May US payrolls beat forecasts two-to-one, but two sectors did 73% of the work and long-term unemployment hit a cycle high — into a split central-bank week and oil back above $96. Three things for long-horizon allocators. (1) US jobs: strong on top, frozen underneath. (2) The Atlantic splits: ECB to hike, Fed on hold. (3) The supply shock: Brent above $96 on the Strait of Hormuz. Full brief: https://www.universalassetowners.com
Transcript
This is the Universal Asset Owners daily video brief for Monday, June eighth. Three things for the people who allocate long-horizon capital.
The US added one hundred and seventy-two thousand jobs in May — more than double what was expected. But two sectors, leisure and hospitality and local government, did about seventy-three percent of the work. And the long-term unemployed are now twenty-seven and a half percent of all unemployed — a cycle high. A market that has stopped hiring without yet firing.
That data lands into a divided week. Markets now see the European Central Bank's June eleventh hike as near-certain, taking its deposit rate to two-and-a-quarter percent, as euro-area inflation hits three-point-two percent. The Federal Reserve is expected to hold. For a global owner, opposing central banks are a currency and duration event.
Brent crude is back above ninety-six dollars after fresh Iran–Israel strikes, with the Strait of Hormuz still near-closed. OPEC-plus added only one hundred and eighty-eight thousand barrels a day for July. This is the inflation a central bank can't ease away — and a globally diversified owner can't diversify away.
Here's the jobs report in one chart. Of May's gain, leisure and hospitality added seventy thousand and local government fifty-five thousand — together about seventy-three percent of the total — while financial activities shed twenty-two thousand. A beat, but a narrow one.
Here's our take. A market that has stopped hiring, an inflation shock central banks can't ease, and a long bond selling off on that same inflation all charge against one account. For a universal owner, the instruction isn't a trade. It's to stop assuming bonds will rally when equities fall.
The full brief, the chart, and The Universal Owner podcast are at universalassetowners dot com. Back tomorrow.
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Produced and edited by the UAO editorial desk. Not investment advice.