Here are a couple of interesting charts from last week’s labor report.
The labor participation chart is kind of interesting. The primary working age group still has a way to go back to the pre-recession levels. On the other hand, for the over 55 age group, that recovery has been quite muted.
I believe the labor participation rates for females versus males is similar to the age participation chart. It appears females have had at least a somewhat better time regaining employment. However there participation is at a significantly lower level overall.
There has been quite the conversation regarding the inversion of the Yield Curve between the short term US Treasury Bills versus the 10 year US Treasury Note. In essence, it appears to strongly suggest that a recession is eminent.
However this morning, Axios had a blurb regarding the 2 year US Treasury note yield versus the 10 year US Treasury Note. This spread has not [at least yet] inverted.
The Axios article suggests the Fed’s actions are more likely the cause of the rise in shorter term rates even though they have indicated they will not push up the fed funds rate this year. The level of uncertainty related to Fed policy and the level of government borrowing necessary to fund the deficit may be the key culprits in the inversion.
This chart was on Axios earlier this week. I think this is could be one of the reasons for the ongoing challenge between capital and labor since the ‘Great Recession’.
Clearly the recovery in Profits of 10.1% versus Wages of 3.3% is significant. However, this is part of a much longer term trend. Whether it is due to technology or some other factor, it has made it difficult for the middle class to get ahead economically.
I gather this may at least be a partial explanation for an uptick in the idea that Socialism may be desirable versus Capitalism. This appears to be especially so for younger workers.
Another group of beneficiaries from the new tax law – Accountants.
For all the headlines Alphabet has received, this is kind of interesting. Dominos stock has actually outperformed since the went public. Either one would have been a good investment 15 years ago, but 3600% does beat 2500% rather handily!
The difference between bank savings account rates at Online Banks versus Brick and Mortar Banks is rather dramatic.
However, it would appear that a tightening of the Interest Rate Spread is not the issue!
Meanwhile, the Federal Deposit Insurance Corp. said the new tax law drove double-digit profit growth at U.S. banks last year. Banks collectively notched record annual profits of $236.7 billion, up 44% from 2017.
I saw these two charts this morning one from the Wall Street Journal’s Daily Shot and the other Axios Markets.
This appears to highlight the quite remarkable economic recovery since the great recession. Increasing Job Openings is a very good way to address the needs of the Unemployed looking for jobs. On the other hand when the two numbers cross, we may be moving into interesting territory for wage growth / inflation.
Once upon a time, the US National Debt was supposedly not necessarily a good thing. I guess I was never overly concerned about the US Budget Deficit. But, it was always thought there were limits. Based on the very rapid growth in the deficits since the Great Recession, we may find out if there are in fact any ramifications to the level of US Government debt.
I found this chart and blurb on Axios about the effect of the tariffs that the Trump Administration has imposed on imports from China on the bi-lateral trade deficit. At least at first glance, it would appear that the tariffs have had an impact albeit a somewhat smallish effect. On the other hand, the trade war has the potential to be very disruptive for the Ag Economy.
“Tariffs reduce imports and, all else equal, reduce the U.S. bilateral trade deficit. The complication lies in the fact that China retaliates by reducing imports from the U.S., thus pushing up the bilateral deficit. In addition, the tax cut boosted domestic demand in the U.S. for imports from China and everywhere else. If tariffs hadn’t changed, the bilateral deficit would have likely widened anyway because of the tax cut. “If tariffs remain in place in some sort of ‘extended truce’ we would see a more apparent decline in U.S. imports from China as frontloading will soon be water under the bridge. If all tariffs are removed (the consensus is that this is unlikely) chances are imports would normalize, reversing most of the decline we’ve seen so far.”— Gene Ma, Head of China Research, Institute of International Finance
It appears the S&P 500 had its best January in over 30 years.
Unfortunately, January might only look good compared to other Januarys. For the past twelve months, the performance is not all that inspiring. Even though the S&P 500 is only down marginally during that time period, it is still quite a bit lower than its mid October high.
Now I see that its performance is dependent on how the Patriots do in the Super Bowl?