After Weak Jobs Report, Dow Plunges
The economy is starting to tailspin: The the S&P 500 had its worst July in 10 years and manufacturing activity contracted.
By now, most of our Legal Insurrection readers will have had a chuckle over The New York Times attempt to generate enthusiasm over the Democratic Party’s selected presidential candidate, Vice President Kamala Harris.
“Kamalanomenon”! Omg. Can’t breathe. pic.twitter.com/9quMcQlC9l
— Julie Frost–That Werewolf Writer🐺🦉 (@JulieCFrost) August 2, 2024
I decided to coin my own term, based on this example and the fact that Harris has been Biden’s co-pilot in the inflation plane: Kamalanomics.
Scott Bessent on how the Biden-Harris Administration has handled inflation:
“She was Joe Biden’s co-pilot in the inflation plane, and they crashed the American economy in the side of the mountain.”
Kamala Harris needs to own her policies that failed the American people. pic.twitter.com/376LT4TGQj
— Brian Kilmeade (@kilmeade) August 1, 2024
This term will likely prove more accurate over the course of the next 90-plus days, as Americans begin reviewing the economic debris field.
To begin with, a weak jobs report that was so bad it could be be massaged triggered a stock sell-off.
Stocks sold off for a second straight session on Friday, and the Nasdaq confirmed it was in correction territory after a soft jobs report stoked fears of an oncoming recession.
The Dow Jones Industrial Average fell nearly 1,000 points in morning trading before paring losses, slumping 610 points, or 1.5%, to 39,737.26. On Thursday, the Dow lost nearly 500 points.
The S&P 500 dropped 1.8%, and the Nasdaq slid 2.4%. All three indexes finished with weekly losses of more than 2%.
The Labor Department said nonfarm payrolls increased by 114,000 jobs last month, well short of the 175,000 of economists polled by Reuters, and the at least 200,000 that economists believe are needed to keep up with population growth. The unemployment rate jumped up to 4.3%, near a three-year high.
Federal Reserve Chairman Jerome Powell had also a negative outlook on the labor market.
Powell warned Wednesday that cracks are starting to form in the labor market, and the sudden jump to a 4.3% unemployment rate is the latest piece of evidence.
…It’s been a turbulent few weeks for markets, as some earnings reports have underwhelmed and fear about increased regulation of tech and lackluster AI performance have soured investors’ moods. Companies have reported US consumers have pulled back from restaurants and retailers, and this week some preliminary jobs data looked weak.
The hit to then markets due to lackluster performance in Artificial Intelligence (AI) and tech cannot be overstated.
The 10-year Treasury yield fell to its lowest since December as investors flooded into bonds for safety on the fear the Federal Reserve made a mistake this week by keeping interest rates at current levels.
Some megacap names saw steep losses during the day, as Amazon’s second-quarter results sparked investor concerns about Big Tech’s blowout levels of artificial intelligence-related capital spending. The e-commerce giant slid 8.8% after missing the Street’s revenue estimates and issuing a disappointing forecast. Intel, meanwhile, cratered 26% after announcing weak guidance and layoffs. Nvidia lost 1.8%, following a 6% loss a day before.
As a result, the S&P 500 had its worst July in 10 years.
As of 11:00 AM ET on July 31, the S&P 500 has advanced 1% in the month. The broad-based index was actually down 0.4% headed into the final trading session, but encouraging financial reports from AMD and Microsoft renewed investor confidence in the artificial intelligence boom.
Even so, the S&P 500 is headed toward its worst July since 2014.
But the plunge in the Stock Market is only one sign of an economy that is in a tailspin. A new industry survey shows that manufacturing activity contracted more sharply than expected in July.
The Institute for Supply Management’s (ISM) manufacturing index was 46.8 percent in July, down 1.7 percentage points from a month earlier.
This was well below market expectations of 48.0 percent, according to Briefing.com, and marked the fourth consecutive month where the reading was below the 50-point mark separating expansion from contraction.
“This is a very downbeat report underlining that the manufacturing sector continues to struggle,” Pantheon Macroeconomics senior US economist Oliver Allen wrote in a note to clients.
If Harris is going to LARP (Live Action Role Play) as President of the United States, then Bidenomics should be renamed Kamalanomics. I am sure her economy will live up to expectations. Hopefully, it will be brief.
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Comments
I like the idea of comparing her from taking over from Joe against Trump. It sounds better than Trump vs Biden when he is not running. Add everything she is not fixing right now.
“Add everything she is not fixing right now.”
She’s a fixer, but not that kind of fixer.
That’s a campaign idea that should be pushed:
Kamala, you should be focused on the economy right now, more than on campaigning:
What are your plans to stop inflation and improve the economy?
Kamala Harris will soon discover that, even with a significant passage of time, unburdening herself of what has been is not easily unburdened because she and her record are a burden to herself. And, in our communities, a burden in and of itself is a significant burden to overcome.
Might have to change the definition of job like we did with recession and vaccine.
Tailspins are easily corrected and people do them for fun. It’s death spirals that you want to watch out for – where what you do to correct the problem makes it worse.
Dead pilots are often found with the stick in their crotch.
I don’t think we will be hearing Carville remind us during the next 90 days that “it’s the economy, stupid.”
Not hearing from Carville — on any subject — is a blessing.
That recession that the Biden/Harris Administration fought by all means economic and propaganda is here.
She and Biden* are not failing with their economic policies, they are succeeding beyond their wildest fever-dreams.
Cloward-Piven was the strategy all along.
Ding. Ding! DING!! You just won the internet this year. Sky high inflation, sky high interest rates, sky high property taxes, and all time low purchasing power are your lovely parting gifts.
‘Murica!
It’s the “better to rule in hell than serve in heaven” strategy. It’s every blue state and blue city.
Ultimately this will fail when there’s no productive capitalist economy to sell the failed socialist/communist grain to stave off famine in ‘utopia’. Plenty of off ramps before then as well. The Sunbelt Republic idea seems viable.
We have bad news and we have good news. The bad news is the economy shows signs of contracting with numbers of layoffs increasing. The good news is it’s happening on the Dimocrats’ watch. Trump and the Republicans need to hammer this nail for the next three months with the additional line, “Remember how things were while Trump was president?”
.
I’m of the opinion this is very good.
Accounting departments will start “taking out the trash” in reporting losses and bad news.
Also smart companies will use this opportunity to toss DEI to the curb to. I was reflecting on the MSFT move and I’m betting the individuals in question were actually loathed by their peers and it was a knife in the back at the right opportunity that did it. I’m finding it’s all game of thrones with those VPs.
The market will come back. Are you ready to buy while things are on sale now? Dollar cost averaging works every time its tried!
In addition to the jobs report, isn’t it also possible that the market is reacting to the increased possibility of Harris and the Dems winning in November, and that some of the bull market was attributable to the expectation that DJT would win?
Now, now, now, UVABuck. You can’t be injecting some tiny bit of rationality into the discussion.
IGNORE THE WOMAN BEHIND THE CURTAIN!
The Dem-wing of the UniParty putting her up as their candidate could not possibly have a negative effect on markets! Why, just look at all of the positive indicators from the Biden/Harris policies! Prices haven’t gone up over 50% in the past 3-1/2 years, that’s just Rep-wing misinformation. Don’t be fooled by your grocery store bill, just believe us. The country is safer than ever since the Border Czar secured them for us! Anything else is just malinformation from those evil Rep-wingers. Our now-diverse military is stronger than ever! The fact that unqualified, obese, out-of-shape illiterates now populate the military makes it better.
DIdn’t you see how the market kinda-sorta recovered towards the end of the day when the truth finally sank in about Kackles being selected by the elites? C’mon, man
IMO markets are over valued when looking at PE ratios and the tell for weakness is lack of both breadth and volume. Then there’s the point that the stock indices ain’t the economy. An up market may be good for a stock price but bad for the kitchen table of the downsized workers when cheaper labor costs by offshore are the reason for stock price increase.
Exactly. Increased stock prices are a sham when they come about on the backs of the working poor rather than on any actual added value (as in superior product, e.g.).
It’s the 1970s all over again: Inflation, stagnation, persistent unemployment all driving economic uncertaintity, social unrest, international turmoil to include an oppressive threat of terrorism. Internationally, even the players are the same to particularly include the Iranians and American hostages being held by Muslim fanatics. They say history doesn’t repeat itself. But, it really does rhyme sometimes.
I will be using the term someone else coined here yesterday: Harriysteria.
Harriysteria
Kamalamenom
Kamalamania
Meanwhile, we are just weird. 😂
Harristerectomy?
The current high prices and sell off look like theatre by people with the ability to trade off of panic and uncertainty. Not quite pump and dump, but this looks a little too staged. Wait for a big dip and buy options as far into the future as you can when all looks most grim.
No serious money could look at the constant revisions of GDP and unemployment and not know they have been lying. Now they will tell the truth for while to drive it back down and trade on the upswing later on. Though as COVID demonstrated, don’t underestimate the ability of “experts” to be morons. ALSO- I was watching options on the DOW this week and noticed the puts for DIA at 400 were REALLY high so serious money knew EXACTLY what was going to happen. I had sold at the DOW 400 on the way up and wanted back in (slightly lower, not that I try hard to time.. only with a small part of the portfolio).
As noted on Intel. This has been 25 years in the making. They won’t innovate and they try and belt tighten their way out of every tight quarter. It’s literally their only trick. You can only pull the plants from the lobby and get rid of employee perks and copy machines so many times before that trick is done and it was done 20 years ago. They could have added a software and gaming division in the late 90s when consoles were eating the PCs lunch. They could have become a data center monster in the 10s and teens when all the others were doing it. They could become an AI leader now if they were to invest. They don’t invest in anything outside of manufacturing and DEI, and neither of those creates new revenue streams. The latter destroys innovation.
I was in Orlando this week for vacation and visited with a friend who works for a company that can actually use AI and automation. Despite being woke, they actually do some smart things. Based on what is happening there- there is a small “there” there- but honestly the clowns pushing AI where I work are a joke. The supplier staff from the company I work with can’t automate their way out of a paper bag and the real life problems we have to solve do not lend themselves to AI. It’s legacy garbage written in the 90s/2000s on servers that can’t be retired that is the problem. There is no magic smoke to fix that. They have to invest in smart people to migrate. I don’t think that is unique to the hell hole I work in.
Another note- Florida is full. Same dude mentioned above- their neck of the woods near Orlando is getting so crowded that water pressure is zilch in the morning. Orlando is going to the next deeper salty aquifer and investing in the reverse osmosis tech- but they are obviously late to the game. I’ve been there a few times over the years- but good lord- the Costco parking lot was overflowing at 1:30 on a Wednesday. It’s crowded.
So, the takeaways are to keep some dry powder, and stay the hell away from Intel?
Yes and Yes.
You have to wonder how many more company’s have 20-30% overhead of worthless employees (many DEI).
The DEI ones are very dangerous to profits because they taint all future hiring to be DEI and they crater productivity through horrible decision making. Corp DEI doesn’t just demand you hire black women; they mandate you put them in charge. Qualified or not.
When the reaper comes for DEI a lot in the corporate will start to just function as it should.
Not just productivity gains from competence and merit in deciding who to hire/promote/fire. How much productivity loss is due to walking on eggshells and complying with HR goons latest fad?
The real problem is loss of trust. Why would someone want to go back to the office b/c some Boomer can’t understand remote work? If you were able to work from home during Covid and met all the goals/requirements and whatever metrics they used for your report card I can understand pushback from workers. To these workers the ‘go back to the office’ command seems like more HR nonsense. Then there’s the total cost on the worker. The company gonna up their pay to account for commute time, gas, vehicle maintenance? How about daily wardrobe and dry cleaning?
Lots of the more productive, independent minded free thinkers able to see around corners and outside the box ain’t gonna do it. They gonna work an Indy consulting gig so they don’t have to deal with HR tyranny.
Everything you say about Intel is unarguably correct. They really lost their way after the departure of Andy Grove. It’s sad that another American company that enjoyed market dominance has been eclipsed at the top because it failed to lead that market in innovation. We’re seeing it play out in Boeing in real time.
But … First
Indian AsianBlack Female President (TM)!Ignore the media reports. Watch that interview that the Donald gave. It was brutal. Made the “what is Biden talking about?” shrug during the debates seem like cocktail hour. The correct headline should have been “Trump allows interviewer to show her stupidity and malice to the audience.”
But what does Jim Cramer say though.