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Hi John, here's what you need to know for December 9th in 3:08 minutes.

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• The US economy added more jobs than expected
• OPEC agreed to cut oil’s supply as Saudi Aramco raised over $26 billion from the world’s largest initial public offering

Work Kermitments

What’s Going On Here?

Data out Friday showed that the US economy added 266,000 jobs in November – beating investors’ expectations by 45% and capping off a very cheery week. Sheesh!

What Does This Mean?

Everyone expected the US to add more jobs in November than October, when numbers were driven down by a massive strike at General Motors. But almost no one expected things to be this good. What’s more, October’s numbers were revised up – the US actually added 28,000 more jobs than previously thought. All that’s brought the unemployment rate back down to 3.5%, its lowest in 50 years.

China also lifted tariffs on some US soybean and pork imports on Friday – indicating that a resolution to the trade war may be in store. Taken together, investors’ fears of an economic slowdown have been significantly assuaged: they duly sold off “safe-haven” investments like government bonds in favor of stocks.

Why Should I Care?

For markets: The Federal Reserve isn’t sold just yet.
November’s US employment data also revealed that wages grew 3.1% compared to 2018. That, combined with buoyant consumer sentiment, suggests that the US is in for a good holiday season: people have money, and they’re ready and willing to spend it (tweet this). For now, however, that hasn’t fed through to inflation – the US central bank’s other main concern. It’s therefore likely to keep interest rates steady when it meets later this month. If fatter wallets eventually lead to higher prices, however, a rate cut could be on the horizon.

For you personally: Uh-oh.
As wages creep up and unemployment falls, employers struggling to hire new people could turn elsewhere. While automation isn’t always cost-effective when wages are low, it might soon get more attractive for some. That could become a problem for those in easily automated jobs – although by improving productivity, it could also boost the economy overall.

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Roll Back The Barrel

What’s Going On Here?

Some of the world’s biggest oil-producing nations agreed on Friday to cut supply by another 500,000 barrels a day – and Saudi Arabia volunteered to go even further.

What Does This Mean?

The oleaginous OPEC group and its allies have cut production several times over the past three years: reduced supply boosts the oil price, theoretically meaning more profit all round. But that hasn’t worked in practice: only Kuwait, Angola, and Saudi Arabia have actually stuck to the deal this year, with Saudi actually cutting by more than it had to. That means it’s benefited less than others from higher prices.

The new agreement seems designed to encourage others to share the load – especially oversuppliers like Iraq, Nigeria, and Russia (which, while not officially an OPEC member, generally follows its policies anyway). And with Saudi Arabia saying it’ll continue its additional supply reductions, there’ll now be 900,000 fewer barrels of OPEC oil produced each day next year. That may be good news for oil investors – but environmentalists shouldn’t get too comfortable…

Why Should I Care?

The bigger picture: Pushing a string. These cuts may not be enough to solve OPEC’s biggest problem: the US is now producing lots more shale oil, meaning global supply is increasing faster than demand. And a sluggish economy isn’t helping matters: demand for oil is closely linked to global economic growth. To really move the oil price up, OPEC will likely need to cut production even more – something its members seem unwilling to do.

For markets: Aramco’s big day. Saudi Arabia had other big news last week: it finally announced a price for its state oil firm’s initial public offering (IPO). This week’s IPO will value Saudi Aramco at $1.7 trillion, making it the biggest public company in the world – and its at least $26 billion fundraising will also be the biggest IPO ever. Still, Saudi authorities may be disappointed: they initially planned to raise $100 billion at a $2 trillion valuation.

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