You’re fired

Market sentiment is turning sour after last Friday’s weak US jobs data that led to the firing of the Chief of the Bureau of Labor Statistics (BLS)! The BLS reported just 73,000 nonfarm payroll gains for June — far below expectations. But what likely enraged Trump was the revisions: a sharp downward adjustment of 258,000 jobs from the previous two months, which completely reshaped the narrative of a resilient labour market. Taken together, the three-month average job gain fell from 150,000 to just 35,000.

And here’s the rule of thumb: if the US sees NFP figures under 50,000 for six months in a row, that’s considered a recession signal. So, the US may already be halfway there.

The good news — for Donald Trump — is that recession fears have turbocharged rate cut expectations. After Friday’s weak jobs report, the probability of a September Federal Reserve (Fed) rate cut jumped from 38% to above 80%. The US 2-year yield, which tracks rate expectations, dropped sharply from near 4% to below 3.70%.

But the bad news is that a weak economy wasn’t part of Trump’s promise. Cutting rates at the wrong moment won’t magically rescue markets, and scapegoating the BLS for the outcome of his administration’s chaotic policies risks damaging the credibility of US economic data.

One by one, the things that made the US exceptional are being eroded.

But US tech earnings show resilience

The S&P500 earnings season — particularly for tech — is going well. Strong AI demand and a softer dollar have led to better-than-expected results across Big Tech.

Meta once again outperformed expectations, Microsoft’s cloud business grew faster than anticipated, and Google held steady. Even Apple sold more iPhones last quarter and reaffirmed its focus on AI. Tesla and Amazon were rare weak spots: Tesla for reasons well known, and Amazon because investors haven’t yet seen AI investments translate into revenue.

So far, 66% of S&P 500 companies have reported earnings, and Fact Set points that 82% posted positive EPS surprises and 79% reported better-than-expected revenues. The earnings growth rate for the S&P 500 stands at around 10% — well above the 5–7% that investors were expecting.

The issue now is guidance. Outside of AI, it’s not great. Many companies are warning that tariffs could weigh on future results. So maybe — just maybe — those S&P 500 record highs are a bit exaggerated in the current broader context.

Across the Atlantic, earnings have been hit by tariff uncertainty, a stronger euro, and the fact that many companies — particularly automakers — have opted to absorb tariff costs to preserve market share during negotiations. Banks were the exception, benefiting from higher volatility.

The impact of tariffs will persist, though unevenly. Big Tech, financials, utilities, and communications are seen as relative winners in this chaotic reshaping of global trade. Consumer staples, energy, real estate, and healthcare are among the most exposed. Consumer discretionary, industrials, and materials face mixed outcomes, depending on whether they can pass on tariff costs or not.

Eventually, US consumers may end up paying most of the tariffs. To appease Trump’s deficit obsession, they may have to curb their consumption — especially imports. The data released over the next few months will be incredibly interesting to watch — but may also be framed in ways that make the US economy look better than it feels.