Job openings slide by more than half a million as the labor market tightens

Total vacancies tumbled by 561,000 to 6.8 million for the month, the lowest since February 2018, according to the government’s Job Openings and Labor Market Turnover Survey. Job openings plunged to their lowest level in nearly two years as hiring surged in November and the employment market got tighter, the Labor Department reported Friday. On an industry basis, the biggest drops in job openings came in retail, which decreased by 139,000, and construction, which was down 112,000. The quits rate


Total vacancies tumbled by 561,000 to 6.8 million for the month, the lowest since February 2018, according to the government’s Job Openings and Labor Market Turnover Survey.
Job openings plunged to their lowest level in nearly two years as hiring surged in November and the employment market got tighter, the Labor Department reported Friday.
On an industry basis, the biggest drops in job openings came in retail, which decreased by 139,000, and construction, which was down 112,000.
The quits rate
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Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: jeff cox
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Job openings slide by more than half a million as the labor market tightens

The big decline in openings came during a month when nonfarm payrolls increased by 256,000 , the best total since January. Total hires increased by 39,000 though the rate was unchanged at 3.8%.

Total vacancies tumbled by 561,000 to 6.8 million for the month, the lowest since February 2018, according to the government’s Job Openings and Labor Market Turnover Survey. Despite the big drop, openings still outnumbered Americans considered unemployed by nearly 1 million. The vacancy rate nudged down to 4.3%.

Job openings plunged to their lowest level in nearly two years as hiring surged in November and the employment market got tighter, the Labor Department reported Friday.

On an industry basis, the biggest drops in job openings came in retail, which decreased by 139,000, and construction, which was down 112,000.

“Common sense should tell you that indeed, after an eleven-year run of economic growth that many companies have hired all the help they need for now,” Chris Rupkey, chief financial economist at MUFG Union Bank, said in a note. “Today’s sharp reduction in jobs available may be telling us that the economy has finally reached full employment.”

The quits rate, or the total employees who left voluntarily, rose for the month by 39,000, though the rate as a measure of workers stood unchanged at 2.3% from October. The quits rate is considered a strong gauge of worker mobility as it reflects confidence that employees can find other work.

Separations also were little changed, with a drop of 4,000 keeping the rate at 3.7%. Layoffs and discharges fell 46,000 and the rate declined to 1.1%.

Payroll growth tailed off in December, however, with the department’s first estimate showing 145,000 new jobs. The JOLTS data has a one-month lag, so December’s job openings are not available.


Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: jeff cox
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Trump’s Fed pick Judy Shelton faces obstacles to confirmation

Judy Shelton, U.S. executive director for the European Bank for Reconstruction and Development, speaks during an interview in Washington, D.C., May 29, 2019. The second, though, is a sticky legal question and centers around a provision in the Federal Reserve Act that prohibits two governors from the same district. ‘A perfect fit’ who faces headwindsOne strategy that could be employed is if Shelton had a residence elsewhere. A White House release Wednesday stated that she is from Virginia, though


Judy Shelton, U.S. executive director for the European Bank for Reconstruction and Development, speaks during an interview in Washington, D.C., May 29, 2019.
The second, though, is a sticky legal question and centers around a provision in the Federal Reserve Act that prohibits two governors from the same district.
‘A perfect fit’ who faces headwindsOne strategy that could be employed is if Shelton had a residence elsewhere.
A White House release Wednesday stated that she is from Virginia, though
Trump’s Fed pick Judy Shelton faces obstacles to confirmation Cached Page below :
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Trump's Fed pick Judy Shelton faces obstacles to confirmation

Judy Shelton, U.S. executive director for the European Bank for Reconstruction and Development, speaks during an interview in Washington, D.C., May 29, 2019. Andrew Harrer | Bloomberg | Getty Images

President Donald Trump’s intention to nominate economist Judy Shelton to the Federal Reserve comes with two pressing questions — whether she could be a future chair at the central bank, and if she even will be able to serve if confirmed. The first is largely a political question and would only come into play if Trump continues to be dissatisfied with Chairman Jerome Powell and chooses not to renominate him when his term expires in 2022. The second, though, is a sticky legal question and centers around a provision in the Federal Reserve Act that prohibits two governors from the same district. Governor Lael Brainard hails from the same Richmond region, though it’s not clear that there wouldn’t be a way around the rule. In an announcement Wednesday, the White House said Trump plans on sending Shelton’s name to the Senate, along with that of fellow economist Christopher Waller of Missouri, whose nomination is expected to face few obstacles.

“Legally, it’s absolutely correct that there is a stipulation that calls for the appointment of representatives from each of the districts and not having any two from the same district. So far, that looks like it poses a great constraint,” said George Selgin, director of the Cato Center for Monetary and Financial Alternatives, a libertarian think tank. “But in practice, for all kinds of reasons it hasn’t been a binding constraint.” Selgin pointed specifically to former governors Elizabeth Duke (2008-12) and Sarah Raskin (2010-14), both of whom also were from the Richmond district, which encompasses Washington, D.C. A Fed spokesman referred the issue to the White House, which declined comment. Shelton did not respond to a request for comment. The Federal Reserve Act states that “In selecting the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district, the President shall have due regard to a fair representation of the financial, agricultural, industrial, and commercial interests, and geographical divisions of the country.”

‘A perfect fit’ who faces headwinds

One strategy that could be employed is if Shelton had a residence elsewhere. A White House release Wednesday stated that she is from Virginia, though she could be named to represent another district. On the political issue, speculation has been growing that Shelton would be a strong contender for the chair position should Trump not renominate Powell. The president has been a fierce critic of Powell for the chairman’s lead in raising interest rates four times in 2018 and for rolling back the trillions of dollars in asset purchases instituted by his predecessors. Shelton’s record on interest rates is somewhat complicated — she has criticized both the near-zero rates instituted during and for several years after the financial crisis, and the more recent moves to raise rates. Trump has pushed the Fed to cut rates and even urged the central bank to look at the negative rates pervasive in parts of Europe. Shelton also has spoken in favor of returning to the gold standard that backs the issuance of U.S. dollars, and opposes the practice of paying interest on reserves that banks store at the Fed.


Company: cnbc, Activity: cnbc, Date: 2020-01-17  Authors: jeff cox
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Student loan debt is over $1.6 trillion and hardly anyone is paying down their loans

Since the explosion of student debt following the Great Recession, annual repayment rates, or the amount of existing balances lowered, have been just 3%, Moody’s said. Just 51% of borrowers whose took out loans from 2010-12 have made any progress at all in paying down their debt. Presidential candidates, particularly on the Democratic side, have made reducing or eliminating student debt a cornerstones of their campaign. In the meantime, the burden of student loans continues to be felt with an 11


Since the explosion of student debt following the Great Recession, annual repayment rates, or the amount of existing balances lowered, have been just 3%, Moody’s said.
Just 51% of borrowers whose took out loans from 2010-12 have made any progress at all in paying down their debt.
Presidential candidates, particularly on the Democratic side, have made reducing or eliminating student debt a cornerstones of their campaign.
In the meantime, the burden of student loans continues to be felt with an 11
Student loan debt is over $1.6 trillion and hardly anyone is paying down their loans Cached Page below :
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Student loan debt is over $1.6 trillion and hardly anyone is paying down their loans

Since the explosion of student debt following the Great Recession, annual repayment rates, or the amount of existing balances lowered, have been just 3%, Moody’s said. Just 51% of borrowers whose took out loans from 2010-12 have made any progress at all in paying down their debt.

Total indebtedness over the past year or so has stopped its meteoric rise, according to a study that Moody’s Investors Service released Thursday. Nevertheless, the study showed a number of factors are constraining borrowers from lightening their loads. Outstanding loans total more than $1.6 trillion, more than doubling over the last decade and tripling since 2006.

The rapid increase of student has slowed over the past few years, but individual borrower balances aren’t going down mostly because hardly anybody is paying down their loans.

“While in the past, higher enrollment and rising tuition were the main drivers of growing student loan balances, more recently, slow repayments have become the primary driver,” Jody Shenn, senior analyst at Moody’s, and others said in the report. “Over the next few years, the combination of slow repayments and elevated, if no longer growing, levels of new borrowing will likely fuel further increases in outstanding debt.”

There are multiple reasons why the debt levels are not going down.

One is that many borrowers are taking advantage of repayment plans based on borrowers’ incomes, along with some opting for longer repayment options.

Presidential candidates, particularly on the Democratic side, have made reducing or eliminating student debt a cornerstones of their campaign. Moody’s said those kinds of proposals “would stimulate the US economy but have negative effects for some financial institutions.”

In the meantime, the burden of student loans continues to be felt with an 11% default rate that is the highest of any debt category. Education also is now second only to mortgages as the highest form of debt for all Americans.

“Increased reliance on student debt crowds out an individual’s access to other forms of household credit, which likely delays business formation and homeownership, important drivers of economic growth and wealth creation,” Shenn wrote.

One indication that the pressure may alleviate if only a bit is that the annual growth rate decelerated to 5% in the third quarter of 2019, down from the peak of 14.7% at the end of 2008, according to the Federal Reserve.

A paper released earlier this week from the St. Louis Fed also looked at the student debt issue. The research noted that debt has grown more rapidly for students in four-year and graduate schools as opposed to community colleges, hinting that repayment rates could accelerate in the future.


Company: cnbc, Activity: cnbc, Date: 2020-01-16  Authors: jeff cox
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Labor Department makes change to the way jobs data is released, aimed at hedge funds, media

The Labor Department is changing the way it will release economic reports to the public, in an effort to tighten security it says gave Wall Street traders an unfair advantage. In an announcement Thursday, the department said it no longer will allow computers in the lockups it hosts for credentialed press. Media members have access ahead of time to reports, in particular the monthly nonfarm payrolls count, in a room with no outside access. The department previously had prohibited outside devices


The Labor Department is changing the way it will release economic reports to the public, in an effort to tighten security it says gave Wall Street traders an unfair advantage.
In an announcement Thursday, the department said it no longer will allow computers in the lockups it hosts for credentialed press.
Media members have access ahead of time to reports, in particular the monthly nonfarm payrolls count, in a room with no outside access.
The department previously had prohibited outside devices
Labor Department makes change to the way jobs data is released, aimed at hedge funds, media Cached Page below :
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Labor Department makes change to the way jobs data is released, aimed at hedge funds, media

The Labor Department is changing the way it will release economic reports to the public, in an effort to tighten security it says gave Wall Street traders an unfair advantage.

In an announcement Thursday, the department said it no longer will allow computers in the lockups it hosts for credentialed press. Media members have access ahead of time to reports, in particular the monthly nonfarm payrolls count, in a room with no outside access. Print and digital outlets are allowed to file stories precisely at 8:30, while broadcast networks have their own lockups after which they can report the news.

The changes are aimed at news organizations that sell the information from the reports to high-speed traders, according to a senior department official who spoke on condition of anonymity. While the spokesman denied that the new rules are aimed at any one outlet, one media firm that this pertains to is Bloomberg News, whose founder, Michael Bloomberg, is running for president as a Democrat.

As a practical matter, the new rules will most impact print and digital, who won’t have access to devices to file stories immediately after the jobs report, which is closely watched on Wall Street and often moves markets.

The department previously had prohibited outside devices like laptops, tablets and smart watches from the lockup room. It did, however, allow journalists to work at DOL computers whose online access was shut down during the lockups.

There was no apparent recent provocation for the move. The department spokesman said the impetus came instead from the department’s inspector general.

The changes will take effect March 1.


Company: cnbc, Activity: cnbc, Date: 2020-01-16  Authors: jeff cox
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US stock market to lose top perch globally, and one reason is the election, KKR says

The status the U.S. has enjoyed as the investing destination of choice looks to be in jeopardy for 2020, according to private equity giant KKR. “We think the U.S. ends its reign as the dominant equity market in 2020,” wrote KKR experts led by Henry H. McVey, the firm’s head of global macro and asset allocation. At the same time, long-term investors are advised to look past the election “noise” and consider what ramifications the changing political landscape will have. “President Trump did not cr


The status the U.S. has enjoyed as the investing destination of choice looks to be in jeopardy for 2020, according to private equity giant KKR.
“We think the U.S. ends its reign as the dominant equity market in 2020,” wrote KKR experts led by Henry H. McVey, the firm’s head of global macro and asset allocation.
At the same time, long-term investors are advised to look past the election “noise” and consider what ramifications the changing political landscape will have.
“President Trump did not cr
US stock market to lose top perch globally, and one reason is the election, KKR says Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-15  Authors: jeff cox
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US stock market to lose top perch globally, and one reason is the election, KKR says

The status the U.S. has enjoyed as the investing destination of choice looks to be in jeopardy for 2020, according to private equity giant KKR. Following a year in which the domestic market rose nearly 30%, increasing valuations and the prominence of other nations make the U.S. no longer the only, or at least the best, game in town, the firm said in a lengthy overview of what the new year presents. “We think the U.S. ends its reign as the dominant equity market in 2020,” wrote KKR experts led by Henry H. McVey, the firm’s head of global macro and asset allocation. “Non-U.S. markets are now cheap enough that, even with their flawed compositions … they warrant investor attention for at least a cyclical ‘catchup trade.'” One of the biggest and perhaps most unappreciated challenges facing investors is political risk.

‘Particularly consequential’

President Donald Trump is up for reelection this year, and the U.S. market, save for a hiccup in 2018 that came amid four Federal Reserve interest rate hikes, has been a strong performer. Corporate executives, though, fear the economy could slow this year, and they also have cited the volatile climate in Washington as a concern. Trump faces a crowded field of Democratic challengers diametrically opposed to most of what he has done so far.

“While all presidential elections are important, 2020 could be particularly consequential, as both a referendum on President Trump’s disruptive leadership and a harbinger of future direction for U.S. policy and politics,” KKR wrote. “As populism and polarization have grown, increasingly ideological and angry voters have been attracted to leaders who emphasize our collective differences – versus other, more consensus focused politicians during the recent past.” The firm warns against making short-term bets based on political calculations. At the same time, long-term investors are advised to look past the election “noise” and consider what ramifications the changing political landscape will have. “President Trump did not create this dynamic, but he is particularly adept at highlighting and exploiting divisions, and his presidency has accelerated this trend,” the analysis said. “Once repelled by President Trump, many Democratic leaders actually now mimic parts of his divisive style.”

Where the buys are

Betting against U.S. stocks hasn’t worked well for most of the current bull market, which will turn 11 years old in March. Over the past 12 months, while the S&P 500 has risen 27.1%, stock markets in the rest of the world are up just 15.4%, as measured by the Vanguard FTSE All-World ex-US ETF. Still, KKR thinks there are opportunities elsewhere as U.S. investors already have priced in a “robust economic recovery” while KKR’s models suggest “only a modest recovery” for corporate earnings that have been in recession for what could be the fourth straight quarter to start 2020. Investors should look to expanding economies in Brazil, Mexico, China, India and Indonesia, rather than just investing in emerging markets generally.


Company: cnbc, Activity: cnbc, Date: 2020-01-15  Authors: jeff cox
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This retailer ordered 35,000 cases of French wine to brace for possible tariffs

Bottles of French wine are displayed for sale in a liquor store on December 3, 2019 in Arlington, Virginia. Though it’s not clear yet whether massive tariffs against French wine will take effect next month, Moore Brothers Wine Co. isn’t taking any chances. “It’s just really terrible,” said David Moore, a co-owner of the sprawling business. “But what we hope to do is make sure that we aren’t doubling prices overnight.” Though the U.S. and China have worked out a “phase one” deal of their respecti


Bottles of French wine are displayed for sale in a liquor store on December 3, 2019 in Arlington, Virginia.
Though it’s not clear yet whether massive tariffs against French wine will take effect next month, Moore Brothers Wine Co. isn’t taking any chances.
“It’s just really terrible,” said David Moore, a co-owner of the sprawling business.
“But what we hope to do is make sure that we aren’t doubling prices overnight.”
Though the U.S. and China have worked out a “phase one” deal of their respecti
This retailer ordered 35,000 cases of French wine to brace for possible tariffs Cached Page below :
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This retailer ordered 35,000 cases of French wine to brace for possible tariffs

Bottles of French wine are displayed for sale in a liquor store on December 3, 2019 in Arlington, Virginia.

Though it’s not clear yet whether massive tariffs against French wine will take effect next month, Moore Brothers Wine Co. isn’t taking any chances.

The retailer, which operates in New York, New Jersey and Delaware, ordered more than 35,000 cases of imported wine to be delivered by Feb. 1, just in case the White House follows through on its threat for tariffs that could be around 100% and levied on a host of other goods.

“It’s just really terrible,” said David Moore, a co-owner of the sprawling business. “But what we hope to do is make sure that we aren’t doubling prices overnight.”

Wine imports from the European Union already face 25% duties, but the Office of the U.S. Trade Representative has floated the idea of hiking them to 100% as part of an ongoing battle over tariffs on Airbus airliners. The USTR did not respond to a request for comment.

Though the U.S. and China have worked out a “phase one” deal of their respective tariff battle, the wine issue is just one of many unresolved trade issues around the world.


Company: cnbc, Activity: cnbc, Date: 2020-01-15  Authors: jeff cox
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Bond data back to the Black Death shows lower and even negative rates could be here to stay

Crisfotolux | Getty ImagesMore than 700 years of history show that the times as they are now, at least in regard to interest rates, aren’t quite so different as we’re led to believe, according to research that goes back to the Black Death plague of the 14th century. In fact, the low interest rate climate has been more rule than exception and indicative that even negative interest rates shouldn’t be considered a major aberration, and may stay there — permanently. The work from Paul Schmelzing at


Crisfotolux | Getty ImagesMore than 700 years of history show that the times as they are now, at least in regard to interest rates, aren’t quite so different as we’re led to believe, according to research that goes back to the Black Death plague of the 14th century.
In fact, the low interest rate climate has been more rule than exception and indicative that even negative interest rates shouldn’t be considered a major aberration, and may stay there — permanently.
The work from Paul Schmelzing at
Bond data back to the Black Death shows lower and even negative rates could be here to stay Cached Page below :
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Bond data back to the Black Death shows lower and even negative rates could be here to stay

Plague Doctor Mask. Crisfotolux | Getty Images

More than 700 years of history show that the times as they are now, at least in regard to interest rates, aren’t quite so different as we’re led to believe, according to research that goes back to the Black Death plague of the 14th century. In fact, the low interest rate climate has been more rule than exception and indicative that even negative interest rates shouldn’t be considered a major aberration, and may stay there — permanently. The work from Paul Schmelzing at the Bank of England runs counter to a popular economic theory known as “secular stagnation.” The idea, put forth most prominently by former White House economist and Treasury Secretary Larry Summers, contends that the recent low-growth low-rate environment is likely to persist and is linked to causes that aren’t likely to go away soon. However, by tracing rates back to 1311, Schmelzing found that the current state of affairs is consistent with the results over time.

“Against their long‑term context, currently depressed sovereign real rates are in fact converging ‘back to historical trend’ — a trend that makes narratives about a ‘secular stagnation’ environment entirely misleading, and suggests that — irrespective of particular monetary and fiscal responses — real rates could soon enter permanently negative territory,” Schmelzing wrote. The paper comes as some $11 trillion in global sovereign debt continues to carry negative yields. In theory, that means that investors buying those bonds actually have to pay for the privilege of doing so. In practice, it has meant below-zero deposit rates through a wide span of Europe, though the total of negative-yielding debt is down from a high around $17 trillion earlier in 2019.

Role in wealth inequality

Secular stagnation is a theory that traces back to the Great Depression, and has been cited both as an explanation for the current global pattern of low rates as well as growing wealth inequality. Economist Thomas Piketty in 2014 released the landmark “Capital in the Twenty-First Century” book that explored the inequality issue further and argued that a global wealth tax should be used to restore balance. Schmelzing also argues against Piketty’s findings that wealth for the upper echelon is greatly outpacing economic growth. The conclusions, Schmelzing wrote, are “equally unsubstantiated by the historical record” and “overwhelmingly omit archival and other historical factual evidence.”

Piketty disputed the characterization of his work. “If you look at stock market rates of return, or at the rate at which top billionaire wealth rises year after year, it is clear that the relevant rate of return is substantial, and much larger than the growth rate,” Piketty said in an email to CNBC. Summers did not respond to a request for comment.

The new ‘norm’


Company: cnbc, Activity: cnbc, Date: 2020-01-14  Authors: jeff cox
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US budget deficit topped $1 trillion in 2019 for the first time in seven years

The U.S. fiscal deficit topped $1 trillion in 2019, the first time it has passed that level in a calendar year since 2012, according to Treasury Department figures released Monday. The budget shortfall hit $1.02 trillion for the January-to-December period, a 17.1% increase from 2018, which itself had seen a 28.2% jump from the previous year. Rising corporate tax revenue helped lower the pace of increase in the spending gap. If that pace continues it would also lead to a fiscal deficit for 2019-2


The U.S. fiscal deficit topped $1 trillion in 2019, the first time it has passed that level in a calendar year since 2012, according to Treasury Department figures released Monday.
The budget shortfall hit $1.02 trillion for the January-to-December period, a 17.1% increase from 2018, which itself had seen a 28.2% jump from the previous year.
Rising corporate tax revenue helped lower the pace of increase in the spending gap.
If that pace continues it would also lead to a fiscal deficit for 2019-2
US budget deficit topped $1 trillion in 2019 for the first time in seven years Cached Page below :
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US budget deficit topped $1 trillion in 2019 for the first time in seven years

The U.S. fiscal deficit topped $1 trillion in 2019, the first time it has passed that level in a calendar year since 2012, according to Treasury Department figures released Monday.

The budget shortfall hit $1.02 trillion for the January-to-December period, a 17.1% increase from 2018, which itself had seen a 28.2% jump from the previous year.

Rising corporate tax revenue helped lower the pace of increase in the spending gap.

For the fiscal year, which began in October, the shortfall is already at $356.6 billion, an 11.7% increase from a year ago. If that pace continues it would also lead to a fiscal deficit for 2019-20 of more than $1 trillion.

Through December, receipts have totaled $806.5 billion while outlays have come to $1.16 trillion.

President Donald Trump had vowed that his stimulus policies, including massive corporate tax cut and aggressive deregulation, would help stem the red ink coming from Washington, but it has only increased. As deficits have swelled, so has the national debt, which is now at $23.2 trillion.


Company: cnbc, Activity: cnbc, Date: 2020-01-13  Authors: jeff cox
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Two key moves from the Federal Reserve have boosted stocks, but they could come with a price

The stock market has picked up 2020 pretty much where 2019 left off, thanks in large part to two key Federal Reserve moves that could keep the rally going, at least until something goes wrong. “That’s a really big message that I can’t think of another Fed really delivering.” Friedman said the change means the Fed has gone from considering 2% a ceiling for inflation to perhaps a floor. The Fed since implemented its own repo operations on an as-needed basis, then decided to extend its operations t


The stock market has picked up 2020 pretty much where 2019 left off, thanks in large part to two key Federal Reserve moves that could keep the rally going, at least until something goes wrong.
“That’s a really big message that I can’t think of another Fed really delivering.”
Friedman said the change means the Fed has gone from considering 2% a ceiling for inflation to perhaps a floor.
The Fed since implemented its own repo operations on an as-needed basis, then decided to extend its operations t
Two key moves from the Federal Reserve have boosted stocks, but they could come with a price Cached Page below :
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Two key moves from the Federal Reserve have boosted stocks, but they could come with a price

The stock market has picked up 2020 pretty much where 2019 left off, thanks in large part to two key Federal Reserve moves that could keep the rally going, at least until something goes wrong. Amid an already strong backdrop for Wall Street, the Fed issued two directives right around the same time in October — one, an open commitment to providing liquidity in the short-term borrowing market for banks, the other a pledge not to increase interest rates until inflation rose substantially higher. Taken together, the moves have been seen as stimulus that while stealthier than the measures taken to pull the economy out of the financial crisis, nevertheless represent important backing that has been positive for the kind of risks that stocks embody.

“The biggest thing the Fed has done, which is really out of the box, is just this insistence … that their goal is to raise inflation,” said Jim Paulsen, chief investment strategist at The Leuthold Group. “That’s a really big message that I can’t think of another Fed really delivering.” While that message has been seen as unequivocally positive for the market and economic projections in 2020, there is concern about danger further down the line.

Looking for ‘significant’ move

The big moment regarding inflation came in late October when Fed Chairman Jerome Powell said he would need to see a “really significant” move higher before hiking interest rates. The statement came after the central bank had approved its third rate cut of the year and as investors were looking for guidance on what the next move might be. Since then, Fed officials have underlined the effort to bring inflation up with statements indicating that they might tolerate a level higher than the 2% they’ve previously targeted as in line with their congressional mandate for price stability. At a time when the market was just getting over fears that a recession was on the horizon, the Fed’s pledge helped soothe some jangled nerves. “This change in the Fed strategy is extremely significant,” said Steve Friedman, senior macroeconomist at MacKay Shields. “To me, it means they want to see inflation above 2%. This is very supportive of risk assets and economic growth in the year ahead.” Friedman said the change means the Fed has gone from considering 2% a ceiling for inflation to perhaps a floor. Inflation is associated with rising prices and interest rates, though MacKay Shields expects the Fed’s moves will result in “somewhat higher” government bond yields though a continued low-rate environment overall.

QE or not QE, it doesn’t matter

The other side of the Fed’s move came from its intervention in the overnight borrowing system, through a process known as “repo” that provides the basic plumbing for the banking industry. The process involves banks’ exchanging high-quality collateral for cash and liquidity from the Fed. A financial system cash crunch in mid-September briefly sent very short-term rates surging and raised fears that the Fed’s efforts to reduce the bonds it holds on its balance sheet were sucking reserves out of the system and jeopardizing the repo market’s usually smooth operations. The Fed since implemented its own repo operations on an as-needed basis, then decided to extend its operations through at least the second quarter of this year.

To some market observers, the move resembles the quantitative easing process the Fed used during and after the crisis to hold rates down and revive the housing market. QE helped boost market prices by providing greater liquidity to the system, but officials insist the nature of these operations is different and geared only toward keeping its benchmark for short-term lending within a range of 1.5%-1.75%. Still, the increase in the balance sheet through the Fed repo has been in near lockstep with the stock market’s rise during the same period. The balance sheet has expanded more than 10% since early September; the S&P 500 is up about 11% since then.

Even if this is not technically another round of easing — QE4, as the markets call it — the impact has been the same. “In this post-crisis regime of QE-everywhere, people just associate money printing and an expansion of one’s balance sheet with an attempt to lift asset prices,” said Peter Boockvar, chief investment officer at Bleakley Advisory Group. “Some of it is not direct. A lot of it is psychological.”

The danger of wanting inflation


Company: cnbc, Activity: cnbc, Date: 2020-01-13  Authors: jeff cox
Keywords: news, cnbc, companies, operations, stocks, system, sheet, federal, really, boosted, rates, key, moves, higher, reserve, price, market, inflation, repo, fed, come


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Job market ends 2019 with disappointing 145,000 growth in payrolls

WASHINGTON — The U.S. jobs market ended 2019 on a sour note, with December’s payroll and wage growth missing expectations, according to Labor Department figures released Friday. Economists surveyed by Dow Jones had been looking for job growth of 160,000. In addition to the slow payroll growth, average hourly earnings rose by just 2.9%, below the 3.1% projection. December marked the first time that wage gains were below 3% on a year-over-year basis since July 2018. Pearce characterized the job gr


WASHINGTON — The U.S. jobs market ended 2019 on a sour note, with December’s payroll and wage growth missing expectations, according to Labor Department figures released Friday.
Economists surveyed by Dow Jones had been looking for job growth of 160,000.
In addition to the slow payroll growth, average hourly earnings rose by just 2.9%, below the 3.1% projection.
December marked the first time that wage gains were below 3% on a year-over-year basis since July 2018.
Pearce characterized the job gr
Job market ends 2019 with disappointing 145,000 growth in payrolls Cached Page below :
Company: cnbc, Activity: cnbc, Date: 2020-01-10  Authors: jeff cox
Keywords: news, cnbc, companies, payroll, gains, payrolls, job, solid, market, rate, growth, wage, ends, 145000, 2019, pearce, note, disappointing


Job market ends 2019 with disappointing 145,000 growth in payrolls

WASHINGTON — The U.S. jobs market ended 2019 on a sour note, with December’s payroll and wage growth missing expectations, according to Labor Department figures released Friday.

Nonfarm payrolls increased by just 145,000 while the unemployment rate held steady at 3.5%. Economists surveyed by Dow Jones had been looking for job growth of 160,000. The jobless rate met expectations for staying at a 50-year low.

In addition to the slow payroll growth, average hourly earnings rose by just 2.9%, below the 3.1% projection. December marked the first time that wage gains were below 3% on a year-over-year basis since July 2018.

Revisions to the October and November counts brought those two months down by 14,000 as well. The glittering 266,000 initial estimate for November came down 10,000 while October’s fell from 156,000 to 152,000.

“After a strong 256,000 gain in payrolls in November, boosted by the return of 40,000 GM workers, some slowdown in the pace of job gains in December was inevitable,” Michael Pearce, senior U.S. economist at Capital Economics, said in a note. Pearce characterized the job growth as “solid” even though it missed estimates, and said “we expect solid gains in payrolls to extend through 2020.”

Dow futures turned negative following the disappointing report.


Company: cnbc, Activity: cnbc, Date: 2020-01-10  Authors: jeff cox
Keywords: news, cnbc, companies, payroll, gains, payrolls, job, solid, market, rate, growth, wage, ends, 145000, 2019, pearce, note, disappointing


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