Tag Archive: employment

For Labor And Recession, The Bad One

There’s a couple of different ways that Unit Labor Costs can rise. Or even surge. The first is the good way, the one we all want to see because it is consistent with the idea of an economy that is actually booming. If workers have become truly scarce as macro forces sustain actual growth such that all labor market slack is absorbed, then businesses have to compete for them bidding up the price of marginal labor.

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From Friends to Nemeses: JO and Jay

It was one of the first major speeches of his tenure. Speaking to the Economic Club of Chicago in April 2018, newly crowned Federal Reserve Chairman Jerome Powell was full of optimism. At that time, however, optimism was being framed as some sort of bad thing. This was the height of inflation hysteria, where any sort of official upgrade to the economic condition was taken as further “hawkishness.”

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Monthly Macro Monitor: Doom & Gloom, Good Grief

When I first got in this business oh so many years ago, my mentor told me that I shouldn’t waste my time worrying about the things everyone else was worrying about. As I’ve related in these missives before, he called those things “well worried”. His point was that once everyone was aware of something it was priced into the market and not worth your time.

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Monthly Macro Monitor: We’re Not There Yet

I first wrote about the current economic slowdown a year ago and Jeff Snider actually started seeing signs of slowdown in the Eurodollar market as early as May 2018. So, the slowdown we’re in now certainly isn’t a surprise here at Alhambra. I think though that we often forget how long these things take to develop.

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Monthly Macro Monitor: Economic Reports

Is recession coming? Well, yeah, of course, it is but whether it is now, six months from now or 2 years from now or even longer is impossible to say right now. Our Jeff Snider has been dutifully documenting all the negativity reflected in the bond and money markets and he is certainly right that things are not moving in the right direction.

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Effective Recession First In Japan?

For a lot of people, a recession is two consecutive quarters of negative GDP. This is called the technical definition in the mainstream and financial media. While this specific pattern can indicate a change in the business cycle, it’s really only one narrow case. Recessions are not just tied to GDP. In the US, the Economists who make the determination (the NBER) will tell you recessions aren’t always so straightforward.

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Monthly Macro Chart Review: April 2019

The economic data reported over the last month managed to confirm both that the economy is slowing and that there seems little reason to fear recession at this point. The slowdown is mostly a manufacturing affair – and some of that is actually a fracking slowdown – but consumption has also slowed.

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Monthly Macro Monitor – August 2018

The Q2 GDP report (+4.1% from the previous quarter, annualized) was heralded by the administration as a great achievement and certainly putting a 4 handle on quarter to quarter growth has been rare this cycle, if not unheard of (Q4 ’09, Q4 ’11, Q2 & Q3 ’14). But looking at the GDP change year over year shows a little different picture (2.8%).

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Bi-Weekly Economic Review

This will be a fairly quick update as I just posted a Mid-Year Review yesterday that covers a lot of the same ground. There were, as you’ll see below, some fairly positive reports since the last update but the markets are not responding to the better data. Markets seem to be more focused on the trade wars and the potential fallout. I would also note that at least some of the recent strength in the data is related to the tariffs.

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Bi-Weekly Economic Review: As Good As It Gets?

In the last update I wondered if growth expectations – and growth – were breaking out to the upside. 10 year Treasury yields were well over the 3% threshold that seemed so ominous and TIPS yields were nearing 1%, a level not seen since early 2011. It looked like we might finally move to a new higher level of growth. Or maybe not.

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Bi-Weekly Economic Review: Growth Expectations Break Out?

There are a lot of reasons why interest rates may have risen recently. The federal government is expected to post a larger deficit this year – and in future years – due to the tax cuts. Further exacerbating those concerns is the ongoing shrinkage of the Fed’s balance sheet. Increased supply and potentially decreased demand is not a recipe for higher prices. In addition, there is some fear that the ongoing trade disputes may impact foreign demand...

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Bi-Weekly Economic Review: Investing Is Not A Game of Perfect

The market volatility this year has been blamed on a lot of factors. The initial selloff was blamed on a hotter than expected wage number in the January employment report that supposedly sparked concerns about inflation – although a similar number this month wasn’t mentioned as a cause of last Friday’s selling. The unwinding of the short volatility trade exacerbated the situation and voila, 12% came off the market in a matter of days.

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Bi-Weekly Economic Review: The New Normal Continues

There has been a lot of talk about the economic impact of the recent tax reform. All of it, including the analyses that include lots of fancy math, amounts to nothing more than speculation, usually informed by little more than the political bias of the analyst. I am guilty of that too to some degree but I don’t let my personal political views dictate how I view the economy for purposes of investing.

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Bi-Weekly Economic Review: A Weak Dollar Stirs A Toxic Stew

We received several employment related reports in the first two weeks of the year. The rate of growth in employment has been slowing for some time – slowly – and these reports continue that trend. The JOLTS report showed a drop in job openings, hires and quits.

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The Payroll Report To Focus On Is August’s, Not September’s

The hurricanes didn’t disappoint, causing major damage at least to the BLS. Precisely how much the statistics were affected by the disruptions in Texas and Florida really can’t be calculated, not that everyone won’t try. It makes this month’s payroll report a Rorschach test of sorts. You can pretty much make it out to be whatever you want.

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Proving Q2 GDP The Anomaly, Incomes Yet Again Fail To Accelerate

One day after reporting a slightly better number for Q2 GDP, the BEA reports today that there is little reason to suspect it was anything more or lasting. The data for Personal Income and Spending shows that the dominant condition since 2012 remains in effect – “good” quarters, or whatever passes for one these days, are the anomaly. There still is no meaningful rebound in income.

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Bi-Weekly Economic Review: Ignore The Idiot

Of the economic releases of the past two weeks the one that got the most attention was the employment report. That report is seen by many market analysts as one of the most important and of course the Fed puts a lot of emphasis on it so the press spends an inordinate amount of time dissecting it.

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Bi-Weekly Economic Review: Attention Shoppers

The majority of the economic reports over the last two weeks have been disappointing, less than the consensus expectations. The minor rebound in activity we’ve been tracking since last summer appears to have stalled. Retail sales continue to disappoint and inventory/sales ratios are once again rising – from already elevated levels.

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Retail Sales Weren’t All That Bad, Meaning They Were The Worst

Taken in comparison to the last few years, today’s retail sales report wasn’t that bad. Total sales for May 2017, including autos, grew by 5.17% year-over-year (NSA). That was the highest growth rate since last February. The 6-month average is now just shy of 4%, the best since early 2015. It is clear the US economy has shrugged off the effects of last year’s downturn.

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Forced Finally To A Binary Labor Interpretation

JOLTS figures for the month of April 2017, released today, highlight what is in the end likely to be a more positive outcome for them. It has very little to do with the economy itself, as what we are witnessing is the culmination of extreme positions that have been made and estimated going all the way back to 2014.

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