The Trade Desk’s Woes & A New AI Donut?

**Travis Hoium** (0:02)
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Welcome to Motley Fool Hidden Gems Investing. I'm Travis Hoium, joined today by Lou Whiteman and Jon Quast. Guys, we're going to get to that donut-shaped AI device in just a moment. But I do want to cover the latest news that came out just a few minutes before we started recording. That is the jobs report for the month of July. Lou, the US economy, at least according to this first reading, these get revised over time, lost 23,000 jobs. The estimate was for 83,000 jobs to be gained, but the unemployment rate fell 4.1 percent. The strange thing here, if you are not into these market dynamics, is that the market is actually up, at least in pre-market trading.

**Lou Whiteman** (0:50)
Right. Yeah, which I think makes sense, because it at least maybe puts the idea of not raising rates on the table, which I think we were thinking was going to happen. Because the Fed's dual mandate is fight inflation and protect employment.
All the focus of late has been on inflation. If employment is weak, then maybe that does stall things. But really, I don't think the market is shocked by this report, because I don't think we should be. The unemployment rate is kind of a...
The participation rate is the lowest it's been since COVID. So that is the denominator on the unemployment rate. So that I kind of don't focus on. I think this report, and the last month too, where it missed expectations, it's telling us what we kind of already knew. It's not a red hot employment market. It's also not a falling off the cliff employment market. I think the employment side of the mandate speaks for a lack of action among the Fed, but watching closely. So I think the question is still the same. Is inflation bad enough that the Fed has to move, or will they just bide their time and not do anything? And maybe we got a slight leaning towards do nothing for longer.

**Travis Hoium** (2:09)
Jon, this does seem to be at least the short-term reaction is, what is the Fed going to do based on this report? Obviously, inflation is still something to think about. But as we look at earnings reports, and we're going to talk about big picture takeaways from earnings season in just a moment, it does strike me that some of the weakness in the economy that some companies talk about is showing up in these job numbers. And that has me at least a little worried about what are earnings going to look like going forward if fewer people have jobs.

**Jon Quast** (2:41)
That would definitely be a thing if fewer people have jobs. I just don't think that this report showed us enough to make us overly concerned about that in the moment. Of course, we're always looking forward and monitoring that and making sure that jobs aren't falling off a cliff in the future, but they certainly aren't right now.
I do know that from the government's perspective, it's kind of a weird place to be. Yes, it wants a hot economy, but it also does want those interest rates to come down. And that's harder to do the hotter the economy is. So maybe this is the middling kind of support that the government hopes for, so that we can at least start not raising rates and getting them down, because so much of the national budget at this point is going to interest, and so it would like lower interest rates.

**Lou Whiteman** (3:25)
Yeah, that's not happening, sorry. But I think it's important to, I think it's important to really look at these numbers and not just take the big macro. I mean, a lot of the weakness was retail and leisure, and that is likely the World Cup reaction. Hospitality shed 40,000 jobs after the World Cup, and this is again heading away from the summer season. You're definitely hiring there. Sports equipment jobs, sports and leisure equipment jobs though, were great. So again, I am very, very cautious, especially Travis, as you say, this will be revised a lot of times. Could get a lot worse, could get a lot better. But there was nothing in here saying the sky is falling. There's nothing here that's saying that things are robust. This again speaks to Fed inaction. And I think, yeah, sure, the government would like to pay less on interest rates, but interest rates are fine. Interest rates are still below where they have been for most of the last three decades. Businesses can survive here.
I think, I don't want to say Goldilocks because, you know, if anything, everything is glass half empty, but there is a lot of water in the glass at least.