U.S. JOLTS: U.S. Labor Market Activity Improves Slightly
The total job openings rate of 3.7% during November was improved from October’s 3.6%, revised from 3.7%. It remained down from the record high of 3.9% in July. The private-sector job openings rate held steady, however, at 3.9%. It was slightly higher versus last year’s 3.6% average. In the government sector, the job openings rate improved to 2.4%, the highest level since July. (…)
The actual number of job openings increased 1.3% (6.2% y/y) to 5.522 million, down from the April high of 5.845 million. Private-sector openings improved 0.4% (5.2% y/y) to 4.972 million, but that was down 6.4% from the April high. (…) Government-sector job openings jumped 16.1% y/y.
The total hires rate held m/m at 3.6%, but that remained down from February’s high of 3.8%. The private-sector hiring rate was stable m/m at 3.9% and remained below the high of 4.2% reached in February. (…)
The number of hires increased 1.1% (-0.6% y/y) to 5.219 million. Private-sector hiring improved 0.9% (-1.1% y/y) as jobs in leisure & hospitality jumped 7.1% (4.9% y/y). Construction employment gained 1.2% (-1.5% y/y), but factory sector hiring improved 0.4% (-1.1% y/y). The number of professional & business services jobs rebounded 1.6% (0.4% y/y), but jobs in retail trade experienced a 9.6% decrease (-12.8% y/y). Government- sector hiring recovered 4.2% (6.3% y/y) following a sharp October fall. (…)
- One area of the job openings report that showed a positive trend was the number of voluntary quits. The trend is unmistakable, suggesting that Americans are increasingly more comfortable leaving their job. (The Daily Shot)
From a Bespoke survey:
Job openings are very strong, up 6.2% YoY but hires are down 0.6%. Either these are fake openings (!), or the shortage of (skilled) workers is getting very acute. From the NFIB:
Job openings at America’s main employer group is at a cyclical high and employers are actively raising compensation…
…and prices:
Synchronized acceleration?
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Trump’s Proposed Tax Cuts Could Boost U.S. and Global Growth, Says World Bank Donald Trump’s vowed tax cuts could goose global economic growth this year and next, the World Bank said Tuesday, fresh fuel for a world struggling with stagnant trade, weak investment and rising policy uncertainty.
In its semiannual flagship economic report, the development institution said the global economy should expand by 2.7% this year, down a bit from the 2.8% predicted last June. But it is up from last year’s postcrisis low of 2.3%. The U.S. economy is picking up steam and stabilizing commodity prices are helping major emerging-market economies rebound, it said.
The bank estimates the U.S. president-elect’s proposals to slash corporate and personal income taxes could add up to 0.3 percentage point to American growth this year and up to 0.8 percentage point next year. That could raise the U.S. growth rate to 2.5% this year and 2.9% next, and add 0.3 percentage point to global growth next year, the bank said. (…)
And the institution warned Mr. Trump could offset potential gains from his promised tax cuts if he triggers a trade war with rivals such as China and Mexico. Officials at the bank and its sister institution, the International Monetary Fund, fear the Trump administration could stir global protectionism by delivering on threats to slap China and Mexico with tough new tariffs. They caution such trade restrictions could curb already weak global growth. That, some officials warn, raises odds for geopolitical conflict, pointing back to the protectionist origins of the Great Depression and World War II.
Political and policy uncertainty in the U.S., Europe, China and in other major economies around the world is at unprecedented levels, the bank said. That is a major factor behind corporations around the world focusing more on acquisitions than pouring capital into new projects. (…)
Growth in the volume of cross-border sales of goods averaged 0.9% through September 2016, well shy of its long-term trend of 6.5%. (…)
An unexpected surge in U.S. inflation could force the Fed to raise rates much faster than currently planned. Higher borrowing costs would then hit emerging-market firms and governments with large debt loads, particularly commodity exporters.
The Paris-based research body’s gauges of future activity showed firmer signs of a pickup in growth in the U.S. and other developed economies, as well as large developing economies such as China and Brazil. (…)
As recently as May, the leading indicators for the U.S. were pointing to a slowdown in growth. They then switched to signal a stabilization, but the latest figures based on information available in November mark the second straight month in which they point to a pickup. (…)
The rate of global economic expansion ticked up to a 13-month high at the end of 2016, supported by strengthening inflows of new business and increased levels of employment. (…)
December saw the rate of expansion in worldwide manufacturing production accelerate to the fastest for two-and-a-half years. The trend in service sector business activity also remained solid, with the latest rate of growth matching November’s 12-month high.
National PMI data signalled positive performances for the majority of the nations covered by the global survey. (…)
December saw global all-industry new business rise at the quickest pace since July 2015. Faster increases were registered at manufacturers and service providers alike. New order inflows expanded in almost all of the nations covered, the exceptions being Brazil and India.
Improved inflows of new work led to a further increase in outstanding business, the fifth in as many months. (…)
Oh! There was also this at the end of the release:
Price pressures intensified in December. Cost inflation rose to a 63-month record, leading in turn to the sharpest increase in output prices since April 2014. Rates of inflation in both price measures were stronger at manufacturers than service providers.
- The latest PMI figures are consistent with the global GDP growth of 3.2%. (The Daily Shot)
Source: Deutsche Bank, @joshdigga
- BTW, China’s PPI is now +5.5%.
- According to Blomberg’s GDP trackers (similar to Atlanta Fed’s GDPNow for the US), the Eurozone economic growth is rapidly improving. The ECB remains behind the curve. (The Daily Shot)
Richard Bernstein, Chief Executive and Chief Investment Officer, Richard Bernstein Advisors
There is an old saying that “It’s chess, not checkers,” which implies that things are more complicated than one might expect. However, right now we view the markets as being more checkers than chess. The stock and bond markets’ performances are currently based on a
rather simple construct: when in the past has Washington, DC ever proposed significant fiscal stimulus when the economy was NOT in recession? Answer: never. Adding significant fiscal stimulus to a healthy, albeit not robust, economy is virtually unprecedented. (…)Observers always make the financial markets seem more complicated than they really are, and today is no different. The simple reality is significant fiscal stimulus is being discussed when the economy is already healthy. On paper, this would imply stronger stock markets, stronger commodity markets, and weaker bond markets.
All those performance characteristics are indeed happening. It’s not that complicated. It seems like checkers.
But make sure to check your chest! 
The Lady and the Trump
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RISING LONG-TERM RATES: THE SCARY FACTS!
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EQUITIES AFTER FIRST RATE HIKES: THE CHARTS SINCE 1954
1930s-like Demographic Headwinds Are Restraining the U.S. Economy
America’s Fastest-Growing Loan Category Has Echoes of Subprime
(…) booming corner of the lending industry called Property Assessed Clean Energy, or PACE. Such loans, set up by local governments across the U.S., are designed to encourage homeowners to buy energy-efficient solar panels, window insulation and air-conditioning units.
About $3.4 billion has been lent so far for residential projects, and industry executives predict the total will double within the next year. That would likely rank PACE loans as the fastest-growing type of financing in the U.S.
As the loans spread, so do problems that echo the subprime mortgage crisis. Plumbers and repairmen essentially function as loan brokers but have scant training and oversight. They often pitch PACE loans to help land contracting jobs and earn referral fees from lenders, according to loan documents and more than two dozen borrowers, industry executives and employees.
Creditworthiness matters little to lenders, because loans are based on the value of a homeowner’s property. PACE loans typically require no down payment, and the debt is added to property-tax bills as an assessment. (…)
Investors Bolt Mexico as Peso Enters Free Fall
The peso tumbled 2% on Tuesday to another all-time low against the dollar, frustrating Mexican central-bank efforts to slow the currency’s decline. Bank officials said Tuesday that they spent $2 billion last week to prop up the peso, which has weakened nearly 16% against the dollar since the U.S. election. (…)
Mexico’s benchmark stock index has tumbled 5.3% in the two months since the U.S. election. Yields on 10-year Mexican government debt, which move in the opposite direction of price, have jumped to 7.76% from about 6% before Mr. Trump’s victory. (…)
About 80% of Mexican exports go the U.S. (…)
Almost 30% of the country’s gross domestic product comes from trade with the U.S., Natixis estimates.
Fitch Ratings in early December cut its rating outlook on Mexico’s long-term debt to negative from stable, a sign that currency depreciation resulting from Mr. Trump’s victory had increased uncertainty to the point that it could hurt Mexico’s public finances. (…)
A weak currency often comes with benefits by making a country’s exports more competitive. But a falling peso may not boost the Mexican economy as much as a weakened currency did for other developing countries. If Mr. Trump carries out his threat to put new tariffs on Mexican goods if the country doesn’t revise trade terms, new duties on Mexican products could partially offset the competitive advantage from a weaker peso, economists say. (…)
Luis de la Calle, a former top Mexican trade official, said Mr. Trump’s statements and policies that have caused the peso to decline could backfire. They would dent Mexicans’ ability to buy U.S. goods, which could expand the U.S. trade deficit. A weaker peso is also likely to spur more illegal immigration if Mexico’s economy falters. (…)
SMALL BUSINESS OPTIMISM SKYROCKETED IN DECEMBER
EXCLUSIVE OUTLOOK FROM WALL STREET’S #1 ECONOMIST ED HYMAN
Perhaps the best investment use for economic forecasts is as a monitor of excessive confidence, something that often indicates that the market’s run too far in one direction. 