US jobs report and rest of economy disappointing. And Wall Street loves it!

Yesterday was the first Friday of the month, which meant it was time for a new US jobs report. And it added to several other pieces of evidence that show whatever bump we got from the GOP's tax-cut-and-spend moves in 2018 was fading fast.

Job creation decelerated strongly in May, with nonfarm payrolls up by just 75,000 even as the unemployment rate remained at a 50-year low, the Labor Department reported Friday.

The decline was the second in four months that payrolls increased by less than 100,000 as the labor market continues to show signs of weakening. Economists surveyed by Dow Jones had been looking for a gain of 180,000.

In addition to the weak total for May, the previous two months’ reports saw substantial downward revisions. March’s count fell from 189,000 to 153,000 and the April total was taken down to 224,000 from 263,000, for a total reduction of 75,000 jobs.

So when you take into account the downward revisions of the prior two months, we had the equivalent of ZERO new jobs in May compared to what we thought we had last month. In addition, wage growth was up a tepid 0.2% for May and is up less than 1.1% for 2019 so far.

And as UW's Menzie Chinn noted in a series of tweets yesterday, this lame jobs report the latest in a variety of figures that indicates the 10-year economic expansion is stalling out.

(2/3) #Investment (#equipment, #housing) declining...https://t.co/dtdXvH7DyJ pic.twitter.com/koKSgpyxPv

— Menzie Chinn (@menzie_chinn) June 8, 2019

(3/3) Real housing prices have likely peakedhttps://t.co/dtdXvH7DyJ pic.twitter.com/zLuLpSsloq

— Menzie Chinn (@menzie_chinn) June 8, 2019

CNBC also sounded the theme of "stumbling toward a downturn" following the release of the jobs report.

Broadly speaking, the report amounted to another dark spot amid fears of a larger sputtering in growth and perhaps a recession within the next year.

“While much of the attention from investors has been focused on trade disputes and the potential for a slowing economy, today’s disappointing employment report provides further evidence that the end of the business cycle is upon us and economic activity is slowing,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.

So what did Wall Street hedge-funders think of those numbers? Just as I predicted they would - they loved them.

Stocks jumped on Friday, building on strong weekly gains, as weak economic data increased the odds of easier monetary policy from the Federal Reserve.

The Dow Jones Industrial Average closed 263.28 points higher at 25,983.94, led by gains in Microsoft and Apple. The climbed 1% to 2,873.34 as the tech sector outperformed. The Nasdaq Composite gained 1.7% to 7,742.10....

Fed Chair Jerome Powell said Tuesday the central bank is “closely monitoring the implications of these developments for the U.S. economic outlook and, as always, we will act as appropriate to sustain the expansion.”

“You’re seeing this view to price in cuts, that things are going to be worse later this year, that the Fed is going to have to quickly change its cycle again, and that puts Powell in a tough bind here,” said Erik Bregar, head of FX strategy at the Exchange Bank of Canada. “In December, they were still talking rate hikes and now they’ve got to flip around to pandering to the market’s want for cuts.”

“There’s this view that Powell is going to come in for the rescue and it’s lifting everything,” he said. “The punch bowl is back in play.”

And now there's news that our "Tariff Man" president plans to stop putting duties on items from Mexico because of... something relating to immigration that likely won't change much of anything (much like how USMCA is really NAFTA, Part 2). Somebody is either scared of what the real economy would do to his already-low popularity...or he and his family are in on a pump-and-dump scheme. (Both possibilities are in play.)

Now that the GOP Tax Scam failed to produce any kind of sustainable growth (as we all predicted), apparently the strategy now is to keep this bull market and expansion going is hoping the Fed will drop interest rates and form another Bubble. Then keep things afloat just long enough so that we don't fall into recession and noticeably higher unemployment over the next 18 months.

And by making the Bubble large enough, it increases our already-crippling inequality to the point that when it inevitably pops, the resulting downturn is worse than it would have been if it was smartly managed today. It's remarkable to see the masters of our economy making the same mistakes we've seen over and over for the last 30 years.

You know, unless it's not a mistake, and merely the intelligence of the oligarchs' designs.