Stocks opened lower this morning (Dow -83 pts; SPX -.45%). Surprisingly, the energy sector surged 1.6% in early trading along with oil prices. Industrials and materials are also modestly higher. Most everything else is lower on the day. The real estate sector sank nearly 2% on rising interest rates, but for some reason the banks aren’t spiking. Usually those two groups move opposite to one another on days when interest rates move sharply. Most commodities are trading higher. WTI crude oil is up 1.4% to trade at $58.60/barrel. Bonds are selling off and yields are moving higher. With the massive run-up in bonds this year, a correction makes a lot of sense even if the longer term direction of rates is still lower. The 10-year Treasury yield shot up to 1.67% from 1.56% last Friday.

The Bureau of Labor Statistics, which measures and reports official unemployment and job growth data, announced it will revise 2018 and 2019 job growth data at the beginning of 2020. The BLS regularly surveys employers to tally jobs but once per year checks that data against state unemployment insurance records in order to get a more accurate read. Early indications are that this revision will be much larger (i.e. more negative) than usual, erasing about 500,000 jobs from the initial monthly estimates reported between April 2018 and March 2019. This means hiring activity has not been as strong as we were led to believe, and that the Trump Administration’s tax cuts did not meaningfully accelerate hiring. The initially reported 223,000 net new jobs created per month in 2018 will likely be revised down to 185,000. Final numbers won’t be available until early next year. Rest assured, the Federal Reserve is paying attention and this report will likely influence monetary policy.

The Nat’l Federation of Independent Business (NFIB) publishes monthly surveys on the health of US small businesses. August results show that CEO optimism fell more than expected due to re-escalation of the trade war. Future expectations declined a bit, but measures of current business conditions held steady. Quality of labor remains a big issue for business leaders, who found it difficult to fill open positions. Overall, small business optimism remains at a relatively high level—much better than average levels in 2010-2016. And despite the trade war, plans for capital spending are stable.

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