💰 Non Farm Payrolls Shock: Jobs Blowout or Bust?

Good Morning!

The markets are on a wild ride, and it's not over yet. A softer ISM report on U.S. manufacturing has investors sweating bullets about the economic outlook. The Fed's September rate cut? Yeah, that optimism just flew out the window. Now we're looking at a possible 50-basis-point cut, as traders worry the Fed might be falling behind. Stocks are taking a nosedive, while the yen and Swiss franc are basking in safe-haven glory. All eyes on tonight's U.S. nonfarm payrolls report!

In today’s email:

• Fed Watch: All eyes on Non-Farm Payroll today

• Bitcoin: Bitcoin plunges, barely hanging onto $64k

• BoE: First rate cut in 4 years

• Gold: Strong as a bull!

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THE BIG IDEA

July's job report expected to show slow but steady growth, potentially paving the way for a September Fed rate cut

The U.S. job market is doing its best impression of a slow-motion roller coaster. July's employment report, dropping tomorrow, is expected to show a healthy but modest increase of 175,000 jobs. That's down from June's 206,000, but hey, who doesn't love a good coast after a thrilling climb?

Now, before you start sweating about that 4.1% unemployment rate (a 2.5-year high), take a deep breath. Experts say this isn't your grandpa's job market crisis. We're looking at a "normalization process," not a full-blown meltdown. It's like the economy is gently applying the brakes after a wild joyride.

Hurricane Beryl crashed the party during the survey week, potentially knocking out up to 30,000 jobs. But don't fret - those positions should bounce back faster than you can say "weather-related anomaly."

Here's the juicy part: wage growth is expected to hit its slowest pace in over three years

Music to the Fed's ears as they eye that elusive 2% inflation target. It's looking more and more like September could be rate cut o'clock!

Immigration has been throwing some curveballs, boosting the labor supply and keeping unemployment ticking up. But here's the kicker - layoffs are still historically low. We're not seeing the usual domino effect of job losses leading to reduced spending and more pink slips.

So, buckle up for tomorrow's report. It might not be a heart-stopping thrill ride, but it could be the green light the Fed needs to ease off the economic brakes. The labor market may be cooling, but it's far from frozen.

MARKETS AT A GLANCE

TOP NEWS

Economic concerns resurface on Wall Street, threatening the US stocks rally as investors worry about prolonged high interest rates

After months of high-fiving over cooling inflation and slowing employment, investors are now breaking out in a cold sweat. The Fed's potential September rate cut? It's looking more like a double-edged sword. Fears are growing that we've kept rates too high for too long, and it's starting to sting. Thursday's weak labor and manufacturing data sent stocks into a tailspin, with tech taking a particularly nasty tumble. Keep your eyes peeled for Friday's jobs report – it could make or break this rodeo.

Central banks signal rate cuts, prompting a rush to lock in high bond yields before they potentially disappear

Surf's up, bond lovers! The central bank dam is bursting, and there's a mad dash to ride the wave of high yields before they vanish. The Bank of England just cut rates for the first time in four years, with the Fed hinting at a September trim. Two-year Treasury yields have nosedived 50 basis points in a month, hitting February lows. With $6.14 trillion parked in U.S. money market funds, the question is: stick with cash or chase those juicy long-term yields? The bond market's betting on a tsunami of cash flowing into longer-dated securities. Time to wax your surfboard?

Warren Buffett's Berkshire Hathaway sells $3.8 billion of Bank of America shares, remaining the largest shareholder

The Oracle of Omaha is trimming his banking buffet! Warren Buffett's Berkshire Hathaway has been on a Bank of America selling spree, offloading a whopping $3.8 billion worth of shares since mid-July. But don't panic - Buffett's still the biggest fish in BoA's pond, holding a 12.1% stake worth a cool $37.2 billion. This comes after the bank's stock price surged by two-thirds since October. Is the legendary investor seeing something we're not, or just taking some profits off the table? Stay tuned for Berkshire's earnings report this Saturday for more clues.

CRYPTO

Bitcoin plunges over 10% from recent $70K high amid economic data and shifting political landscape

Hold onto your crypto wallets! Bitcoin's taking a nosedive, dropping from $70K to $62,700 in just 72 hours. Weak economic data and Trump's fading election odds are spooking investors. With Harris gaining ground, the crypto-friendly future Trump promised is looking hazier.

MicroStrategy's Q2 earnings show massive Bitcoin holdings, but significant losses

MicroStrategy's Bitcoin bet keeps growing! They've scooped up another 12,222 BTC, bringing their total to 226,500 ($14.7B). But it's not all crypto sunshine - they posted a $123M net loss in Q2. Despite this, they're eyeing more purchases with a $2B equity offering. Crypto rollercoaster, anyone?

Russia pushes for CBDC adoption and crypto integration amid sanctions

Russia's central bank chief Nabiullina predicts widespread digital ruble use by 2031, citing free transfers and lower fees as key drivers. Meanwhile, the country is advancing crypto legislation, legalizing Bitcoin mining and exploring stablecoins for international trade. These moves aim to navigate sanctions and boost cross-border transactions. Russia's digital financial landscape is evolving rapidly, balancing innovation with regulatory control.

U.S. crypto ETFs see mixed flows as market sentiment shifts

U.S. spot Bitcoin ETFs netted $50.64 million inflows Thursday, led by Grayscale's new Mini Trust. Ether ETFs rebounded with $26.75 million inflows after Wednesday's outflows. Grayscale's GBTC saw significant outflows, while BlackRock's funds attracted capital. Trading volumes varied, with Bitcoin ETFs at $2.91 billion and Ether ETFs at $331.11 million. The crypto ETF landscape continues to evolve, reflecting shifting investor appetites in the digital asset space.

GOLD

Four Key Drivers for Higher Gold Prices

Gold prices are expected to rise, driven by four key factors: ongoing central bank buying, geopolitical tensions, persistent inflation concerns, and a weaker US dollar. Central banks are increasing their gold reserves, while geopolitical instability and inflationary pressures enhance gold's appeal as a safe-haven asset. Additionally, a declining dollar supports higher gold valuations.

DAILY ECONOMIC CALENDAR (ET)

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