Finimize - 😵 US jobs fall off a cliff

Hi Reader, here's what you need to know for September 6th in 3:04 minutes.

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Today's big stories

The US economy added far fewer jobs than expected last month
A new technology could be about to turn bitcoin into a mainstream form of payment, which could send its price to a whole new level – Read Now
Germany’s key stock market index has been refreshed, which might make it an even more attractive investment

Oh Sh*t

What’s Going On Here?

Data out on Friday showed the US added just 235,000 new jobs last month – far fewer than even economists’ lowest forecast of 400,000 (tweet this). So, uh, is it time to panic?

What Does This Mean?

Before you start running around the room in a frenzy, there are two mitigating factors to bear in mind here. First, the survey was taken in mid-August, when Delta variant fears were arguably at their highest. Bosses might’ve put hiring on pause to manage a slowdown in demand, and potential employees might’ve been holding off on accepting jobs to keep themselves safe. Second, wage growth came in ahead of expectations, though that was admittedly because high-paying jobs – rather than those in the retail and hospitality and leisure sectors, where hiring stayed flat or declined – were being filled. Between those two factors, most economists actually reckon August’s jobs report was just a coronavirus-driven blip.

Why Should I Care?

For markets: Keep the support comin’.
The US Federal Reserve (the Fed) has previously said that August’s jobs data would influence its gameplan for reducing its economic support, namely its bond-buying. But given how far short the number’s come in, the central bank isn’t expected to announce any major changes this month. Instead, it’ll probably wait until November at the earliest to see if August was a one-off. And since a reduction in the amount of bonds the Fed buys could drive stock prices lower (all else equal), the stay of execution should benefit stock prices in the short term.

The bigger picture: Central banks are in sync.
Economists are on average expecting the European Central Bank to start rolling back its economic support later this year too, with Europe having got a stronger handle on the pandemic than the US. That could put it on a similar timeline to the Fed, and show that major central banks are as synchronized in their pandemic recoveries as they were in their collapses.

You might also like: How interest rates influence every investment you make.

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🙋 Ask a question

Analyst Take

Are You Finally About To Buy Your Breakfast With Bitcoin?

What’s Going On Here?

Quick question: have you ever actually used bitcoin to buy anything?

No? Don’t you think that’s weird, considering the whole point of the cryptocurrency was originally to “make payments cheaper and faster”?

The Lightning Network might change all that: it effectively moves some of those transactions off the blockchain, and in doing so makes them faster, cheaper, and more easily split into small amounts.

And if its technology works out, it could take bitcoin to a whole new stage of mainstream acceptance – and its price to a whole new level.

So that’s today’s Insight: why you should be paying attention to the Lightning Network, and how it could change the game for the OG cryptocurrency.

Read or listen to the Insight here

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Glow Up

What’s Going On Here?

Germany’s key stock market index unveiled a whole new look late on Friday, and – wow! – who’d have thought it looked like that without a scrunchie?

What Does This Mean?

Last year, German fintech giant Wirecard collapsed after admitting that $2 billion it claimed to have in cash didn’t exist. But given its existing rules, the DAX – Germany’s stock market equivalent of the US’s Dow Jones Industrial Average – couldn’t easily remove the company from its number.

So the index decided to overhaul those rules: it’s now demanding its members publish quarterly statements and audited annual results, and will kick out any that don’t release them on time. It made another significant tweak too: the DAX will expand from 30 companies to 40, which will see online fashion retailer Zalando, food subscription service HelloFresh, and aircraft manufacturer Airbus join the team. All in all, that’ll add around $415 billion to an index already worth $2.2 trillion.

Why Should I Care?

For markets: Fewer dividends, more growth.
The DAX is renowned for its dividend-payers, with companies like cloud computing provider SAP and luxury carmaker Daimler regularly making substantial payouts. But new additions like Zalando and HelloFresh are more interested in spending their cash on rapidly growing their businesses than they are on paying shareholders. That could change the dynamic of the index, and should lure in more growth-focused – rather than income-focused – investors.

The bigger picture: Rebalancing giveth and taketh away.
Exchange-traded funds (ETFs) tracking the DAX with an estimated $19 billion of capital will invest some of that cash into the new stocks joining the index, which could give their share prices a boost. Not so for some of the biggest remaining DAX members: ETFs will reallocate some of their cash to the newcomers, which could put pressure on the veterans’ shares.

You might also like: How to buy entire markets like the DAX.

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💬 Quote of the day

“More tears have been shed over men’s lack of manners than their lack of morals.”

– Helen Hathaway (an American writer)

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📞 Tough call

The Pros And Cons Of Alternative Investments is Monday’s event, so we thought we’d do the pros and cons of attending. Pros: you’ll become wiser about alternative investments, impress all your friends, and could make a lot of money. Cons: you might miss Below Deck. Sorry about that.

🤔 The Pros And Cons Of Alternative Investments: 5pm UK time, September 6th
📚 How To Navigate Investing In A Meme Stonk World: 2pm UK time, September 8th
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🎨 WTF Is Next For NFTs?: 1pm UK time, September 16th
✅ How To Be Greener About Bitcoin: 6pm UK time, September 16th
🔌 When Will Microchips Bounce Back?: 1pm UK time, September 17th
💰 A Guide To Valuing Crypto Assets: 5pm UK time, September 17th
🚗 How To Profit From The EV Boom: 5pm UK time, September 20th
🔒 Navigating The World Of Bitcoin Security: 6pm UK time, September 21st
🚀 Should You Jump On The NFT Bandwagon?: 1pm UK time, September 22nd
📱 How To Be A Diligent Tech Investor: 4pm UK time, September 22nd
♻️ How To Turn Your Portfolio Green : 6pm UK time, September 23rd
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🤠 How To Win Big With Fractional Shares: 5pm UK time, September 28th
🤖 The Pros And Cons Of Algorithmic Trading: 6pm UK time, September 29th

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Finimize - 😵 US jobs fall off a cliff

Today's big stories

Oh Sh*t

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Are You Finally About To Buy Your Breakfast With Bitcoin?

Get into Exodus at the ground floor

Glow Up

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Your entry to commercial real estate

📞 Tough call

Older messages

⚠️ US stocks could crash this month

🤕 China isn't so perfect after all

👴🏻 Zoom gets old fast

😬 A Fed's gotta do what a Fed's gotta do

👩‍💻 Look busy, Salesforce is coming

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