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Posted on 7/31/22 at 9:11 am to Bard
quote:
You're thinking the labor market will remain tight? What's in place to make you think that?
Right now there are about 2 open jobs for every person looking for a job. Are companies really going to have significant layoffs when they just went through a hell of a time trying to hire and retain workers? If the labor market does start to soften, I bet a lot of healthy companies will look at that as an opportunity to get good hires and won’t slow down their hiring much at all.
Posted on 7/31/22 at 12:04 pm to Jon Ham
quote:
Right now there are about 2 open jobs for every person looking for a job. Are companies really going to have significant layoffs when they just went through a hell of a time trying to hire and retain workers? If the labor market does start to soften, I bet a lot of healthy companies will look at that as an opportunity to get good hires and won’t slow down their hiring much at all.
Maybe, but if there is a slow down of spending, then the need to hire slows down as well. There will still tons of money floating around the 2 years after covid which kept demand high, but now money is leaving circulation and people are spending less.
Posted on 7/31/22 at 8:57 pm to Jon Ham
quote:
Right now there are about 2 open jobs for every person looking for a job.
That's a good point but it's a bit blunted by the fact that initial jobless claims have been rising since the middle of March. The Labor Force Participation Rate is still a full point below where it was prior to COVID. In other words, there are jobs but there are an increasing number of people choosing to not work.
quote:
Are companies really going to have significant layoffs when they just went through a hell of a time trying to hire and retain workers? If the labor market does start to soften, I bet a lot of healthy companies will look at that as an opportunity to get good hires and won’t slow down their hiring much at all.
Is it really a good labor market if workers are staying out of the market due to unemployment options being preferable?
A rise in unemployment is coming. Continued high inflation, continued high fuel and continued high energy prices does not a strong economy make. Add to this the rising interest rates which will slow down economic growth even more; unemployment will tick up when the July numbers come out in August, and again when the August numbers come out in September.
Having open jobs in such an economy is a placebo, it's a Jenga tower whose fall is more inevitable than Thanos.
This post was edited on 7/31/22 at 9:01 pm
Posted on 8/1/22 at 6:41 am to Shepherd88
quote:
The fed cannot control supply side inflation though. They can only control demand side. Both sides are contributing to the problem. I think with another 0.5%-1% raise then they’ll have demand under control but core cpi will still be elevated at 4-4.5% even by end of 2023. It’s just something we were gonna have to live with and im betting they’ll say exactly that.
The problem is that supply side inflation is a red herring. Much of this problem of supply side inflation is because of their ability to charge higher prices due to excess money in the market in the FIRST PLACE. It is demand inflation masquerading as supply side. BUT FOR the extra trillions dumped into the economy out of THIN AIR, one would not be seeing this.
quote:
Milton Friedman: It is [inflation] always and everywhere, a monetary phenomenon. It's always and everywhere, a result of too much money, of a more rapid increase in the quantity of money than an output. Moreover, in the modern era, the important next step is to recognize that today, governments control the quantity of money. So that as a result, inflation in the United States is made in Washington and nowhere else.
This is all the FED’s doing, and here we are trusting the same people who screwed us to unscrew us. Seems perfectly logical to me.
Posted on 8/1/22 at 7:40 am to Bard
quote:
Is it really a good labor market if workers are staying out of the market due to unemployment options being preferable?
Where are you getting your info? All the extra money/extended time receiving unemployment benefits during and after Covid ended months ago. Everything should be back to the way it was before which wasn't that great.
Posted on 8/1/22 at 8:24 am to Bard
Opinion piece on Bloomberg today by former NY Reserve Bank President, Bill Dudley:
quote:
Investors have lately become strangely optimistic that the Federal Reserve won’t have to tighten monetary policy much further, bidding up stocks and bonds amid hopes that the Federal Reserve will soon get inflation under control. This wishful thinking is both unfounded and counterproductive.
The market’s exuberance appears to stem in part from Jerome Powell’s latest news conference, in which the Fed chair observed that growth had slowed, didn’t commit to another 75-basis-point rate increase in September and suggested that monetary tightening might curb excess demand for workers without doing too much harm to those currently employed. This has fueled speculation of a “pivot” to smaller interest-rate increases, with some even arguing that the Fed has done enough already.
Don’t be confident about such an outcome. For one, Powell repeatedly referred to Fed officials’ projections from June, which show the federal funds rate reaching 3.8% in 2023 — more than 50 basis points higher than what financial markets currently expect, and difficult to reconcile with the pivot hypothesis…
The latest reading from the employment cost index underscores how tight the labor market is: Wages for private sector workers are up 5.7% from a year earlier.
Some argue that the Fed doesn’t need to induce such job losses — that inflation will subside on its own along with the supply disruptions created by the pandemic and the war in Ukraine. But the central bank must contend with the world as it is: If demand exceeds supply, the Fed must act to reduce the former even if the latter is constrained. Beyond that, supply disruptions are far from the whole story. Inflation pressures have broadened, as evidenced by the 6% year-over-year increase in the Cleveland Fed’s median consumer price index, up from 3.8% six months earlier.
All told, the outlook hasn’t changed. Inflation is too high, the labor market is too tight and the Fed must respond — most likely by pushing the economy into an actual recession, as opposed to the two quarters of minor GDP shrinkage that has occurred so far. Wishful thinking in markets only makes the job harder, by loosening financial conditions and requiring more monetary tightening to compensate.
The biggest mistake the Fed can make is to fail to push inflation back down to 2%. Fortunately, Powell recognizes this, even if he understates how difficult the task will be given the economic environment and the Fed’s very late start.
Posted on 8/1/22 at 8:30 am to Jon Ham
Caught a few minutes of the bobble heads on CNBC this morning in the car. And they were all screaming that June 16th was the bottom. Full on calling it, no questions asked.
So, in short. There is a 0% chance that was the bottom.
So, in short. There is a 0% chance that was the bottom.
Posted on 8/1/22 at 8:44 am to Jon Ham
quote:
Thoughts?
Just bought 3800 strike puts with 1/20/23 expiration. 4100-4150 was the point I expected us to get to before sliding back. Apple number three a wrench in things for me a bit, but I still think we go back down from here before finally breaking through 4200 to leg up. Also getting long tech because I think things will be better for tech in 12 months.
Posted on 8/1/22 at 9:46 am to FLObserver
quote:
All the extra money/extended time receiving unemployment benefits during and after Covid ended months ago. Everything should be back to the way it was before which wasn't that great.
Incorrect.
quote:
Where are you getting your info?
TANF benefits doubled, starting January 2022
P-EBT for school lunches
SNAP allotments increased in Oct. 2021, anyone not already at max allotment as of August 2022 will be brought to max
These are essentially programs increased (or planned to increase) because of COVID, they then tacked inflation on as just extra justification.
Unemployment compensation
quote:
Across the nation, millions of Americans lost their jobs in the wake of the COVID-19 pandemic and, as a result, claimed unemployment benefits. The American Rescue Plan extended employment assistance, starting in March 2021.
In addition, the American Rescue Plan waives federal income taxes on the first $10,200 of unemployment benefits received in 2020 by individuals with adjusted gross incomes less than $150,000.
There's also still ongoing extra federal rental assistance and a few other programs.
Posted on 8/1/22 at 10:22 am to Jon Ham
Solid piece.
I've been wondering lately if many investors hadn't begun to expect the Fed to raise rates by a full point last month, and when they stuck with .75 it was seen as a positive (thus the bump).
I've been wondering lately if many investors hadn't begun to expect the Fed to raise rates by a full point last month, and when they stuck with .75 it was seen as a positive (thus the bump).
Posted on 8/1/22 at 10:52 am to Bard
You left out no one has had to pay on their student loans in two years... take that money out of the economy and it shrinks even faster. Before 9/1, the administration will need to come up with another reason (not Covid) as to why this should be extended yet again.
Posted on 8/1/22 at 10:55 am to Bard
Y'all realize stocks were going up when Lehman filed for Bankruptcy and the Repo market blew up? If you think "investors" GAF about overnight lending rates you're probably watching every tick a little too closely and taking opinions from media clowns a little too seriously.
Posted on 8/1/22 at 10:58 am to FLObserver
quote:
All the extra money/extended time receiving unemployment benefits during and after Covid ended months ago. Everything should be back to the way it was before which wasn't that great.
As I sit over lunch with friends who have businesses or work at neighboring companies, we’re still trying to figure out why it’s SO difficult to find qualified workers. And we’re not talking about low wage jobs.
I understand the various benefits that Bard has listed. But I can’t see that things like increased or extended SNAP benefits would be discouraging someone from taking a $50k/yr. job. And although maybe there are a few states that still have some boosted unemployment benefits, at the federal level, those have ended, according to the USA.gov site:
quote:
COVID-19 extended unemployment benefits from the federal government have ended. But you may still qualify for unemployment benefits from your state.
So at least in my circle, we’re still confused about this situation.
Posted on 8/1/22 at 11:06 am to wutangfinancial
quote:
Y'all realize stocks were going up when Lehman filed for Bankruptcy and the Repo market blew up?
And don't forget Bear Stearns...
quote:
If you think "investors" GAF about overnight lending rates you're probably watching every tick a little too closely and taking opinions from media clowns a little too seriously.
I just wonder what it is they are watching and/or how much Hope-ium they're smoking. The movement of the FedFund is an economic driver, not taking it into account in our current environment is somewhere between wishcasting and whistling as they walk past the graveyard.
Posted on 8/1/22 at 11:17 am to Jag_Warrior
quote:
I understand the various benefits that Bard has listed. But I can’t see that things like increased or extended SNAP benefits would be discouraging someone from taking a $50k/yr. job.
On the labor front, that's the real question, but no one seems to be asking it (because they seem content with looking only at Unemployment, thus not seeing the full picture).
We know there are jobs available. We know there are an increasing number of people filing unemployment claims. We know we have never achieved the total labor levels we had prior to COVID. What's enabling them to stay out of the job market? Have they all become wealthy through OnlyFans? Are they blowing out credit cards? (some are) Are there extended COVID benefits at play? Some combination thereof? Something else?
Posted on 8/1/22 at 11:29 am to Bard
Equity markets aren't structured like that. It's the dumbest market of all the assets classes. Almost half the market is systematically buying up shares (mostly big tech) on the assumption stocks only go up and corporate buybacks.
You're assumption that equities are discounting future cash flows is flawed. The economy is completely disconnected from equity valuations. They only fall in price when there's a liquidity crisis in the credit markets where everything is sold for cash.
quote:
The movement of the FedFund is an economic driver
You're assumption that equities are discounting future cash flows is flawed. The economy is completely disconnected from equity valuations. They only fall in price when there's a liquidity crisis in the credit markets where everything is sold for cash.
Posted on 8/1/22 at 11:45 am to wutangfinancial
quote:
They only fall in price when there's a liquidity crisis in the credit markets where everything is sold for cash.
That's closing the barn doors after the horse has already bolted, isn't it?
Posted on 8/1/22 at 12:35 pm to wutangfinancial
quote:
The economy is completely disconnected from equity valuations.
Agree. I tell people on here we are in a recession and they act like I am the devil. Presumably they don’t want anyone to say something negative about Biden’s economy because there is no other reason to be so passionate about a term that doesn’t greatly impact stocks. I think we will remain in a bear market, but it is much more related to liquidity.
People pointing to the July rise in stocks on here should really be looking at liquidity as the reason, not improvement in economic conditions, which continue to get worse. The reserve balances of depository institutions held at the Federal Reserve increased to $3.276 trillion from a low reading of $3.116 trillion in June. That was the primary driver of July stock market rise.
Liquidity still runs this market. Jobs have always and will continue to be lagging indicators, which is why Powell’s comments about strong job market indicating we are not in a recession was surprising to me.
The S&P 500 market cap ratio to reserve balances expanded during July from a June low of 9.94 to 10.75. That 10.75 number is an indicator this market has topped and is about to fall back IMO.
This post was edited on 8/1/22 at 12:40 pm
Posted on 8/1/22 at 12:51 pm to go ta hell ole miss
I’d bet a forensic analysis of the capital flows would show its mostly dealers hedging gamma risks to the downside and foreign selling, and concentration into big tech while everything else gets slaughtered. Nobody in my world has changed their retirement strategy or behavior.
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