• October 5th, 2024 | Jobs data, Employment report, ILA Dockworkers strike, Money Market Funds, Spousal Social Security, Costco Wholesale Corp (COST), Humana Inc. (HUM) & LyondellBasell Industries (LYB)

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October 5th, 2024 | Jobs data, Employment report, ILA Dockworkers strike, Money Market Funds, Spousal Social Security, Costco Wholesale Corp (COST), Humana Inc. (HUM) & LyondellBasell Industries (LYB)

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  • More jobs data points to a healthy economy The Job Openings and Labor Turnover Survey (JOLTs) showed a surprise increase in the month of August. Openings totaled 8.04 million, which topped the estimate of 7.64 million and July’s reading of 7.71 million. While this is still well off the highs from just a couple of years ago, there are still 1.1 available jobs for every person looking for one. On the inflation front, I believe it was positive to see the quits rate decline to 1.9%, its lowest level since June 2020. This indicates that the labor market has softened as employees are seeing less opportunity to quit their job in favor of another one. This should help put less pressure on wage inflation. The Fed will have to continue to walk the fine line of keeping the economy moving in a positive direction without stoking a rise in inflation. It’s a tough task, but the labor market has continued to hold up much stronger than many believed was possible. Employment report surprises to the upside I was surprised to see the continued strength in the labor market as the growth of headline nonfarm payrolls of 254k in the month of September easily topped the estimate of 150k. Strength came from leisure and hospitality, which saw payrolls grow 78k thanks to a nice spike of 69k jobs from food services and drinking places. Other positive sectors included health care and social assistance (+71.7k), government (+31k), and construction (+25k). Only two sectors saw declines in the month with manufacturing losing 7k jobs and transportation and warehousing down 8.6k jobs. Both July and August saw upward revisions to their reports for a combined total increase of 72k. Wage inflation was also stronger in the month as average hourly earnings grew 4% compared to last year. This is up from last month’s reading of 3.8%, but still remains substantially below last year’s high of 5.92%. Precovid, wage growth was in the low to mid 3% range. Overall, this report didn’t have many problems. The only concern is, did the Fed move to soon and could inflation still be the larger concern rather than a weakening labor market? This report did increase expectations for a November rate cut to be 0.25% rather than 0.5%. I would have been shocked if the Fed would have opted for another 0.5% cut even if the jobs report wasn’t this strong. ILA Dockworkers strike Good news for those that were concerned about the International Longshoremen’s Association’s (ILA) strike as the union and the United States Maritime Alliance reached a tentative agreement on wages and agreed to extend the Master Contract until January 15th, 2025. Wages will increase 61.5% over six years under the tentative deal, but the major point of conflict that still needs to be negotiated is port automation. With the increase in wages, it will be interesting to see how much the Maritime Alliance is willing to budge on automation as they will likely need to look for ways to improve efficiency to offset the higher wages. Efficiency is already a concern for US ports as a study from just a couple of years ago ranked the LA and Long Beach ports as the least efficient trade hubs for handling containers in the world. Other US ports including Savannah, Georgia, New York, and New Jersey also ranked in the bottom half of the list. Of the 370-member Container Port Performance Index, we did not have a single port in the top 10. While this resolution is positive, the problems could be delayed until early next year if the two sides still cannot come to an agreement. During my research on this strike, I learned some surprising things about the union leader, Harold Daggett. You may be shocked to learn that his combined income as president of two unions is around $900,000 per year with $728,000 coming from the ILA. He currently drives a Bentley, which is a high-end luxury vehicle with a price of $210,000 for a new one. He also recently sold his 76-foot yacht and based on the US boat group market index, the average price of a yacht in that range is $1.5 million and costs around 10 to 15% of the value to operate yearly. I was also surprised to see this is a “family business” as his son is employed by the same two unions as his dad and was paid a total of more than $700,000 last year. As for the workers, on the East Coast the union workers have an average pay around $81,000 per year. However, the waterfront commission of New York estimates 1/3 of the longshoreman made $200,000 or more last year with overtime. Investors are still adding money to money market funds Even with the recent rate cut by the Federal Reserve, investors still put nearly $130 billion into money market funds. This brought total assets in money markets to $6.8 trillion. I don’t believe this money will stay there very long as probably within 3 to 6 months investors will start seeing the interest rates decline and once, they fall below 4%, we could see a large drop in the assets held in money ...
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あらすじ・解説

More jobs data points to a healthy economy The Job Openings and Labor Turnover Survey (JOLTs) showed a surprise increase in the month of August. Openings totaled 8.04 million, which topped the estimate of 7.64 million and July’s reading of 7.71 million. While this is still well off the highs from just a couple of years ago, there are still 1.1 available jobs for every person looking for one. On the inflation front, I believe it was positive to see the quits rate decline to 1.9%, its lowest level since June 2020. This indicates that the labor market has softened as employees are seeing less opportunity to quit their job in favor of another one. This should help put less pressure on wage inflation. The Fed will have to continue to walk the fine line of keeping the economy moving in a positive direction without stoking a rise in inflation. It’s a tough task, but the labor market has continued to hold up much stronger than many believed was possible. Employment report surprises to the upside I was surprised to see the continued strength in the labor market as the growth of headline nonfarm payrolls of 254k in the month of September easily topped the estimate of 150k. Strength came from leisure and hospitality, which saw payrolls grow 78k thanks to a nice spike of 69k jobs from food services and drinking places. Other positive sectors included health care and social assistance (+71.7k), government (+31k), and construction (+25k). Only two sectors saw declines in the month with manufacturing losing 7k jobs and transportation and warehousing down 8.6k jobs. Both July and August saw upward revisions to their reports for a combined total increase of 72k. Wage inflation was also stronger in the month as average hourly earnings grew 4% compared to last year. This is up from last month’s reading of 3.8%, but still remains substantially below last year’s high of 5.92%. Precovid, wage growth was in the low to mid 3% range. Overall, this report didn’t have many problems. The only concern is, did the Fed move to soon and could inflation still be the larger concern rather than a weakening labor market? This report did increase expectations for a November rate cut to be 0.25% rather than 0.5%. I would have been shocked if the Fed would have opted for another 0.5% cut even if the jobs report wasn’t this strong. ILA Dockworkers strike Good news for those that were concerned about the International Longshoremen’s Association’s (ILA) strike as the union and the United States Maritime Alliance reached a tentative agreement on wages and agreed to extend the Master Contract until January 15th, 2025. Wages will increase 61.5% over six years under the tentative deal, but the major point of conflict that still needs to be negotiated is port automation. With the increase in wages, it will be interesting to see how much the Maritime Alliance is willing to budge on automation as they will likely need to look for ways to improve efficiency to offset the higher wages. Efficiency is already a concern for US ports as a study from just a couple of years ago ranked the LA and Long Beach ports as the least efficient trade hubs for handling containers in the world. Other US ports including Savannah, Georgia, New York, and New Jersey also ranked in the bottom half of the list. Of the 370-member Container Port Performance Index, we did not have a single port in the top 10. While this resolution is positive, the problems could be delayed until early next year if the two sides still cannot come to an agreement. During my research on this strike, I learned some surprising things about the union leader, Harold Daggett. You may be shocked to learn that his combined income as president of two unions is around $900,000 per year with $728,000 coming from the ILA. He currently drives a Bentley, which is a high-end luxury vehicle with a price of $210,000 for a new one. He also recently sold his 76-foot yacht and based on the US boat group market index, the average price of a yacht in that range is $1.5 million and costs around 10 to 15% of the value to operate yearly. I was also surprised to see this is a “family business” as his son is employed by the same two unions as his dad and was paid a total of more than $700,000 last year. As for the workers, on the East Coast the union workers have an average pay around $81,000 per year. However, the waterfront commission of New York estimates 1/3 of the longshoreman made $200,000 or more last year with overtime. Investors are still adding money to money market funds Even with the recent rate cut by the Federal Reserve, investors still put nearly $130 billion into money market funds. This brought total assets in money markets to $6.8 trillion. I don’t believe this money will stay there very long as probably within 3 to 6 months investors will start seeing the interest rates decline and once, they fall below 4%, we could see a large drop in the assets held in money ...
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October 5th, 2024 | Jobs data, Employment report, ILA Dockworkers strike, Money Market Funds, Spousal Social Security, Costco Wholesale Corp (COST), Humana Inc. (HUM) & LyondellBasell Industries (LYB)に寄せられたリスナーの声

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