Fed Beige Book: Modest Wage Growth Is Broadening A tightening labor market is putting broader pressure on wages as U.S. firms increasingly report trouble filling low-skilled jobs, according to a new Federal Reserve report.
(…) In a couple regions, “worker shortages and increased labor costs were restraining growth in some sectors, including manufacturing, transportation and construction,” the Fed said Wednesday in a roundup of anecdotal information on regional economic conditions, known as the beige book. (…)
More broadly, the Fed said economic activity expanded across all 12 districts, “with the pace of expansion equally split between modest and moderate.”
Inflation continued to firm, with prices reported as rising modestly. “Businesses mostly expected mild to moderate price growth to persist in the next several months,” the report said. (…)
“Couple regions”, “modest vs moderate”, “mild vs moderate”?
Other quotes from the Beige Book:
- Consumer spending varied as reports of stronger light vehicle sales were accompanied by somewhat softer readings in non-auto retail spending.
- Labor markets remained tight.
- A larger number of firms mentioned higher turnover rates and more difficulty retaining workers.
Here’s why courtesy of The Daily Shot:
Bond Markets Send Jitters, But Is Anyone Listening? Bonds have rallied sharply in the past six weeks, but other assets appear unfazed. Political jitters and positioning explain some of the moves, but it also leaves the possibility that investors should be more worried about the future.
The bond-market reversal has been swift. Ten-year U.S. Treasury yields have fallen around 0.4 percentage point in just six weeks and stood at about 2.21% on Wednesday morning in New York; the 10-year German yield is back below 0.2% and Japanese 10-year bonds yield zero. The U.S. yield curve has flattened, with the gap between two-year and 10-year U.S. yields narrowing back to its pre-election level. That could signal concern about the economic outlook. Headline inflation may have peaked, and hard growth data have failed to match the lofty heights suggested by surveys of economic sentiment, particularly in the U.S.
Yet other asset classes haven’t succumbed to gloom. Corporate-bond spreads have remained tight even as Treasurys have rallied; U.S. stocks are moving broadly sideways, with European stocks winning favor. In emerging markets, risk appetite looks alive and well, with bonds and stocks taking the softer U.S. dollar and lower yields as encouragement to push higher, not a reason to sell off. Global growth still looks in decent shape. (…)
But that old movie of rising earnings amid a weakish economy is having another sequel, so far at least:
- 66 companies (18.0% of the S&P 500’s market cap) have reported. Earnings are beating by 6.4%, with 76% of companies surpassing bottom-line estimates. Revenues are surprising by 0.5%.
- Expectations are for revenue, earnings, and EPS growth of 6.7%, 9.4%, and 11.4%, respectively. EPS is on pace for 15.1%, assuming a typical beat rate for the remainder of the season.
(…) New retail brokerage accounts tallied 235,000 during the quarter, up 44%. (…)
- Personal anecdote: a 53 year old door installer was watching his stock ptf. on his cell phone while doing work at my house this week…
The Partisan Conflict Index tracks the degree of political disagreement among U.S. politicians at the federal level by measuring the frequency of newspaper articles reporting disagreement in a given month.
Research suggests that increased partisan conflict increases uncertainty among firms and households. Such uncertainty has been shown to slow economic activity by delaying business investment and consumer spending.
South Korea’s government wants to know whether Chinese President Xi Jinping gave alternative facts on the nation’s history to Donald Trump.
In an interview with the Wall Street Journal last week, Trump said Xi told him during a recent summit that “Korea actually used to be a part of China.” The comments sparked outrage in Seoul and became an issue in South Korea’s presidential race, prompting the foreign ministry to seek to verify what Xi actually said.
“It’s a clear fact acknowledged by the international community that, for thousands of years in history, Korea has never been part of China,” foreign ministry spokesman Cho June-hyuck said at a briefing in Seoul on Thursday. (…)