U.S. Economy Created 336,000 Jobs in September, far Surpassing the Estimate of 170,000… The unemployment rate remained at 3.8%.
What it means— If you are a fan of the old television show “Get Smart,” you might say the people calling for a slowdown “missed it by that much.” The U.S. Bureau of Labor Statistics (BLS) also added another 119,000 jobs to previous months, which makes the current report close to a half a million jobs. This won’t give the central bankers a reason to pause their rate hikes or bond selling (quantitative tightening), which likely will push rates higher all along the yield curve and give stock investors more agita.
On income, average hourly earnings increased just 0.2% last month and put the annual increase to 4.2%. It looks like income is moderating a bit, while the employment picture remains strong. We wonder how long that will hold, with some states pushing for big wage hikes at the lowest rung of employment and unions in health care and manufacturing demanding big raises.
Government Is Open, but Speaker McCarthy Is Out of a Job… With minutes to go, the speaker of the House worked to keep the government open for another 45 days. A few of his fellow Republicans and all of the Democrats voted him out of the speakership.
What it means— It took 15 rounds for McCarthy to win the gavel and one possible side deal with Democrats to lose it. It’s rumored that McCarthy agreed to an up-or-down on support for Ukraine in exchange for Democrat votes to keep the government open, but with him out of the speaker’s chair, it doesn’t matter. Patrick McHenry, as speaker pro tempore, currently occupies the chair, as a handful of people vie for the position. Jim Jordan and Steve Scalise have both thrown their hats into the ring.
Stocks Sag as Bond Prices Fall and Yields Rise… Investors are dealing with losses in both stocks and bonds, as 10-year Treasury yields breached 4.80% and 30-year Treasury yields touched 5%.
What it means— It’s never fun when stock and bond prices correlate as they move lower. Investors apparently are realizing something we’ve been talking about for the past year: you don’t want to ﬁght the Fed. If the central bank remains committed to raising overnight rates to ﬁght inﬂation while also draining liquidity by letting bonds roll off its balance sheet, then it’s going to hurt. The longer economic growth stays positive and employment remains robust, the longer the Fed can stay the course.
Job Openings Jump Higher in September, From 8.89M to 9.6M… The increase reversed a gradual decline from last year.
What it means— The number of job openings is considered a sign of economic health. Last year, openings reached a record 12 million, and then eased. The reversal in September could just be an anomaly, or it could show that the labor market remains strong, because the current 9.6M total in openings is still higher than at any point before the pandemic. Given the low unemployment rate and rising labor force participation rate, it looks to be a sign of strength.
General Motors Stock Now Almost 10% Lower Than When It Went Public 13 Years Ago… This week, General Motors (GM) traded around $30, whereas it was at $33 when it went public in 2010.
What it means— Mary Barra took the helm at GM in January 2014. The stock has had its up and downs since then but still lags behind. It doesn’t seem right that a CEO who hasn’t guided the company’s value higher after almost a decade gets a hefty paycheck year after year. Barra made $29 million just last year, or 362 times that of the median worker at GM. I’ve written about this before. This stems from cronyism in the board room, where compensation committees claim they have to offer higher-than-average compensation packages to get better-than-average leaders. That’s bull. Offer the job at $3 million per year to the highest GM executive who will take it, with the understanding that everyone making more than that will be terminated. Options can be sweeteners but will only vest over a long time frame. It’s time to refocus on executive pay.
Jack in the Box Employee Shoots Out of the Drive-Thru Window at Customer… After arriving at Houston’s George Bush Intercontinental Airport, Anthony Ramos drove through Jack in the Box with his wife and 6-year-old daughter to pick up some food. They drove off only to realize their meal lacked curly fries. Ramos returned and asked for them, even offering to pay for them, but employee Alonniea Ford wasn’t having any of it. She refused to work with Ramos on fulﬁlling the order and ended up in an argument with him. Ford threw ice and ketchup at Ramos, who responded by throwing a drink at the drive-thru window. That’s when Ford retrieved a gun and leaned out of the drive-thru window as she shot off a few rounds at the Ramos family. This happened two years ago but is in the news now because the Ramos family is suing Jack in the Box. Who knows what will happen, but we can offer some advice. When visiting Jack in the Box, don’t bring a soda to a gun ﬁght over curly fries.
Data supplied by HS Dent Research
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