What Fed rate hike? The economy just gave one to all of us. In this case though, not only is the cost of money more expensive (as it would be in the case of a rate hike) but now EVERYTHING is more expensive. How did this happen? The quarterly increase in wages measured by the Employment Cost Index (ECI) rose a mere 0.2%. This is the weakest wage growth since this metric was tracked all the way back to 1982. Also, It was half as slow as the weakest 57 economist estimates predicted. From Bloomberg:
"Fed officials are "still looking at a lot of slack remaining in the job market," Scott Brown, chief economist at Raymond James Financial Inc. in St. Petersburg, Florida, said before the report. "If the numbers sort of fall back a bit, that might push the Fed toward a later rate increase than September."
The median forecast of 57 economists surveyed projected a 0.6 percent increase for the total ECI index. Last quarter's reading was lower than all estimates, which ranged from increases of 0.4 percent to 0.8 percent. The gauge measures employer-paid taxes such as Social Security and Medicare in addition to the costs of wages and benefits."
The Treasury market sure seemed to think this pushed the upcoming rate hike off a bit:
Before the announcement Valentin Marinov of Credit Agricole said:
"Today's US data could be quite important as well with market focus likely to be on the Employment Cost Index (ECI) - easily the most comprehensive measure of wages in the economy.
Evidence of further ECI growth would be consistent with mounting wage pressures against the background of subdued trend economic growth and dissipating slack in the labour market. In turn, It would strengthen the case for lift-off sooner rather than later. USD could extend its gains broadly with markets also positioning ahead of the all-important NFP release next week."
So, since the opposite happened it would weaken the case for lift-off.
Apparently, getting the unemployment rate down is not the answer. Replacing actual growth –inducing jobs with low-paying bartender and waitress jobs won't do the trick. What's the kicker? Their low paying jobs just got lower paying.
Trade well and follow the trend, not the perma-bull OR perma-bear "experts."
Behold the age of infinite moral hazard! On April 2nd, 2009 CONgress forced FASB to suspend rule 157 in favor of deceitful accounting for the TBTF banking mafia.
The major averages started off making a move to the upside on Friday. Unfortunately that is not how we finished the session, as shorter term profit takers cashed out. With Friday being the end of the week/month, the afternoon session was weak as traders cashed in. I don't suspect we will see the weakness carry over into today. With August...
A gambler calls it "doubling down", a trader calls it "cost averaging". I don't care what you call it, it's the same thing. There is nothing wrong with doubling down and there's nothing wrong with cost averaging. The question you have to ask yourself is: "why am I doing this? Am I doing this because I am down huge at the blackjack...
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Keep a civil tongue.