Labor Market Holds Steady

Added: 2026-05-10

[00:00:00]Hey everyone, thanks for jumping back into the macroverse.

[00:00:04]Today we're going to talk about the most recent labor market report and we're also going to talk about the markets. 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 into the cryptoverse.com.

[00:00:21]We had the labor market reports this week and honestly not too many surprises. The unemployment rate came in at 4.3%. Which is exactly where it was uh previously. So not a huge change there. If you go look at initial claims, they also remain relatively low. Layoffs remain relatively low. Still supporting the idea that we're not yet in a recession. Um this is a a a very long process. But the point is is until initial claims are printing 300K, I don't really see this as recession territory. I will say though going into the summer is when claims start to pick back up. Okay? So be aware of that. Like if you look at 2023, you can see claims went up into into the summer like June of 2023. Um you can see we also went up into the summer of 24. Um, and then of course we went up into the summer into June of 2025. So I wouldn't be that surprised to see initial claims start to rise from here, especially after getting that that sharp low that we just got.

[00:01:29]Um, so do keep an eye on that. So all in all, the labor market, while there's weakness in some areas, there's still strength in others. So if you look at at layoffs, I think they picked up a little bit this past month, but they still remain relatively low, right? right?

[00:01:46]They still remain relatively low. Um kind of like preandemic levels, if you will. Initial claims low, layoffs low.

[00:01:56]Job openings remain low. So, there's some weakness. It's kind of hard to get a job. It's hard to get a job if you don't have one. That doesn't mean you can't. Like, I I know that you you can still get jobs because there are still jobs available, but there's fewer job openings uh than there are available workers. So, job openings kind of remain low. Quits remained low. I think they surged back a little bit, but not not a lot. The big one was hiring. It looks like hires picked up a little bit this past month. So, we'll see. That that is a an interesting data point, and we'll see if that actually holds and if it's the start of a new trend or if it's just sort of like a a one-off thing that that doesn't actually um sustain itself, if that makes sense. But remember, one of the things you have to have in order to have a recession and for the business cycle to end is you have to have lower asset prices. And as long as you don't have lower asset prices, then it's it's hard for the for the labor market to truly roll over into that feedback loop that we've talked about. And with the stock market, a while back, we said we would likely have a 10% drop. And from there, we would likely get a rally that could lead to all-time highs. We are at all-time highs right now. And this might seem weird, but that happens in midterm years. I think a lot of people are are sort of jaded by what happened in the last midterm year, but in the two midterm years before, the stock market did put in new all-time highs throughout parts of the midterm year. So, if you look at 2018, we had a new all-time high in January, but then we also had new all-time highs going into September.

[00:03:36]And if you look at 2014, you can see the market trended up throughout 2014. And there was also a big drop into October of 2014. And you know, there was initial weakness in February.

[00:03:51]Market turned it up and then another period of weakness in October. So what I think is going to happen is I think you you sort of have your initial weakness here. And by the way, in 2018 there was two major windows of weakness. early part of the year and then the last part of the year. It's the same thing, right?

[00:04:09]208 2026 is probably the same thing where you have your first window of weakness in the early part of the year and then you get another window of weakness into the latter part of the year and that will likely be what sort of corresponds to the low for Bitcoin.

[00:04:25]Again, I know it's it's far-fetched and and a lot of people are really upset that I I remain bearish on Bitcoin, but there's just been so many rallies like this in midterm years, and it's easy to get caught up in the hype. But if there is another correction coming for the stock market later this year, which I think there will be, then it will likely correspond to Bitcoin going back down.

[00:04:52]And you might say, well, Bitcoin's going to catch up. The problem is is that's not normally how it works for windows of weakness. You have windows of weakness and windows of strength. The assets that are doing well during that window of strength, they're doing well for a reason. If Bitcoin Bitcoin's doing well, but so what, right? Like it's it's still underperforming a lot of other markets this year. So, the problem is that the NASDAQ's, you know, shooting up to all-time highs. The stock market shooting up to all-time highs. Bitcoin has gone up, but it's still nowhere near all-time highs. And that's not a declaration that you're about to have all-time highs. It's more so a declaration that Bitcoin is weak relative to the assets that are putting in all-time highs. And when those assets roll over and go back down potentially for that secondary window of weakness in the midterm years that we normally get, that's how Bitcoin then goes back down to the lows and probably puts in a a lower low. So, and I don't know what the narrative is going to be. It could be energy stocks going back up. A lot of times energy does very well at the end of cycles and if the stock market's still putting in new all-time highs, then energy probably will as well. So looking at things like XLE, I would expect that to bounce back up uh in the coming months. Um but you know, going back going back just to sort of the labor market stuff, if we want to look at like the number of states where the unemployment rate is rising compared to say 6 months ago, it is going up, but there's still windows or pockets of strength. So if you look at a map of the states where the unemployment rate is rising over six months ago, Yeah. like it is a lot of states, but it's also looked like that in other years as well, like 24 and 23.

[00:06:39]But notice how every year it's not the whole country affected. And if you look at recessions like 2008, it's the whole country.

[00:06:50]2001, it's the whole country. So, there's still pockets of of optimism. and the market likes to climb the wall of worry. So, the stock market right now is is still following the S&P M2 fractal, by the way, as crazy as that sounds. And actually, in February, that was one of the reasons I, you know, I I mentioned this in the first place was that, all right, well, what if this thing continues like this?

[00:07:20]Could it, you know, could it continue in this fashion and and still mimic what we saw back then? And look, I think this is I think it's going to break. Honestly, I I do think it's going to break. I don't think this whole thing is going to play out, but it hasn't really broken yet is the point, right? Like it hasn't really broken yet. And and this might be sort of the fear that we have to live with later this year is what happens if it doesn't break? Like what happens if the stock market does find a top within the next few weeks, drops back down, and then rallies up into September? Because that's where September would be, that top right there. And September is exactly where the S&P topped in 2018.

[00:07:57]You know, that's where it topped was in September. I I believe um let me double check that. But if you look at 2018, yeah, it was it was right here in September when the S&P 500 found found that high um or around that period. I guess I could zoom in, but you guys, I think kind of get the uh the idea.

[00:08:19]You can see it was the week of September 17th. The S&P hit a high of 29.40 and that ended up marking the high for the year. So, who's to say that it's not following the S&P divided by M2 from from back then? It very well could be, but for now, I think you you know, you look at the labor market and you say, look, until you see lower asset prices, you're unlikely to roll over into into a recession. And um and while there is weakness in parts of the labor market, it is not yet widespread enough for it to sort of trigger those recessionary warnings. And if we look at the recession risk dashboard, it still remains relatively low, right? And it's been relatively low for, you know, for I think since the last recession in 2020, like we haven't even really had any like major fake moves. This risk metric hasn't even gone above 0.16 since 2020.

[00:09:17]So, we'll keep an eye on this. I mean, it's it's made up of the employment area, national income and product production and business. And also, you can turn on interest rates on here as well if you want. It's not as clean, but it does provide a little bit more signal. One of the reasons why interest rate risk is good is because it tends to be a little bit more forward-looking.

[00:09:32]the other ones almost require a stock market drop to, you know, to trigger, but the interest rate one often triggers a little bit earlier, but when you use it, it makes it a little less clean. Um, so, you know, going back over to the to the labor market, I'm not sure if there was any other major things that happened. I guess we could look at total non-farm. That's probably something to look at. So if you look at uh well this is the unemployment level but if we look at um the employment statistics employment level total non-farm increased by a little over 100,000 so it is still going up year-over-year change is almost negative but not quite right like year-over-year change is still about a quarter million jobs. Um it's really close to being negative but it it's not there yet and who knows when it will be negative. uh total temporary health service employees. That looks like it's it's starting to go up a little bit here, right? Like you can see it's actually been moving up since last year. So, it's moving in the right direction. Um but it was moving in the right direction in 01 and then it and then we still had a drop in the stock market. So, it doesn't necessarily mean anything, but we'll see how that develops. Um we also have non-farm private payroll. This is from the uh the automatic data processing research institute the ADP. If you look at the year-over-year change there, it's it's been moving up a little bit recently. So, that's a little that's that's good to see in the in the labor market. So, as of right now, the data in the labor market is still holding up.

[00:11:08]Layoffs remain low. The unemployment rate remains relatively low.

[00:11:12]Historically, as you go into the summer, that's when initial claims start to pick up. So, my guess would be that you'll see initial claims start to pick up and that might be reflected in the unemployment rate as we get later on in the summer. Um, and I do think you'll have sort of like another correction in the stock market later this year that will likely culminate in sort of the late Q3, early Q4 period, maybe even later Q4, where that's what kind of corresponds to that Bitcoin drop into the back half of the year, which is how it typically uh plays out.

[00:11:47]But hopefully this has been useful to you guys. And then that basically wraps up, I think, our discussion here of the labor market. If you guys like the content, make sure you subscribe, give the video a thumbs up, and check out Benjamin Cowan.com. I'll see you guys next time. Bye.