We get the August jobs report tomorrow.
What's the one thing the Fed has threatened, dating back to March?
They are explicitly attacking jobs.
The Fed doesn't have the tools to deal with the policy and pandemic-driven supply disruption/destruction (which has driven prices higher). So the Fed has targeted employment, as a tool to influence demand lower.
With that in mind, a weak number tomorrow would be considered a positive for markets (i.e. it would calm the rate hike hawks).
So what should we expect?
The previous jobs report for July was hot (at 528k new jobs).
Tomorrow, the market is expecting a lower number of about 300k new jobs added for August. But that would still be a hot number, quite a bit higher than the average monthly job growth of the decade preceding the pandemic (which was 193k/mo.).
For clues, we can look at the ADP jobs report which came in on Wednesday.
It was weak. In fact, it showed the weakest job gains since the start of 2021, noting a "more conservative pace of hiring."
Again, a similar weak report from the BLS (Bureau of Labor Statistics) tomorrow would be a positive for markets (bad news is good news).
With the sharp bounce in stocks today, there seemed to be some positioning for this scenario.
Let's take a look at the chart on stocks …