Jobs revised down nearly one million — Markets brace for PPI, CPI, and the Fed

• The BLS revision shows that the Biden narrative was incorrect.
• The Labor Mkt is indeed softening.
• PPI and CPI today and tomorrow.
• FOMC next week.
• Try the Easy One Pan Chicken Cacciatore.

And it happened… At 8:30 yesterday morning, the BLS released the long-awaited revision to the jobs data from March 2024 through March 2025. Now, let’s be clear: March 2024 through January 20th, 2025, was the Biden administration. Agreed? Trump didn’t take office until 11 a.m. on January 20th, 2025.

So, the data we got yesterday reflects a period controlled mostly by the Democrats under Joe Biden — no debate there. The expectation was for a negative revision of about 682k jobs (jobs that were never actually created during that stretch). The market was ready for that.

But when the number hit, it wasn’t –682k… it was –911k. Translation: 911,000 fewer jobs were created than originally reported during the Biden period. And that is the ‘first revision’ – the final report is actually not due until early 2026. And what did Hakeem Jeffries and the House Democrats post on X?

“Nearly 1 million fewer jobs – Trump and the Republicans are crashing the US economy.”

They even spun it into a New York Times piece. But here’s the point — this revision may have been reported yesterday under the Trump administration, but it clearly happened under the prior administration. There should be no question about that.

What it tells us is that the original numbers were artificially bolstering a narrative that never really existed. Now the new reality is front and center: the labor market is weakening, and at a faster pace than the Fed — or the rest of us — understood. And that just about seals the deal: rates are going lower. Even JPM CEO Jamie Dimon chimed in – saying that ‘the record revision to US Payrolls data is further proof that the US economy is battling a slowdown.’ He fell short of calling it a recession.

And now, today we get the August PPI report — inflation at the producer level. Recall that last month’s print came in much hotter than expected at +0.9%, but producers were largely absorbing those higher costs as they waited to see how the tariff battle would shake out.

This morning’s report is expected to show a 0.3% increase m/m and 3.3% y/y on the headline PPI. Strip out food and energy, and the expectation is for +0.3% m/m and +3.5% y/y. We’ll get the results at 8:30.

Should it come in as expected, it will reinforce the idea that while producer prices remain elevated, they’re not accelerating out of control— giving the Fed even more room to lean toward rate cuts. Should it rise it will cause more confusion for the FED – because rising prices should cause the FED to hold rates steady. Should it be weaker, then expect calls for a bigger rate cut to hit the tape.

Tomorrows CPI is expected to show an increase of 0.3% m/m and +2.9% y/y – both results that are higher than last month. Now if we take out food and energy it is expected to be +0.3% m/m and +3.1% y/y – UNCHANGED over last month.

And again - Should it come in as expected, it will reinforce the idea that while consumer prices remain slightly elevated, they’re not accelerating out of control — giving the Fed even more room to lean toward rate cuts. Should it rise, it will cause more confusion for the FED – because rising prices should cause the FED to hold rates steady. Should it come in weaker, then expect calls for a bigger rate cute to hit the tape.

And so, guess what stocks did? Well they ended mixed. The Dow rose 196 pts or 0.4%, the S&P up 17 pts to 0.3%, the Nasdaq up 80 pts or 0.4%, the Russell lost ground – falling 13 pts or 0.6%, the Transports lost ground – falling 125 pts or 0.8%, the Equal Weight S&P gave back 25 pts or 0.3% while the Mag 7 gained 285 pts or 0.8%.

Why? Because some analysts and economists are starting to whisper about the return of stagflation — that toxic mix of rising prices and a slowing economy with too many people out of work.

The last time we lived through it? 1978–1982. That was when the Fed was cutting rates to protect the labor market even as prices kept climbing. I was 17 to 21 years old then — and like every other Boomer, I remember it well. It wasn’t pretty. In fact, it was brutal. Eventually, Fed Chair Paul Volcker had no choice but to jack rates above 20% to finally crush out-of-control inflation (running at 13.5%) … and in the process, he crushed the economy too.

So, the question now: are we headed there again? I don’t know — but I sure hope not.

Which brings us right back to the Fed and next week’s FOMC meeting on Tuesday and Wednesday. The market is expecting a 25 bp cut. While 50 is technically on the table, it would almost certainly be taken as a negative — a sign the Fed is panicking. In the end, investors will hang on every word from JJ, listening not just to what he says, but how he says it — because they don’t just want to know where it begins, they want to know where it ends.

Bonds weakened…..the TLT and TLH both ended the day lower – after rallying hard over the past week. The TLT lost 0.6% while the TLH lost 0.4%. The 10 yr rose 5 bps to end the day at 4.085%, the 30-yr ended the day up 4 bps to end the day at 4.73%.

Oil continues to push slightly higher after the weekend news…..This morning it is up 70 cts at $63.30. It is now solidly between trendline support at $62.85 and trendline resistance at $64.25.

Gold is now trading at $3,645 – just a hair below yesterday’s intra-day high of $3,674. Pick any number of reasons – geo-political unrest, Central Bank Buying, inflation hedge, safety trade in an uncertain economy. Any of those would work….and it may be a combination of all of them – at this point it makes no difference…. the Momo guys have taken control of it – the RSI remains in overbot territory.

US futures are beginning to tire…. Dow futures are -70, S&P’s up 15, Nasdaq up 48 while the Russell is -8.

Overnight – Trump asked the EU to impose massive tariffs (up to 100%) on India and China in an effort to put pressure on Vlad to end the war, a move that many think could destabilize global trade and global trade relations.

The S&P closed at 6512 up 17 – we now tested and pierced the old closing high at 6508 – leaving us in a position to test the intra-day high of 6532 next. Whether or not we do that will be revealed at 8:30 am when we get the August PPI. The tone of that report will set the tone for tomorrow’s CPI report and will set the tone for next week’s FOMC meeting.

Easy chicken cacciatore (one pan)

For this you need: chicken thighs and legs, skin on, bone in, s&p, olive oil, kalamata olives, Cherry Tomatoes in puree. Chopped celery, carrots, and onions, 2 garlic cloves (whole) and red wine.

Begin by sautéing the vegetables in olive oil in a large sauté pan that will accommodate the chicken. After 10 mins, add the seasoned chicken pieces and garlic cloves to the pan and brown on all sides. Add 1 cup of red wine. – Allow it to come to a boil and steam the alcohol away.

Now add the cherry tomatoes with the puree sauce, mix to incorporate. Season with s&p, cover, turn heat to low and let it cook down – after 30 mins – get ready to serve.