Markets rally on soft jobs data

This week, we saw several data points about the labor market that showed some softness. The JOLTS number, which measures the total amount of job openings, came in smaller than anticipated early in the week. On Wednesday, the ADP employment report, one measure of the labor market's health, came in slightly lower than anticipated. Then, on Friday, US Non-farm payrolls, the government’s official measure of the labor market's growth, came in slightly ahead of expectations. However, the prior two months were both revised lower. The unemployment rate ticked up to 3.8% from 3.5% due to more people entering the labor market (labor participation rate).

• The tight labor market has kept pressure on wages, which is supportive of inflation
• The Fed has cited the tight labor market multiple times as one of the reasons they need to maintain a tight monetary policy
• With the data we received this week, the odds of a rate hike at each of the next two Federal Reserve meetings decreased significantly
• Some have pointed to labor strikes across various industries as a potential distortion of the reported figures, so we have to take the numbers with a grain of salt

BRICS welcomes six additional countries

The BRICS acronym was coined in the early 2000s by economist Jim O’Neill at Goldman Sachs. Brazil, Russia, India, China, and later South Africa were five emerging markets that Jim identified as ones to watch on a global stage. This week, the nations met in South Africa and added Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the UAE. The group now represents roughly 50% of the world’s population and 33% of the world's economy.

• While there is no formal membership, BRICS countries work together across several shared interests, not the least of which is economic development
• The addition of six additional countries is symbolic, given the current rift between the Eastern and Western worlds
• Collectively, they will now control almost half of the world’s oil supply
• One of their goals is to wean themselves off the reliance on the US Dollar (USD), which oil is priced in
• If they can make progress in using an alternative to the USD for trade between members, this could have serious ramifications on the value of the USD and foreign demand for US treasuries

SEC loses case filed by Grayscale

This week, the United States Court of Appeals ruled in favor of Grayscale Investments in a lawsuit against The SEC. Grayscale sued after the SEC denied their application to convert its GBTC product into a Bitcoin ETF. The court ruled unanimously that the denial of their application was “arbitrary and capricious,” and the SEC failed to provide a “rational explanation” for its decision.

• This was a major win for the institutionalization of this nascent asset class
• The SEC now has 45 days to appeal the ruling
• In response, the SEC postponed for 45 days the approval of an additional 6 Bitcoin ETFs, including one from Blackrock

‍