Month: November 2023

Payroll employment rises by 150,000 in October; unemployment rate changes little at 3.9%

Total nonfarm payroll employment increased by 150,000 in October, below the average monthly gain of 258,000 over the prior 12 months, and the unemployment rate changed little at 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, government, and social assistance. Employment declined in manufacturing due to strike activity.

Employment in manufacturing decreased by 35,000 in October, reflecting a decline of 33,000 in motor vehicles and parts that was largely due to strike activity.

Employment in government increased by 51,000 in October and has returned to its pre-pandemic February 2020 level. Monthly job growth in government had averaged 50,000 in the prior 12 months. In October, employment continued to trend up in local government (+38,000).

The change in total nonfarm payroll employment for August was revised down by 62,000, from +227,000 to +165,000, and the change for September was revised down by 39,000, from +336,000 to +297,000. With these revisions, employment in August and September combined is 101,000 lower than previously reported.

Over the past three months, hiring has averaged 204K, continuing the downward trend over the past two years but still rising faster than the 2018-2019 average pace of 177K.

Outside of auto manufacturing, job growth narrowed in October. The diffusion index, which captures the net share of industries adding headcount, fell to its lowest level since the throes of the pandemic in April 2020. Excluding the strike-related drop in manufacturing employment, the goods industry continued to add jobs thanks to a 23K rise in construction employment. Services employment, however, slowed sharply after September’s unexpected gain. The 110K gain in private sector services could primarily be traced to a 77K increase in healthcare. In a sign that businesses may be cautious on holiday sales this year, retail employment was up a scant 1K last month, while transportation & warehousing employment fell 12K. (Wells Fargo)

Source: U.S. Department of Labor and Wells Fargo Economics

The average workweek for all employees on private nonfarm payrolls edged down by 0.1 hour to 34.3 hours in October.

In October, average hourly earnings for all employees on private nonfarm payrolls rose by 7 cents, or 0.2 percent, to $34.00. Over the past 12 months, average hourly earnings have increased by 4.1 percent.

In October, average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.3 percent, to $29.19. [4.4% YoY]

Fed Extends Pause on Rate Hikes but Keeps Door Open to Moving Higher The central bank is sorting through the implications of unexpectedly strong growth and higher borrowing costs.

(…) “The committee is proceeding carefully,” Powell said during a press conference where he said nothing to shift the market’s expectation that officials won’t raise rates in December. (…)

At Fed officials’ September meeting, most projected one more rate increase this year, but some have spoken in recent weeks as though they aren’t eager to hike again unless hotter-than-expected economic data force their hand.

Powell echoed that sentiment on Wednesday by repeatedly highlighting how much inflation has fallen, rather than emphasizing the economy’s recent strength. (…)

Officials have been trying to balance two risks. They don’t want to overdo rate rises to avoid causing an unnecessarily severe downturn. They also don’t want to allow inflation to reaccelerate or to settle at levels well above their 2% target. “Those risks are closer to being in balance,” Powell said. (…)

Pressed over whether the Fed had raised rates to a level that would be sufficient to bring down inflation, he said, “We’re not confident that we haven’t, but we’re not confident that we have.” (…)

That inflation eased as growth strengthened this summer highlights how the economy has likely benefited from improving supply conditions, including fewer bottlenecks and shortages of goods, freight shipping and workers.

Powell said those supply-side improvements could allow inflation to continue to fall even if economic growth is solid, suggesting that stronger growth isn’t necessarily a problem for the Fed. “We feel like we’re on a path to make more progress, and it’s essential that we do,” he said. (…)

Importantly, on wages:

“In the labor market, what we’ve seen is a very positive rebalancing of supply and demand, partly through just much more supply coming online,” Powell said Wednesday. So even “with labor demand still clearly remaining very strong…you see wage increases coming down.”

October data was quite positive on wages with both total and service-providing wages rising 0.2% MoM. Last 3 months: both series +3.2% annualized.

Good news on employment (slowing) and wages (slowing) comes with a caveat: labor income is also slowing from 5.6% YoY in September to 5.0% in October, suggesting slower consumer expenditures in October after the strong September print (+5.9%).

On this next chart, there is no blue bar for October because aggregate payrolls were unchanged, zero, MoM, suggesting flat nominal spending last month.

Slower employment growth, slowing wages (black) and declining hours. Right before the holiday season…

• John Authers: Not Even Thinking About Thinking About Rate Cuts In 2020, Jerome Powell famously said he wasn’t giving a thought to hikes. Central banks are now coming full circle to the question of easing.

It’s more than three years since Jerome Powell gave us one of his best one-liners. “We’re not even thinking about thinking about raising rates,” he protested in June 2020. He kept to that line firmly for another a year, and didn’t hike rates until March 2022. Now more or less everyone, including Powell himself, accepts that the Fed should have done that earlier, and by extension started thinking about it earlier as well. (…)

We’re not talking about rate cuts, Powell averred earlier this week. On Thursday, Andrew Bailey of the Bank of England weighed in with more or less the same words, saying it was “much too early to be thinking about rate cuts.” And they were both following the example of the European Central Bank’s Christine Lagarde, who last week said in questioning: “When and at what level do you cut? This was not discussed at all, and the debate would be absolutely premature.” (…)

If the overnight index swaps market is right, then the first fully priced-in cut by the ECB will happen in April, to be followed by the Fed and the Bank of Canada in July, and the Swiss National Bank and BOE in September. None is expected to go any higher — and previously markets were braced for them to keep rates high for much longer. (…)

The receding belief in “higher for longer” has spurred the startling rallies for both stocks and bonds of the last few days. But how well based is it? Inertia is important. A move in either direction is a big signal, and central banks would rather not move if they don’t have to. For most of them, inflation is unambiguously their priority. So it would take real trouble, combined with reasonably calm inflation expectations, for a central bank to cut. (…)

For weeks now, rising yields have been seen as the driver of equities, with both moving in lockstep. That’s resulted in pain for the time-honored portfolio of 60% stocks and 40% bonds. More recently, a Bloomberg gauge of the 60/40 model had slumped roughly 8.4% since July until the recent rebound. (…)

Ian Harnett of Absolute Strategy Research in London draws attention to the way the unemployment rate is inversely correlated with equities’ performance relative to bonds. When it’s falling (much of the time), stocks beat bonds. When it rises, bonds win, often quite violently. Rising joblessness in the non-farm payroll data due Friday would be good news for bonds — but not necessarily for stocks:

So, if you think the jobs market really will ease, you should be buying bonds. But the critical number in the data the Bureau of Labor Statistics is about to release concerns the cost of employing people. Unit labor costs were revealed to have risen much slower than feared in data published earlier this week, but the total employment cost index remains high. Average hourly earnings, part of the unemployment report, have so far moved more with the ECI, as the chart from Joe Lavorgna of SMBC Nikko demonstrates. (…)

Apple’s Disappointing Outlook Spotlights Growing China Woes

Apple, which is trying to reverse several successive quarters of revenue decline, reported its lowest revenue from the greater China region since mid-2022. Its shares slid more than 3% after that number missed the average of five analysts’ projections by 11%. Chief Executive Officer Tim Cook assured Wall Street that iPhone demand remains strong in China, blaming Mac and iPad weakness instead. But he also predicted flat December-quarter revenue, suggesting Wall Street won’t see the growth rebound it’s banking on. (…)

Apple’s revenue in Greater China declined 2% [vs expectations of a 10% increase]— a steeper drop than the companywide figure. There are signs that trend may persist: Initial sales of the iPhone 15 in China were 6% lower than its predecessor in part because of incursions by Huawei, according to the consultancy GfK. (…)

Beijing has expanded a ban on Apple products to state-backed firms and government-backed agencies. Hon Hai Precision Industry Co. — which assembles the majority of Apple’s iPhones from its Chinese factories — is now under investigation over taxes and land use. (…)

In one potentially ominous sign, Qualcomm said that its smartphone chip business saw a 35% increase from Chinese manufacturers of Android phones, suggesting that customers in the region are opting for non-iPhones in larger numbers.

The area is Apple’s largest international market, accounting for about a fifth of sales. Still, Cook said he believes Apple actually gained smartphone market share in China during the quarter. (…)

• Warning Signs Grow Apple Is Losing China Consumers to Huawei Data from GfK and IDC show iPhone down as much as 6% in China

(…) Mobile industry tracker IDC estimates Apple’s shipments were down 4% in the third quarter, with both identifying Huawei Technologies Co.’s return to the mobile arena spotlight as a key event in the period. Huawei’s Mate 60 series recorded sales of close to 1.5 million in its launch month, more than doubling from a year ago, GfK said, despite facing supply constraints. (…)

Counterpoint Research and Jefferies analysts released preliminary sales figures for China earlier this month, indicating the slump for Apple could be as big as a double-digit percentage as the country’s economic challenges hit consumer demand. (…)

In the latest IDC report, local brands Honor Device Co. and Oppo took the top two spots in China in the past quarter. Honor, which was spun off as an independent business from Huawei in 2020, introduced several foldable models in recent weeks, focusing on the segment of the smartphone market that is still showing robust growth.

U.S. Housing Supply Ticked up 5% in October Extremely low inventory is still dragging on the market and remained 42% below prepandemic levels

Supply was down 2% in October compared to the same time a year ago, according to a report Thursday from Realtor.com. However, instead of supply decreasing in October compared to September—as it typically does—the inventory of homes for sale grew by 5.1%. (…)

• The US Housing Market Has Become an Impossible Mess Americans with cheap loans don’t want to sell. Those without homes can’t afford to buy. Will anything budge?

(…) The Federal Reserve bank’s aggressive tightening since last year has driven the interest rate on a 30-year mortgage close to 8%, the highest point in almost a quarter century, adding some $1,100 to the monthly payment on a $400,000 loan. That might be manageable if higher rates led to lower prices. But the impact on supply is even more drastic because of the so-called lock-in effect: Homeowners are unwilling to let go of cheap mortgages they got when rates were scraping bottom. This has resulted in the least affordable housing market since the 1980s, with sales approaching record lows. (…)

University of California at Berkeley economist John Quigley in the 1980s identified the lock-in effect, which he said was preventing Americans from selling their homes. Mortgage rates had spiked from 9% in 1978 to 18% in 1981, leaving millions of households with older mortgages paying what amounted to below-market rates. Buying a new home meant a more expensive loan, adding substantial costs—a powerful disincentive to moving. (…)

These days, most existing mortgages are below 4%, roughly half the cost of a new 30-year loan. The large spread is likely to reduce the rate at which homeowners move by more than a quarter over the next decade, according to estimates from Julia Fonseca of the University of Illinois and Lu Liu of the University of Pennsylvania.

The trend will mostly affect would-be buyers of their first homes, who will miss out on a key opportunity to use government-supported mortgages to build wealth. But economists point to other issues: The lock-in effect threatens to prevent younger owners from moving to larger homes and expanding their families while causing empty nesters to put off downsizing. And decreased mobility makes for a less efficient labor market, as workers will be less likely to move for new jobs if they don’t want to give up their old mortgages. (…)

New homes now account for a third of available inventory, versus the typical 10%, according to consulting firm Zonda. (…)

Only way out: substantially lower mortgage rates.

Note: I am travelling this month. Posting will be sporadic and shorter due to limited time and equipment.

The U.S. and European Economies Are Diverging With eurozone economic activity weakening and inflation tumbling, rate rises appear to be having greater traction

The European Union’s statistics agency Tuesday said the combined gross domestic product of the eurozone’s 20 members fell by an annualized 0.4% in the three months through September, having increased by 0.6% in the previous quarter.

This is a stark contrast with the 4.9% rate of annualized growth recorded by the U.S. during the same period, more than double the pace of growth in the previous quarter.

Added to this are signs that consumer-price inflation is easing in Europe’s single currency area while it has increased recently in the U.S. Figures also released by Eurostat showed prices were 2.9% higher in October than a year earlier, the lowest rate of inflation since July 2021. The core rate of inflation, which excludes energy and food prices, fell to 4.2% from 4.5% in September. (…)

The widening growth gap and the narrowing inflation gap between the eurozone and the U.S. suggest that the European Central Bank’s rate rises are having a greater impact on an economy that already faced stronger headwinds.

“Our past interest rate increases continue to be transmitted forcefully into financing conditions,” said ECB President Christine Lagarde in a news conference last week. “This is increasingly dampening demand.”

Some critics of the ECB argue that by almost matching the Federal Reserve’s rate rises while confronting stronger headwinds to growth from other sources, eurozone policy makers will make the growth gap even wider. (…)

Meanwhile, the eurozone’s weakness is holding back other parts of the world economy. The EU’s imports from China in the first eight months of this year were down 15.4% on the same period of 2022, while imports from the U.K. were down 13.7%. Imports from the U.S. were little changed as Europe looked to the world’s largest economy to replace natural gas that it no longer buys from Russia.

In the wake of the invasion, energy and food prices have risen more sharply in Europe than in the U.S. since the invasion, reducing the ability of households to spend on other goods and services.

Households around the world have cut back on their spending on goods after splurging during the Covid-19 pandemic and instead have focused on the services they were denied during lockdowns. But that swing has been particularly pronounced in Europe: By August, retail sales in the eurozone were 7.5% lower than in January 2022, compared with a 1.8% drop in the U.S. 

Total consumer spending in Germany was 0.5% lower than a year earlier in the three months through June, while in the U.S. it was 1.8% higher. In the third quarter, U.S. consumer spending surged again, while consumer spending fell in Germany.

The second blow for Germany and the rest of Europe has come through higher costs for energy-intensive factories. Output cuts in Germany’s large chemicals industry, among other sectors, meant industrial production in August was 2.2% lower than the month before Russia’s invasion of its neighbor, while in the U.S. production was up 2.3%.

There are few signs that economic growth in the eurozone is set to pick up over the coming months. October surveys of eurozone businesses released by S&P Global last week pointed to the largest decline in activity since November 2020, with new orders falling sharply and purchasing managers reporting the first reduction in employment since January 2021. By contrast, a similar survey of U.S. businesses pointed to a pickup in activity during October. (…)

On top of those headwinds, the ECB has raised its key interest rate to a record high, and to a level that policy makers believe is cooling demand. The central bank Thursday ended a historic run of 10 consecutive rate increases, but said they would continue to weigh on the economy through the first quarter of next year, if not for longer.

• Eurozone Inflation Drops Sharply Amid Energy Deflation, Economic Contraction

The consumer price index, which measures how fast prices are rising in the 20-member euro area, stood at 2.9% in October, dropping sharply from 4.3% the month before and below economists’ expectations for a reading of 3.3%, according to a poll compiled by The Wall Street Journal.

Inflation was brought lower notably by energy prices, which were some 11% lower in October compared with last year, when price spikes from the Russia-Ukraine crisis resulted in natural-gas supply shortages. In September, energy prices were 4.6% lower on year.

Food inflation also continued to ease, reaching 7.5% in October from 8.8% the month before.

Core inflation, a measure stripping out volatile food and energy prices, meanwhile eased to 4.2% from 4.5%, in line with economists’ expectations. (…)

Inflation cooled across most of the zone’s major economies in October. In Germany, the eurozone’s powerhouse, harmonized price rises eased to 3.0%, while in France they cooled to 4.5% and in Italy to 1.8%, bringing the latter country in line with European Central Bank targets. In Spain, where inflation had cooled more quickly, prices rises ticked up again in October, reaching 3.5%.

Canadian economy stalls as higher interest rates weigh on growth GDP on track to fall by 0.1% annualized in the third quarter, following a 0.2% drop in the second quarter, according to preliminary Statscan data

Real gross domestic product was essentially unchanged in September, according to a preliminary estimate that Statistics Canada published Tuesday. While the numbers will be revised on Nov. 30, GDP is on track to fall by 0.1 per cent annualized in the third quarter, after a 0.2-per-cent drop in the second quarter.

If those figures hold, Canada would post two consecutive quarters of declining GDP – what some economists refer to as a “technical recession.” Output would also be considerably weaker than the Bank of Canada’s most recent projection, published last week, which expected 0.8-per-cent growth in the third quarter. (…)

“We’re expecting growth below 1 per cent for the next three, four quarters,” Bank of Canada Governor Tiff Macklem explained at a press conference last week. “Is that a recession? No, it’s not a recession. It’s low positive growth.”

Mr. Macklem said “some small negative numbers” couldn’t be ruled out in the near future – although this wouldn’t necessarily qualify as a recession.

“When people say the word ‘recession,’ I think what they have in mind is a steep contraction in output and a large rise in unemployment. That’s not what we’re forecasting.” (…)

MANUFACTURING PMIs

China: Manufacturing production falls slightly in October

At 49.5 in October, the headline seasonally adjusted Purchasing Managers’ Index™ (PMI®) fell from 50.6 in September and below the neutral 50.0 threshold to signal a fresh deterioration in manufacturing conditions. Though only marginal, it was the first time that a deterioration has been recorded since July.

Weighing on the headline index was a renewed fall in manufacturing production during October. Though only slight, the decline contrasted with modest expansions in the prior two months. Companies that cut output levels often linked this to relatively muted sales, particularly from abroad.

Overall new business expanded for the third straight month, but the rate of growth eased to one that was only marginal. Panel members often noted that sluggish global economic conditions and high prices had dampened sales. Notably, new export business declined for the fourth straight month in October, albeit slightly.

Lower production and relatively muted client demand weighed on purchasing activity, which fell for the first time since July. Firms also made greater usage of current stocks, partly to help control costs, which led to a moderate decline in inventories of inputs. On the other hand, weaker-than-expected sales and the delayed shipment of goods led to the strongest rise in inventories of post­production items since September 2015.

Turning to supply chains, average delivery times for purchased inputs improved slightly in October. There were some reports that requests for expedited shipments had supported the slight shortening of lead times.

Manufacturers trimmed their staffing levels for the second straight month in October, with the rate of job shedding the quickest seen since May. There was evidence that softer customer demand and efforts to cut costs had led firms to readjust their workforce numbers. At the same time, backlogs of work continued to expand slightly, with some firms linking this to recent increases in new work and pressure on capacity.

Average input prices faced by Chinese manufacturers increased further in October. Though modest, the rate of inflation was the quickest recorded since January, with firms often citing higher prices for raw materials and oil. Greater operating expenses were partly passed on to clients in the form of higher selling prices, which likewise rose at a modest rate.

Business confidence regarding the 12-month outlook for production softened again in October, reaching its lowest since September 2022. While some companies were hopeful that new product launches and improved client demand both at home and overseas would support growth, others expressed concerns over the sluggish global economic climate.

Japan: Manufacturing conditions continue to deteriorate inOctober

The headline au Jibun Bank Japan Manufacturing Purchasing Managers’ Index™ (PMI®) was little-changed in October but remained marooned below the crucial 50.0 no-change mark for a fifth successive month. After accounting for seasonal factors, the index recorded 48.7, up from 48.5 and a reading indicative of a modest deterioration in operating conditions.

Output and new orders remained on downward trajectories during October. Both have now fallen for five months in a row since some marginal growth was registered in May.

Panellists commented that sales demand was weak regardless of whether it emanated from domestic or international markets. Indeed, new export orders declined for a fifth successive month in October, and at a solid rate that was the steepest since June.

High prices were in some cases reported to have weighed on sales.

China was notably reported to be a key source of reduced international sales, although Europe and the US were also mentioned. (…)

Meanwhile, firms continue to report some modest delays in the delivery of inputs to their plants, and this helped to explain in part why input price inflation remained elevated during October. According to the latest anecdotal evidence, a wide plethora of inputs increased in cost, including steel, energy, wood, food and semiconductors. Firms sought to pass on higher costs again to their clients, and subsequently increased their own charges in October. (…)

• French Economy Slows Nearly to a Halt as Exports Slump

S&P 500 Companies With More International Exposure Reporting An Earnings Decline of -5%

(…) For this analysis, the index was divided into two groups: companies that generate more than 50% of sales inside the U.S. (more domestic exposure) and companies that generate more than 50% of sales outside the U.S. (more international exposure [41% of S%P 500 companies]). Aggregate earnings and revenue growth rates were then calculated based on these two groups.

The blended (combines actual results for companies that have reported and estimated results for companies that have yet to report) earnings growth rate for the S&P 500 for Q3 2023 is 2.7%. For companies that generate more than 50% of sales inside the U.S., the blended earnings growth rate is 6.8%. For companies that generate more than 50% of sales outside the U.S., the blended earnings decline is -4.7%.

The blended revenue growth rate for the S&P 500 for Q3 2023 is 2.1%. For companies that generate more than 50% of sales inside the U.S., the blended revenue growth rate is 3.6%. For companies that generate more than 50% of sales outside the U.S., the blended revenue decline is -2.0%.

  

Q3 ECI: Labor Cost Growth Slowing Gradually

The slowly improving balance between supply and demand for labor is helping to gradually reduce cost pressures stemming from the labor market. The Employment Cost Index rose 1.1% in the third quarter, a touch higher than the consensus and our own expectation for a 1.0% gain. Yet the “low” 1.1% reading (1.07% before rounding) was enough to nudge down the year-over-year rate to nearly a two-year low of 4.3% (not seasonally adjusted).

The ECI is the preferred gauge of labor costs among the FOMC and most economists as it provides a more comprehensive look at compensation growth. Compared to the more timely average hourly earnings data from the monthly jobs report, the ECI includes public sector workers and benefit costs, in addition to controlling for compositional shifts in jobs that can at times muddy the trend in pay pressures.

Helping to drive the stronger-than-expected ECI print in Q3 was a 1.5% increase for government workers, whose pay growth typically lags the private sector. Private sector compensation rose 1.0% over the quarter, consistent with an annualized rate of 4.1% and on par with the 4.2% annualized increase in average hourly earnings growth for the private sector in Q3. Total benefit costs growth was unchanged in Q3 at 0.9%, which slowed the one-year change to 4.1%. (…)

  

Source: U.S. Department of Labor and Wells Fargo Economics

Since the onset of the pandemic, employment cost growth for unionized workers has trailed behind that of non-unionized workers by a total of 3.8 percentage points, suggesting that at least some of the recent push by unions is to catch up to the lofty rates of compensation growth for non-unionized workers amid the exceptionally tight labor market of the past few years.

We doubt the significant extractions of recent union deals will be enough to reverse the downward trend in labor cost growth over the coming year, although they may slow its progress.

First, only a small fraction of the private sector workforce is represented by a union (6.8% in 2022). Second, compensation pressures are broadly receding as demand for workers cools and more workers join the labor force. The quits rate has returned to 2019 levels, signaling less pressure for companies to raise pay in order to retain workers. Meantime, the share of small businesses raising pay has fallen alongside hiring plans.

Factoring in the recent trend in productivity, labor cost growth remains too high to be consistent with the FOMC’s 2% inflation goal. Moreover, we believe Fed officials will need to see labor cost growth reach the ~3.0-3.5% range consistently before feeling confident that inflation can return to 2% on a sustained basis.

Therefore, any policy easing remains distant in our view. That said, the moderating trend in labor cost growth alongside signs of a further slowdown to come over the next few quarters suggests little need for the Fed to tighten policy further from here, and we continue to believe that the current hiking cycle has come to an end.

Source: U.S. Department of Labor and Wells Fargo Economics

Druckenmiller Says He Has ‘Massive’ Bullish Bets on 2-Year Notes ‘I started to get really nervous’ about the economy recently

Billionaire investor Stan Druckenmiller said he’s bought “massive” bullish positions in two-year notes, as he’s become more worried about the economy.

In recent weeks, “I started to get really nervous,” Druckenmiller, founder of Duquesne Family Office, said in an interview with hedge fund manager Paul Tudor Jones at a conference last week. “So I bought massive leveraged positions” in the short-term notes, he said.

Druckenmiller has joined a number of prominent investors, including Bill Ackman and Bill Gross, in sounding the alarm about the economy lately. Ackman, founder of Pershing Square Capital Management, said this month that he’s unwound bearish bets on 30-year Treasuries, because “there is too much risk in the world.”

Unlike Ackman, Druckenmiller said he’s keeping bearish wagers on longer-term bonds because he’s concerned about swelling government-debt issuance. But with the new bullish bets on two-year notes, overall he is long fixed income for the first time since 2020, he said at a Robin Hood Foundation event in New York. A video of the interview surfaced on social media this week. (…)

In the interview with Tudor Jones, Druckenmiller said he’s observed anecdotal evidence that “on the margin, things are getting softer” as pandemic stimulus is “running down rapidly.” Historically, the simultaneous increases in interest rates, oil and the dollar have been negative for the economy, he added. (…)

If he’s right about the economy, Druckenmiller said two-year yields could fall to 3%, while 10-and 30-year yields remain at the current levels of roughly 5%.

“I am confident the yield curve will normalize,” he said. “That’s a trade I expect to have for some time.” (…)

In the interview, Druckenmiller blasted Treasury Secretary Janet Yellen for not taking advantage of near-zero interest rates during the pandemic by selling more longer-term bonds, calling it “the biggest blunder in the history” of the department.

“When rates were practically zero, every Tom, Dick, Harry, and Mary in the United States refinanced their mortgage,” Druckenmiller said. “Unfortunately, we had one entity that did not, and that was the US Treasury.”

Druckenmiller reiterated his concern about the growing government-debt burden. If rates stay where they are, the government’s interest expense will amount to 7% of GDP by 2043 — equivalent to 144% of annual discretionary spending today, he said. (…)

WeWork is expected to file for Chapter 11 bankruptcy protection as early as next week. (WSJ)