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Quick Fix
A million jobs May? — It’s not quite jobs week yet but the number out ahead of the long July Fourth weekend could give the White House something to celebrate (though it could also complicate their spending plans.)
Current data suggest that the June number should blow out May’s decent but not great figure of 559K and could push back above 1 million, which would indicate that tight supply in the labor market is easing a bit as more younger people get vaccinated and the end of enhanced federal jobless benefits looms at the end of September.
Via Pantheon’s Ian Shepherdson: “The Homebase employment data, which were dead right about May and pretty close in April, are consistent with private payrolls rising by just over 900K, which means that a one million headline number is not out of reach.
“Childcare issues likely haven't changed much since May, but Covid fear presumably has diminished as cases have dropped, and offers of higher wages, signing bonuses and other incentives likely are pulling some people back into work.”
But even at 1 million jobs or more the pace would still be slower than most economists expected and leave the economy 10 million-plus jobs short of where it would have been. And it would likely not be enough to ease inflationary pressure on wages.
One more bailout? — Our Zachary Warmbrodt: “The U.S. economy is surging back from Covid-19, but restaurants, hotels and other industries hit hardest by the pandemic are telling Congress they still need tens of billions of dollars in new government funds to stay afloat.
“The growing list of trade associations lobbying for a new round of pandemic aid — also representing gyms, amusement parks, travel agents and horse shows — say they suffered massive, unrecoverable financial losses because of social distancing restrictions and still face uncertainties as the economy recovers.”
GOOD MONDAY MORNING — Hope everyone had a reflective and enjoyable Juneteenth and Father’s Day Weekend. Lots of financial/economic juice this week to keep everyone busy. Email me on [email protected] and follow me on Twitter @morningmoneyben. Email Aubree Eliza Weaver on [email protected] and follow her on Twitter @AubreeEWeaver.
DRIVING THE WEEK
President Biden this afternoon “will meet with lead financial regulators for an update on the state of the country’s financial system and institutions in the Oval Office. The meeting will cover regulatory priorities including climate-related financial risk and agency actions to promote financial inclusion and to responsibly increase access to credit …
Fed Chair Jay Powell testifies on Tuesday at 2:00 p.m. before the House Select Subcommittee on the Coronavirus Crisis … House Financial Services is scheduled to vote Wednesday on an ESG policy bill for big banks … Senate Banking has a housing hearing on Thursday at 10:00 a.m.
WALL STREET BLOWS OFF INFRASTRUCTURE SAGA (FOR NOW) — Compass Point’s Isaac Boltansky: “The bipartisan effort will drive headlines in Washington this week, but we remain bearish given the lack of detail, progressive reticence, and persistent divides over both scale and scope.
“Our sense is that investors will continue to largely ignore tax and infrastructure headlines … [B]ut Wall Street will be forced to begin following every twist and turn once the reconciliation process begins next month.”
HIGH-END SPENDING IS BACK IN A BIG WAY — WP’s Andrew Van Dam and Heather Long: “Travel agent Dottie Williford’s phone won’t stop buzzing: Her high-end clients in Raleigh, N.C., are eager to explore the world again. She stayed up until midnight recently to book two $20,000 cabins on a luxury cruise to the Bahamas in July. …
“The luxury travel boom is one of the clearest signs of a budding spending surge by wealthy Americans that is likely to tilt the balance of the economy even further toward the well-off and may deepen economic disparities already heightened by the global pandemic. The spending tsunami, though good news for an economy still salving the financial wounds of the coronavirus, underscores how the wealthy can propel economic recoveries”
Markets
FED SHIFT CAUSES RALLY IN VALUE STOCKS TO WOBBLE — Reuters’ David Randall: “The Federal Reserve's hawkish shift is forcing investors to reevaluate the rally in so-called value stocks, which have taken a hit in recent days after ripping higher for most of the year.
“Shares of banks, energy firms and other companies that tend to be sensitive to the economy’s fluctuations have tumbled following the Federal Reserve’s meeting on Wednesday, when the central bank surprised investors by anticipating two quarter-percentage-point rate increases in 2023 amid a recent surge in inflation.”
FACEBOOK, ALPHABET KEEP RISING AS APPLE, NETFLIX FADE — WSJ’s Karen Langley: “Big tech stocks are going their own ways in 2021. It is a far cry from last year, when the so-called FAANG stocks took a commanding role in a market driven by the coronavirus pandemic.
“After the swift downturn of early 2020, shares of Facebook Inc., Apple Inc., Amazon.com Inc., Netflix Inc. and Google parent Alphabet Inc. recovered more quickly than the broad stock market. Then they pushed higher, ultimately powering the S&P 500 to a 16 percent gain for 2020.”
ICYMI: FRIDAY SAW S&P 500’S WORST WEEK SINCE FEBRUARY — AP’s Damian J. Troise and Stan Choe: “Stocks sank again on Wall Street Friday, knocking the S&P 500 to its worst weekly loss since February, as more steam comes out of banks and other stocks that soared earlier this year with expectations for the economy and inflation.
'The S&P 500 fell 55.41 points, or 1.3 percent, to 4,166.45 in a widespread slump. It was the worst day for the index in a month as unease grows about the Federal Reserve making plans to eventually offer less help to markets.”
Fly Around
G-20 HOST TO CALL FOR TOUGHER ‘GIG ECONOMY’ RULES — Reuters: “Italy will call for tougher rules governing 'gig economy' workers when it hosts labour ministers of the world's biggest economies in the Group of 20 next week. Italy's labour minister, Andrea Orlando, said countries should require big companies such as Amazon to take responsibility for working conditions at their suppliers, as part of reforms to ensure contractors are well-treated.
“‘Large corporations must also take responsibility for small ones. They can no longer say that what happens outside their sheds does not concern them,’ Orlando was quoted as saying by Italian daily La Repubblica.”
EMERGING-MARKET BULLS PIN CURRENCY HOPES ON HAWKS OUTPACING FED — Bloomberg’s Netty Idayu Ismail: “Emerging-market currencies hit by a hawkish Federal Reserve could soon regain their record run against the dollar on expectations that developing central banks may outpace their U.S. counterpart in policy tightening.
“The currencies of Brazil, Russia, the Czech Republic, South Africa and Hungary — countries that delivered multiple rate hikes or are expected to do so soon — are retaining quarterly gains and outperforming peers. More may join their ranks, with tightening expectations growing for countries including Chile and South Africa as economic activity and inflation roar back from a pandemic-driven slump.”
TROUBLED COMPANIES TAKE PAGE FROM AMC’S PLAYBOOK — WSJ’s Alexander Gladstone and Soma Biswas: “The frenzied stock-buying activity that may have saved AMC Entertainment Holdings Inc. from bankruptcy is opening up a potential escape hatch for other troubled borrowers as well.
More companies with steep financial challenges are seeking a lifeline from equity markets, eager to capitalize on the surge of interest in stock buying from nonprofessional investors. Earlier this month, coal miner Peabody Energy Corp., offshore drilling contractor Transocean Ltd. and retailer Express Inc., all announced plans to sell stock, betting equity markets will support them despite heavy debt loads, recent losses and industry headwinds.”
TIGHT LABOR MARKET RETURNS THE UPPER HAND TO WORKERS — WSJ’s Eric Morath and Greg Ip: “Low-wage workers found something unexpected in the economy’s recovery from the pandemic: leverage. Ballooning job openings in fields requiring minimal education—including in restaurants, transportation, warehousing and manufacturing—combined with a shrinking labor force are giving low-wage workers perks previously reserved for white-collar employees. That often means bonuses, bigger raises and competing offers.”
TRANSITIONS — Brian Buchwald, Shann Biglione and Dan Gaynor are launching Kelp, an AI-powered platform focused on corporate reputation. Gaynor, an Obama and Martin O'Malley alum, and Buchwald most recently were at Weber Shandwick and Biglione was at Publicis Media.
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June 21, 2021 at 07:05PM
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