Employers Are Not Hiring Or Firing. Productivity May Be the Reason.

We acknowledge that today's employment report was weaker than we expected, but there were pockets of strength. We also acknowledge (as the market expects) that the Fed is more likely to cut the federal funds rate in November and December following a rate cut in September, which we think will still be 25bps, not 50bps.

Furthermore, we don't see a recession in today's report. Instead, we think it supports our productivity-led Roaring 2020s outlook. Finally, we still think stock prices will remain choppy through the November 5 elections before resuming their climb to new record highs. The 10-year bond yield has declined more than we expected. We still think it might revisit 4.00%-4.25% after the elections, especially if there is a sweep by either the Democrats or the Republicans. Here's our quick takes on today's jobs report focusing on the no-recession positives: