All Things in Moderation

Vital Statistics:

Stocks are flattish this morning on no real news. Bonds and MBS are down small.

Jerome Powell is scheduled to speak at a Wall Street Journal webinar today. Expect to hear dovish remarks about monetary policy and also a push-back against the “inflation is coming” narrative.

Initial Jobless Claims came in at 745,000 last week. To put that number in perspective, the ADP jobs report showed only 117,000 jobs were added last month. The 4 week moving average for initial claims is 790k, so last month that means 3.16 million jobs were lost while 117,000 were created. Meanwhile, companies announced 34,500 job cuts according to outplacement firm Challenger, Gray and Christmas.

Nonfarm productivity decreased 4.2% as output increased 5.5% and hours worked increased 10.1%. Unit labor costs rose 6%. Unit labor costs rose 6%. I think the pandemic is introducing a lot of noise into these statistics. FWIW, productivity measurement has been an issue for a while with the advent of “free” internet services which receive payment in monetizable data.

The Fed reported that economic activity grew “modestly” in January and February. “Modest” is fed-speak for “meh” which means growth probably decelerated in the first quarter from the 4% reported in Q4. “Most Districts reported that employment levels rose over the reporting period, albeit slowly.” Nothing in this report suggests that the Fed is at the point of contemplating any sort of tightening. One interesting tidbit: The Philly Fed said anecdotally that the $15 minimum wage is already here, as they are seeing warehouse jobs being advertised for $23 an hour. Still leisure and hospitality jobs are the hardest-hit area, so I am not really buying the big jump in wages arguments.

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