From the Census Bureau reported that overall construction spending decreased:

Construction spending during June 2025 was estimated at a seasonally adjusted annual rate of $2,136.2 billion, 0.4 percent below the revised May estimate of $2,143.9 billion. The June figure is 2.9 percent below the June 2024 estimate of $2,199.8 billion.
emphasis added

Private spending decreased and public spending increased slightly:

Spending on private construction was at a seasonally adjusted annual rate of $1,621.9 billion, 0.5 percent below the revised May estimate of $1,630.2 billion. ...

In June, the estimated seasonally adjusted annual rate of public construction spending was $514.3 billion, 0.1 percent above the revised May estimate of $513.7 billion.

Click on graph for larger image.

This graph shows private residential and nonresidential construction spending, and public spending, since 1993. Note: nominal dollars, not inflation adjusted.

Private residential (red) spending is 9.7% below the peak in 2022.

Private non-residential (blue) spending is 6.6% below the peak in December 2023.

Public construction spending (orange) is at a new peak.

The second graph shows the year-over-year change in construction spending.

On a year-over-year basis, private residential construction spending is down 6.2%. Private non-residential spending is down 4.0% year-over-year. Public spending is up 5.2% year-over-year.

This was well below consensus expectations; however, spending for the previous two months was revised up slightly.

UMich Sentiment Hits 5-Month High As Inflation Expectations Plunge

US consumer sentiment rose to a five-month high in July on optimism about current conditions tied to a stock-market rally, while inflation expectations eased further.

The survey showed the current conditions gauge rose to a six-month high of 68, while the expectations index slipped to 57.7...

Source: Bloomberg

“A rise in sentiment among stock holders was partially offset by a decline among consumers who do not own stocks,’’ Joanne Hsu, director of the survey, said in a statement.

Most notably, inflation expectations plunged. Consumers expect prices to rise at an annual rate of 3.4% over the next five to 10 years, the tamest since January, data released Friday showed. They saw costs rising at an annual rate of 4.5% over the coming year, down from 5% in June...

Source: Bloomberg

Democrats and Independents appear to be coming around to reality as their inflation fears subside somewhat...

Source: Bloomberg

But, consumers in the Michigan survey were also skeptical that the risk of faster inflation has passed...

“Meanwhile, expectations remain poor for business conditions and elevated for unemployment; critically, consumers anticipate they may be personally affected,” Hsu said.

“Despite recent improvements, this combination of views is consistent with a slowdown in spending, as consumers may respond to these risks with more cautious financial behavior.”

It seems Ms. Hsu really doesn't like this rebound.

Tyler Durden Fri, 08/01/2025 - 10:16

(Posted with permission). The ISM manufacturing index indicated contraction. The PMI® was at 48.0% in July, down from 49.0% in June. The employment index was at 43.4%, down from 45.0% the previous month, and the new orders index was at 47.1%, up from 46.4%.

From ISM: Manufacturing PMI® at 48% July 2025 Manufacturing ISM® Report On Business®

Economic activity in the manufacturing sector contracted in July for the fifth consecutive month, following a two-month expansion preceded by 26 straight months of contraction, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

“The Manufacturing PMI® registered 48 percent in July, a 1-percentage point decrease compared to the 49 percent recorded in June. The overall economy continued in expansion for the 63rd month after one month of contraction in April 2020. (A Manufacturing PMI® above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index contracted for the sixth month in a row following a three-month period of expansion; the figure of 47.1 percent is 0.7 percentage point higher than the 46.4 percent recorded in June. The July reading of the Production Index (51.4 percent) is 1.1 percentage points higher than June’s figure of 50.3 percent. The Prices Index remained in expansion (or ‘increasing’) territory, registering 64.8 percent, down 4.9 percentage points compared to the reading of 69.7 percent reported in June. The Backlog of Orders Index registered 46.8 percent, up 2.5 percentage points compared to the 44.3 percent recorded in June. The Employment Index registered 43.4 percent, down 1.6 percentage points from June’s figure of 45 percent.

“The Supplier Deliveries Index indicated faster delivery performance after seven consecutive months in expansion (or ‘slower’) territory. The reading of 49.3 percent is down 4.9 percentage points from the 54.2 percent recorded in June. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 48.9 percent, down 0.3 percentage point compared to June’s reading of 49.2 percent.

“The New Export Orders Index reading of 46.1 percent is 0.2 percentage point lower than the reading of 46.3 percent registered in June. The Imports Index registered 47.6 percent, 0.2 percentage point higher than June’s reading of 47.4 percent.”

Spence continues, “In July, U.S. manufacturing activity contracted at a faster rate, with declines in the Supplier Deliveries and Employment Indexes contributing as the biggest factors in the 1-percentage point loss of the Manufacturing PMI®.
emphasis added

This suggests manufacturing contracted in July.  This was below the consensus forecast of 49.8. New export orders were still weak; employment was weak and prices very strong.

Surveys Signal Manufacturing Contraction In July, But...

'Hard' data has disappointed in recent weeks (most notably today's payrolls miss) and while soft data overall has been rising, today's Manufacturing surveys were expected to show deterioration (after a rebound from April lows).

• S&P Global US Manufacturing PMI fell from 52.9 to 49.8 (final) in July (back below 50 for the first time since December). The final print is slightly higher than the flash print of 49.5.

• ISM US Manufacturing PMI fell from 49.0 to 48.0 (worse than the increase to 49.5 expected). That is the weakest since Oct 2024.

So both surveys are in contraction/recession...

Source: Bloomberg

The Employment component confirms this morning's payrolls weakness, New Orders remain in contraction, but the silver lining is that fears of inflation are falling...

“July saw the first deterioration of manufacturing operating conditions since last December as tariff worries continued to dominate the business environment," said Chris Williamson, Chief Business Economist at S&P Global Market Intelligence.

“The downturn at the start of the third quarter in part reflects the passing of a busy period of tariff-related inventory accumulation in prior months.

Factories reported little change in inflows of new orders and reduced stock holdings of both raw materials and finished goods in July.

This comes after companies had built up inventories in May and June amid concerns over higher import prices and worsening supply availability resulting from tariff hikes.

But there is a silver lining in inflation data...

“Input prices continued to rise at a steep rate, with these higher costs often being passed on to customers to drive another month of elevated selling price inflation, but there are signs that these price pressures may have peaked back in June.

Finally, Williamson notes that “optimism about the year ahead has meanwhile taken a knock as factories worry about reduced demand from customers, especially in export markets, and the inflationary impact of tariffs."

"Employment consequently fell as factories trimmed headcounts amid concerns over rising costs and lower sales.”

Today's 'hard' data decline left 'soft' data to lead

Is the hard data weakness (and sub-50 PMI) enough to push Powell to finally cut?

Tyler Durden Fri, 08/01/2025 - 10:07

 

Who would ever have guessed that chaotically deploying a random set of discredited economic policies for 6 months would disrupt the economy and hurt the labor market…?

The headline NFP number was a disappointing +73,000; that included a decrease in government workers of -10,000. Unemployment ticked up to 4.2% from 4.1% last month. Hourly wages gained a third of a percent.

But the big news is the revisions:

June was revised down by 133,000, from +147,000 to +14,000
May was revised down by 125,000, from +144,000 to +19,000

That makes three consecutive months of sub-100k payroll data.

If the economy were not so robust heading into the tariff mathem, I’d say these were very recessionary numbers. (Listen to my conversation with Neil Dutta from July for his economic warnings of a recession late 2025/early 2026).

These are no good, bad datapoints. Philippa Dunne of the TLR Analytics described it this way: “While not a disaster, this was one of the weakest employment reports we’ve seen in a long time, with nary a bright spot.”

Markets are down 1.5% – 2.0% as I write this. The silver lining is that it increases the odds of rate cuts in September and October.

Data points like today’s NFP explain why I am hopeful that the tariffs will be lifted. Yesterday’s discussion of their dubious legality was two parts analysis, one part wishful thinking.

~~~

Light posting next week — I am off to the woods of Maine…

 

 

Previously:
Might Tariffs Get “Overturned”? (July 31, 2025)

 

The post NFP Disappoint; Revisions Worse appeared first on The Big Picture.

Jobs Shocker: July Payrolls Far Below Estimates, Follow Massive Revisions Lower

Heading into today's jobs report, sentiment had seen a surprising boost in recent days, with the whisper number rising from just about 110K back to 125K, or where it started the month of July.

Well, the optimism proved to be very, very wrong, because moments ago the BLS reported job numbers that were very ugly with July printing just 73K, far below the 104K estimate.

But that's not the real punchline: what is, is that Trump not only took a page out of the Biden playbook, but ripped pretty much all of it out with May and June revised massively lower, to wit:

• May was revised down by 125,000, from +144,000 to +19,000,
• June was revised  down by 133,000, from +147,000 to +14,000.

With these revisions, employment in May and June combined is 258,000 lower than previously reported, which puts to shame any/all of the far smaller revisions that defined much of the Biden regime. 

Blackrock PM Jeff Rosenberg told Bloomberg TV that the big news today is the revisions, and the main takeaway is that it raises the odds of a rate cut in September.

The number of jobs came in below the 80-100k breakeven level estimated by Fedʼs Barkin, suggesting Trump may have literally instructed the BLS to print a number that basically forces Powell's hand to cut.

The number was even uglier in the Household survey, which showed a drop of 260K workers in July, the 3rd biggest monthly drop of 2025.

And with that the gaping disconnect between the two series is back with a vengeance.

Going down the report, the unemployment rate rose from 4.1% to 4.2%, as expected, which may be the only silver lining in today's report as the Fed is now more focused on the unemp rate (according to Powell) than the number of jobs actually added.

Of note here is that the unemployment rate for Black workers was highest since October 2021.

The labor force participation rate, at 62.2%, dropped slightly in July from 62.3%, and has declined by 0.5% point over the year. It was the lowest since November 2022. The employment-population ratio, at 59.6%, also changed little over the month but was down by 0.4% over the year.

Turning to wages, we find that hourly earnings actually rose from an upward revised 3.8% (was 3.7%) to 3.9%, above the 3.8% expected.

Average hourly earnings for all employees on private nonfarm payrolls rose by 12 cents, or 0.3 percent, to $36.44 in July. Over the past 12 months, average hourly earnings have  increased by 3.9 percent. In July, average hourly earnings of private-sector production and nonsupervisory employees rose by 8 cents, or 0.3 percent, to $31.34. 

The average workweek for all employees on private nonfarm payrolls edged up by 0.1 hour to 34.3 hours in July. In manufacturing, the average workweek held at 40.1 hours, and overtime edged  down to 2.8 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls edged up by 0.1 hour to 33.7 hours in July. 

Some more details from the report:

• The number of people employed part time for economic reasons, at 4.7 million, changed little in July. These individuals would have preferred full-time employment but were working part time  because their hours had been reduced or they were unable to find full-time jobs. 
• The number of people not in the labor force who currently want a job changed little in July at  6.2 million but was up by 568,000 over the year. These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were  unavailable to take a job. 
• Among those not in the labor force who wanted a job, the number of people marginally attached to the labor force changed little at 1.7 million in July. These individuals wanted and were available for work and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers decreased by 212,000 in July to 425,000, largely offsetting an increase in the prior month. Discouraged workers are a subset of the marginally attached who believed that no jobs were available for them. 

Turning to the composition of the report, the BLS reports that employment continued to trend up in health care and in social assistance. Federal government continued to lose jobs. 

• In July, health care added 55,000 jobs, above the average monthly gain of 42,000 over the prior 12 months. Over the month, job gains occurred in ambulatory health care services (+34,000) and  hospitals (+16,000).
• Social assistance employment continued to trend up in July (+18,000), reflecting continued job growth in individual and family services (+21,000). 
• Federal government employment continued to decline in July (-12,000) and is down by 84,000 since reaching a peak in January. 
• Employment showed little change over the month in other major industries, including mining,  quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; retail  trade; transportation and warehousing; information; financial activities; professional and  business services; leisure and hospitality; and other services.

Of the above the most notable perhaps is that Federal workers declined by 12K, this was the 6th straight drop in a row.

There was more ugliness: looking beneath the surface we find that the number of full-time jobs tumbled 440K to 134.837 million, while part-time jobs surged by 237K to 28.437 million.

Here is the total number of FT and PT jobs.

One very interesting twist is that the number of native-born workers actually jumped by 383K in July, following the 830K increase in June. Meanwhile, foreign-born workers tumbled for the 4th month in a row, plunging by 467K in July. As such one can argue that much of today's jobs report was a consequence of the purge of illegal aliens from the labor market.

The numbers were so ugly, they effectively put a 25bps rate cut in Sept front and center... maybe even 50bps. Sure enough, bond yields from the two-year through seven-years are lower by at least 10 basis points as the market sniffs out a Fed being late to cut. 

“We would look for the Fed to begin lowering rates in September,” says Gregory Faranello, head of US rates trading and strategy for AmeriVet Securities.  “It’s somewhat amazing how you can have a sitting Fed Chair intimate the strength in labor one day and receive these numbers a few days later.”

Commenting on the numbers, Bloomberg's chief Economist Anna Wong wrote:

“July’s nonfarm payrolls were surprisingly weak, but the biggest shock was the massive revision to past data, which reduced gains for the past two months from solid to nearly zero. Adjusted for potential overstatement from the BLS’ ‘birth-death’ model, underlying job gains in July were also about flat.

“The unemployment rate, which Fed Chair Powell said earlier this week is the ‘main number’ to watch, also edged up, even as the labor force shrank for a third straight month. The main takeaway from the jobs report is that labor demand appears to be falling faster than labor supply – the labor market is not ‘solid,’ as Powell characterized it earlier this year, and we expect him to revise his opinion accordingly. We see growing chances of an earlier rate cut than our December base case.”

And here is B. Riley Wealth chief market strategist, Art Hogan,  

“Today’s jobs report is unambiguously soft and a reflection of the trade and tariff impact on economic growth. Both the actual report and the big negative revisions are more evidence that the trade policy will slow growth. What we know about our workforce population growth is that we need to create between 100 and 150,000 jobs a month to keep the unemployment rate unchanged. That is down from a range of 150 to 200,000 last year due to less immigration. The three-month average coming to today’s report was 150,000. The new three-month average of job creation is now 80,000. Not great news.”

All good points, but what really happened is that Trump finally figured out what we said last December, namely that if he wants the Fed to cut quick, he needs a labor market emergency. 

Finally he figured it out https://t.co/soBNzoHDBX

— zerohedge (@zerohedge) August 1, 2025

Well, he finally got it. 

Tyler Durden Fri, 08/01/2025 - 09:40

Trump To Get On With Bitcoin Reserve "In Short Order" - Bo Hines

Authored by Martin Young via CoinTelegraph.com,

US President Donald Trump’s crypto liaison has confirmed that the administration is still keen on a strategic Bitcoin reserve, despite only briefly being mentioned in a recently published crypto policy report.

“We do believe in accumulation,” said Robert “Bo” Hines, the executive director of the US President’s Council of Advisers on Digital Assets, said in an interview on Crypto in America on Wednesday, when asked about the US strategic Bitcoin reserve.

“We have it, it’s been established [...] we also have the strategic national digital assets stockpile,” he said, adding that Bitcoin is in “a class of its own and everyone recognizes that.”

He also said that the administration wants to “give credence” to the work and developments happening across other ecosystems, but did not mention any other digital assets or platforms. 

Hines said that building the infrastructure takes time and labor to ensure it’s done the right way and has long-term success, and there are “countless ways” that we can accumulate.

“I think that people will be very pleased with the direction that we are going, and we’ll start moving on that in short order,” he said.

Bo Hines talks about strategic Bitcoin reserves. Source: Crypto in America

Bitcoin reserve briefly mentioned White House report 

The President’s Working Group on Digital Asset Markets released recommendations to “strengthen American leadership in digital Financial Technology” on Wednesday, with only a short mention of the Strategic Bitcoin Reserve.

Hines said that the priorities and focus, as outlined in the report, were to create a clear and robust regulatory framework.

“We understand the importance of the strategic Bitcoin reserve, we’re enormous fans of Bitcoin and the Bitcoin community, we want to deliver for them as well, and I’m certain that we will.” 

We want as much BTC as we can possibly get

When asked how much Bitcoin the federal government has, Hines said, “I can’t discuss that right now.”

“There are several reasons we’re not disclosing that right now, there might be a time when we do, but I will say we want as much as we can possibly get [...] and we’re going to continue to work on that.”

The US government holds an estimated 198,000 BTC worth around $2.35 billion, according to Nansen.

President Trump signed the executive order officially establishing the Strategic Bitcoin Reserve and US Digital Asset Stockpile in March. 

Tyler Durden Fri, 08/01/2025 - 09:35

'Fade The Post-Payrolls Rally In The Long-End Of Bond Yields'

Authored by Peter Tchir via Academy Securities,

The headline establishment survey was 73k, which looks not so great at first blush, but unfortunately, is one of the better numbers in the entire report. 

Only 1 economist surveyed by Bloomberg had a number lower than the actual.

As bearish on jobs as some of the rest of this analysis may sound, I suspect that we overstated job growth the prior months and are entering the time of year where we underestimate it, but we are all stuck living with the official data.

Not that I’m bitter, but last month’s headline number was revised down from 147k to 14k. Only bitter as we were expecting weak data last month and then didn’t get it, only to find a month later, we were probably right. How can businesses make decisions with such bizarrely inaccurate data? In this day and age of AI, electronic data, there has to be a way to get “better” as in “more accurate” data, rather than coping with “garbage in, garbage out”.

Total two month revisions were -258k.

The birth/death model, which we see as fraught with issues, miscalculations based on a legacy economy that doesn’t exist any longer, added 257k jobs (I think that is unadjusted and maybe the full amount doesn’t get passed into the final number but it disturbs me that a total of only 73k incorporates a significant boost from this calculation).

Manufacturing lost jobs in each of the last two months, though if tariffs are going to work to bring manufacturing back, it will take time (I remain skeptical of how much of a resurgence in manufacturing employment of humans we will get via tariff policy).

Government shrank a bit, after some weird seasonals pushed them higher initially last month (who knows where they are after revisions). That should get worse as we move into September and we see the impact of DOGE (most doge’d employees are still counted as employed since they are still receiving their salary).

The unemployment rate only inched higher to 4.2% - a bright spot on the surface. But that was with the labor rate declining to 62.2% (the lowest participation rate since 2022). The underemployment rate (potentially a precursor to further labor issues) moved up 0.2% to 7.9%. Not a horrible number in its own right, but the trend is not good (and fits our view that the low QUITS rate as reported by JOLTs tells us labor is concerned about their ability to get a job).

The Household Data, used for the unemployment rate had -260k jobs lost. Without the lower participation rate, unemployment rate would be higher. That brings the 3 month total for this measure to -863K total.

The Fed should take notice and cut – they should have gone this month and I’m still in the 3-4 cut for the year camp (which looks less ridiculous today than it did a few weeks ago).

Treasuries are rallying across the curve, which makes sense, though I’d be fading the long end with 10’s back to 4.27%.

One reason for that bearishness on longer term yields at these levels is the Fed might be forced to cut even as inflation pressure from tariffs trickle in.

Also, and somewhat contradictory, there is the potential that the court system will invalidate the existing tariffs. That money may have to be refunded (there is supposedly a market to trade potential tariff refunds – Wall Street will trade anything  ). If we see lower tariffs and refunds on tariffs already paid, we could see pressure on bond yields, because while we don’t think the market has been giving enough benefit to tariff revenue, it has given some benefit. With appeals, injunctions, etc., we are some ways a way from the final decision, but we could see some noise around existing tariffs.

It is far from clear where the trade deals announced (often with great fanfare and little detail) will stand in the wake of any court decisions forcing the administration to use new or different avenues to impose tariffs. Companies that benefitted the most or were hurt the most by trade deals could see some reversals in their price action as well.

Bottom Line

Fade the rally in the long end of bond yields.

Be cautious on equities, and look for some reversals of recent trends between the outperformers and the laggards (the Russell 2000 is down year to date, and I’m not sure it is time to commit overweight here, but it is getting tempting).

Tariffs will be interesting as we see reaction (and potentially more deals) based on the tariff rates being set. At the same time, the court rulings could play a major role.

Finally, we continue to look to National Production for National Security and DEREGULATION to help some sectors do very well in the coming weeks and months!

Good luck and I do wish we had accurate data last month, imagine what the Fed might have done at the meeting if they knew jobs were punk last month and not some illusory surprise to the upside 

Tyler Durden Fri, 08/01/2025 - 09:20

The headline jobs number in the July employment report was below expectations and May and June payrolls were revised down by 258,000 combined.  A weak report. The participation rate and the employment population ratio decreased, and the unemployment rate was increased to 4.2%.
NOTE: Last month I noted that state and local government education hiring was up sharply - probably due to a data collection, timing or seasonal adjustment issue.   That increase was revised away for June. 

Earlier: July Employment Report: 73 thousand Jobs, 4.2% Unemployment Rate
Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate decreased in July to 83.4% from 83.5% in June.
The 25 to 54 employment population ratio decreased to 80.4% from 80.7% the previous month.
Both are down from the recent peaks, but still near the highest level this millennium.

Average Hourly Wages

The graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  
There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 3.9% YoY in July, up from 3.8% YoY in June.
Part Time for Economic Reasons

From the BLS report:

"The number of people employed part time for economic reasons, at 4.7 million, changed little in July. These individuals would have preferred full-time employment but were working part time because their hours had been reduced or they were unable to find full-time jobs."

The number of persons working part time for economic reasons increased in July to 4.68 million from 4.47 million in June.  This is above the pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 7.9% from 7.7% in the previous month. This is down from the record high in April 2020 of 22.9% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.6%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

This graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.83 million workers who have been unemployed for more than 26 weeks and still want a job, up from 1.65 million the previous month.
This is down from post-pandemic high of 4.171 million, and up from the recent low of 1.056 million.

This is above pre-pandemic levels.

Job Streak

Through July 2025, the employment report indicated positive job growth for 54 consecutive months, putting the current streak in 2nd place of the longest job streaks in US history (since 1939).
The streak barely survived the large downward revisions to May and June payrolls!  
Headline Jobs, Top 10 Streaks Year EndedStreak, Months 12020113 2Current, N/A551 3199048 4200746 5197945 6 tie194333 6 tie198633 6 tie200033 9196729 10199525 1Currrent Streak
Summary:

The headline jobs number in the July employment report was below expectations and May and June payrolls were revised down by 258,000 combined.  The participation rate and the employment population ratio decreased, and the unemployment rate was increased to 4.2%.
This was a weak employment report.  

'Too Little Too Late' - Trump Rages Amid The Post-Payrolls Carnage...

Weaker than expected job gains combined with rising unemployment rates and massively negative revisions have sent rate-cut odds soaring with September now priced around 75%...

2025 cut expectations are now back above 50bps (and 2026 is fading modestly)...

This has helped smash Treasury yields lower with the short-end leading (down a stunning 18bps)...

And the dollar is puking...

Gold is mirroring the dollar weakness and soaring higher...

Stocks are lower post-payrolls but were notably weaker already on the heels of tariffs and AMZN disappointment...

So, circling back to the start, is this 'bad news' from the labor market, good news for Trump as it forces The Fed's hand sooner rather than later?

Time for an emergency cut?

Tyler Durden Fri, 08/01/2025 - 08:56

From the BLS: Employment Situation

Total nonfarm payroll employment changed little in July (+73,000) and has shown little change since April, the U.S. Bureau of Labor Statistics (BLS) reported today. The unemployment rate, at 4.2 percent, also changed little in July. Employment continued to trend up in health care and in social assistance. Federal government continued to lose jobs.
...
Revisions for May and June were larger than normal. The change in total nonfarm payroll employment for May was revised down by 125,000, from +144,000 to +19,000, and the change for June was revised down by 133,000, from +147,000 to +14,000. With these revisions, employment in May and June combined is 258,000 lower than previously reported.
emphasis added

Click on graph for larger image.

The first graph shows the jobs added per month since January 2021.

Total payrolls increased by 73 thousand in July.  Private payrolls increased by 83 thousand, and public payrolls decreased 10 thousand (Federal payrolls decreased 12 thousand).

Payrolls for May and June were revised down by 258 thousand, combined.
The second graph shows the year-over-year change in total non-farm employment since 1968.

In July, the year-over-year change was 1.54 million jobs.  Year-over-year employment growth is slowing.

The third graph shows the employment population ratio and the participation rate.

The Labor Force Participation Rate decreased to 62.2% in July, from 62.3% in June. This is the percentage of the working age population in the labor force.

The Employment-Population ratio was decreased to 59.6% from 59.7% in June (blue line).
I'll post the 25 to 54 age group employment-population ratio graph later.

The fourth graph shows the unemployment rate.

The unemployment rate was increased to 4.2% in July from 4.1% in June.

This was below consensus expectations and May and June payrolls were revised down by 258,000 combined.  
A weak report.
I'll have more later ...

Trump's Global Tariff Breakdown: Full Country-By-Country Rate List

Four months after President Trump stunned the world and rattled global markets by unveiling "Liberation Day" tariff rates, his latest revisions (read here), announced Thursday, and set to go into effect in a week, sparked fresh global equity futures selling early Friday morning. With an average tariff rate of 15%, the world now faces the highest US levies since the Great Depression days of the 1930s, and these rates are roughly six times higher than one year ago and will certaintly lead to further rejiggering of supply chains. 

The new tariff rates are set to take effect in just seven days, starting at 12:01 a.m. ET. A baseline 10% tariff will apply to imports from most countries. 

Here's what you need to know: 

• 10% Global Minimum Tariff imposed across all imports.

• Canada: Tariff raised to 35% (from 25%), but goods under USMCA remain exempt.

• Switzerland: Tariff increased to 39% (from 31%); Swiss officials criticize the change, citing divergence from prior draft terms.

• 40 Countries: Imports face a 15% tariff.

• 12+ Economies: Hit with even higher duties.

• China & Mexico: Deadline delayed by 90 days.

The list:

The multi-month wave of tariff threats sparked front-loading of exports, supporting many Asian economies and shielding US consumers from price spikes. However, that could all change...

Commenting on this is Raghuram Rajan, former India central bank governor and chief economist of the International Monetary Fund, who is now a professor at the University of Chicago Booth School of Business, told Bloomberg TV earlier today, "For the rest of the world, this is a serious demand shock," adding, "You will see a lot of central banks contemplating cutting as the rest of the world slows." 

Tyler Durden Fri, 08/01/2025 - 07:20

Standard Chartered Sees Higher Long-Term Oil Prices As Shale Costs Rise

Oil prices are set to trend higher in the coming years, according to Standard Chartered, as the economics of U.S. shale have shifted significantly, according to OilPrice.com.

While crude has hovered near $70/bbl — close to the 20-year average of $73.38 — StanChart notes that breakeven costs in the shale patch have climbed sharply. “The average breakeven price for Permian producers is now edging back toward the mid-$60s, up from the mid-$50s just two years ago,” the bank said, attributing the rise to higher costs for steel, labor, and frac materials, in part due to U.S. tariffs.

Analysts at Rystad Energy and Wood Mackenzie share the view that today’s oil prices are unsustainably low for shale. Rystad estimates breakeven prices for new horizontal wells in key plays near $68/bbl, while WoodMac warns that without a firmer price floor, “the rig count will absolutely fall.” Both firms point to tight capital budgets, cautious reinvestment, and a continued investor focus on returns rather than growth.

OilPrice.com reports that the outlook comes as crude prices hit six-week highs. Brent crude for September rose 1.2% to $73.34/bbl, while WTI gained 1.5% to $70.24, driven by geopolitics and trade developments. President Trump extended his deadline for Russia to reach a ceasefire with Ukraine to Aug. 3 from July 14, warning of additional sanctions and tariffs if talks fail. “The new deadline caught many analysts by surprise and, if enforced, could tighten Russian crude and fuel supplies to the global market,” BOK Financial Securities said.

Oil prices also found support from a U.S.-EU trade agreement that avoided escalation into a full trade war. Under the deal, EU exports to the U.S. will face tariffs capped at 15%, providing relief to markets worried about a broader slowdown in trade.

Still, gains were tempered by a surprise U.S. crude stock build. The Energy Information Administration reported commercial crude inventories rose 7.7 million barrels in the week ending July 25 to 426.7 million barrels. While stocks remain 6% below the five-year seasonal average, the weekly jump was far larger than the 1.54 million-barrel increase reported earlier by the American Petroleum Institute, catching traders off guard.

Meanwhile, U.S. drilling activity continues to contract. The Baker Hughes rig count shows oil rigs falling for the 13th consecutive week to a 46-month low of 415, down 68 rigs year-to-date. Texas saw the steepest declines, with drilling in the Eagle Ford formation down five rigs to 34, while Permian activity slipped in both the Delaware and Midland basins.

Bloomberg reports separately that fracking activity in the Permian Basin is slowing faster than expected as tariff uncertainty and rising OPEC+ production weigh on demand. ProPetro Holding CEO Sam Sledge said only about 70 frack crews remain active in the world’s top shale region, down from roughly 100 earlier this year.

“The completions market in the Permian Basin continues to face challenges,” Sledge told analysts, citing idle capacity driven by weaker market conditions. ProPetro shares fell as much as 21% after a surprise second-quarter loss, with the company now planning 10–11 crews this quarter and potential cuts ahead.

The forecast echoes Halliburton, which said last week it will sideline equipment amid worsening U.S. shale conditions.

With U.S. output under pressure and global geopolitical risks mounting, Standard Chartered’s bullish view reflects a tightening supply picture. Many analysts see sustained prices above current levels as essential to stabilize U.S. production — a dynamic that may be shaping the Trump administration’s increasingly hard stance on Russia.

Tyler Durden Fri, 08/01/2025 - 06:55

Happy August! My end-of-week morning train WFH reads:

• Almost Every Corner of Emerging Markets Is Surging as Dollar Sinks: After more than a decade as an afterthought in investing circles, developing assets are having a moment as Trump roils the dollar. (Bloomberg)

• 2024 Private Equity Fundamentals. An analysis of private equity companies showed they are smaller, more leveraged, pay higher interest rates, and have lower margins than public companies. (Verdadcap) see also Foie Gras Retirement plan participants shouldn’t be force-fed private assets: Private equity and credit managers desperately want access to retirement plan participants. And steps are reportedly being taken to make that happen. I feel ambivalent at best about this. (Basis Pointing)

• As Consumers Lose Their Appetite, Food Brands Fight to Keep Wall St. Happy: Packaged food companies are struggling to adjust — and profit — as tastes, waistlines and wallets change. (New York Times)

• The Texas Economy Ain’t All That: If Texas were a country, it would have the world’s 8th largest economy, with its sights on overtaking France at No. 7. It is also, according to the personal-finance website WalletHub, the state with “the most people in financial distress.” For all the impressive economic statistics, Texas doesn’t generate sufficient income or security for its residents. (Bloomberg)

• Scapegoating the Algorithm: America’s epistemic challenges run deeper than social media. (Asterisk)

• Why Smart People Deliberately Kill Their Status: The Art of Strategic Disappearance “Status Death”: the deliberate decision to walk away from recognition, followers, and prestige to start fresh. From Roman Emperor Diocletian retiring to grow cabbages, to modern founders abandoning million-follower accounts, we’ll dive into why this counterintuitive move is often the secret to long-term success. (Listen Notes)

• Norway should buy Harvard: Academic excellence has never been more affordable. (DN)

• Trump’s imaginary numbers, from $1.99 gas to 1,500 percent price cuts: The president likes to cite specific numbers to bolster his claims. They are often wildly improbable — or just impossible. (Washington Post)

• ‘Real-life Happy Gilmore’: Meet the hockey player who inspired the Adam Sandler movies. (New York Times)

• I Drank Every Cocktail: The International Bartenders Association, or IBA, maintains a list of official cocktails, ones they deem to be “the most requested recipes” at bars all around the world. It’s the closest thing the bartending industry has to a canonical list. As of 2025, there are 102 IBA official cocktails, and as of July 12, 2025, I’ve had every one of them. (Adam Aaronson)

Be sure to check out our Masters in Business interview this weekend with Erik Hirsch, Co-CEO Hamiliton Lane, which manages or advises on $958 billion in client assets. Previously, he was an M&A banker at Brown Brothers Harriman, and a municipal financial consultant with Public Financial Management, specializing in asset securitization, strategic consulting and sport stadium financings.

A growing share of US household assets is owned by people age 55+

Source: Apollo

 

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The post 10 Friday AM Reads appeared first on The Big Picture.

Zelensky Says He Discussed New 'Large-Scale' Arms Deal With Trump

Ukrainian President Volodymyr Zelensky in a Wednesday night address said Kiev is on the brink of another major arms agreement with the US. He described he presented President Donald Trump with Ukraine's "main principles" for future weapons deals, but without specifying whether Trump has agreed to the terms.

"Today, I also agreed on the main principles of our agreements with America, Ukraine – the United States, on arms," Zelensky stated. "Large-scale agreements, I talked about them with President Trump, and I very, very much hope that we will be able to implement all of this. This will definitely strengthen both of our countries, and therefore – our allies, our partners."

Via Reuters

While it was just last week that the Trump administration approved a series of arms sales to Ukraine totaling $650 million, it remains unclear if these are the same "large-scale" deals discussed by Zelensky.

The Ukrainian leader hailed all of this as part of the right direction and necessary step toward ending the war. "Right now we need to act to force Russia to peace. Yes, Moscow wants to continue fighting. But the whole issue is in the potential, the whole issue is in the resources for war, in money. That is why sanctions are useful. That is why pressure can work," he said.

Trump also last week proclaimed the landmark Washington and the EU deal under which the bloc would pay "100% of the cost of all military equipment" provided by the US. 

"They’re going to ship it to the European Union, and then they'll distribute it, and much of it will go to Ukraine," he had stated.

And concerning all the latest talk about air defenses, the EU will also pay for any US-made Patriot air defense systems which are shipped - or rather forcibly donated from European countries for Ukraine. Trump has openly boasted that "this will be a business for us."

Trump tells Ursula von der Leyen to her face that the EU won’t be getting anything less then 15% tariffs.

The EU lives in humiliation while led by these donkeys.pic.twitter.com/W1sWptZPgI

— ADAM (@AdameMedia) July 27, 2025

Politico reported earlier this week that multiple EU member states are requesting tens of billions of dollars in loans from the European Union to fund weapons purchases for Ukraine.

All of this is within the context of Trump growing frustrated at lack of peace progress, and he has increasingly laid blame squarely on Putin and Russia, this week giving Moscow just ten days to come to the negotiating table and reach a peace agreement, or else face far-reaching new sanctions, particularly secondary sanctions punishing trade partners continuing to do business with Russia.

Tyler Durden Fri, 08/01/2025 - 05:45

US Imposes Sweeping New Sanctions On Iranian Shipping Network

Via The Cradle

The US Treasury Department has announced new sanctions targeting the global shipping interests reportedly controlled by Mohammad Hossein Shamkhani, son of senior Iranian official Ali Shamkhani, in what it described as the most significant Iran-related action since 2018.

The sanctions aim to dismantle what Treasury officials called a "vast network" used to sell Iranian and Russian oil through container ships and tankers operated by front companies and intermediaries.

via Reuters

The network, they said, generated tens of billions of dollars used to support the Iranian government.

"These profits have helped prop up the Iranian regime," the Treasury stated, accusing Shamkhani of leveraging corruption and personal connections in Tehran to evade existing restrictions.

In total, the action designates 15 shipping firms, 52 vessels, 12 individuals, and 53 entities involved in sanctions evasion, with operations spanning 17 countries, including Panama, Italy, Hong Kong, the UAE, and the UK.

A US official said the measure was "tailored" to avoid disrupting global oil markets while striking specific targets.

"From our perspective, given where this individual fits, given his connection to the supreme leader and his father's previous sanctions activities, given the Iran-related authorities, it's critically important to emphasize that this is an Iran action that is meaningful and very impactful," the official said.

The EU sanctioned Shamkhani earlier in July for his role in the Russian oil trade, and his father, Ali Shamkhani, was sanctioned by the US in 2020.

Tehran condemned the decision as a hostile move, with Foreign Ministry spokesperson Esmail Baghaei calling it a "blatant assault on the Iranian people and their national dignity," adding that it reflected "the hostility of American policymakers towards the Iranian people."

He accused Washington of seeking to "cripple Iran’s development, sow internal discord, and erode the rights and livelihoods of ordinary citizens."

"The Iranian people, fully aware of the malicious intent of the aggressive sanctioning party …, will stand firm with all their might to safeguard their dignity and interests," Baghaei said.

He criticized the US's "addiction" to unilateralism and said its measures repeatedly violated “international law, human rights, and freedom of sovereign trade.”

He called for international accountability and reaffirmed Iran’s "unshakeable resolve" to defend its sovereignty and continue its development goals.

Sanctioned entities include Sepehr Energy Jahan Nama Pars Company, linked to Iran’s Armed Forces General Staff. Among the targeted vessels are Bendigo, Carnatic, Luna Prime, Goodwin, Davina, and Spirit of Casper.

Tyler Durden Fri, 08/01/2025 - 05:00

Spain Beats Germany, Tops EU, In Asylum Requests Amid Shift In Migrant Patterns

Germany is no longer the EU’s top destination for asylum seekers, as applications from Syrians plummet following the fall of Bashar al-Assad in December, according to an unpublished EU Agency for Asylum (EUAA) report seen by the Financial Times.

The report says the bloc’s asylum system is undergoing a “significant shift,” with May 2025 seeing 64,000 applications — nearly 25% fewer than the same month in 2024, according to the Financial Times. The drop was driven by an “extremely abrupt” fall in Syrian claims, from about 16,000 in October 2024 to just 3,100 in May.

“Since February Germany has no longer been the top EU+ destination; Spain, Italy and France all received more applications in May 2025,” the EUAA writes.

The Financial Times writes that Germany, long a top choice for Syrians, saw overall claims in May fall to 9,900 from 18,700 a year earlier. Spain now leads with 12,800 applications, mainly from Venezuelans fleeing the “severe economic and political crisis” in their country — a trend the agency partly links to U.S. deportations.

Italy is second with 12,300 claims, driven by Bangladeshis and Peruvians. France follows with 11,900, led by applicants from the Democratic Republic of Congo, Afghanistan, and Haiti.

The EUAA stressed the fall in Syrian claims is “likely not due to any asylum policy changes” but “rather, the shift likely reflects changing circumstances in Syria.”

Despite the decline, Germany still hosts the largest asylum seeker population, having granted asylum to 150,000 people in 2024, compared to about 50,900 in Spain, 40,000 in Italy, and 65,200 in France.

Tyler Durden Fri, 08/01/2025 - 04:15

Germany's Fiscal Free Fall: Record Debt, Recession, And Welfare Crisis

Submitted by Thomas Kolbe 

Germany’s 2026 federal budget is set. The cabinet has reached an agreement on the framework, with only parliamentary approval pending—a mere formality. With a record deficit and no credible path to fiscal consolidation, Germany is lurching toward a debt crisis.

On Wednesday, the federal cabinet greenlit the 2026 budget. Core expenditures are projected at €520.5 billion, €174.3 billion of which must be financed through new debt. This includes €89.9 billion in traditional borrowing and an additional €84.4 billion categorized as “special funds” directed toward infrastructure and climate initiatives.

Only with creative accounting has Finance Minister Lars Klingbeil (SPD) managed to present his deficit-ridden budget as Maastricht-compliant. Total new borrowing amounts to 3.3% of GDP—well above the 3% EU ceiling.

The reclassification of large parts of government spending marks a new chapter in fiscal recklessness. Any meaningful consolidation or structural reform is being kicked down the road.

Between 2025 and 2029, over €850 billion in new debt is planned.

Debt as Coalition Glue

The common denominator uniting the coalition of conservatives and social democrats is one thing: a massive debt package expected to pour over the country in coming years. The projected borrowing would push Germany’s debt-to-GDP ratio from 63% to over 90%, rapidly aligning the country with the debt profiles of Southern Europe.

But the crisis is not a distant threat—it’s already here. Near-daily headlines report fresh deficits from the country’s social insurance funds, and promised relief for citizens—like the cut in electricity taxes—has already been abandoned. Budgeting in Berlin has shifted into permanent crisis mode.

Social Security in Free Fall

While politicians in Berlin bicker over cost-cutting, serious consolidation measures vanish in the trenches between coalition factions. Meanwhile, the foundations of the welfare state are crumbling.

According to the statutory health insurance forecasting board (GKV), the system expects a record €47 billion deficit this year. That number is likely to rise further in tandem with the country’s deepening recession.

Hopes for a job market rebound have all but evaporated, with Germany entering its third year of contraction.

Long-term care insurers are also ringing alarm bells. Their current shortfall is €1.55 billion, and the Association of Statutory Health Insurance Funds warns it could double by 2026.

The national pension system fares no better. After a €2 billion deficit last year, the government forecasts a €7 billion shortfall for this year.

The exploding social deficits reflect not only failed immigration and demographic policies but also the fallout of a recession-prone economic model. The burden is falling squarely on the workforce—threatening a deepening loss of faith in the welfare system. For many, it’s becoming a bottomless pit, a hamster wheel from which there is no escape.

Workers Shouldering the Burden

The pain threshold for contributors has already been reached. The average social contribution rate now stands at 42.5% of taxable income. Health insurance alone—bloated with bureaucracy, expanded services, and rising staff costs—consumes 17.5%, including a 2.9% surcharge. Another hike is looming in 2025, driven in part by the multi-billion euro hospital transformation fund.

The long-term outlook is grim. Projections by the IGES Institute show pension contributions could rise above 21% by 2035, alongside 3.4% for unemployment insurance and 4.7% for long-term care. The German welfare machine is speeding full throttle toward a debt wall, dragging the federal budget down with it.

A Fiscal Capitulation

The 2026 budget marks a fiscal surrender by the Merz government. It offers no solution to the social insurance crisis.

Germany, once hailed for its sound budgeting and feared as the austerity enforcer during Europe’s last debt meltdown, is losing control over the financing of its bloated welfare state. With social deficits multiplying rapidly, the federal budget becomes a meaningless formality—soon to be patched up with endless supplementary budgets.

The only certainty is that Germany has entered an era of accelerated indebtedness. Political consensus is now bought with the sweet poison of cheap credit. The country edges closer to the political gridlock and debt spirals witnessed in France—where structural reform becomes all but impossible.

* * * 

About the author: Thomas Kolbe is a graduate economist. For over 25 years, he has worked as a journalist and media producer for clients from various industries and business associations. As a publicist, he focuses on economic processes and observes geopolitical events from the perspective of the capital markets. His publications follow a philosophy that focuses on the individual and their right to self-determination.

Tyler Durden Fri, 08/01/2025 - 03:30

These Are The Biggest Wartime Buyers Of Russian Fossil Fuels

China followed by India have been the two biggest wartime buyers of Russian fossil fuels, here defined as any oil, coal or gas purchased after Jan. 1, 2023.

Turkey was the third-biggest buyer while the European Union came fourth.

The economic bloc has attempted to wean itself off its dependency on Russian fossil fuels but has struggled to do so after 2022, especially when it comes to natural gas.

Timelines published by CREA show that EU reductions in purchases were very significant during the first year after Russia's invasion of Ukraine, but have struggled to make meaningful progress since.

At the same time, China, India and Turkey upped their buying in 2022 as Russian oil could be had at reduced rates.

Especially fossil fuel flows to India rose by a lot during that year, while Turkish purchases also soared recently. The biggest EU buyers were Hungary, Slovakia, France and Belgium.

As Voronoi reports, many rounds of sanctions were not enough to diminish Russian fossil fuel revenues due to a mix of global dependency on the major energy exporter and opportunism by non-alligned nations.

After different types of sanctions have been tried out by Western alliances to curb Russia's export income (often unsuccessfully), U.S. Senator Lindsay Graham on Sunday said that steep tariffs could be another option to pressure countries to abstain from buying Russian oil.

On Sunday, the lawmaker from the state of South Carolina said on Fox News directed towards India, China and Brazil: "We're going to crush your economy."

U.S. President Donald Trump had already mentioned this scenario last week on the ocassion of a visit by NATO Secretary General Mark Rutte, saying that "secondary tariffs" of 100 percent would come into effect for countries trading with Russia if no peace deal was reached within 50 days with Ukraine. 

A similar threat was leveled towards buyers of Venezuelan oil in March, but tariffs threatened only stood at 25 percent then.

Tyler Durden Fri, 08/01/2025 - 02:45

Calls Grow For Nationwide Islamic Education In German Schools

Authored by Thomas Brooke via Remix News,

Germany’s Association for Education and Training (VBE) has called for the introduction of comprehensive Islamic religious education in schools across the country, arguing that Muslim students should be offered the same opportunities as their Christian peers.

“We are committed to ensuring that all believers can talk about their faith within schools and receive relevant information about their religion and other religions,” said VBE Federal Chairman Gerhard Brand in comments to the RedaktionsNetzwerk Deutschland (RND).

He urged political leaders to ensure that schools are equipped with the necessary personnel and materials, and that programs are implemented quickly and expanded over time.

Islamic religious education is currently regulated at the state level, resulting in significant variation. In North Rhine-Westphalia, Islamic religious education is already offered in schools, while in Bavaria, a state-run Islamic studies course is available as an alternative to ethics. However, the Bavarian model does not include cooperation with Islamic religious communities.

According to estimates, around 5.5 million Muslims live in Germany, and at least 580,000 were attending school as of 2020.

Yet only around 81,000 students are currently enrolled in Islamic religious education programs.

Advocates say that expanding access to these classes is essential for integration and for protecting students from extremist influences.

The Turkish Community in Germany also welcomed the initiative but warned of political and structural hurdles.

“Islamic religious education is a must — just like Catholic and Protestant religious education,” said the group’s chairman, Gökay Sofuoglu. He called for educational standards to be aligned at a national level, while acknowledging the constitutional limits imposed by Germany’s federal system.

“We would need a nationwide Islamic cooperation partner. Unfortunately, that isn’t in sight at the moment,” he said.

Sofuoglu stressed that while the state must remain secular, it has a duty to ensure fair and equal treatment of religious communities. “I don’t know how this could be regulated nationwide,” he added.

Stefan Düll, president of the German Teachers’ Association, told the RND that “religious education in public schools, taught by teachers trained and state-certified in Germany, can provide a counterbalance to fundamentalist attitudes — mediated by the family or by fundamentalist preachers online.”

The debate over Islamic education is not just reserved for Germany. As the Muslim population across Europe grows, both support for and opposition to Islamic teachings have risen in multiple European nations.

In April of this year, Remix News reported how, for the first time, Muslim students had become the largest religious group in Vienna’s schools, underlining the incredible demographic transformation taking place in the Austrian city.

According to data obtained from the office of Bettina Emmerling, the city councilor responsible for education, Muslims now account for 41.2 percent of all students, while Christian students fell to 34.5 percent. The trend is only growing, and is accompanied by rising problems, including violence in schools, anti-Semitism, and contempt for women.

“Islam is changing our society in ways we do not want,” warned Christian Klar, a Viennese school principal, last October. He expressed concern over the “rapid Islamization” of Austrian schools, alongside rising violence and anti-Semitic incidents.

In January, it was reported that approximately 200 schools across the Spanish autonomous community of Andalusia now teach Islam as part of their curriculum, following the disclosure of official figures after a parliamentary request by the local Vox party.

The inquiry submitted by Vox Andalusia sparked political debate over the extent to which the curriculum is being catered to immigrants and the scope of influence a rising Islamic community now has on institutions across the region.

Read more here...

Tyler Durden Fri, 08/01/2025 - 02:00