Stocks are flattish on no real news. Bonds and MBS are up small.
Initial Jobless Claims came in at 270k, a decent number. Challenger and Gray announced job cuts increased 125%. The drop in energy prices is forcing job cuts in the oil patch.These are not actual firings, just company announcements that they will cut X number of jobs. Often these job cuts don’t ever happen.
Consumer comfort slipped again last week to 40.3 from 40.5. 50 is considered normalcy.
Mohammed El-Arian has a good column summing up the state of the labor market and the Fed’s thinking. “With concerns lurking behind the scenes that the Fed has gone too far in decoupling financial markets from the economy’s fundamentals, just a slight strengthening of labor market conditions (particularly on the wage front) would be enough to increase the probability of a September rate hike.” This is the case even if the economy is not strong enough that people feel the economy is better. The thinking is also that the low labor force participation rate has more to do with structural issues in the economy, which means monetary policy is simply not an effective tool to change it.
President Obama gave a long speech yesterday defending his Iran deal. Polls continue to show the public is skeptical about it. He accused people who have reservations of making common cause with the hardliners in Iran. Note that there are numerous side deals with the agreement that no one has seen yet.
The SEC passed a rule on a 3-2 basis yesterday mandating that companies disclose the ratio of CEO pay to worker pay. This is pretty much a sop to the unions and liberal activists and it is a pretty game-able number. Stock compensation doesn’t count, and the unintended effect will probably be to increase share buybacks.
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