ARC Radio 6.5.26

Well, Charles, it's Jobs Day, and government and private sector entities hired 172,000 more people in May.

So 172,000 people have new jobs.

It's a surprisingly strong number.

I was considering this in light of the fact that the S&P as of yesterday is up 5% over the past month, despite the energy shock and what is likely to be a more elevated interest rate curve on risk-free rates.

So my takeaway from the past week is financial conditions are easy.

Fed policy seems to be easy.

And I was going to ask you if there was any room for doubt about Robert Lucas's great teaching that we should never guess the collective mind of the market, that it's probably right.

But today I have my answer, and that answer seems to be no.

What do you think?

I think the most important takeaway for President Trump is it's better to be lucky than smart.

So AI has, as everyone recognizes now, was a kind of hidden ship passing in the darkness of all these terrible shocks that we were experiencing with the war, the oil prices, tariffs, stupidities.

And all this time, this productivity growth has just been working to maintain the economy despite it being buffeted by those other things.

Not something that anyone planned, kind of like your Lucas quote, but the market somehow has perceived it, and the market's been right so far.

I'm not saying that going forward these frothy prices will continue, but it's really been remarkable.

We've had three months of not just positive, but growing growth.

from one month to the next jobs.

And it's solidly, if you look at this jobs report, the private job growth is also remarkable and beat forecasts.

The private job growth was 110, forecasted.

Actual, I think, was 122.

And if you look at it, it's broad-based.

It's not just healthcare.

It's pretty much 90% of the sectors are showing job growth.

So we haven't really seen these three consecutive months of growing jobs really for over a year.

And so it seems to me that we kind of have to recognize alongside growth in business fixed investment and the steady growth of consumption despite sort of failing growth in disposable income.

The consumers are also optimistic.

Well, Charles, it's Jobs Day, and government and private sector entities hired 172,000 more people in May.

So 172,000 people have new jobs.

It's a surprisingly strong number.

I was considering this in light of the fact that the S&P as of yesterday is up 5% over the past month, despite the energy shock and what is likely to be a more elevated interest rate curve on risk-free rates.

So my takeaway from the past week is financial conditions are easy.

Fed policy seems to be easy.

And I was going to ask you if there was any room for doubt about Robert Lucas's great teaching that we should never guess the collective mind of the market, that it's probably right.

But today I have my answer, and that answer seems to be no.

What do you think?

I think the most important takeaway for President Trump is it's better to be lucky than smart.

So AI has, as everyone recognizes now, was a kind of hidden ship passing in the darkness of all these terrible shocks that we were experiencing with the war, the oil prices, tariffs, stupidities.

And all this time, this productivity growth has just been working to maintain the economy despite it being buffeted by those other things.

Not something that anyone planned, kind of like your Lucas quote, but the market somehow has perceived it, and the market's been right so far.

I'm not saying that going forward these frothy prices will continue, but it's really been remarkable.

We've had three months of not just positive, but growing growth.

from one month to the next jobs.

And it's solidly, if you look at this jobs report, the private job growth is also remarkable and beat forecasts.

The private job growth was 110, forecasted.

Actual, I think, was 122.

And if you look at it, it's broad-based.

It's not just healthcare.

It's pretty much 90% of the sectors are showing job growth.

So we haven't really seen these three consecutive months of growing jobs really for over a year.

And so it seems to me that we kind of have to recognize alongside growth in business fixed investment and the steady growth of consumption despite sort of failing growth in disposable income.

The consumers are also optimistic.