📈 The US can't keep this up forever, can it?

Hi Reader, here's what you need to know for July 11th in 3:03 minutes.

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Today's big stories

The US just keeps adding to its jobs tally
Goldman Sachs thinks European companies are sitting on a stock-boosting weapon – Read Now
Airlines need big jets again, and Rolls-Royce is here for it

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What’s Going On Here?

Data out on Friday showed that the US added more jobs than expected last month.

What Does This Mean?

The US had replaced pretty much all the jobs it lost in the early days of the pandemic by May, which might be why economists were expecting the number of new jobs to level off last month. Oh ye of little faith: the US added 372,000 jobs in June – over 40% more than economists were expecting. That means available workers are getting harder and harder to come by, with almost two job openings for every unemployed American. On the plus side for you, it’s continuing to force companies to put their best foot forward, which might be why average hourly wages were 5.1% higher last month than they were in June 2021.

Why Should I Care?

For markets: The Fed’s permission structure.
Make no mistake: the US economy is in dire straits. In fact, the jobs thing is probably just going to make matters worse, with Friday’s data likely to encourage the Federal Reserve (the Fed) to hike rates by 0.75% again later this month. After all, the central bank said this week that it might need to get even more aggressive to stop inflation from becoming entrenched, with some Fed members arguing that rates should be close to 3.5% by the end of the year.

The bigger picture: What goes around comes around.
Any economic slowdown is going to impact the jobs market sooner or later, and there are signs it’ll be sooner: a number of companies – mainly in the tech industry and interest-rate sensitive sectors like real estate – announced layoffs in June. And if those Americans have less cash to spend as a result, other companies might start to feel the pinch too – in turn leading them to reduce the size of their teams. That might be why the Fed is estimating that the unemployment rate will go from 3.6% today to 4.1% in 2024.

You might also like: Tesla, Coinbase, and more tech companies are stripping themselves for parts.

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Analyst Take

Goldman Thinks European Stocks Are Harboring A Secret Weapon

Carl Hazeley, Analyst

If dogs are man’s best friend, share buybacks are yours.

Not just because you’ll benefit from a rising share price and tax-efficient returns, but because investors tend to reward companies that buy back their own shares.

So Goldman Sachs has some good news: the investment bank thinks the percentage of European companies buying back their own shares could reach an all-time high this year.

It thinks they’ll spend more on buybacks too, for a laundry list of reasons: companies are flush with cash, they’re not investing in themselves, insiders are buying, and on and on.

So if you can buy into those companies before the fact, you’re in a very tidy position.

That’s today’s Insight: why Goldman thinks European companies will boost their share buybacks, and which stocks stand to benefit.

Read or listen to the Insight here

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