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Risk assets have bounced to close the week as geopolitical tensions have cooled and juicy Chinese liquidity continues to provide a global tailwind.

China's stimulus package is estimated at 7.5 trillion yuan ($1.07 trillion USD), making it potentially the largest in the country’s history, representing about 6% of its GDP​.

While Chinese stock indexes have soared over 40% since the Fed’s September rate cut, US indexes are merely up 2% over the same timeframe.

Crypto assets have largely lagged Chinese stocks but have outperformed US stocks, as BTC has climbed 3% while a higher beta asset like SOL is up by 11%.

Today’s strong jobs report gives reason for pause - wages are up, unemployment is down - implying demand for goods and services is rising - indicating inflationary pressures might be coming back - which could dictate the Fed cut rates slower than markets expect - but we’re holding off judgement until the trend is confirmed.

We’re staying long.

Non-farm Payroll Report Shocks To The Upside

Synopsis:

The U.S. economy saw a 254,000 job surge in September, surpassing expectations and marking the largest monthly gain since March. This uptick drove the unemployment rate down to 4.1% and pushed wages up by 0.4% month-over-month, raising concerns over inflation. However, recent substantial revisions to employment data by the Bureau of Labor Statistics (BLS) indicate that such figures are subject to change, adding an element of uncertainty to the current labor market analysis.

The Details:

• Payroll Growth: September's 254K job increase sharply exceeded expectations, with previous months also revised upwards by 72,000 jobs. However, the BLS recently announced a downward revision of 818,000 jobs to March 2024's y/y employment numbers, indicating that current figures could be similarly revised​.

• Unemployment Rate: Fell from 4.2% to 4.1% in September, with a decline in unemployed workers from 7.115 million to 6.834 million. However, this drop needs to be considered in light of historical revisions that have previously altered unemployment narratives.

• Wage Growth: Average hourly earnings increased by 0.4% month-over-month and 4.0% year-over-year, suggesting potential inflationary pressures. Yet, revisions to historical data mean that wage growth figures could later shift, affecting inflation outlooks.

• Industry Breakdown:

  • Food Services & Drinking Places: +69,000 jobs, exceeding the 14K monthly average.

  • Healthcare: +45,000 jobs, below its 57K monthly average.

  • Government: +31,000 jobs, continuing its upward trend.

• Full-Time vs. Part-Time: The rise in full-time employment and the decline in part-time jobs point to a strengthening labor market. Nonetheless, the recent surge in multiple jobholders signals potential financial strain among workers.

• Labor Force Composition: The charts reveal an increase in native-born workers and a slight decline in foreign-born workers, reversing a strong multi-year trend.

WHY IT MATTERS:

The strong job growth and wage increases, at face value, raise questions about the Fed’s recent 50 basis point rate cut. This could signal looming inflationary pressures, prompting the Fed to rethink its easing strategy. However, substantial recent revisions to employment data suggest caution; what appears as a strong labor market now could be revised down, as seen in the BLS’s recent 818,000 job downward.

Zerohedge

OpenAI Closes Largest Venture Funding Round Ever

Synopsis:

OpenAI has raised a massive $6.6 billion in its latest funding round, reaching a valuation of $157 billion—the largest venture capital round in history. Despite recent executive departures, the company plans to use the funds to bolster its AI research, increase computational capacity, and enhance tools like ChatGPT. However, this funding round is met with skepticism, pointing to concerns about OpenAI's reliance on individual subscriptions and investor exclusivity agreements.

The Details:

• Funding Round: Led by Thrive Capital, with additional investments from Nvidia and Microsoft.

• Valuation: Now at $157 billion, marking it the largest VC round to date.

• ChatGPT Stats: Over 250 million weekly unique users.

• Investment Concerns: Critics question OpenAI's long-term viability due to:

  • Acceptance of $500 million from Softbank, known for investing in overvalued companies like WeWork.

  • Reliance on ChatGPT subscriptions rather than API usage or licensing models.

• Investor Exclusivity: OpenAI reportedly required new investors not to fund its competitors, including Anthropic and Musk's xAI, raising concerns about market competition.

• Skeptical Viewpoints: Some analysts view OpenAI’s latest moves as signs of the company being “too big to fail,” though it faces intense competition in the AI space from firms like Google, Anthropic, and Liquid AI.

• Strategic Focus: OpenAI’s strategy involves frequent AI model updates to maintain its leadership in AI performance benchmarks.

Why It Matters:

OpenAI’s massive valuation reflects the high stakes in AI development, where companies are competing not just in technology but also in securing exclusive funding. For traders and investors, OpenAI's large funding round may signal a short-term stability but also raises questions about long-term profitability given its reliance on direct consumer subscriptions. The company's requirement for investor exclusivity hints at concerns about competition, suggesting an opportunity to explore investments in emerging AI competitors.

VentureBeat

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The BRRR is meant for informational purposes only. It is not investment advice. Please consult with your investment, tax, or legal advisor before making any investment decisions.ll