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Chapter 1: What is the main topic discussed in this episode?
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I'm Alexis Christophorus, and these numbers just crossing the Bloomberg now. The Labor Department says the U.S. economy lost 92,000 jobs in February. That is worse than expected. We were looking at an additional 55,000 jobs. And, of course, this is compared to January when we added 130,000 jobs. The unemployment rate ticking up to 4.4%. The estimate there was 4.3%, and the prior month was 4.3%.
Checking wages month over month, up slightly to four-tenths of a percent. Estimates were for three-tenths, and earnings year over year also a bit hotter, 3.8% versus the 3.7%. expected. But again, the headline here, the economy lost many more jobs than expected, 92,000 in the month of February. Estimates were for 55,000.
We also just got retail sales numbers out for the month of January, and they were down two-tenths of a percent versus the estimate of three-tenths of a percent. As for market reaction, it is swift. The Dow futures now down more than 400 points. S&P futures off 64. Guys, Claudia Sama with us as we continue with all of her good work here.
These are the kind of numbers, Claudia, where amateurs like me go, okay, that means diminished GDP. Is that correct, that all of this sun's back to a lesser real GDP where we're on the Sama recession watch? So not necessarily. So clearly these numbers from February are not in checking the box on signs of stabilization in the labor market, right? We're losing jobs, unemployment rate ticked up.
This is not a good sign. This actually sits pretty consistently, especially if you look at the last three months, with what we saw all of last year. The US economy last year created almost no jobs on net. And at the same time, consumer spending increased, business investment increased, GDP rose for the year on trend.
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Chapter 2: What are the latest job numbers reported for the US economy?
Bloomberg surveillance this morning, this jobs day, it's brought to you by IBKR. Will the year-over-year change in the US CPI, will it exceed 2.6% this February? Turn your view into a trade at IBKR.com slash forecast. Last trading day, it is March 11th. One of my favorite things, it's like the miserable winter. It was a great song. Arlo Guthrie sang it. Oh, okay. Northampton Winter.
That's what it was like at Smith College. Joining us now, Nadia Lovell, you're from the Union Bank of Switzerland, Israel. What was the coldest morning at Smith College? I mean, there must have been one where you just said, this is terrible. Terrible, especially since I'm from an island. So it was quite brutal.
Chapter 3: How does the job loss in February compare to previous months?
You were not used to it. I was not used to it at all, but I've adjusted. You were forced to study as well. Thank you so much for coming in. With a geopolitical shock and with this economic data, someone with a measured view, do they just sit back and watch the show unfold?
Chapter 4: How does the unemployment rate impact economic outlook?
Or is this a point of action for UBS? You know, I'm still in the studio. I didn't escape. Although when I did see the numbers, I said, oh, this is not a good combination right now, particularly, you know, because the narrative had been that there was stabilization in the labor market. And then this is causing questions to that.
And it's a little surprising just given the data that had been coming through initial jobless claim and also some of just a survey. Pagebook said that there was stabilization. So this is a little bit perplexing and put the Fed in an odd position at the same time that you have inflation risk rise and geopolitical tension.
But I would say at the core, you know, it's too early for us to fundamentally change our view. And so sort of stay the course, stay invested in this. Do we have to reassess some potential rise in risk around where markets could go in the next few months? Absolutely. You know, in terms of like, do we want to take on more defensive positioning? We're not quite there yet.
We need to see a little bit more data because we know that there's some dislocations and peculiarity that's going to also happen in the labor market. Nadia, one of the challenges, I guess, for this market is that it's been led for the longest time by technology, information services, the names we all know, maybe the Mag7, but broader than that, those stories are now under pressure.
The AI story's kind of morphed a little bit, and it's not just a net positive for AI. Now people are asking tough questions. How do you think about tech as a leader in this market? You know, we did downgrade tech and comm services to our neutral, so that's an indication to us that it's no longer going to be a leader of the market.
Now, that's not to say that it's going to continue to drag down the market. We do hope to see some stabilization in tech. The AI tailwinds are still there structurally, but obviously you see volatility pick up. And so you have to be a bit more selective in this area.
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Chapter 5: What factors contributed to the unexpected job cuts?
It's not so much about the sectors, how you position across the AI value chain. That's a distinction that you're seeing because, you know, the beneficiary of the capex spending has really been the semiconductors as well as the memory software is under pressure.
And so we think that it's about more about, you know, positioning properly across the AI value chain and not so much about the sector as a whole.
90 level with this ubs growth global wealth management you published thank you for publishing your target here for december year end nine months away and it's a double digit view there's an enthusiasm here how do you acquire shares given the hour by hour buffeting we're getting right now brent crude uh 89.29 but you're basically saying into the next year acquire shares right
Basically, you know, and I think it's because, again, we know geopolitical race and shocks, right, tends to be short-lived, and while they can cause some near-term volatility, we'll sort of see how things play out in the next couple of weeks in the Strait of Hormuz, and if the flow of oil can resume in a meaningful way.
We think that if that happens, then you should see some normalization in energy prices. And that's why we think that ultimately crude oil, Brent will get back down to $67 by the end of the year because there is excess capacity in the system. $67 Brent by the end of the year. Because we do think that there is capacity in the system.
What's causing the spike we know is just concern about the disruption near term. And we know that geopolitical risk markets tend to bounce back.
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Chapter 6: What are the immediate market reactions to the job report?
Now again, we'll see where GDP kind of comes in. We know that there's consumer stimulus coming from the tax returns. Let's continue to watch the labor markets. And so when we look at the picture now, yes, this job report does cause us for a pause to reassess a few things. But when we look at the picture collectively, even before today,
It felt like this economy was on pace for above trend GDP growth, and that's still our core view. And so if you have that as well as earnings growth at double digits and the broad in and out, we all having that broad in and out, right? I think you can get to double digits by the end of the year. And we've seen that in past periods where you've had geopolitical shocks.
Going back to the first time Nadia Lovell went in the Iron Horse Cafe in Northampton. Well, I've never seen A market slash economy like this. It's nuts. Look at the labor economy. We're flat on our back. That's the summation. And the GDP numbers are like shocking. Shockingly, they're hanging in there.
I mean, so we have seen a rotation starting late last year out of some of the tech names you were talking about into some more industrials and maybe small and mid cap. Is that something you guys embrace? Do you think that's a longer term trend? Yeah. We have. And, you know, we did upgrade industrials in the last month or so.
And that really, again, it's like playing into that, you know, cyclical uptick that we do expect. You've seen it at ISM, you know, manufacturing services all above expectations in the most recent numbers above 50. And then you also have... defense spending that we expect to continue to be robust and increase.
And then the structural growth story that's happening in the industrials is the electrification story and the build out of electrical grids and monetization and around AI. And so we do think that that cyclical story feels like it's still intact and you want to have some exposure balance in the portfolio, not just structural growth, but also some cyclical. Can you come in on Sunday?
Tom, you know, I was working this past Sunday, so I can't be here, but I will be working. Okay, I'm going to just rip up the script right now. Nadia Lovell with us out of Smith College, and I bust her chops, but we're talking double major mathematics, physics. Ugh. I want you to talk to everyone listening across this nation about the motivation necessary, all the biases against girls doing STEM.
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Chapter 7: What insights do experts provide on the current labor market trends?
It's improved. It's gotten better. What was it like when you chose to do mathematics and physics? You know, thankfully, I did it at Smith, which was a quite supportive environment. You know, being able to look out to other women physicists at the time at Smith College.
And I think that we continue to break those glass ceilings and to show that, you know, women, just like anybody else, have the chops to do it. And I think that that's a great story to tell. The nurturing, seriously, and I adore Mount Holyoke. That's a school. Folks, for those of you who don't know this, Duke Chapel Hill is sort of like Mount Holyoke Smith as well.
But there's something about, and I'm talking my book here, folks. Afterthought did the all-girls thing. There's something about the nurturing environment. It's okay for you to do Newtonian physics in an all-girl environment. Well, I think it's okay to do it anywhere, right? But yes, it can be a bit more encouraging when you're in classroom with other women.
I mean, people like to look up and to see what someone that looks like them doing the things that they want to do. So when you're in UBS and you're with some smooth investment banker who took marketing at some school and they're looking at you like, and you're like, just shut up. I mean, what's it like bouncing off of global Wall Street with your academic background?
Well, thankfully at UBS, but particularly in the chief investment office, I would say a lot of us do have a very strong analytical background. Yes, I deserve that. So that is definitely the case. And I wouldn't even say where I started my career. One of the things that attracted, you know, at the time I started a capital group, managers of the American funds. And again, strong math background.
Most people did have that. So again, encouraging environment. Robin Wigglesworth is a great write up on capital group. Okay. Active again, really struggling, but Capital Group doing better than most there as well. Yep, L.A., L.A., TCW and Capital Group, those are your two anchor meetings in L.A. This is great. I needed to go to warm weather after Smith. Yeah, exactly, smart.
Nadia, thank you so much. Nadia Lobel from the Union Bank of Switzerland. I'm sorry, I'm not going to, I always will call it the Union Bank of Switzerland. UBS with us today. Thank you, thank you so much, Nadia, for coming in. On Jobs Day, the markets deteriorate. Nadia Lovell driving the market lower, negative 77. On futures, we're at three big figures. On the VIX, 26.90. The oil, $89.
Brent crude almost up to that 90 level right now, up $4.55. We're going to get that at any moment. Let me go over CO1. Mr. Bloomberg taught me how to do this. CO1 commodity, GIP. That's about all I know. But then up we go, and we see if we have a 90 print yet on Brent Crude. 89.99. Are you kidding me? Within a penny of $90 a barrel.
We want to get Nadia in here to give Jennifer Lee time to really digest this economic data. Jen Lee is just spectacular at BMO Capital Markets of just slicing and dicing it and putting it together. In the 15, 20 minutes, Jen Lee, you've had to digest the data. What is the distinction you see? My distinction is I have no idea how we're going to call this. Good morning.
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