The Labor Market and Bitcoin

Hey everyone, and thanks for jumping back into the macroverse. Today, we're going to talk about the labor market and Bitcoin. If you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and also check out the sale on Into the Cryptoverse Premium at into the cryptoverse.com. Let's go ahead and jump in.

So, unfortunately, we don't have as much to report this week on the labor market because, due to the US government shutdown, the BLS is not releasing the data. So, while expectations for the unemployment rate for this month were about 4.3%, we didn't actually get an update, so we don't fully know.

With that said, there are other, there's other data that came out this past week before the government shutdown, and the Chicago Fed actually released their own estimate of the unemployment rate. So, if you go look at what they think the unemployment rate was for the month of September, they think about 4.34%. Okay? And, um, last month, you can see 4.32%. So, obviously, we can't fully know for sure, like, what it's, what it was, what it, what it will ever be because I don't know how long it's going to take to actually get the next, the, you know, the data for the next data point. But it is interesting to know that 4.34% is where the Chicago Fed has general estimations.

If you look at the distribution of probabilities, if you look at the probability of where the unemployment rate would be, you can see the most likely outcome for the Fed, or for the Chicago Fed, for the month of September, 28.2% likely no change. You can see though that there is a slight bias to the upside, right? Like, it leans more towards 4.4 than it does 4.2. And that's, you know, indicative of the fact that it came in at 4.34%. You know, it's, I mean, it's almost high enough to just be rounded to 44. So, you can see it's definitely skewed higher than, than going back down. So, there's still some softening in the labor market, but still, all in all, you know, it's, it's moving up in a, in a fairly, um, predictable way. I think again, I think estimations were 4.3 for this month before they just got taken off the table because they're not going to release it, and essentially this would round to 4.3%. So, no big surprises, uh, by the labor market in terms of the unemployment rate.

If you go look at some of the other stuff we got before the government shutdown, I believe we got job openings early on in the week. So, if you look at job openings, uh, they actually went up a little bit from 7.21, 21 million to 7.23 million. So, job openings are, are they've essentially been steady for a while, like about a year now. Like, if you were to apply a moving average, a 3-month moving average, they're mostly steady. I mean, I guess you could argue it's been going slightly down, but hasn't really moved a whole lot. Um, if you look at job quits, that actually did drop back down to cycle lows of, of 1.9%. This is something that a lot of people think like, if, if it goes down, it's a good thing, but in reality, if, if the quits rate is going down, it represents that people are unable, or they're not willing to leave their job for whatever reason. Now, we can make up whatever reasons those might be, but usually people are less likely to leave their job if they are fearful that they can't find a new one, or if they have not already been able to find a new one.

Layoffs still remain relatively low. In fact, they decreased. They actually decreased last month. Um, so again, the narrative is that the labor market is very, very weak, but reality would say the hiring is weak. Openings, job openings are weak. So, if you're a new grad, good luck out there because it's a tough market. There's not a lot of people hiring. If you have a job, up until now, layoffs are still fairly normal, right? Like, they're basically just at pre-pandemic levels. Nothing too crazy, which again, you could argue is the reason why risk assets continue to climb the wall of worry until layoffs actually start. There's always going to be some reason, you know, for, for the optimism.

We did not get initial claims data, um, this week, but I did want to provide an update because the last time I believe we talked about initial claims data was before the rate cut, and it was when initial claims spiked to 264,000, and we said, let's just hope it's a one-off spike and it comes right back down, and it has. I, you know, I, I don't really think there's a major reason to get concerned about initial claims until they're printing 300K. We've had a lot of spikes up, um, and they just came back down. My guess is that by the time we actually do get a spike up and it doesn't come back down, no one's going to be thinking it because all the prior spikes have come back down. It's almost going to be like the boy who cried wolf, right? Like, there's been so many spikes to the upside that then just get faded. By the time it actually happens, probably no one will actually believe that it's happening, you know? Um, something to think about.

Uh, if you look at, like, job postings on Indeed, you know, that continues to, to slowly drop. I don't really expect any major changes over there. But one of the interesting things, um, that we've talked about before is, is looking at, like, some of the maps that we have, like, if you look at, like, a map of states where the unemployment rate is rising over the last month, you can see that, you know, there are a few states where it has, it went up, but most of the country is still relatively okay. Now, if you look at over the last six months, over the last six months, you can see there's 23 states where the unemployment rate has been going up, but that means there's 27 where it hasn't. And as always, the markets will always look for a reason to be optimistic. They won't look for a reason to be pessimistic, generally speaking, right? Markets go up more often than not, and so when they go down, they usually need a reason, especially if it's going to be a longer down period, and the unemployment rate, right, this is not giving the market that reason, not yet.

To give you an idea of what I'm talking about, if you actually look at prior recessions, um, you can see that, you know, essentially the whole country had an unemployment rate that was rising, right? That's when the market can't ignore it, right? This is September 2008. If you go to, so, November of 2001, when we were back then, we had a recession as well. When the entire country has an unemployment rate that is going up, that's when the market notices, and that's when the market cares. If it's just pockets, and if you play this, right? If you play this since April 2021, now we're in 2022, right? There's always some pocket that is doing okay. It hasn't been the whole country, right? And at some point, if it becomes a whole country, right, that's when you actually have your, um, your recession, but that is not what we have seen up until, up until this point.

Um, there were, you know, there, there might, there was some other data released. The only other thing that I, I definitely want to talk about, um, I believe is the non-farm private payroll employment coming out of the ADP, the Automatic Data Processing Research Institute. More often than not, I don't put a lot of weight into the ADP. And the reason is because the market doesn't really seem to have reactions to it in the same way that it has reactions to the BLS data. But when this is all we have, right, when we don't have, you know, the employment level from the DLS, this is kind of like the next best thing. Um, and, you know, what's interesting is that, you know, it has started to roll over here. In fact, the last month, which was previously positive, got revised negative to -3k. I think originally it was like over 50k or something, and then this past month is -32k. So, you know, back in the summer, we had a single negative month. Now we have two negative months. We also had a negative month back in March of 2023. You can see that, well, I guess there's not really a lot of data, uh, from prior recessions, but you can kind of see the tail end of maybe this one back in the 2008, 2009 recession. Even in 2010, it was still negative. And then going into the, you know, the, the pandemic, it started to flash negative, but then it, the market didn't really care until it really went negative. So, we are seeing some negative numbers, which is not a good thing. Um, but it needs to be, you know, sort of corroborated in, in other areas as well.

And when you don't release the data, you know, I guess you can solve the weak labor market with this one simple trick. If you don't release the data, then you don't have a bad number. Um, so it's kind of like a, I guess it's kind of like a good narrative potentially for, uh, for Bitcoin to go into maybe its market cycle top, uh, in Q4, which is what, what it normally does. And, and if we don't get a, a reading for a while, maybe by the time we do get a reading, it'll be a big jump, and then the market will have like a negative re, you know, much more negative reaction to it because it will be over, you know, it, it'll be more than just one data point worth of of data. It'll be maybe potentially up to two or more. I have no idea how the, how long the shutdown's going to last. Hopefully, it's over soon, but I, I honestly have no idea.

Um, you know, one of the last ones that we had back in 2018 lasted for 34 days, right? So, if this one lasts for 34 days, that'll last into the next labor market released as well, right? So, um, and then I think, I think I heard, I don't know if it's true, but I think I heard that like, even once the government shutdown is over, they then still need to go out and actually collect the data. So, who knows when we're going to get another updated data point. Um, but we'll just take it one day, one day at a time.

Um, the other thing I wanted to mention is if you look at construction in the non-farm private payroll, like that one is starting to, to slow down a little bit. Um, I would look at a year-over-year change and see that it is starting to go down. It's not negative, right? Like, it's not, uh, but it's just something to keep an eye on. It was also going down back over here in 2023, and then it ended up bottoming out around these levels and going back up. So, hopefully, it does do that. Uh, but we'll keep an eye on it.

Other than that, I, I think a lot of this stuff we didn't get updates on, right? Like, total temporary health service employees, no update on it. Uh, if you look at the employment level, right, no update on it. If you go look at, at construction there, u, you know, you certainly can see that it, it looks like it's plateauing up here, which is not a good thing. Um, but again, the business cycle takes a long time to play out, right? If you look at, like, the year-over-year change, it, it's not negative, but it's, I mean, it looks like it's heading that direction. And so, you know, at this pace, within a few months, it, it will turn negative. Um, or I guess if they don't release the data, then it won't, right? So, at least no one will know about it.

As far as Bitcoin is concerned, you know, one of the, one of the really interesting things is just how similar this has been to a lot of the prior post-election years. Uh, if you look at 2013, and I'll do another video probably just talking about this, but 2013, same idea, right? You have a high in August or so, and then you get that low late September, early October, and then you go into the market cycle top. And also, by the way, this rally into the market cycle top also started during a US government shutdown in 2013. Um, if you look at the next cycle in 2017, you have the local top there in August, a low in September, and then a rally into the market cycle top. Very similar thing, right? And then the rally started the last week of September, right? Like, it started the last week of September, and, and we just kept on on going. Um, and then if you look at 2021, you can see that the rally started, uh, the last week of September. Now, in that case, there was a wick down back to the 20-week moving average before we had that move, and we haven't seen that. But I mean, in order to go back down there, Bitcoin would have to sell off by about $10,000. And I don't know if that's going to happen or not. Um, but what I do know is that this still actually looks a lot like 2020, where you have a very similar move. You have your sort of Q1, Q2 capitulation low, up, sideways before the 21-week catches up, you go up, sideways down, two-week rally, two-week dump, and then your Q4 rally. Right? Same idea. So, you have your, your, your Q1, Q2 dump, up, sideways before the 21-week EMA catches up. Go up, sideways down, two-week rally, two-week dump, and then you're potentially starting that rally, uh, into the market cycle top. So, um, very, like, really interesting in terms of the similarities between this cycle and 2020, also playing out very much like what we saw back in 2013, 2017, and 2021.

You know, if there is another wick down, hopefully, you know, hopefully, it, it holds as support. Remember what we said in September that the goal was to basically hold the bull market support band as support, and we did that. We didn't even have to deal with the 50-week moving average in, in September. Interestingly though, the 50-week moving average is now at 100K, right? So, I, I mentioned that we this week should see it hit 100K. Remember, the cycle is likely over after we get weekly closes below the 50-week moving average. So, from this point on, you could just simply argue that whenever we get a weekly close below 100K, um, cycle's over at that point. Uh, but as long as we are above the 20-week estimate, it's not even really something we need to be overly concerned with. Um, but those are my views.

Unfortunately, we don't have more to discuss as far as the labor market goes, just because, well, they didn't release the data. So, uh, hopefully, they release it for, for the next month, and we can get back on track with, with looking at this stuff. But again, if you guys like the content, make sure you subscribe to the channel, give the video a thumbs up, and check out the sale on Into the Cryptoverse Premium at into the cryptoverse.com. I'll see you guys next time.