Job Data-Tariff War, Recession Fears

● **Headline Employment Shock, Rate Cut Gamble**

Analysis of the Impact of Hidden Employment Data and Prospects for Interest Rate Cuts in the Rapidly Changing US Stock Market

1. US Stock Market Declines and Their Background

The US stock market is currently experiencing declines, with Nasdaq down 2.2%, Dow Jones 1.4%, SP500 1.7%, and Russell nearly 2%. While analyses cover various perspectives, including presidential policies, investment strategies, and economic forecasts, a less visible aspect is the revision history of the non-farm payroll data, a key indicator of employment. This conveys a message beyond mere job numbers. In particular, the unexpected increase of 83,000 in private non-farm payrolls for July and the drastic reduction in revised figures from the previous 150,000 have amplified overall market anxiety.

2. Derivatives, ETFs, and the Dilemma of Investment Strategies

Recently, investors have been using leveraged ETFs and derivatives, anticipating a rise in the fear index (VIX). However, professional investors in US stocks and the stock market emphasize that trading derivatives requires a high level of financial expertise and is not recommended for general investors. Therefore, when formulating investment strategies, it is crucial to thoroughly examine economic forecasts and fundamental employment data rather than relying solely on trends.

3. Revised Employment Data and Concerns about Stagflation

Current employment data shows the worst growth rate in three months since the pandemic. Excluding the healthcare sector, overall job growth is significantly sluggish. With economic instability and declining productivity occurring simultaneously, columnist Joe Weisenthal warns of signs of stagflation. The growth of specific industries such as aging, welfare, and AI alone may exacerbate concerns about future economic recession.

4. Fed Chair Powell’s Remarks and the Possibility of Interest Rate Cuts

It is noteworthy that Fed Chair Powell has mentioned downside risks to the labor market six times recently. Based on this data, the market is forecasting a September interest rate cut. Both Polymarket and FedWatch see a high probability of interest rate cuts, suggesting that a short-term interest rate cut could positively impact economic activity and stock market liquidity. However, careful attention is needed as rising inflation could again create a significant burden.

5. Investment Strategies and Stock Market Outlook: Preparing for the Future

The current market situation is mixed with the possibility of economic recovery after interest rate cuts and concerns about recession due to sluggish employment. Investors should continue comprehensive analysis focusing on key SEO keywords such as US stocks, interest rates, stock market, economic forecasts, and investment strategies. In particular, it is necessary to closely examine the revision history of this employment data, and carefully consider the policy changes of Powell and the ripple effects of future interest rate cuts. Unlike in the past, this data cannot be simply ignored, and it is time to closely monitor future economic trends and readjust investment strategies.

The backdrop to the US stock market’s sharp decline includes revised employment data and sluggish job growth.This has highlighted concerns about stagflation along with the possibility of Fed Chair Powell’s interest rate cuts.Investors need to pay attention to detailed analysis focusing on key keywords such as US stocks, interest rates, economic forecasts, investment strategies, and the stock market. It is necessary to closely monitor the current market situation and revise strategies.

*YouTube Source: [ 내일은 투자왕 – 김단테 ]

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● US Jobs Data – Tariff War Recession Alert

1. Impact of the Tariff War

As the tariff war between the U.S. and its major trade partners intensifies, there is a possibility that U.S. sample tariff rates will sharply increase from 2-3% to 10-9%. This raises concerns that Korean companies with a high proportion of exports to the U.S., as well as small and medium-sized manufacturers and suppliers of parts and raw materials, will be significantly impacted. The increase in tariffs may not only reduce exports but also lead to a decline in corporate operating rates, potentially exerting downward pressure on the entire domestic value chain.

2. Detailed Analysis of the U.S. July Employment Figures

U.S. employment figures are analyzed based on three main categories. Key details for each category are as follows:

• Unemployment Rate

The unemployment rate slightly increased from 4.1% to 4.2% in July.
This marks the highest level since the pandemic, raising concerns in the market.

• Employment Change

The change in non-farm payrolls increased by approximately 73,000.
This fell short of market expectations (around 110,000), raising concerns about a slowdown in employment growth.

• Wage Growth Rate

The wage growth rate was announced at 3.7%.
Falling short of the expected 3.8%, this could lead to a slowdown in consumer sentiment and service prices.

3. Impact on the Overall Economy and Investment Sentiment

With the U.S. employment figures and the implementation of tariffs coinciding, two major issues are emerging in the overall economy:

• Concerns about an Employment Shock

Instability in the labor market could negatively impact domestic demand and exports, along with an economic slowdown.
In particular, sluggish job growth and a minimal increase in the wage growth rate could lead to the risk of stagflation (simultaneous economic stagnation and inflation).

• Expectations for Interest Rate Cuts

The combination of poor employment figures and tariff-induced economic pressure is highlighting the possibility of a Federal Reserve interest rate cut.
Recent statements by Fed officials and changes in market sentiment are amplifying expectations for interest rate cut cycles in September and December.

This analysis includes the long-term impact of the tariff war on small and medium-sized manufacturers and the entire domestic value chain, going beyond simple trade disputes, which is not covered in general news or YouTube channels. Furthermore, it is crucial because it meticulously examines the impact of changes in the Fed’s benchmark interest rate policy on both employment and price stability, aiming to provide an accurate economic outlook.

4. Future Outlook and Points to Note

• Short-Term Outlook

In a situation where the timing of tariff implementation coincides with the release of U.S. employment figures, employment indicators, which are lagging economic indicators, may deteriorate further.
The effects of the resulting interest rate cuts may be seen in the short term.

• Mid- to Long-Term Outlook

If trade disputes persist, it may be difficult for domestic exports to the U.S. and the production sector to show a stable recovery.
There are concerns that new job creation may be curtailed due to reduced investment in the U.S.
This situation could negatively impact the overall domestic economy and lead to the stagnation of small and medium-sized businesses and regional economies, requiring careful policy responses.

• Investment and Response Strategies

According to the global economic outlook analysis, attention should be paid to the Fed’s interest rate cut cycle and signs of employment improvement along with the economic slowdown.
Investors should establish portfolio diversification strategies to prepare for short-term volatility.
Additionally, it is important to pay attention to the strategic changes of companies in preparation for changes in the supply chain and reorganization of the value chain due to the tariff war.

With the implementation of the tariff war coinciding, the U.S. July employment figures are raising concerns about an employment shock and stagflation, including an unemployment rate of 4.2%, sluggish job growth, and a slowdown in wage growth. This is amplifying expectations for a Federal Reserve interest rate cut, and there is a high possibility that downward pressure will be applied to the value chain of domestic manufacturers and small and medium-sized businesses in general. Portfolio diversification is needed to prepare for short-term interest rate policy changes and mid- to long-term economic slowdown.

*YouTube Source: [ 경제 읽어주는 남자(김광석TV) ]

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