Stock bulls cite prices back near all-time highs as a self-fulfilling prophecy for financial resiliency. After rebounding 22% since the April 8 lows, the S&P 500 is now +3.5% year to date and .90% below its February high.
Another way to say this is that large-cap stocks have returned to extreme capital risk and overvaluation (S&P 500 forward PE of 22x, TSX 18.5x), while underperforming short-term Treasuries over the past seven months.
At the same time, since mid-January, as Treasury prices have quietly rallied, US 10-year yields are 48 basis points lower, while oil (WTI) remains -18% despite a steady stream of Middle East terror.
The June 18 peak for WTI was $75 per barrel and $120 in June 2022 following Russia’s invasion of Ukraine. The overarching factors remain a slowing global economy, accompanied by steadily rising total primary energy supply from fossil fuels, nuclear, and renewable sources (IEA’s Global Energy Review 2025).
Growth bulls further cite a historically low US unemployment rate of 4.2% as proof of happy days, even though unemployment, like the consumer price index, is one of the most lagging economic indicators. Less mentioned is that May’s labour force participation rate declined by 0.2 percentage points to 62.4%, matching February’s two-year low, while the employment-population ratio declined by 0.3 percentage points to 59.7%–the lowest level since January 2022. Canada’s job market is weaker than the US’s, despite the Bank of Canada having already lowered its policy rate from 5 to 2.75%.
US non-farm payrolls (NFP) are generally considered a coincident to slightly lagging economic indicator. As it turns out, over the past 12 months, non-farm payrolls have been consistently revised lower after initial better-than-expected announcements, by an average of 30,000 jobs per month.
Despite Fed Chair Jerome Powell’s insistence that the “solid” job market suggests financial easing is not required, economist Eric Basmajian explains the signal behind the inflated NFP noise in the segment below.
Current data suggests we are adding ~1.6 million jobs per year. The pace is likely closer to 1.25 million, a 20% difference. pic.twitter.com/ewtGLdMqHL
— Eric Basmajian (@EPBResearch) June 23, 2025
This video highlights the subtle cracks forming in the US labor market. Here is a direct video link.
The trouble is that once the lagging data gets revised down to reality, and the US Fed starts cutting, it is generally too late for complacent masses to find shelter from financial harm.
