With the U.S. presidential election weeks away, plenty of volatility catalysts could shift the market despite its solid performance year-to-date.
Cracks in the system have been appearing in recent months. We dive into three: a weakening labor market, Warren Buffett's cautious stance, and the potential presence of structural inflation.
Labor Revisions Flash Alert
After last month's labor revision that saw 800,000 fewer jobs added, the August U.S. payroll report came lower than expected at 142,000.
Still, revisions from previous months paint an even worse picture.
July's payroll figure was revised from 114,000 to 89,000, and June's number nearly halved from 206,000 to 118,000. This data suggests that the labor market is weaker than expected. It raises questions about whether the August report has been overstated, too.
Furthermore, the Sahm rule, a recession confirmation tool, has been validated. After a 0.53 reading in July, the data ticked up to 0.57 in August, moving deeper into recession territory.
Sahm rule and recessions, Source: Real Investment Advice
Meanwhile, the yield curve has uninverted, with the two-year Treasury yield falling below the 10-year — a move that historically ...
