NEC Director Brainard on Jobs Report, Retail Rollercoaster, Disney-Charter Showdown 9/1/23

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What's on the horizon for financial markets?

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Jim Cramer (0:31)

It's Jim Cramer here. You're listening to the opening bell of CNBC's Squawk on the Street. Don't miss a minute of the action.

Carl Quintanilla (0:38)

Good Friday morning, welcome to Squawk on the Street. I'm Carl Quintanilla with Leslie Picker, Mike Santoli, a post-9 of the New York Stock Exchange. Cramer and Faber have the morning off. Pre-market does like the jobs number. 187,000 is above consensus, but June and July get revised lower by 110,000. Unemployment spikes to 38, highest in the year and a half. Wages are light. The 10-year yield drops to about 408 Our roadmap begins with that last jobs print ahead of the Fed's September meeting, showing some continued strength in the labor market, despite rising rates.

NEC Director Lael Brainard's gonna join us first later on this hour. Meantime, retail's mixed picture. Lulu upping its guidance. Walmart at a record high. The dollar stores meanwhile trading at some multi-year lows. And then got some media tensions as well today. Disney and Charter in this heated distribution dispute, while Barry Diller calls Netflix the enemy when talking about the strike.

Let's kick off reaction first though to the jobs number.

Light wages, Leslie. Average hourly earnings, lightest since June of 2021 Better labor force participation, especially among the older crowd, 55 and up.

Leslie Picker (1:44)

Yeah, the market clearly likes what it sees. A very clear reaction to the print when it came out.

That 3.8, when was the last time we talked about the unemployment rate? We haven't necessarily because it has been historically low for such a long time. And going into the print, economists were expecting it to be 3.5, 3.8, huge upside surprise here. And of course, Mike, the key narrative this week and in recent weeks has been, bad news is good news. And the question I think remains, and you can see this from the reaction today, is how long that sentiment really carries through into equity?

Mike Santoli (2:17)

Yeah, we're in that comfortable zone where moderating activity takes the edge off of bond yields, off of Fed expectations, doesn't yet really hit the core expectation that the economy had a decent amount of momentum coming into this period. I do think we have to explore where the border is when bad news does not necessarily help the markets. But for now, I do think mostly because, especially coming into the last week or so, everybody was focused on things look too hot in terms of GDP in the current quarter, 10 year treasury yields, maybe they're gonna break out of their range. They didn't and they're in retreat. The two year now below 4.8 as well.

So this is definitely bolstering the idea. Look, we're landing, okay? It's a question of how soft or hard. The numbers in terms of the last seven months of downward revisions to jobs reinforces the Jolt's message.

Somewhat moderating wage growth has been a very important piece of that because otherwise you're talking about wages too sticky, even as job growth goes down. So we're okay for the moment. I think the market has probably correctly said earnings estimates in the last six weeks when we were last at 4,500 and change in the S&P in this level, earnings estimates are up 3%. 10-year treasury yield up a bit, not a lot.

Oil kind of made a run higher. Now it's still in the mid 80s. We're okay with that. So it sort of boils together as we haven't had to really reprice assets in a dramatic way based on the backdrop. So we're okay for now. I still think we haven't called off the weight for further lagged effects, further weakness potentially. And so just alert to that narrative shift that could be coming.

Carl Quintanilla (3:59)

Yeah, it is curious. The Journal Today takes actually echoes what Boston Fed wrote about earlier in the week. And that is takes five quarters for some of these things to really start hitting corporate balance sheets and maturity walls.

You add NFIB, jobs hard to fill, Conference Board, Labor Differentials.

Mike mentions Joltz. When do we start talking about harder landing? Today, B of A. Look, Michael Hartenit says you do want to sell the last rate hike. And he points to some signs in retail and housing as signs that this might start looking more pernicious soon.

Leslie Picker (4:33)