Morning Report: Wage growth accelerates 9/7/18

Vital Statistics:

Last Change
S&P futures 2870.5 -9
Eurostoxx index 372.33 -1.26
Oil (WTI) 67.74 -0.02
10 year government bond yield 2.92%
30 year fixed rate mortgage 4.57%

Stocks are lower this morning on overseas weakness. Bonds and MBS are down.

Jobs report data dump:

  • Payrolls up 205,000
  • Unemployment rate 3.9%
  • Average hourly earnings up 2.9%
  • Labor force participation rate 62.7%

The payroll number and the wages were higher than what the Street was looking for, which explains the reaction in the bond market. The labor force participation rate fell as 467,000 workers dropped out of the labor force. A big decrease was seen in the 16-19 year old category, which would mean summer jobs ending. With more and more schools starting in before Labor Day, perhaps it is time for BLS to make some re-adjustments in their seasonality calculations. In terms of sectors, professional and business services rose by the most, followed by health care. Surprisingly, construction increased going into what is a seasonally slow period and despite the jump in same store sales, retailers shed jobs. Overall, a decent report, which should keep stock investors happy and will also give bond investors something to fret about. Wage growth is getting close to a 3-handle and that will be a big number.

In response to the jobs report, the December Fed Fund futures raised their 2 hike probability to 75%.

The Trump administration continues to hammer out a trade deal with Canada and Mexico. Separately, the deadline passed for an additional 200MM in Chinese tariffs, which means he can implement them at any time.

Rep. Jeb Hensarling penned an editorial in the Wall Street Journal yesterday, where he laid out a framework for dealing with the GSEs. His solution will be to run everything through Ginnie Mae, with private capital taking the first loss position, and the taxpayer taking a catastrophic loss position. It would create a common securitization platform and still maintain some sort of affordable housing fund. Originators would have to get a private credit enhancer to guarantee the loan. The private credit enhancer would have to be market-based and have a bank-like balance sheet. Note that this is the first bipartisan housing reform bill, which means we may be getting closer to having the political will to de-nationalize the US mortgage market.

Skilled construction labor is hard to find. 83% of builders report some sort of shortage for rough carpenters. It is even worse for subcontractors. With those sorts of shortages, we should see wages accelerate. It is inevitable. The 9-occupation trade shortage is as big as it has ever been.

30 Responses

    • It’s the legacy of Obama, presumably. He was so good he’s been able to extend the effect of his presidency two years into Trump. He may have been brilliant enough to extend his god-like power over the economy into Trump’s second term!


  1. Orrin Hatch Twitter is good.


  2. obama is pissed that trump is getting credit for the economy…


  3. This is hilarious

    Liked by 1 person

  4. Women are dumb. Guys want to fuck them and will say and do what it takes to get laid. Maybe don’t put out till you have a commitment.

    Or keep putting out, I enjoyed the hell out of casual sex, why make it such a big deal?



  5. Free markets are now racism in disguise…


  6. This clip has triggered more liberals since the election

    Liked by 1 person

  7. In this context, why is being a racist bad? Or a misogynist or a casteist?

    Seems that the correct thing to do is embrace the label and say “Yeah, what of it?”

    How am I wrong?


    • So first sign of not being a racist is saying “I’m a racist.”? Have we come full-circle.

      The accusation of racism is now a prejudicial epithet to suggest the person is less than, if not outright evil. Nobody is going to agree with and outsiders assessment of them as racist.

      Everybody has judgements associated with class (including the author) so I assume “casteist” means people who make judgements on the wrong kind of class divisions.


      • KW:

        ….so I assume “casteist” means people who make judgements on the wrong kind of class divisions.

        I suspect her inclusion of “casteism” comes from the fact that the woman is from India, which still maintains an actual caste system.


    • The correct thing is just to say “you’re wrong.”


  8. The Democratic base has Kavanaugh dead to rights, it’s gambling debts and the Russian mob.

    WTF were Senators Harris and Booker wasting their time with? Hell, what was ANY SENATOR wasting their time with?

    Question for our centrist left leaning friends, how disappointed are you with the Democratic leadership, up to and including Obama that NO ONE is talking about this?!?!?

    And this is bigly because maybe that starts to explain what we going on with Justice Kennedy’s “early” retirement from the court.
    1. You have Kennedy’s son linked via the finance world with shady types.

    2. Trump needs a reliable guy in the court to protect him — hence Brett K.

    3. Trump and Russian friends leverage the son to get daddy to retire early.

    4. Brett K vaults to the top of the SCOTUS nominee list as “next up”.

    5. Someone paid of Brett K’s gambling debts (Inaug Slush Fund? NRA? Russians? Russians via NRA?)

    Somewhere in all that, I seriously doubt that Brett’s buddies soaked him for $200k in baseball tickets and then paid him back. That’s a lot of ball games. Does Brett have 1000 buddies to buy tickets for? You get my drift…

    Nailed it.


    • As in a dictatorship, people spoke in code: President Trump’s name was not mentioned, yet everybody understood that praise for McCain, a symbol of the dying values of the old Republican Party, was also criticism of the authoritarian populist in the White House.

      The hyperbole goes up to 11.


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