Geopolitics and Markets Review – 5th June 2023

Sections

1) US Jobs Data

2) Chinese Warship and US Destroyer Almost Clash, US and Chinese Jet Also Almost Clash

3) Saudi To Join BRICS Bank

4) Saudi Arabia's Production Cut

5) Other News

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US Jobs Data

The jobs market is a very interesting scene currently. A loss of jobs during COVID has seen 14 beats on Non-Farm Payrolls. Most of these are part-time jobs, but Biden can claim it as a win for those who don’t look deeper into the figures. This is also a sign of the times as those struggling with the cost of living have to take extra jobs to make it through.

NFP increased by 339,000 in May, versus a forecast of 180,000.

Unemployment rose to 3.7% versus a 3.5% forecast.

The market took this rather well. However, stronger than expected jobs data means the HOPE recession framework isn’t having a major impact on the “E” yet, employment. This could point the Fed to further rate hikes and hence less economic growth. We are close to the end of the hiking cycle, but strength will indicate strength and hence perhaps further hike to slow the economic system enough to combat inflation.

It's clear we need to look deeper still into the employment data.

Focusing on productivity. Dropped 2.1% last quarter. However, output increased by 0.5% and hours worked increased by 2.6%. So more people now are doing the same job that fewer people did a few short years ago. No wonder more people are employed.

https://www.bls.gov/productivity/images/state-productivity-chart.png

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Chinese Warship and US Destroyer Almost Clash, US and Chinese Jet Also Almost Clash

It's clear to most who keep up with geopolitics, that World War Three has already begun. As Biden spoke a few weeks ago, he stated he sees a thaw in the icy cold relations between the US and China. Perhaps he was reciting a dream when he made this statement. Since then, we’ve seen fighter jets attempting to spook the other country, and now the playing field has expanded to the maritime game board.