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Ahead of the highly anticipated November jobs data to be released this week, even lackluster numbers may be greeted with relief by Wall Street.<\/p>\n
A moderately cooling labor market could increase the likelihood of more rate cuts by the Federal Reserve\u2014a tantalizing prospect for many investors eying future earnings growth\u2014fueling bullish behaviors in the stock market, according to Morgan Stanley analysts.<\/p>\n
\u201cWe are now firmly back in a good is bad\/bad is good regime,\u201d Michael Wilson, chief U.S. equity strategist and chief investment officer for Morgan Stanley, wrote in a note to investors on Monday.<\/p>\n
Fed Chair Jerome Powell\u2019s divisive cut last week, the Fed\u2019s third cut in as many meetings, was based on consistent data showing a softening job market, including unemployment rising three months in a row through September, and the private sector shedding 32,000 jobs last month, per ADP\u2019s November report.\u00a0<\/p>\n
According to Powell, the quarter-point cut was defensive and a way to prevent the labor market from tumbling, adding that while inflation sits at about 2.8%, which is higher than the Fed\u2019s preferred 2%, he said he expects inflation to peak early next year, barring no additional tariffs. <\/p>\n
He added that monthly jobs data may have been overcounted by about 60,000 as a result of data collection errors, and that payroll gains may actually be stagnant or even negative.<\/p>\n
\u201cI think a world where job creation is negative\u2026we need to watch that very carefully,\u201d Powell said at the press conference directly following the announcement of the rate cut. <\/p>\n
Wilson suggested that Powell\u2019s emphasis on the jobs data, as well as his de-emphasis on tariff-caused inflation, makes the labor market a crucial factor in monetary policy going into 2026. <\/p>\n
As a result of the government shutdown, the Labor Department\u2019s job market report will be released on Tuesday, which will contain data from both October and November, and is expected to show a modest 50,000 payroll gain in November, with the unemployment rate ticking up from 4.4% to about 4.5%, consistent with the trend of a labor market that is slowing, but not suddenly bottoming out.\u00a0<\/p>\n
The Morgan Stanley strategist has previously argued that weak payroll numbers are actually a sign of a \u201crolling recovery,\u201d with the economy in the early stages of an upswing slowly making its way through each sector. It follows three years of a \u201crolling recession\u201d that Wilson said had kept the economy weaker than what employment and GDP figures suggested.<\/p>\n
In Wilson\u2019s eyes, because jobs data is a lagging metric, the trough of the labor cycle was actually back in the spring, coinciding with mass DOGE firings and \u201cLiberation Day\u201d tariffs. For a more accurate representation of the health of the economy, Wilson argued to look instead at\u00a0the markets. The S&P 500, for example, is up nearly 13% over the last six months.<\/p>\n
However, with Powell basing his policy decisions on data such as jobs, Wilson noted, the Fed could still see more room to cut, even as Morgan Stanley sees a labor market that is not in jeopardy.<\/p>\n
\u201cIn real time, the data has not been weak enough to justify cutting more,\u201d Wilson told CNBC last week prior to the Fed meeting. \u201cBut when they actually look at the revisions now\u2026it’s very clear that we had a significant labor cycle, and we’ve come out of it, which is very good.\u201d<\/p>\n
But just as economists weren\u2019t in consensus for the FOMC\u2019s most recent rate cut, the possibility of more meager jobs numbers is not universally favored.<\/p>\n
Claudia Sahm, chief economist at New Century Advisors and a former Fed economist, agreed the job data is a lagging economic indicator, but warned it could indicate a recession is underway, not that we\u2019re already in the clear. What was particularly concerning to her was that lagging labor data could bear worse job news, as layoffs have yet to surge following shrinking job openings.\u00a0<\/p>\n
She told Fortune<\/em> ahead of the Fed\u2019s decision last week that additional rate cuts would not be welcome news, but rather a sign the Fed had acted too late in trying to correct a battered labor market.<\/p>\n \u201cIf the Powell Fed ends up doing a lot more cuts, then we probably don\u2019t have a good economy,\u201d she said. \u201cBe careful what you wish for.\u201d<\/p>\n This story was originally featured on Fortune.com<\/p>\n #firmly #good #badbad #good #regime #Weak #job #data #lead #rate #cuts #boost #stocks #Morgan #Stanley #economist<\/p>\n","protected":false},"excerpt":{"rendered":" Ahead of the highly anticipate… <\/p>\n","protected":false},"author":1,"featured_media":3903,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[2],"tags":[3791,591,550,1059,2192,3790,66,635,508,650,126,3792,1166,221,3793],"_links":{"self":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/3902"}],"collection":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3902"}],"version-history":[{"count":0,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/posts\/3902\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=\/wp\/v2\/media\/3903"}],"wp:attachment":[{"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3902"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3902"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/microvibenews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3902"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}