entities.”

After began its argumentation with a defense of the Securities and Exchange Commission’s (SEC) policies on crypto and invocation of the Supreme Court’s Howey and Reves decisions, among others.

It went on to claim that Zhao’s Nov. 6 tweet, “Due to recent revelations that have came [sic] to light, we have decided to liquidate any remaining FTT on our books,” was false and misleading, since Binance has already sold its FTT holdings, and the post was “intended to cause the price of FTT in the market to decline.”

Related: New FTX documentary to spotlight SBF-CZ relationship

The plaintiffs found evidence for their claim in the same post by Zhao, where he wrote, “We are not against anyone. […] But we won’t support people who lobby against other industry players behind their backs.” The plaintiffs took the latter sentence to indicate that Binance opposed FTX CEO Sam Bankman-Fried’s “regulatory efforts.”

The suit alleges that Zhao’s proposal to acquire FTX was not made in good faith and the episode would “ultimately lead” to the collapse of FTX:

“Zhao’s tweet resulted in FTT price declining from US 23.1510 to US 3.1468. This significant drop plummeted FTX Entities into bankruptcy without giving an opportunity or chance to FTX Entities’ executives and board of directors a chance [sic] to salvage the situation and put in safe guards to protect its clients and end-users.”

The suit demanded monetary damages, court costs and disgorgement of ill-gotten gains based on seven counts. “Plaintiff believes that there are thousands of members of the proposed class,” the suit stated.

As the suit noted, both Binance and FTX are currently subject to SEC actions. The criminal case against Bankman-Fried will begin Oct. 4 in New York. Zhao addressed potential accusations of unfair competition in the same tweet that is cited in the suit. “Regarding any speculation as to whether this is a move against a competitor, it is not,” he wrote.

His statement did not stop speculation to that effect within the crypto community, however. The CEOs of the crypto exchanges traded jibes on then-Twitter for weeks afterward.

Magazine: FTX bankruptcy filing details, Binance’s crypto industry fund and a U.S. CBDC pilot: Hodler’s Digest, Nov. 13-19

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