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00:00 Speaker A
What do you think the jobs report’s going to show on Wednesday?
00:03 Speaker B
Well, um, I think the labor market’s stabilizing.
00:07 Speaker B
But it’s early days. It’s hard to be confident.
00:09 Speaker A
But stabilizing at what kind of I mean, you know, what does that mean in this environment?
00:13 Speaker B
Well, the problem with that is that statement is, what does that mean and what’s normal these days?
00:18 Speaker A
Right. What is stable? Yeah.
00:19 Speaker B
So, I I think we’re we’re probably stabilizing in the low 10, 20s per month payrolls trend. And the and the and the and the labor market growth is probably 50 or 60 a month. There’s a big debate about that in the markets. Some say 40, some say 100. It’s who knows. Um, very difficult to be confident. The point is we’re just it’s below where it should be.
00:38 Speaker A
Right.
00:38 Speaker B
Whatever the estimate is.
00:39 Speaker A
Right.
00:40 Speaker B
So another reason for disinflation and rate cuts.
00:43 Speaker A
Well, I I I keep thinking about um what J Powell said at the last press conference where he was asked about the labor market versus GDP and he said, usually one of those is wrong and one of those is right. And he seemed to seemed to indicate that the labor numbers tend to be a little more accurate than the GDP numbers.
01:04 Speaker B
Right.
01:05 Speaker A
So he seemed to be tipping a little more on the, you know, on the side of maybe labor market isn’t doing so great.
01:09 Speaker B
Well you know Yeah, that’s right. And also what he said was, which is which inclines him to cut rates. What he also said was, uh, which I I didn’t think got a lot of attention. He said actually, if you look at inflation and you strip out tariffs, which look like they’re one- off, core’s just above two. And services is disinflationary in all sectors, which I thought was a remarkably sort of a disinflationary type comment.
01:29 Speaker A
Mhm.
01:30 Speaker B
Um, so I think reading between the lines there, they’re all inclined to cut more. And the evidence that the labor market is sticky wage inflation, that’s all dissipating. And actually it’s the bias is to the labor market’s too weak. We need cuts.
01:46 Speaker A
Um, how many cuts do you think we’re going to get this year? I was just I was looking at Polymarket and it looks like they’re kind of split between two and three cuts this year.
01:54 Speaker B
That’s right. Yeah, I think I think the Fed fund features have got 59 basis points or something like that.
01:58 Speaker A
Yeah, which one are you watching now? Are you watching Polymarket? Are you watching the Fed funds futures? We always used to quote the Fed funds futures and now we’re looking at the betting markets.
02:04 Speaker B
I’m not I’m not cool enough to watch Polymarket. But I would I would watch Fed. I’m sure that I don’t know how much money bets in Polymarket on on on interest rate cuts. But I reckon it’s probably more in the in the bond market and the Fed funds feature and and on the CME and so on.
02:19 Speaker B
So, um, so yeah, I think with so we got two and a bit cuts. I wouldn’t be surprised if we had three. I think four is possible. It depends on where we’re at when Walsh turns up, assuming he gets confirmed, which I think’s pretty likely. Um, so yeah, I think you could if you if you like betting on rate cuts, that there’s a trade to be had.