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Americans line up for job fair.
Americans line up for job fair (Joe Raedle/Getty Images)

Jobless claims jump up to highest levels of the year

Slow softening in labor market continues, but some think we are hitting a "sweet spot"

Luke Kawa

The number of Americans filing for initial jobless claims for the week ending July 13 popped up to 243,000 in seasonally adjusted terms, tying their highest level of the year.

But with the pandemic having wreaked havoc upon the typical seasonal patterns of spending, hiring, and firing, I’ve tended to look more at the raw, unadjusted jobless claims compared to years prior to get a sense of how the labor market is evolving.

For the first time this year, jobless claims are higher than they were, on average, from 2015 to 2023 (stripping out 2020 through 2022 in light of COVID-induced distortions).

The impact of Hurricane Beryl is putting some idiosyncratic upward pressure on initial jobless claims — Texas’ figure rose by 11,537 last week (compared to an increase of just 1,267 during the same period in 2023). And of course, jobless claims remain near historical lows in outright terms or when adjusted for the size of the labor force. The labor market is still in a very solid position, all things considered.

One thing you’ll notice is that this early summer period is a time when claims tend to climb. But one feature of the post-pandemic labor market has been the tendency for lower filings during times when they tend to seasonally pick up. Just look at the start of the year, after the holiday shopping season is over: unadjusted jobless claims have been way lower in 2023 and 2024 than they were, on average, during the five years preceding the pandemic.

This is part and parcel of a “labor hoarding” dynamic – as the economy reopened with incomes in good shape but supply still constrained, companies scrambled to staff up and meet demand. Employers still seemingly cognizant of, if not scarred by, that episode: the layoffs and discharge rate remains quite depressed. Overall, labor churn — both hiring and firing — is low.

A return to more seasonal patterns of layoffs is worth monitoring going forward, as it could be an indication that the “labor hoarding” fever is breaking, and companies are more willing to find ways to trim headcount and costs to adjust to the slower nominal growth environment.

“One development in the past few months with significant implications for monetary policy is that labor supply and demand have finally come into rough balance,” said Federal Reserve Governor Christopher Waller in a speech on Wednesday. “But we need to keep the labor market in this sweet spot.”

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Nike sinks to lowest level since 2014 after warning of “challenged” sales environment in Q4 report

Did Nike do it?

Investors had a mixed reaction after the global sports apparel company reported its fourth quarter earnings on Tuesday after the bell. Shares initially rose 5% as Nike beat out Wall Street expectations amid a hefty tariff refund bonus. However, the stock then sank to its lowest level since August 2014 in postmarket trading.

Here are the Q4 numbers:

  • Revenue of $11.0 billion (estimate: $10.8 billion).

  • Adjusted earnings per share of $0.20 (estimate: $0.12).

Ahead of this report, Nike warned that results would be flattered by a one-time tariff refund (now estimated at roughly $0.52 per share for the bottom line). That gave the company an extra cushion in snapping its streak of seven quarters of year-over-year profit declines.

Over the past year, the company had been punished by tariffs on imported goods, stagnant consumer spending, and increasing competition from other footwear brands like New Balance, Adidas, and Hoka.

Outgoing CFO Matthew Friend deemed it an “increasingly challenging operating environment, where sell-through remains challenged.”

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Rocket Lab deal lifts space stocks

Shares of Rocket Lab are surging after announcing an $8 billion acquisition of satellite communications operator Iridium Communications, helping lift a broader basket of space-related stocks as investors piled back into the sector.

Planet Labs, AST SpaceMobile and Redwire all traded higher alongside Rocket Lab, extending gains in an industry that has drawn enhanced investor attention in recent months in light of the strategic importance that governments place on space and satellite communications infrastructure.

In a presentation, Rocket Lab’s management called the purchase “a shortcut” for its satellite communications business.

Under the terms of the agreement, Iridium shareholders will receive $27 in cash and Rocket Lab stock, valuing Iridium at $54 per share. Backed by a $3.6 billion bridge loan committed by Deutsche Bank and Wells Fargo, Rocket Lab absorbs Iridium’s globally licensed spectrum and an active base of 2.5 million subscribers.

Rocket Lab has also remained one of the most active launch providers in the sector. The company completed its 12th launch of the year last week, maintaining one of the highest launch cadences among commercial space companies.

Today's rally helps offset a brutal stretch for the group. Rocket Lab shares had fallen over 35% over the prior month, while Planet Labs stock was down more than 40% and AST SpaceMobile stock was down around 30% over the same window.

markets
Jake Lahut

Comcast shares rise on news of NBCUniversal spinoff deal

Comcast rose on the news that the telecom behemoth is spinning off NBCUniversal and Sky from its cable portfolio. 

Comcast initially jumped up to 17% in early trading, with the deal leaving management to focus on its core verticals of cable, wireless, and business services. 

NBCUniversal and Sky will form a new publicly traded company, similar to Versant Media, the holding company of CNBC and MS NOW that Comcast officially spun off in January. Bravo, one of the most lucrative properties that remained at Comcast, will remain part of NBCUniversal in the deal. The Universal theme parks and studios will also come with the new spinoff entity, along with Telemundo and Peacock.

Mike Cavanagh, the co-CEO of Comcast, will become the CEO for NBCUniversal, according to CNBC. 

The spinoff will be completed in about a year, according to a Comcast company statement. Its shareholders will also own shares in NBCUniversal, according to the same statement.

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