Hey everyone and thanks for jumping back into the Macroverse. Today we're going to talk about the most recent jobs report. If you guys like the content make sure you subscribe to the channel, give the video a thumbs up, and also check out the sale on Into the Cryptoverse Premium at intothecryptoverse.com.
We will also be discussing the effect of the labor market data that we've gotten this week on assets like Bitcoin. I have said many times I do think we are approaching a very critical decision time for Bitcoin, which I think it's making that decision sometime this week. So let's go ahead and jump in. The unemployment rate came in at 4.1%. So it's sort of mixed news, right?
It's not terrible, right? I mean, it's not it's better than it jumping up to 4.4% or something like that. But it also shows that the downtrend that was previously taking place seems to have at least temporarily come to a halt.
So it's sort of one of those things where it's not that great because the downtrend hasn't continued, but it's also not that bad because, well, it's still well below what it was, you know, the last couple of months or, you know, a few months ago when it hit 4.3%. So always worthwhile to keep an eye on the labor market. If you look at the unemployment level, you know, it did increase by about 150,000.
If we look at the unemployment level by reason for unemployment, you can see that job losers actually started to go back up. Some of the layoffs actually did increase this month. You can look at job losers on temporary layoff actually went down slightly, but permanent job losers, you can see has basically hit a new cycle high. Okay, it bottomed out at 1.17 million in September of 2022. And now, in October 2024, it's at 1.83 million. So certainly worthwhile to keep an eye on that.
Again, this jobs report has mixed data in it. Some of it looks okay. Some of it looks a little bit weak.
And some of the numbers could also be affected by things like the hurricane. There's also been some, you know, some strikes, that sort of stuff, which obviously affects this stuff. But just know that that has been a thing. And actually, the hurricane did affect initial claims for a week or two, especially in states like North Carolina. But now those initial claims have sort of dropped back down to normal levels.
If we look at the unemployment rate per state, I always like to at least spend a couple minutes looking at some states. We always take a look at Alabama just because it's ordered alphabetically and Alabama is the first state. But it actually is. ticked up a little bit to 2.9%. Always worthwhile to check in on California to see what's going on over there.
It stayed constant at 5.3%. We'll take a look at Texas and see that it also stayed constant at 4.1%. And we will also check in with Washington State, which stayed constant.
And I always like to check in with the District of Columbia as well, because that was the one that was increasing quite a bit and you can see that it also leveled off this past month to check in on maybe just a few more florida also stayed constant so you can actually see like a lot of the states stayed constant and this was updated um this was updated a week ago and i mean it makes sense right if a lot of the states are staying flat in the unemployment rate then the expectation would seemingly be that the national rate should also stay somewhat flat Some states like Connecticut, you can see the unemployment rate just continues to trend down, right? So that's always an interesting thing because remember, in order to get really slowdowns in the economy, you need to see the labor market cool in more of the states, right? It can't just be a few.
If it's only a few, the market can ignore it. If it's all of them, the market, or close to being all of them, it's harder for the market to ignore. And so right now, I mean, you can see that there are some states like Connecticut that the unemployment rate has just continued to go down.
Now, if you were to look at, you know, states like Delaware, obviously, it has been trending higher, but it was flat relatively recently. Maybe we'll go check in with Kansas. I don't know if we've checked in with that one before. Also flat, right? I mean, you can see a lot of these, a lot of these states had increasing unemployment rates.
And then it's it's been flat here for the last month or so. So we'll just continue to move on. But what we could do is we can look at the number of states where the unemployment rate is rising. So where it's rising over the last month decreased from 31 states last report. to 16 states.
So only 16 states actually saw the unemployment rate increase over the last month. And that's more in line with what we were looking at. In fact, while we were going through the unemployment rate, I don't even think we clicked on any of the 16 states where it actually increased. Now, if you look over the last three months, that number went up by a state, right?
So over the last three months, the unemployment rate has gone up in 35 states. Now, what's interesting about this is that it tends to bottom out. sort of at the beginning of the year, and then go up into October of that year or November, sort of Q4, right?
It goes up into Q4. That one there topped in October 2022. And then the following year, it also topped in October 2023. And now you can see that we've gotten the data for September, right? So you might think, oh, well, does that mean it's hit its top?
Probably not, right? There's a good chance we'll see it at least go up one more time when we get the- the report for October, okay, which we should get, you know, near the end of this month. Now, if we look at it over six months, right, states where the unemployment rate has gone up over the last six months, you can see that it tends to bottom out in April, and then it tops out in Q4, right, and then bottoms in April, and then tops in Q4. And then once again, here, bottoms in April, and then it's just been slowly going up.
So right now, over the last six months, 26 states have seen a rising unemployment rate. We can actually quickly look to see what states are experiencing a rising unemployment rate. And you can see that it's, you know, a lot of the ones out west, but not actually on the way this is just over the last month, but over the last month, the only the states that actually saw an increased unemployment rate were states like New Mexico, Arizona, Nevada, Utah, Wyoming, Idaho, Montana, Minnesota, and then you see how it like clusters. Right.
And that's how the you know, that's how the sort of the global the national economy works. When there are trends that are occurring, it tends to occur in clusters. OK. And for the market to care, typically, you know, in more than just sort of a one off sell off that gets recovered from, it needs to be most of the states.
Right. This is what it looked like in December of 2008. This is what it looked like. And, you know, in December 2001. And then here is. you know, August, September of 1990, December of 1990. You can see it's a lot more.
This is what it looks like right now. Now, if you look over the last three months, it's a decent amount of states, right? I mean, we're now up to 36 states where the unemployment rate has gone up over the last three months. And the main areas of the country where there's still some strength with the labor market over here in states like Florida, and some of the South Oklahoma.
you know, Alabama, Mississippi, some of those states, and then also, of course, Washington and Oregon, and then also up in the north, up in the northeast, like Maine. Over the last six months, it looks like this, right? But again, you can see the clusters, right, where it the unemployment rate has been moving higher. And then there's also sort of, you know, contiguous states where things are still doing okay. We can also look at alternative unemployment rate measures.
And here you can look at the U1, which is greater than 15 weeks of unemployment. That actually did go up to 1.7%. So that continues to go up. We could also look at job losers, right? So people actually losing their job.
That also increased back up to 2%. I'll just click on the people not in the labor force just so you can see the chart, but I don't really have any strong opinions or comments on it. The labor force participation rate, another thing, it actually dropped this past month. So I would assume that that actually sort of helped out the numbers because there was fewer, there was a lower participation rate. Look at the civilian labor force level.
For, you know, anyone older than 16, always go, say, look at the year over year change. And it has been dropping, right? But it's still, you know, if you look at the percentage, it's still about 0.45%.
Now, if we look at the employment level, right? This is where things start to get a little interesting, because we just got the lowest print for non-farm payroll that we've gotten for the entire cycle. And again, there's probably some effects from things like the hurricane, or both hurricanes, right? Not only Hurricane Milton, but also Hurricane Helene.
And of course, there's potential effects from strikes and whatnot. But at the end of the day, the the number is i think what you have to go with and and it increased by only 12 000. now i think markets were expecting over a hundred thousand and last month i believe it was over two hundred thousand that might have been revised back down to less than two hundred But just to give you an idea of what that looks like, if you were to look at it on a month over month basis, you can see that this is the smallest monthly increase for the entire cycle. And obviously, where the concern becomes more of an issue and not just sort of this vague concern, as the market climbs the wall of worry, is when it goes negative, right?
That's when the market really starts to care when it goes negative. And that's where historically recessions occur. Now, you can get a move into the negative and you still not have a recession.
So you could get something like a negative print, say, next month or in a future month. And it might still not mean recession has definitely arrived, but it could be sort of a warning sign that if monetary policy isn't loosening up, then you could have one. So I think you can't necessarily fault the Federal Reserve for...
you know, wanting to do rate cuts. I mean, I know sort of the arguments as well, if everything's at all time highs, and initial claims are at 220k, I think they're at now 216k was the justification for rate cuts. And I mean, perhaps a chart like this is the justification for rate cuts, right?
I mean, you know, you don't necessarily want to wait for this thing to go negative to start cutting rates, right? I mean, that doesn't really seem to make a whole lot of sense. So, you know, they started cutting rates. And my guess is that in a few months, it might be more obvious like why, you know, maybe there will be a negative print sometime over the next few months. And that would be that would sort of help justify, you know, why the Fed was cutting at all.
Right. But again, they're between a rock and a hard place because no matter what they do, the markets are so volatile that at any point you could say, you know, they made the wrong decision. But, yeah, I mean, 12000. And I think it might be a little bit more interesting to look what's going on under the hood, because if you actually look at total private, it did print a negative number for the first time this cycle. Right.
You know, negative twenty eight thousand jobs. And this is the first time it has printed a negative number, you know, you know, basically since 2020. So something to think about there. If you look at the federal government, it dropped month over month, but only about three thousand.
I mean, if you just look at it. not the monthly change, it still went up, right? You know, it still went up, still more, more jobs there. And we could also look at, you know, manufacturing, it, you know, lost 46,000 jobs, construction, construction added, yeah, construction added about 8,000 jobs.
But yeah, I mean, I do think it's interesting that, that you have total non-farm at only 12,000. And then total private actually lost 28,000 jobs. right this is not something that we've seen this cycle right all prior prints were increases this is the first decrease that we've seen and it took you know until q4 of 2024. if you look at non-farm private payroll employment level um it went up right these are different you know this is from the automatic data processing research institute the adp i tend to trust the other stuff more the adp tends to be all over the place even more so um But, you know, it also went up. And if you look at the year over year change, it's still well off of zero.
So that's good news. Some of the bad news was total temporary help services employees. You know, it's been in a downtrend really since March of 2022. But I think the more concerning thing in the short term is that it seems like this drop started to accelerate a little bit right here.
If you look at, say, a month over month change by this metric, you can see that that's the biggest drop in a single month. since April of 2021. If you look at a year over year change, you can see that it's starting to drop again, right? It's starting to drop again back down.
It was still negative, but the slope was increasingly less negative. And now it's becoming more negative again. Multiple job holders don't really have a strong opinion about chart like this. I just want to show it in case you want to pause the video and just look at it.
Job postings on Indeed. This was an interesting one because it has been relatively flat. since May, right, it really hasn't gone anywhere since May. You can see that job postings on Indeed sort of this index was right around 111 112 for almost like half a year.
But then if you zoom in to just the last like, month or two, the job postings on Indeed have have really been dropping a lot down to sort of the index back down to 109. This is indexed to where it was back in February 2020. So pre pandemic. So If this ever gets back to 100, that means it's back to where it was pre-pandemic. Job openings dropped by a decent amount, actually 418,000. So if you think about it, like last month, when it increased, we said, look, guys, this is still probably part of a larger move down. I would be watching this one very closely at the next jobs report because job openings actually topped in March of 2022 when the rate hiking cycle began.
And we just got the data point for September, which is when the first rate cut began. Right. So ideally, job openings would not go down anymore to sort of show that maybe rate cuts are having an effect because we just got the job.
data for September, job openings for September, we won't get October job openings until a month from now. So that one's interesting, but it's at 7.44 million. One of the things we can do that I always like to take a look at is to actually go look at the total number of job openings per unemployed worker.
And you can see that it dropped slightly, but it's still at above one, right? It's still at 1.09. So based on this data, there's still more job openings than available workers, of course.
You know, I usually people comment, well, how do you trust this data? Guys, not about that. I mean, it's just about following, you know, this is what the Fed follows. And, you know, what the Fed what the Fed does is going to be based on this data.
And it's what the Fed does that, you know, that the reaction function of the Fed is what I think the markets typically care about. And as this number drops, then the expectation will be that looser monetary policy would sort of continue to come in. And we can continue on here.
We can look at job quits. Let's just go look at the job quits rate. You know, it dropped again.
I think this is probably one of the bigger concerns right now with the labor market is like people really aren't leaving their job. I mean, that's not necessarily a bad thing, but it just means that they're not as confident about finding a new job or maybe they're not leaving their job because they have tried to apply to other jobs and they're just not getting them. Right.
So that continues to drop, which is, I think, a concerning thing. But again, at the end of the day, it's the unemployment rate that matters. Everything else just sort of trying to figure out what's the unemployment rate going to do based on all these other metrics.
But at the end of the day, I think that's what the market cares about. You can see that layoffs and discharges increased to 1.83 million. So essentially, it's now returned to fairly normal times.
Initial claims, one of the less concerning indicators dropped back down to 216,000. So this surge here, potentially was in fact just hurricane related we can look at the number of states where initial claims over the population so if we're normalizing it is greater than a certain percent so if we say greater than 0.1 you can see that it's actually been putting in lower highs for a long time note though that there's usually a surge going into the end of the year and early january right you can see it here q4 2022 q4 2023 So there's probably going to be a surge here going into Q4 2024. And I think the important thing is, will it be another lower high or will it be a higher high? You can see that in July, there tends to be another smaller surge and the 2023 high was a little bit lower than the 2024 high.
There is a suggestion here that perhaps the Q4 surge by this metric could be higher than it was last year since sort of the mid cycle. or the mid-year surge was higher than last year. If you look at initial claims, Matt, normalized by population, it's mostly just these states out here that are red. And normally, it's once you get into November, December, where some of these, especially these northern states, start to show some concerns, right?
So like here, this is what it looked like in August 2022. But then by, and then here's October, but then by November, December, that's what it looked like, you know, these sort of the some of these initial claims normalized population. picked up in some of these states. That was 2022. And if you look at 2023, this is what it looked like in October.
But again, by November, December, that's what it looked like by December. So here we are now in October, I'm guessing you'll probably see a very similar trend where it starts to initial claims, normalize the population start to pick up, especially in some of these northern states. And then the question is, will it actually, you know, sort of bleed into some of the other states or will it just be more of what were the same? It will look at the number of states where the percentage year-over-year initial claims is rising by 30%, or at least 30%. It's actually, it's been dropping recently.
Same thing for the map, right? If you look at the map, and we'll maybe change it to just 10% to get, you know, to see where their weakness has been. And you can see kind of where this weakness has been in the country. Continued claims has been relatively flat for a long time. It did just put on a new cycle high a couple weeks ago.
But again... you know with initial claims so low it still suggests layoffs really haven't picked up all that much with continued claims higher again the suggestion is that you know people aren't getting laid off as much but they're having a hard time finding a new job which is also sort of evident in the hires chart down here which did go back up a little bit over the last couple of months, but it still has been in a downtrend since February of 2022. And then we can, of course, look at, you know, the Kansas City Fed Labor Market Conditions Index, right? I mean, it continues to drop.
Not really that interesting of an indicator, honestly. I mean, it's a very slow moving thing, but it also just kind of takes into account a lot of the things that we already... have looked at. It's just kind of combining a lot of different things.
So from there, it's worthwhile, I suppose, to go look at the SOM rule recession indicator. Notice that it triggered a couple of months ago, but then it just sort of untriggered, right? It went back below that 0.5 threshold.
And if you look at the number of states where the SOM rule has triggered, it's actually been dropping some basically since May. Sort of leveled out here, August, September. So let's see what happens going into Q4.
Here you can see the map of where the SOM rule has triggered. And it's basically interesting. I mean, it's just this sort of this the central part of the country is are basically where it's triggered. And then just some random states sort of in between. But that seems to be where the most of the weakness is there.
The smooth recession probability indicator increased slightly up to 1% as of September. Right. So still relatively low, but 1% as of September.
So how is this affecting the markets? Well, one thing to consider, of course, is Bitcoin. And it's kind of had a mixed result, right? It's still sitting around $70,000. Earlier today, after the release, we saw Bitcoin surge up.
Let's go to the hourly time frame just so you can see what I'm talking about. You know, here was the release. And or sorry, it was somewhere over here. Yeah, so the release occurred, Bitcoin surged up.
And then it sold back off. So again, there's not, there still isn't a lot of, there hasn't really been sort of a true signal yet. I mean, I think sort of both the bulls and the bears are fighting over what's going to happen.
As I've said, I think this is probably the decision week for Bitcoin. I think it'll be interesting, mostly not to worry about what happens today or tomorrow, but to see where the weekly close comes in. And to see if there's a continuation of that trend the following week, which I mean, also next week's an important week, too. It's the election in the United States. And also we have FOMC next week as well.
So that should also be interesting. But I think the sort of the question is, is Bitcoin able to sort of sustain this move? Or does this just end up being a wit?
We've talked a lot about, you know, sort of the cyclical view of Bitcoin and the monetary policy view of Bitcoin and wondering like which one is actually going to prevail. And obviously, the market participants keep going back and forth on which one they think is going to prevail. And I think, honestly, I think the market could also affect assets like Bitcoin could affect it differently than, say, other assets like altcoins.
Do remember in Q4 2016, Bitcoin went up. But the altcoin market mostly went down. Again, I don't know if that's going to happen.
And by the way, a lot of people have told me that there's not really a scenario where Bitcoin could go up and Ethereum go down. But actually, last month is a great example of that, right, where Bitcoin went up 10.88%. But Ethereum dropped 3.38%.
Right. So it's not impossible. Right. It's not impossible.
I agree. It would seem likely that if Ethereum were to drop in Q4, which has been my base case that it will drop in November and December, then it would seem likely that Bitcoin would accompany that. At least that's what, you know, would make the most amount of sense logically. But you can't deny that in 2016, when Ethereum was in fact dropping, Bitcoin was actually going up, right? And again, this is one of those things where the market doesn't always have to make sense, right?
I mean, sometimes, sometimes it's just as simple as in this case. It could just be as simple as, you know, the labor market is still doing OK, and therefore the market isn't going to get as many rate cuts as it potentially wants. And as those rate cuts, I mean, you can we can look at the probabilities right now, but you can see the market is still basically saying the Fed's only going to give the market 25 basis points of rate cuts. And I think the problem for the altcoin market is that's probably not enough, right?
I mean, if you look at at. alt bitcoin pairs as i've been mentioning i think they're probably going to bleed into the end of the year and sure enough we just got the lowest monthly close by alt bitcoin pairs for the entire cycle right there's a lot of you know commentary on on bear markets and bull markets, you have to sort of specify what you're talking about. If you're only interested in the USD valuation of altcoins, you could argue, yeah, they've been in a bull market. But if you're interested in what's truly important, and that's the Bitcoin valuation of altcoins, the bear market for that never ended, right? All those videos I did on the altcoin reckoning.
where i specifically said the altcoin reckoning was in relation to their bitcoin pairs not their usd pairs a lot of people have a hard time understanding that and sometimes i'll put out a tweet where i will say things like you know eth bitcoin might bottom soon but even if it does eth usd will likely get one more drop and then people say you know that's confusing to them and i'm like well which part's confusing eth bitcoin is different than eth usd but so many people have such a hard time sort of conceptualizing that but Once you figure that part of the market out, everything else makes sense. And perhaps it takes a full cycle to figure it out for a lot of people. But if you were someone that just held on to a lot of different altcoins for the last three years, a lot of these alts are basically just at their 2022 lows, right? I mean, they're not even that, a lot of them are. They're not that far off their lows, whereas Bitcoin is still really close to its high.
Bitcoin's at 70k. That's why. That stuff matters, right?
And what's interesting is last month, alt Bitcoin pairs opened at 0.4, and then they had a low at 0.35. I've said many, many times, I think that alt Bitcoin pairs are going to 0.25. So if you get November, let's say November, we see alt Bitcoin pairs drop from 0.35 to 0.3, and then December, perhaps 0.3 to 0.25, that gets you to sort of that trend line. by that horizontal support level for alt Bitcoin pairs at best, not at worst, that would get you there by the end of the year. And this is what I've been talking about for quite a long period of time.
Now, I do think the other thing to at least consider here is the yield curve. Because if you look at yields, I've said over and over and over again that the long-term yield curve was likely going to rally in Q4. And you can see that even today, the 10-year yield just keeps on putting in new local highs. And this is what I said was the most likely outcome, right?
That the 10-year, the long end of the yield curve would rally. I also said that the dollar would rally in Q4. And that because they're highly correlated with another, I mean, if the yields are going to go up, then I would assume the dollar would go up.
And that's what's happened. I did say repeatedly, I think on YouTube, but definitely on Twitter and ITC Premium, that while I was bullish on the dollar, I did think it was going to stall out here for one to two weeks. It's already been about a week. It could stall out for one more week, but I don't think it necessarily needs to.
I do think the dollar will continue its uptrend as we get a little bit further out into November. And that will likely be a drag on the altcoin market, especially with respect to their Bitcoin pairs. But if you look at yields, if you think about it, there was sort of a panic event in the markets back in August.
And that actually occurred around the time that Bitcoin had sort of this scare right here, right, where it dropped in August. And one of the things I've talked about a lot with Ethereum is how in 2016, it had a scare in April, August and December. Right. So here, April, August and December.
And then so far this year, it's been April and August. And I think it's going to get one more scare in December. And I do wonder if it's going to what people will blame it on will be the un-inversion of the three month and the 10 year yield.
So if you look at the three month yield, it's now at 4.522. If you look at 10 year yield, it's at 4.339. So, you know, they're getting, they're only like, well, like 20 basis points or so away from un-inverting.
We can even look here. We can say the U.S. 10 year minus the U.S. three month. And you can see what I'm talking about. So they're only, yeah, they're only about 18 basis points here away from an un-inversion. And so what I don't want people to do is if there is a scare around that time.
to to then figure out oh crap you know there's a decent chance there's a i would say there's a very very high probability that what happens for assets like ethereum is that it sells off sometime in november december comes back down to this trend line sort of by december and then starts to move up right people freak out because the uninversion of the yield curve and then that's where eth bounces um and starts going up more in 2025 so i do want people to be aware of that and and let's just watch bitcoin here going into the weekly close i think the big question is you know is this just a wick up here um you know is it is it something more could it you know could bitcoin rally back up and sort of reduce those fears right now if you look at sort of that trend line which is dubious at best because you connect the wicks you connect the candle bodies um but it's only just marginally above that trend line let's see if it can close above it the thing i'm actually more so looking at right now though is total market cap right if you look at total market cap you can see that it hasn't really followed bitcoin with that breakout um and and so i think it makes sense to see what total market cap can do here sort of the reverse idea of of usdt dominance um Probably if you look at USDT dominance, right, is this just a fake out below the trend line and it just starts going back up? I think that's what is the main important, the most important thing to think about right now with regards to, you know, these markets, because as I said before this week began, this is decision week, right? And it was always going to be a volatile week.
This is decision week. And I think what's going to, you know, I think what happens going into the weekly close will be very important. for understanding whether the cyclical view or the monetary policy view plays out for the rest of the quarter.
And then furthermore, I think that, you know, that will give us an idea of what's likely going to happen. And then next week, we'll probably confirm, right? So you get your first week says, hey, this is the most likely outcome. And then next week says confirmation of that. So and again, next week is a lot of stuff, FOMC, the election.
and and again one of the reasons why I thought the dollar might stall out was because of all these big events I I thought maybe the dollar would stall out going into a lot of these macro events and it has but I do think later on in November probably the second week at the latest it will start turning up again which should be a drag on all Bitcoin pairs if you guys like the content make sure you subscribe to the channel give the video a thumbs up and again check out the sale on into the cryptoverse premium at intothecryptoverse.com thank you guys for tuning in I'll see you next time bye