Happy Friday eve, investors. We are one day removed from a historic job market revision by Uncle Sam, and one day away from a key speech from Jerome Powell in Jackson Hole.

Here we go.

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Downward revisions galore

What happens when the job market gets 30% weaker in a single morning? 

We’re living out that scenario now.

On Wednesday, the Bureau of Labor Statistics announced in a preliminary release that it had overstated the number of new jobs created in the 12 months to March by 818,000. 

That’s about one-third of the 2.9 million jobs the government said it added in that stretch, or roughly 68,000 fewer jobs added each month than previously reported.

Indeed, the revision is as big and unusual as it sounds.

If we take this release at face value, it would lower the nonfarm payroll count by 0.5% in the year up to March — the largest adjustment since 2009. 

On Tuesday, Goldman Sachs and other Wall Street firms had predicted the government would wipe out as many as one million jobs.

While the actual report came in lower than that, it confirms that the labor market began cracking well before government officials explicitly acknowledged. 

“That becomes a huge problem [because] we probably thought, based on the economic data, that the economy was stronger than it actually is,” investor Anthony Pompliano told me during a conversation recorded prior to the release Wednesday.

“The Federal Reserve is making monetary policy decisions based on this data,” added Pompliano.

“So there’s this potential that they’re behind the curve because they are getting bad data. And on top of that, how many other people were making decisions in their investment portfolio or elsewhere in the economy based on the economic data?”

To be clear, the Bureau of Labor Statistics announces scheduled revisions every year.

Huge revisions shouldn’t be shrugged off, but they also do not necessarily imply malicious intent or deception. Tracking job activity for more than 330 million individuals is a difficult task. 

That said, it also seems true that a miscount of 818,000 jobs will not help the government earn trust from investors who are skeptical of “official” figures.

“I try to remind people you have to assume that the economic data is a strong data point, but you cannot put 100% faith in these numbers because there are revisions, it’s really complex, and the government historically has under- or over-counted depending on the metric,” Pompliano said. 

The stock market, for its part, hummed along unbothered on Wednesday.

Job numbers are backward-looking, after all, and asset prices move based on what could happen in the future.

And not for nothing, “bad news” in economic data only bolsters the Fed’s case to cut rates in September — which should ultimately push stock prices higher. 

“If you are in the rate cut in September camp, these data all but seal the deal on what the Fed needed to cut rates,” said Jamie Cox, managing partner for Harris Financial Group.

What do you make of the revised jobs data? Hit reply to this email or let me know on X @philrosenn.

Elsewhere:

✂️ Fed officials want to cut in September. That’s according to the latest minutes release from July. The “vast majority” of central bankers say it would be appropriate to ease policy in September, assuming the economic data doesn’t fluctuate before then. Traders, meanwhile, see it as a certainty that the Fed will cut rates next month. (AP)

🥑 What grocery price gouging? Kamala Harris has blamed grocery stores for high food costs, but a new analysis of costs and profits showed little evidence of this. Under the Biden-Harris administration, grocery prices are up 21%. Under Trump, the same gauge climbed about 6.5%. (Yahoo Finance)

🎯 Target stock jumped over 11%. The retailer reported upbeat earnings Wednesday and said that more sales and lower prices have helped drive more customers into its stores this quarter. Shares of T.J. Maxx also climbed more than 6% on the day. (WSJ)

Rapid-fire:

• Stocks in Asia are moving higher in overnight trading (Bloomberg)

• Big banks obtained the critical job market data while the Wednesday report was delayed (Bloomberg)

• Chinese property giant Evergrande accuses top auditor PwC of “negligence” in its work for the collapsing company (FT)

• Netflix stock hit a record high this week for the first time since the pandemic even as shares of competitors struggle (Business Insider)

Interview:

My conversation with Anthony Pompliano about the revised jobs data, stock market volatility, and the Magnificent Seven.

Last thing:

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