Voluntary Job-Quitting Hits Highest Level in Nine Years The number of Americans who voluntarily quit their jobs climbed to a postrecession high in December.
The Labor Department’s monthly Job Openings and Labor Turnover Survey, or Jolts, showed the number of voluntary quits rose to nearly 3.1 million, the highest level since December 2006. Hires, meanwhile, increased to nearly 5.4 million workers, also a postrecession best.
Taken together, the figures signal a strong finish to the year for the U.S. labor market. Americans are more likely to voluntarily leave one job if they think they can do better elsewhere, and companies appeared ready to absorb them. (…)
There were 5.6 million job openings in December, the second-highest level on record (July 2015 was higher; records date back to December 2000 and aren’t adjusted for population growth). And layoffs dropped to 1.6 million, the lowest level in more than a year. (…)
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Wage inflation relatively low despite rising quits rate
Threatening to quit just isn’t as lucrative as it used to be. As today’s Hot Chart shows, while the US private sector quits rate has now risen to the highest in almost nine years, wage inflation remains a full percentage below 2007 levels. This apparent lack of negotiating power by workers shouldn’t be surprising in the current environment of weak unionization, low inflation and disappointing profits. Or perhaps management feels there’s a breakeven wage beyond which automation makes more sense than hiring. (NBF)
Low Oil Prices Hits Global Economy, OPEC Says
(…) Lower oil prices are generally considered a boon to oil consumers and more broadly for the global economy. But this time around, “the overall negative effect from the sharp decline in oil prices since mid-2014 has outweighed benefits in the short term,” OPEC said.
The organization, which supplies more than one in three barrels of oil consumed globally, lowered its 2016 global growth forecast to 3.2% from 3.4%.
Despite oil prices reaching levels not seen in more than 10 years last month, OPEC also cut its oil-demand growth forecast by 10,000 barrels a day for this year.
Oil demand is now forecast to rise 1.25 million barrels a day to 94.21 million barrels a day this year, OPEC said, citing consumers cutting back on car transport and the lingering impact of the recent financial crisis.
“Due to the aftereffects from the ‘great recession’, the potential that consumer spending ability could rise is limited,” it said.
Despite lackluster appetite for its commodity, OPEC has continued to pump at full tilt. The group said its production rose 131,000 barrels a day to 32.33 million barrels a day in January, driven by higher output from Nigeria, Iraq, Saudi Arabia and Iran.
The group’s output level last month implies a global oil surplus of 1.84 million barrels a day in the first quarter of 2016, based on the report’s data.
Blast From the Past: Gasoline Costing a Mere $1 a Gallon Gasoline could return to $1 a gallon for the first time since the 1990s amid the continuing decline in crude-oil prices, a growing fuel glut and seasonal refining shifts.
Crude prices continued to languish Monday, falling $1.75, or 5.9%, to $27.94 in New York. If oil prices continue to march lower, gas stations across a wide swath of the country could soon peddle fill-ups at prices not seen since the 1990s. (…)
The cheapest gas in the U.S. is selling in Oklahoma City at a 7-Eleven station for just $1.11, according to data from GasBuddy.
The national average price for the fuel is considerably higher at $1.73 a gallon, according to motor club AAA. That is because more expensive gasoline sales on the West Coast in places like California and Oregon are inflating the U.S. average. Protracted refinery shutdowns in the region have created some supply shortfalls and extra pollution-control fees mandated at the state level push up gasoline costs in the area. (…)
Nationwide, drivers are filling up for a full $1 a gallon less than they did at the peak price in 2015 and 25% of U.S. stations are already pricing gasoline under $1.50, according to AAA. (…)
In the first 11 months of 2015, drivers moved 2.9 trillion miles—a 3.5% uptick over the same period in 2014, the latest U.S. transportation data show. Gasoline demand during December was the highest for that month in eight years, according to API, the energy industry’s main trade association. (…)
“Mortgage Rates Well Into Mid 3’s”
30 Year Fixed
EARNINGS WATCH
- 336 companies (79.9% of the S&P 500’s market cap) have reported. Earnings are beating by 4.5% while revenues have met expectations.
- Expectations are for a decline in revenue, earnings, and EPS of -3.4%, -4.7%, and -2.9%. EPS is on pace for -2.0%, assuming the current beat rate for the remainder of the season. This would be +4.2% excluding Energy. (RBC)
Global Stocks Enter Bear Market
With stock markets from every continent plunging (Japan most recently), it should be no surprise that MSCI’s world index has entered a bear market – dropping over 20% from its April 2015 record highs. However, as Gavekal notes, while much of the drag on global stocks is from collapsing emerging markets, the average developed market stock is down 23% in the past year. (…)
Goldman Sachs abandons five of six ‘top trade’ calls for 2016.
(…) “Markets have started out this week by aggressively de-risking, apparently owing to fears that the recent slowdown in global growth could descend into recession,” Charles Himmelberg, chief credit strategist, wrote in a note to clients Tuesday. “Financial credit spreads are spiking, especially in Europe, possibly signaling a reactivation of systemic risk concerns.” (…)
The New York-based bank closed its call for dollar strength versus an equally weighted basket of the euro and yen on Tuesday, recording a potential loss of about 5 percent, Himmelberg wrote in his note. Goldman Sachs also ended a bet on five-year five-year forward Italian sovereign yields versus their German counterparts for a loss of about 0.5 percent, he wrote.
Japan’s currency strengthened past 115 per dollar for the first time since 2014 on Tuesday while the euro rose to a more than three-month high. JPMorgan Chase & Co.’s gauge of global currency swings rose to 11.9 percent on Tuesday, its highest in more than two years. Measures of stock-market and bond volatility also climbed. (…)
Increasingly divergent monetary policy in the U.S. versus the euro area and Japan “still favors dollar strength,” Himmelberg wrote. Further easing in Europe is also “conducive to a more positive backdrop for peripheral sovereign bonds.”
Goldman Sachs was forced out of three of its top picks for the year last month: a bet on large U.S. banks against the Standard & Poor’s 500 Index, a wager on 10-year break-evens, and a call on the Mexican peso and Russian ruble strengthening versus the South African rand and Chilean peso. The latter closed on Jan. 21 for a potential loss of 6.6 percent.
The bank’s one remaining trade is a wager on a basket of 48 non-commodity exporting companies versus a basket of 50 emerging-market bank stocks. That’s trading 4.5 percent above its opening level in November.