Yesterday (7th) the big pie continued its downward trend, reaching a minimum of above $40,000, and fell below the low point of about 42k on December 4th; it remained below 42k overnight, effectively falling below the previous low of 42k. The US non-farm payrolls data was released overnight, and the market was at a loss.
The so-called U.S. non-agricultural data, or U.S. Non-farm Payrolls (US Non-farm Payrolls), referred to as NFP, is the employment data of the non-agricultural employment population released by the U.S. Department of Labor (US Department of Labor) every month.
Generally speaking, this kind of macroeconomic data has three levels: one is the data, the other is the interpretation of the data, and the third is the interpretation of the data by the media. As in all cases we have seen, the messages coming out of these three levels are often inconsistent and even distorted.
This release is the statistics for December last year. First, the number of employed people increased by 199,000, followed by a drop in the unemployment rate to 3.9%.
Seeing these two figures, do you think the economic situation is very good? Then why did the U.S. stocks not rise, but the currency market fell?
The growth rate of 199,000 is slower than the 249,000 in November, less than the 210,000 in October, and far below the previous market median expectation of 400,000. So some media will tell you that the non-agricultural data is far below expectations, so market confidence is frustrated.
But if you look at it again, the unemployment rate was 4.2% in November. It was expected to drop to 4.1% in December, but it actually fell to 3.9%. This indicator has exceeded expectations. So you think the job market is recovering very well.
But if you think about it again, the Federal Reserve's monetary policy tracks two indicators, and these two indicators are the inflation rate and the employment rate.
If you look at the increase in the number of employed people, then employment is less than expected. The Federal Reserve should strive to increase employment levels, and should not accelerate the implementation of tightening policies, including a series of actions such as reducing water, raising interest rates, and shrinking balance sheets.
But if you look at the rate of decline in the unemployment rate, the employment situation is beyond expectations. This supports the tightening measures of the Federal Reserve to accelerate water collection, raise interest rates in advance, and shrink its balance sheet early.
Of course, the media also said that even if you think the data shows that non-agricultural employment is lower than expected, once the Fed’s monetary policy is decided, it will not change easily, so we will still be on the road of accelerating water collection and raising interest rates in advance.
There is another layer of logic, that is the inflation rate.
Generally speaking, higher employment rates lead to higher inflation rates. The logic is that when the employment is fuller, the supply of the job market will decrease, so companies are forced to offer higher salaries to attract talents. These salary increases will be passed through the hands of people working in companies Consumption, thereby driving up commodity prices in the market.
If you think non-farm payrolls are worse than expected, then inflation should come down. The decline in inflation reduces the need for funds to buy assets to escape inflation, which is negative for the stock market and currency market. However, if inflation falls, the premise of the Fed's water control to control inflation will not be established, so the Fed can still continue to release water, thereby pushing up the stock market and currency market.
If you think non-farm payrolls beat expectations, then inflation should rise. Rising inflation will increase the demand for funds to buy assets to escape inflation, which is good for the stock market and currency market. However, if inflation rises, the Fed needs to tighten the currency to control inflation, so the Fed will speed up water collection, raise interest rates in advance, and shrink its balance sheet early, thereby suppressing the stock market and currency market.
Therefore, after the simple analysis above, we can see that the data itself is objective and simple, but when you compare the numbers in different backgrounds and interpret them in different logics, you will get come to completely different conclusions. As for the interpretation of data by the media, there are two characteristics: the first characteristic is that they use the results to find the reasons, and use the market fluctuations as the results to find a reason to explain this phenomenon. The second feature is that one-sided selection of logical paths, in order to be able to connect the causes and results they find, the media will ignore some paths that cannot be followed, but deliberately choose paths that can meet the requirements. After being deliberately selected, the so-called causes they find often really look as if they can explain the results and phenomena well.
In fact, the truth is likely to be: the reason they are looking for is wrong, and the logical path and interpretation they gave are also wrong, but the negative and the negative are positive, and the error plus the error has drawn the correct conclusion, which just matches the market performance. up.
The employment data for December was a bit of an oddity in itself. Employment growth fell short of expectations, while the unemployment rate fell more than expected. Isn't this expectation contradictory? Since unemployment needs to be declared or registered, one possibility for this situation is that there are a group of people who are in an intermediate state between employment and unemployment. They did not go to work, but they did not declare that they were unemployed.
Now that the unemployment rate has dropped more than expected, it can only mean that fewer people are voluntarily declaring unemployment, but they are not declaring unemployment because they have found a job. In other words, the number of people in the middle state is expanding.
Think about it in another way, is there such an intermediate state around us? There are many. For example, people who have resigned naked and have not yet looked for a job, but have not registered with the government department to receive unemployment benefits. Another example is the young people who gnaw at the old at home, or the second generation who are not short of money, and live comfortably by collecting rent.
Why do more Americans actively or passively choose to live in the middle state? If it wasn't that they suddenly became the second generation, it was because they suddenly got some way to get something for nothing, such as the government distributing money indiscriminately, they might as well not go to work and stay at home. I will rest and spend time with my family.
But more people choose to lie flat and not work, which cannot create incremental wealth for the society. This is definitely not a good thing for economic growth. The Federal Reserve keeps saying that it will support employment, but if it only uses the superficial data of the decline in the unemployment rate as a reference, it is undoubtedly deceiving itself and deceiving itself.
(Public account: Liu Jiaolian. Knowledge Planet: Reply to "Planet" from the public account)
(Disclaimer: The content of this article does not constitute any investment advice. Cryptocurrency is a very high-risk product, and there is a risk of zeroing at any time. Please participate carefully and be responsible for yourself.)