The January jobs report saw really strong jobs numbers coming out of that well above what analysts expected. John Traynor, Executive Vice President and Chief Investment Officer at People's United Advisors explains what such a positive report could mean for the markets in both the long and short term and whether or not this could be a  turning point for the labor market. 


Wake Up With Cheddar

January Jobs Reports Brings Surprise to Markets Ahead of Inflation Numbers 

So for more in the markets, let's bring in john traynor, Executive vice president and chief investment officer over at People's United advisors. Great to have you here. Thanks so much for joining us this morning john friday those jobs numbers just out of the park in terms of what we were expecting here, what does such a positive report mean for the market's in both the long and the short term and maybe it's just a turning point for the labor market here. You know that that you're correct. The number was just a blowout number. One of the things that really we, we took a look at was the wage number wages were up 5.7% year over year, the the participation rate did increase a little bit. So we were able to pull some people in off the off the couch, which was very good. We need to see that continue. We need to see that participation rate go up. But one of the things that I think really scared the Fed other than that headline number was the wage number. If we start to see the the wages really impact the inflation number well then, you know, the the hope that we will see inflation get back to a more manageable level fairly soon once once we get through the winter that that that thesis may may run into some problems. And I really think that's what the Fed is going to be focused on that wage increase number, we'll talk about inflation here in just a second. But do you think friday's numbers change sort of the calculus of what the Fed potentially might do in March, like if the Fed is is considering raising interest rates in March by even a quarter percentage point does what we got on friday change any of that maybe. Well, I think what the Fed is worried about is that they're behind the curve, you know, they they clearly should have stopped at least stopped the bond buying program last year. So the Fed is is looking at that that that employment growth number, that unemployment number and they're saying, oh boy, you know, we we've let the genie out so there's a good chance, you know, our our bond team is preparing themselves for a half point increase. The key thing though is does the Fed in their statement communicate that it's a half point but they believe they have inflation under control if they think that that boy, you know the employment situation is really going to continue strong And that they're panicking then I think then I think the financial markets are going to get very, very, very upset at that at that prospect. Okay, so when we get the consumer price index numbers on Thursday, as I mentioned, analysts may be thinking that 7.2% increase, the highest number we've had since 40 years. Does that what does that sort of tell you about inflation in this country? Do you expect that then we're not gonna be able to get inflation under control at least for the rest of the year if we're getting these numbers like this. Yeah. I mean the inflation numbers were saying hark back to when I was in college. I mean it's amazing. You know, we're back to where we were in the early 80s. So you're hitting the nail on the head though, you know, we definitely believe january's number will be will be high. The number we see this week, february's number could actually be a little bit higher. So unfortunately when the Fed meats in March, those are the only two numbers that they're going to have. We do believe you're going to start to see inflation go back down. The key thing is when what what is that neutral rate? We think that neutral rate where we settle will be higher because of wage inflation. We don't think we're gonna go back to remember that, you know, we were we were wrestling with 2% not too long ago. We don't think we're going to get there. We think that neutral rate is probably going to be higher. So that's going to continue putting the Fed under pressure to get inflation down, john, depending on what happens with the situation in Ukraine, it seems like it changes and is developing by the hour If we do see a full on military invasion of that country. Do you think that complicates the markets here or do you think investors are looking at things beyond that. You know, I'm actually fairly, pretty surprised actually that what's going on in Ukraine is it's incredibly serious, but it doesn't seem to have roiled the market. Uh, you know, we've got the german chancellor over here this week, we've got Macron in, uh, in, in Moscow. So, you know, I think the market is looking at this saying gee, it looks like we'll be able to, to tamp things down, but you hit the nail on the head if we do get military action. Um, I don't think it's been factored in. So I think you'd see a pretty good pull back. You'd probably see bonds rally normally. You know, there's a flight to quality. So you probably see stocks down, You'd probably see the Treasury market rally here, but I don't believe it's really factored in by investors. Yeah, I'm in the same boat with you. I just think it's so interesting that it hasn't literary futures have not moved anything regarding any sort of development that's happening over there, john traynor is such a pleasure to have you here this morning. Executive Vice President and Chief Investment Officer over at people's United advisors joining us this morning