Conference Board’s Employment Trends Increased in July July’s results mark the second consecutive month of increases
The index grew to 109.89 in July from 108.72 in June. The July reading was 5.4% higher than it was a year earlier. (…)
July’s results were driven by positive contributions from all eight components, according to the report. The largest contributions came from the ratio of involuntarily part-time to all part-time workers, initial claims for unemployment insurance, number of employees hired by the temporary-help industry and industrial production.
JAPAN WAGES SPIKE
The latest acceleration in Japan’s wage growth was a bit of a shocker. The increases in pay are now higher than in most other developed economies (including the US). Is the Phillips curve finally working? Are Japan’s extremely tight labor markets finally translating into faster wage growth? Will this trend boost Japan’s inflation? (The Daily Shot)
The trend in U.S. wages is much smoother and softer, even though employment costs are slowly rising:
Only the job switchers are enjoying much higher wages, although there has been no acceleration there as well.
THE U.S. SAVINGS RATE REVISION
What were the drivers of the Commerce Department’s massive adjustment to the savings rate? A substantial part of it appears to be underreported asset income, which would suggest that the upward correction in savings is skewed toward wealthier Americans. (The Daily Shot)
Source: Goldman Sachs
Don’t Worry About the End of QE, Worry About Rates The Federal Reserve is putting quantitative easing into reverse, but investors should focus instead on interest rates.
(…) So could the turnaround in QE change prices? The Fed aims to cut its holdings of bonds by $40 billion a month, rising to $50 billion by the end of the year. If that makes bond yields rise, investors who had abandoned Treasurys might be tempted back, reducing demand for riskier assets and so their prices. At the end of the chain are emerging markets, the riskiest assets that saw the biggest inflows during the bull market, and it is reasonable to expect them to suffer most from such a rise in yields.
That’s the theory. In reality, Treasury yields are tightly linked to expectations about the economy, inflation and future interest rates–not anyone’s buying and selling. Over each of the three QE periods 10-year Treasury yields rose, the opposite of what would be expected, because investors grew more confident about growth, and after each ended yields fell back. If the Fed was responsible, the general sense that it is doing something, and the signal that sends, seems to be more important than what it actually does. (…)
Well, James Mackintosh may write all he wants about the term premium but the reality is that the Fed’s gargantuesque appetite for bonds during QEs boosted excess reserves and brought real yields way lower than normal.
JP Morgan Asset Management displays central banks QE/QT programs into 2019:
EARNINGS WATCH
We now have 413 reports in and the beat rate has finally declined below 80% to 79% but the surprise factor has gained to +5.2%. Amazingly, 8 of the 11 S&P 500 sectors are showing surprise factors at +5.1% or above (average: +6.6%). Materials (+1.5%), Real Estate (+0.2%) and Energy (-8.9% to +123.6%!) are holding the average down.
Q2 EPS now seen +24.0% from +20.7% on July 1. Revenues: +9.4% (!) vs +8.1% on July 1.
Q3 estimates are +22.6% vs +23.4% on July 1.
Full year 2018: +23.2% from +22.4% on July 1. Full year 2019: +10.1% vs +9.7%.
However, corporate pre-announcements are getting worse with 2 more negatives and no positive yesterday.
Facebook Asks Banks for Customer Data