Posted on January 29, 2017
My writing partner, Chris Versace, and I decided to merge our efforts a bit more with respect to all the balls we have in the air, which has led to the decision to move my posts over to our Tematica Research site.
We’ve moved all the posts from here over to that site, so you can find all my old musings there as well. On to the next chapter!Leave a Comment
Posted on January 6, 2017
Friday’s jobs report, the first of 2017, came in weaker than expected with 156k jobs created in December versus expectations for 176k. This report tends to be volatile month-to-month, so we like to look at the twelve month moving average to get a better idea of the longer-term trends. From that lens we can see that new job creation peaked back in February of 2015 and has been trending downward ever since. Today the twelve month moving average is back to February 2014 levels – not exactly painting the picture of an accelerating economy.
On the other hand average hourly earnings increased by 2.9% on a year-over-year basis as the labor force participation rate, which is still at early 1980s levels, rose slightly from 62.6% to 62.7%. The uptick in wages could be partially attributable to the calendar because the survey is typically conducted during the week of the 12th day of the month which was a Saturday in November but a Monday in December, so that those who get paid on a bi-monthly basis would be counted in December. Taking a look at the longer-term average, average hourly earnings on a 3-month and 12-month moving average basis have been solidly trending upwards along with the monthly number.
Bottom Line: This report is likely to make another rate hike by the Fed more likely rather than less likely, although we still see major structural problems with the labor market given the multi-decade low level of employment in the working age cohort coupled with the ever widening gap between Job Openings and Hirings that indicate a mismatch in the nation between the skills companies want and those available in the population.Leave a Comment
Posted on December 3, 2016
On December 3rd, I spoke with Neil Cavuto, Kennedy and Charles Payne on Fox News concerning President Elect Trump’s action after Carrier, a division of United Technology, announced that it was going to move 2,100 factory jobs to Mexico. The president-elect announced that he would make them keep the jobs in the U.S. The initial claim for the negotiations the Trump had with Carrier was the 1,100 jobs would be saved, but at this point, it looks like around 300 of those jobs were white collar positions that were never going to Mexico in the first place. The total number of jobs remaining in the U.S. is expect to be around 800.
In order to keep those 800 jobs in the country, Carrier was granted about $7 million in tax breaks paid out over 10 year, which means $875 per worker per year. That’s a pretty small number when comparing the cost of labor in the U.S. versus Mexico.
A more plausible story is that some discussions were had concerning the $6.7 billion in federal contracts held by Carrier’s parent company, United Technologies. While I’m all for reducing taxes and regulation, making the U.S. a more competitive place for companies to do business, I’m not too happy to see the power of the White House used to force a company to do something that it originally believed was not in the best interest of its shareholders.Leave a Comment
Posted on December 3, 2016
On December 3rd my Cocktail Investing co-Author Chris Versace and I published a piece in the Toronto Sun on the Italian Referendum, which we think is long-term likely to be much more meaningful to the European Union than many realize today.
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Posted on December 1, 2016
On December 1st my Cocktail Investing co-Author and fellow Tematica Researcher published a piece on the Italian Referendum for Business Insider which you can read here. We think the market is under-pricing the longer-term impact of this decision and what the likely “no” outcome can mean for the European Union.Leave a Comment