00:00 Speaker A
Little optimism here at the uh on the potential for this government shutdown possibly ending this week. Are investors forgetting that prior to this, the economy was slowing down, notably the job market, the data sucked.
00:15 Speaker B
Yeah, I would tell you this, Brian. I think you bring up a really good point. I think the most important part of the government reopening, notwithstanding the fact that uh TSA and and flights will likely get a lot smoother in one of the most important travel periods is that we’re going to have economic data. and in the absence of economic data, you’ve got a Fed that had been leaning towards
00:36 Speaker B
taking a pause at the December meeting. And likely, if we if we compare the private market data that we’ve gotten on unemployment and what we will likely see before the December meeting, I think the Fed’s still going to be looking at a scenario where they need to defend their full employment mandate more than they have to be concerned about their inflation mandate in the here here and now. And I think that’s why
01:00 Speaker B
um if there’s a a major impact on markets with the government reopening, one of those pieces is going to be real economic data in real time that gives the Fed enough evidence to continue along the path of cutting rates.
01:13 Speaker A
Ari, real good points there Ari. You know, I’m of the view that uh markets are going to be reminded very quickly why economic data is so important. But Ari, let me let me just stay with you here. What data have you been using to assess the economy and what are you telling clients?
01:27 Speaker B
Well, I’ll tell you this, it’s unambiguously a labor market that has slowed precipitously and an environment where for at least the last three months, we’ve seen corporations being slow to fire, but slow to hire. And that took a a massive shift last month where we saw
01:46 Speaker B
Challenger Gray come out and show a significant increase in the number of layoffs announced, and there’s been a lot of corporate announcements. So, I would say that the what we uh went into 40 days ago with the government shutdown was an impression that while we’re not creating as many jobs as we uh did a year ago and certainly not enough to keep unemployment from rising. Um we we know that that slow to fire has just picked up a pace and I think that’s going to embolden the Federal Reserve to start thinking about um continuing along the path of getting rates back to a much more normal or neutral level.
02:17 Speaker A
Brooke, there’s a barrage of data just waiting to come out.
02:22 Speaker C
Brian, that’s right. We’re hearing some rhetoric across the street this morning that that barrage of data could be out soon. We know that that September report was largely ready to go before this government shutdown started. And so Krishna Guha over at Evercore ISI saying in a note this morning that he does expect the unpublished September employment report.
02:40 Speaker C
He said it’s ready to go and should the shutdown end in the next few days, they should be able to obtain that October payroll data and that could come out almost immediately. In addition to that, he uh Goldman, we also got a note from them that says if the BLS decides to release the October employment report, we expect its release along with the November report either on schedule on December 5th
02:59 Speaker C
or delayed by one week. Of course, this government shutdown, we have lacked that economic data. We’re supposed to get this CPI report this week. That is not expected to happen even if this government shutdown ends. And so the hope is that we will get this data in the next few weeks by or by early December right ahead of that key FOMC meeting.