Peter Boockvar

On the heels of the big upside January jobs report a few weeks ago and in stark contrast, easily the most sobering commentary I’ve heard all week was from the CEO of ZipRecruiter, Ian Siegel, in his shareholder letter, conference call and on CNBC yesterday. This is a major online recruiter so take note. In his letter, “With an increasingly uncertain macroeconomic backdrop, employers have moderated their hiring plans and reduced their recruitment budgets in the first weeks of the year. Online job postings in our marketplace remained in line with the low point of the 2022 holiday season, rather than following the longstanding seasonal pattern of beginning a run-up in January. The weakness in 2023 is more pronounced among small and median sized businesses than among larger enterprises (SMBs). As a result, January’s revenue was down 15% y/o/y.”

On the earnings call, “clearly, we’re in a macroeconomic slowdown. And online recruiting has effectively cooled across the country especially among SMBs. So if you look at other job companies at our scale, they’re delivering the same message that we’re delivering today. And similarly or correspondingly to what you would expect from a macro slowdown, we are seeing a surge in job seekers. When there are less jobs, it’s going to take these job seekers longer to find work and that is, in fact, what we are seeing. So based on that backdrop, we made the assumption using the information that was available to us at the time from January that there’s going to be as softer hiring environment throughout 2023. We don’t have a better prediction than that.” 

On CNBC, “the reality is right now is there is a very large delta, and it is growing, between open jobs that are posted and open jobs that employers are willing to pay to recruit for. We’re very much seeing a posture amongst the employers in America of all sizes and across all job categories of what I would describe as ‘wait and see.’ 

More on those job seekers, “the golden age of job seekers is coming to an end. For the last 3 years it has been an unprecedented time for job seekers to make a number of demands on employers but we’re definitely seeing a rebalancing of the labor market where the leverage is becoming equalized. 

Moving on, the sharp sell off in stocks on Tuesday following the late week drop pre 3 day weekend resulted in a sharp drop in Bulls in the AAII data seen today. Bulls fell 12.5 pts w/o/w to 21.6 and that is a 7 week low. Bears jumped 9.8 pts to 38.6 and that is the most in 6 weeks. Not capturing the Tuesday fall in stocks, the Investors Intelligence survey saw Bulls fall a touch to 44.4 from 45.1 but Bears fell too, by .4 pts w/o/w to 26.4. The CNN Fear/Greed index touched 80 a few weeks ago and closed at 62 yesterday. Bottom line, it just never fails that just as many get bulled up, the market has already made its move and in the bear market we are still in, until proven otherwise, that becomes more dangerous. 

The Bank of Korea held rates unchanged at 3.5% as expected but the Governor still said the rate hiking might not be over. “I hope the hold this time isn’t going to be seen as meaning the rate-hike stance is over.” 

The February UK CBI retail sales index improved by 10 pts but is still below zero at -12. The CBI said “Whilst retail sales volumes were largely unchanged in the year to February and slightly above seasonal norms, firms remain pessimistic about their business outlook and are bracing themselves for yet another fall in sales next month.” Falling real wages continue to be the damper on the UK economy. This data point is never market moving. Gilt yields are higher again though as BoE member Catherine Mann said rates need to go higher still. The 2 yr yield is was last seen in mid October at 3.96%. The FTSE 100 is down .25% while the pound is little changed. This market remains one of the cheapest in the world at 11x 2023 earnings estimates and with a 4.1% dividend yield. One reason is the heavy contribution of energy and financials.