Payroll employment rises by 145,000 in December; unemployment rate unchanged at 3.5%
The change in total nonfarm payroll employment for October was revised down by 4,000 from +156,000 to +152,000, and the change for November was revised down by 10,000 from +266,000 to +256,000. With these revisions, employment gains in October and November combined were 14,000 lower than previously reported. After revisions, job gains have averaged 184,000 over the last 3 months [175k for all of 2019].
(…) In December, average hourly earnings for all employees on private nonfarm payrolls rose by 3 cents to $28.32. Over the last 12 months, average hourly earnings have increased by 2.9 percent. In December, average hourly earnings of private-sector production and nonsupervisory employees, at $23.79, were little changed (+2 cents) [+3.0% YoY].
You Can Now Make $100,000 Working at Taco Bell
(…) The Yum! Brands Inc.-owned chain will test the higher salary in select restaurants in the U.S. Midwest and Northeast, and will also try a new role for employees who want leadership experience but don’t want to be in the management position. Current salaries for general managers at company-owned Taco Bell stores are between $50,000 and $80,000, according to the company. (…)
Restaurants including Olive Garden owner Darden Restaurants Inc. and Shake Shack Inc. have recently called out labor inflation that’s hurting margins. (…)
Poloz warns ‘froth’ could return to Canada’s housing market
In remarks at the Greater Vancouver Board of Trade’s Economic Outlook Forum Thursday, Mr. Poloz attributed the return of strength in housing – particularly in B.C., Quebec and Ontario – to a combination of healthy employment and wage growth, and immigration-driven population gains. That is driving “fundamental demand” that, he said, “appears to be outpacing our ability to build new homes, which can put renewed upward pressure on prices.”
However, he cautioned, “We will be watching for signs of a re-emergence of extrapolative expectations returning to certain major housing markets – in short, what we call ‘froth.’ ” (…)
In a news conference after his talk, Mr. Poloz said that the B20 mortgage stress-test rules implemented nationally two years ago, combined with other regulatory and tax measures, have been effective in dampening housing speculation in the Toronto and Vancouver areas. “It cooled those expectations, made it less automatic that people were going to profit by investing in more housing. That has given us somewhat more balanced markets in those hot areas,” he said. (…)
“That is not going to distract us from Job One, which is to stabilize the macroeconomy, and through that to achieve our inflation targets,” he said. “We see the implications for certain housing markets as kind of a side effect of that primary mission.” (…)
In the news conference, Mr. Poloz noted that the fourth quarter was hit by rail and auto strikes, as well as some adverse weather, that may have temporarily dampened the economic data. (…)
Trump says China trade deal may be signed shortly after Jan. 15
U.S. President Donald Trump, who announced last month that the Phase 1 trade deal with China would be signed on Jan. 15, said on Thursday the agreement could be signed “shortly thereafter.”
In an interview with the ABC affiliate in Toledo, Ohio, Trump said: “We’re going to be signing on January 15th – I think it will be January 15th, but shortly thereafter, but I think January 15th – a big deal with China.”
Trump proposes rolling back environmental impact law Changes meant to make it easier to get approval for major infrastructure projects
BlackRock Joins World’s Largest Investor Group on Climate Change Move follows criticism that the money manager hasn’t done enough to address climate change
BlackRock Inc. said Thursday that it has joined Climate Action 100+, the world’s largest group of investors by assets pressuring companies to act on climate change, following criticism that the money manager hasn’t done enough to move the needle.
“We believe evidence of the impact of climate risk on investment portfolios is building rapidly and we are accelerating our engagement with companies on this critical issue,” a BlackRock spokesperson said.
Launched in 2017, Climate Action 100+ is a group of more than 370 institutional investors, including the money management arms of HSBC Holdings PLC and UBS Group AG , that now represents around $41 trillion in assets thanks to BlackRock’s membership, up from $35 trillion. The group has successfully pressured oil giants Royal Dutch Shell PLC and BP PLC to set targets to reduce emissions and disclose more data.
“BlackRock is responding to the demands of its asset owner clients and other groups globally that they take meaningful action to address climate change,” said Fiona Reynolds, member of the Climate Action 100+ Steering Committee and chief executive of the Principles for Responsible Investment. (…)
EQUITY VALUATION
At 3275 on the S&P 500, the P/E on forward EPS of $176.80 (per Refinitiv/IBES) is 18.5. Other than during bubbles, we have practically never been there since 1957.
Keep in mind that forward EPS almost always prove too high as Fidelity illustrates:
Using actual trailing EPS provides little comfort, if any:
The Rule of 20 P/E is currently 22.4. It has reached higher levels in some previous cycles…
…generally when the Rule of 20 Fair Value was rising, not the case presently:
The no-recession scenario is more widely accepted.
Analysts are more optimistic. SentimenTrader reveals that
According to Bloomberg data since 2010, they just upgraded the most stocks ever in a single day.
It’s rare to see analysts raise their price targets on more than 100 stocks at a time, but that’s been the case for the past three sessions.When more than a net +/- 100 stocks are upgraded/downgraded by analysts on the same day, it coincided with extreme sentiment. Just because they work for investment banks on the Street doesn’t mean they’re immune to the animal spirits. In some sense, they help drive it.
When more than a net 100 stocks were upgraded, it didn’t pan out well over the next few months, a minor warning considering it has triggered now.
Investors sense that the Fed has their back:
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Fed’s Clarida Gives Markets a Quick Reassurance The Fed vice chairman conveys that the stock market won’t be derailed by a sudden change in monetary policy or a misbehaving bond market.
Momentum remains positive:
- 13/34–Week EMA Trend Chart (CMG Wealth)
Fortune Poll: Investors See a 2020 Recession Coming—But Think They’ll Make Money
Fortune and Civis Analytics teamed up to survey more than 1,300 investors between December 19-20.
- 51% of non-retired investors plan to increase their stock holdings in 2020, while 25% plan to decrease their stock holdings.
- 76% of investors think the stock market will rise in 2020, including 19% who think it will rise more than 10%. Only 5% expect a decline in the stock market. Only 2.3% see stocks declining by more than 5%.
- 58% of investors say a recession is likely in 2020, compared to 42% who say it’s unlikely.
- 40% of investors foresee the presidential election increasing volatility in financial markets in 2020.
Obviously, many investors have no clue how devastating recessions can be to equities.
THE END FOR THE “DOUBLE IRISH/DUTCH SANDWICH”
Fortune tells us that
This month marks the end of the so-called ‘Double Irish’—a much-used tax avoidance strategy that involves setting up operations in Ireland to take advantage of its low corporate tax rates. Under pressure from the OECD, the EU, and the U.S., Ireland closed the loophole, while a similar one in the Netherlands—the ‘Dutch sandwich’—has also shut. (…)
Thanks to a change in Irish law, Google in the U.S. will do something it hasn’t in years: own outright its intellectual property, including patents, trademarks, branding, and more.
For years, Google and other companies employed a legal tax avoidance strategy called the Double Irish, Dutch sandwich. Here’s how it works: Using complex multi-national structures, they transferred ownership of intellectual property to wholly owned subsidiaries in low- or no-tax regions and then licensed the material back to the rest of the company. Profits turned into “license fees” and thus avoided taxes.
One of the Irish laws that made the tactic possible expired on Jan. 1, 2020 due to international pressure from many countries—the U.S., France, the U.K., and Spain, for example—that were tired of losing tax revenue to low-tax Ireland, among other havens. (…)
Money-Losing Companies Mushroom Even as Stocks Hit New Highs A combination of forces has pushed the percentage of listed companies in the U.S. losing money over 12 months close to 40%, its highest level since the late 1990s outside of postrecession periods.
(…) The proportion of U.S.-listed companies losing money for three years reached its highest last year in data stretching back to the late 1990s, according to calculations by Andrew Lapthorne, global head of quantitative research at Société Générale.
Investor tolerance of losses shows up most obviously in new issues, where about three-quarters of IPOs were made by loss-making companies last year, according to University of Florida finance professor Jay Ritter.
What type of companies are losing money? In the U.S., 42% are health-care companies, reflecting the popularity of small, often loss-making biotech stocks. Another 17% are tech stocks, many of them fashionable new ventures. (…)
The shares of three-quarters of the 100 biggest companies that reported losses rose over the past 12 months, because big loss-making companies tend to be growth stories where investors don’t much mind the losses. That’s far above the 41% of all loss-making U.S. companies whose shares rose, because smaller lossmakers really suffered, according to data from S&P Global Market Intelligence.
Among the smallest 80% of companies, there has been a long-term increase in persistent loss makers—those losing money for three years. The proportion of these loss-making companies rose after each of the last two recessions and didn’t come down again afterward. The story should be familiar by now: Many small companies are being dominated by the biggest corporates, squeezing them out of markets and crushing their ability to invest for growth. (…)
Some other facts: looking only at S&P 500 companies, only 3 show negative EPS over the last 4 quarters. Sifting through the 2105 stocks in the CPMS/Morningstar database, 268 (12.7%) lost money during the last 4 quarters, up from 241 (11.4%) three quarters ago. “Money-losing companies mushroom” seems an inappropriate qualification for the majority of U.S. listed companies.
Source: @WSJ; Read full article
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Scooter Startup Lime Exits a Dozen Markets, Cuts Jobs Electric scooter-rental startup Lime is laying off roughly 14% of its workforce as it pulls out of a dozen markets in the U.S. and abroad, the latest downscaling in an unprofitable industry.
Amazon is said to be preparing a luxury fashion platform
Internal Boeing Messages Say 737 Max ‘Designed by Clowns’
(…) “This airplane is designed by clowns, who in turn are supervised by monkeys,” said one company pilot in messages to a colleague in 2016, which Boeing disclosed publicly late Thursday. The company [the clowns] had already provided the documents to lawmakers and the U.S. Federal Aviation Administration [the monkeys], who are investigating the 737 Max and the process that cleared it to fly.” (…)
“Would you put your family on a MAX simulator trained aircraft? I wouldn’t.”
“I’ll be shocked if the FAA passes this turd.”
“This is a joke. This airplane is ridiculous.”
“Best part is we are re-starting this whole thing with the 777X with the same supplier and have signed up to an even more aggressive schedule!”
“Jesus, it’s doomed.”
“I still haven’t been forgiven by God for the covering up I did last year,” an employee wrote in 2018, apparently in reference to the FAA.
Sickening!!! Try to promote capitalism with stuff like that.