Charles Lieberman
@ACMChuck
Managing Partner, Chief Investment Officer; Economist, portfolio manager, tennis player, fossil collector
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A strong jobs report. Wages slowed, but could be b/c of the changing mix. (The ECI report will be important.) The unemployment rate of 3.5% is not going to slow wage inflation. And we still have strong job growth. No respite for the Fed.
In his interview with my firm, Greenspan argued that the labor mkt is very tight and a recession is more likely than not in response to higher rates as there is little margin for error. Higher rates need time to slow job growth. Some slowdown is due few unemployed available.
Initial claims declined & now barely above 200k. ADP jobs strong at +235k. Esther George gave a very direct and honest view that they need to get rate ups and keep them there to get inflation down, even if it risks a recession. We agree.
What recession? 10.4 million job openings. Atlanta Fed GDP Now Q4 almost 4%. Much higher rates and a recession may be needed if inflation doesn't come down quite a bit more, but it is premature to make that judgment. Near term, some more rate hikes are needed and are coming.
The top 2% account for huge fraction of all the income tax revenues earned by NYC (& CA). When Tepper & Cooperman left NJ, 2 people, NJ had to redo the entire budget. 343K departing CA in 1 year will hurt that econ quickly, just not in 1 year. It's why CA lost 1 House seat.
Is Islam peaceful? Why did Mahmoud Al-Zahar, a senior Hamas official, tell Al-Masirah TV on 12/12, "..we are not talking about liberating our land alone...the entire 510 millions sq. meters of Planet Earth will come under.. where this is no Zionism, no treacherous Christianity."
It's possible you could become more idealistic, but I don't know how. Inequality is natural and has been throughout history. Did the Romans care about need or justice? Does Putin want justice? Wasn't Socrates forced to commit suicide? None of your views reflect reality.
I am trying to wrap my head around the idea that the Biden Administration will allow Chevron to produce oil in Venezuela while continuing to obstruct production in the U.S. How does this make any sense whatsoever? It allows a nasty regime to get dollars by producing dirty oil.
Investors have been anxiously looking forward to the end of inflation. Some of the more volatile (transitory) parts slowed. Will the rest? That remains to be seen. A celebration now is not a surprise, but it could be premature.
How is #Iran still on the U.N. Commission on the Status of Women? How is Iran, the world's leading terrorist state, still in the U.N.?
Thoughtful comments from #Powell. They moved expeditiously to get to neutral and should move carefully into restrictive territory. But they can't ease off prematurely and allow high inflation to become embedded. Likely 50 more in December but not the end of the cycle yet.
What's wrong with the Secret Service or Capitol Police? They failed on Jan 6 and now again with Nancy #Pelosi's home. She's #3 in line and they can't provide better protection against #Pelosiattack?
Biden wants oil companies to produce more. How will an extra profits tax accomplish that? What problem does it solve? How does raiding the SPR for political purposes help? These actions send a message, don't be too successful.
Hard part: how restrictive? Neither the Fed nor the mkt knows the underlying inflation rate, so impossible to know what's restrictive for the funds rate. The Fed is using its best judgment (unlike its critics, who just prefer to be critical). I think fed funds go to 5%. 2/2
Frontloading is given a bad rap. Policy was way too loose and there was a very long way to neutral, let alone restrictive. At .25%/meeting, at least 2 yrs. It made sense to get to neutral as fast as the mkt could handle it i.e. frontloading. The pace can slow after that. 1/2
Avg. wage inflation was moderate at 0.3%. But almost 1/3 of the hires were in leisure & hospitality, the single lowest paid sector, and the average pay rose just 0.2%. That depressed the average. The ECI index, which adjusts for changes in job mix, won't be as benign. 3/3
As predicted, hiring is slowing. It must (even if the Fed took rates back to zero.) There are simply not enough unemployed bodies to fill vacancies. It won't be significant until hiring falls below 50K/month. 2/3
The decline in the unemployment rate should not have been a surprise after last month's huge jump in participation. The rebound in Sep was less than I expected, but enough to drive UR back to 3.5% 1/3
Long time friend Tom Keene & Paul Sweeney asked me on Bloomberg radio today if the mkt is close to bottom. Impossible to pick the bottom. But too late to sell, even if it's too early to buy. Still, current prices are exc. values. Buyers will be happy a year from now.
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