The U.S. may have lost jobs in July, one Wall Street strategist says

It felt like a bit of a catch-up on Monday, with the Dow
outperforming the S&P 500
which outperformed the Nasdaq Composite
In any event, it broke a four-session losing streak for the S&P 500, though the August gremlins might be back out on Tuesday. More on that later.

But for the call of the day we’ll go way back in time to Friday — ancient history — when the Labor Department reported 187,000 jobs were created in July. Steve Englander, head of North America macro strategy at Standard Chartered, has been something of a jobs-report skeptic, previously noting the divergence between the payrolls report and the quarterly census of employment and wages. (The most recent data, from December, shows the payrolls report with 2.2 million more jobs than the more authoritative, but less timely, QCEW report does.)

What Englander finds fault with in the July report is the birth-death model. Each month the government surveys 122,000 businesses and government agencies, covering about a third of all workers, to come up with the job numbers produced by what’s called the establishment survey. But new companies pop up, as well as fail, all the time. Hence the birth-death model fills in the gap with its estimate for job creation or destruction each month.

Englander for these purposes is looking at the non seasonally adjusted numbers, which showed 182,000 private-sector jobs created in July. The birth-death model was responsible for 280,000 of them, which means existing companies got rid of 98,000 positions.

“The behavioral question is whether it is plausible that optimism on economic prospects led to many jobs being created at newly established firms when ongoing businesses were contracting. The BLS’ business employment dynamics data, which is based on administrative data rather than a model, tells us this is very unlikely. As is intuitive, job creation from new and existing firms tends to move together. This is the basis of our suspicion of excess animal spirits at BLS,” he said.

MarketWatch’s examination of the numbers does find months that the private-sector job creation of new companies is positive when existing companies are reducing workers, but it isn’t normal — five out of the last 27 reports when January figures are excluded.

Englander says the figures may be overstated by as much as 200,000 — and applying seasonal adjustment would leave private-sector job creation down by nearly 30,000. If he’s right about the overstatement, this also implies job openings data could be awry, since that report uses the headline payrolls data for alignment. And he says when the average of 12 months of private payrolls excluding births and deaths are near current levels, the average 12-month birth-death adjustment has been 35,000 to 60,000 jobs lower than it is now running.

The markets

A risk-off tone seems to be the flavor for Tuesday. U.S. stock futures

were lower, oil futures
dropped, and the yield on the 10-year Treasury
was back around 4%.

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The buzz

A big slate of earnings includes results from United Parcel Service, Eli Lilly
and Warner Music
with Rivian Automotive
and Upstart
reporting after the close. UPS stock
skidded on a reduced outlook while AMC Entertainment
reported earnings and revenue ahead of forecast.

Among Monday’s after-hours releases, Paramount Global
produced results ahead of forecast and agreed to sell Simon & Schuster to KKR for $1.6 billion, Palantir Technologies
announced a new $1 billion stock buyback and Beyond Meat
reduced its forecast.

Novo Nordisk
Lilly’s rival for diabetes drugs, said its Wegovy treatment also reduces cardiovascular events, by some 20% in a study.

Moody’s placed the credit ratings of six banks on review for downgrade and did cut the rating of several others, in which they blamed on interest-rate and asset and liability risks.

June trade data is due for release, after the advanced report said the deficit in goods narrowed by 4.4%. In China, its trade surplus of $80.6 billion for July was worse than the $70.6 billion that was expected.

Best of the web

Elon Musk calls the Cybertruck Tesla’s
best product. Here comes the test.

Even Zoom
is making employees go back to the office.

and EchoStar
may be merged, joining two companies both controlled by Charlie Ergen.

Top tickers

Here were the most active stock-market tickers as of 6 a.m. Eastern.


Security name


Palantir Technologies

AMC Entertainment



Tupperware Brands

T2 Biosystems




The chart

German exports to Kazakhstan, Central Asia and Belarus are surging, more than doubling over the last year. Now, the Kazakh economy did grow at a nearly 5% clip during June, but it seems that some of these exports may be headed to Russia, according to Robin Brooks, chief economist at the Institute of International Finance. He also points out German and Polish exports to Kyrgzstan are surging, as are Swedish exports to Kazakhstan. European Union countries sanctions are meant to prevent the export of cutting-edge technology, certain types of machinery, aviation goods and technology, dual-use goods and luxury goods to Russia, among other restrictions.

Random reads

The Baltimore Orioles took its lead play-by-play voice off the air after he accurately recalled the team’s losing ways in previous seasons.

A car crashed into the second floor of a house in Pennsylvania.

Hank the Tank, a bear (female it turns out) that broke into 21 homes, has been captured.

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