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Astonishingly strong US jobs report sends stocks wavering

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Re: Astonishingly strong US jobs report sends stocks wavering

#131

Post by toomuchtodo »

bombcar wrote: post #125
ianai wrote: post #26

Earlier quoted context omitted.

My hypothesis is the offered wages are below the market clearing rates. People have a willingness to work for every price offered for their labor. If they aren’t filling positions then the wage is too low. Granted, if they raise rates to 10%+ they’ll drive the entire economy into the ditch. Then these jobs will disappear and prices will deflate-along with lots of horrific side effects. Edit-The US minimum wage is 7.2…

Anecdotally but I think there's a large portion of the workforce that left during covid and has determined that returning isn't valuable. Mostly the second income in a household, and often the woman (who was lower paid in general anyway). Why return for $20 an hour when you cut all your daycare expenses, maybe even downsized? You'll have to offer a wage high enough to make it worthwhile.

I have seen similar across various age cohorts. Older folks 65+ who opted for Social Security + Medicare versus going back to an office, as well as couples who found better value from single income and making adjustments versus two incomes and intermittent child care arrangements (child care is not only expensive, but difficult to find, due to wait lists, staff shortages, etc).

Re: Astonishingly strong US jobs report sends stocks wavering

#132

Post by luckylion »

lazide wrote: post #119
luckylion wrote: post #113

Earlier quoted context omitted.

So the standard mortgage rate is agreed on as "official inflation rate + x%"?

Nope. But ‘cost of money’ + x% (where x% is based on risk of repayment, and cost of money includes inflation) is a hard rule for a lender to avoid without going bankrupt. Lenders who go bankrupt tend to not be lenders very long.

Oh, you mean for long-term high inflation, right? I mistook that to apply to today.

Someone who signed a mortgage 5 years ago should be pretty happy if their salary kept up with inflation, wouldn't they?

Re: Astonishingly strong US jobs report sends stocks wavering

#133

Post by horsawlarway »

mastax wrote: post #116
horsawlarway wrote: post #91

Earlier quoted context omitted.

raised 225 points in the years between 2015 & 2018 (very slow return to some sanity after the cuts in 2008 down to nearly 0) Immediately dropped by 75 points in 2019 due to trade war concerns (pre covid), then dropped another 150 points in 2020 due to covid. So back to 2008 levels. Raised by 450 points at the threat of "wage growth" and hot employment causing inflation over the last 11 months. --- So yes, they were e…

I'm no economist, but I think it's fair to raise rates slowly after a long slow economic recovery where you're barely seeing any inflation even when markets and jobs are hot. I also think it's fair to raise rates quickly when there's a huge spike in inflation due to at least partly to excess money supply,which does not go away after waiting a few months.

And that's why I'm mixed...

I don't really disagree with you either. It's one of the few levers that the fed actually has, and it's a BIG lever with lots of consequences and fallout. Moving it is tricky (and hindsight is always an unfair place to judge from).

But it does feel a bit systemically unfair that we're structuring our financial regulations in a manner that seems nearly hellbent on increasing inequality across the population.

That's not really the fed's fault though... I would absolutely lay blame on congress.

Re: Astonishingly strong US jobs report sends stocks wavering

#134

Post by looping__lui »

lazide wrote: post #94
gymbeaux wrote: post #65

Earlier quoted context omitted.

Actually, higher inflation doesn’t necessarily correspond to higher variable interest rates. Indirectly, yea, but only because the fed is raising the benchmark rate to “fight inflation”.

No one is going to write a mortgage for a lower rate than inflation unless they’re crazy (so the gov’t might, but even then not usually!). They’d be signing up to 100% burn their cash doing so. Inflation absolutely impacts mortgage rates, and all other lending.

I totally have a mortgage rate that was lower than inflation at the time because it was sth like 0.7% above market rate for 20 years fixed… Banks don’t care about the real value of money the way normal people do. Borrow 100k, pay 1% interest, buy a piece of stone and sell it for 200k after a couple of decades because of inflation and pay back a banks 100k: they are happy because the math adds up.

Re: Astonishingly strong US jobs report sends stocks wavering

#135

Post by bombcar »

toomuchtodo wrote: post #131
bombcar wrote: post #125

Earlier quoted context omitted.

Anecdotally but I think there's a large portion of the workforce that left during covid and has determined that returning isn't valuable. Mostly the second income in a household, and often the woman (who was lower paid in general anyway). Why return for $20 an hour when you cut all your daycare expenses, maybe even downsized? You'll have to offer a wage high enough to make it worthwhile.

I have seen similar across various age cohorts. Older folks 65+ who opted for Social Security + Medicare versus going back to an office, as well as couples who found better value from single income and making adjustments versus two incomes and intermittent child care arrangements (child care is not only expensive, but difficult to find, due to wait lists, staff shortages, etc).

Yeah, and I feel many people just needed to "try" it to realize "this ain't so bad, sheep" and then they stick with it.

When a second wage earner loses a job you get into a panic because the bills are still coming and you're used to running at a certain spend rate - but when you've been not working for 2+ years now you're going to have acclimatized to one income, and the desire to return may be there, but the fear driven need won't be. And that means you can wait and choose a good offer for you.

Re: Astonishingly strong US jobs report sends stocks wavering

#136

Post by refurb »

harimau777 wrote: post #93
kspacewalk2 wrote: post #82

Earlier quoted context omitted.

Inflation (but not hyperinflation) benefits people in debt, and hurts people with savings. Is having savings nowadays considered intrinsically less moral or something? Inflation targeting of, say, 2%, is the balance that takes into account the sometimes competing interests of all these groups (savers, borrowers, wage earners, people who live off investments, etc). Deviation into either direction causes long-term stru…

In my experience, service sector working class people generally have no savings due to low wages and high cost of housing. I think it's not that people view saving as immoral; rather they view it as a class indicator. It appears that if the lower class starts seeing wage increases, then our economy falls apart and/or the Fed steps in to stop it. That suggests that our economy is broken with respect to the lower class…

No, what happens is wage pressure translates into higher input costs and higher prices thus fueling inflation.

And that hurts low wage workers because any wage increase gets eaten up by inflation and cycle continues.

If we were in a low inflation environment then the fed wouldnt be concerned about low unemployment and rising wages at all.

Re: Astonishingly strong US jobs report sends stocks wavering

#137

Post by jnsie »

skizm wrote: post #37

SPY and VTI are down like 0.65% right now and haven't even given up yesterday's gains. Plus a bunch of non-Meta tech companies missed on earnings yesterday. Come on.

Before reading this headline I was sure that the market was down specifically because of those underwhelming tech earnings. Futures were down when I checked in last night and before the jobs report news broke. I think the claim that the jobs report is influencing anything is unproven at best, willfully misleading at worst.

Re: Astonishingly strong US jobs report sends stocks wavering

#138

Post by lazide »

luckylion wrote: post #132
lazide wrote: post #119

Earlier quoted context omitted.

Nope. But ‘cost of money’ + x% (where x% is based on risk of repayment, and cost of money includes inflation) is a hard rule for a lender to avoid without going bankrupt. Lenders who go bankrupt tend to not be lenders very long.

Oh, you mean for long-term high inflation, right? I mistook that to apply to today. Someone who signed a mortgage 5 years ago should be pretty happy if their salary kept up with inflation, wouldn't they?

Oh for sure, assuming they got a fixed rate. Inflation that starts AFTER the loan was written/that wasn’t priced in to the loan helps the debtor. The lender, not so much.

So mortgages written today need to include the lenders best guess about future inflation, or they’ll expect to go bankrupt in the future. Which is generally a bad business practice.

They also have to give competitive rates, or someone else will end up writing that loan, and they’ll be out of business due to lack of customers.

As the future is unpredictable, that is of course a risky business unless they’re a special entity like the Fed that can do whatever it wants.

Re: Astonishingly strong US jobs report sends stocks wavering

#139

Post by PragmaticPulp »

actually_a_dog wrote: post #124
PragmaticPulp wrote: post #88

Earlier quoted context omitted.

> It hurts people who already have accumulated capital in the form of bonds and stocks. The Fed acts to protect the interests of the very rich, at the expense of the lower and middle class. You're forgetting the primary asset of the middle class: Housing. People purchase housing with mortgages. Inflation raises the price of their home and diminishes the impact of their mortgage debt. Inflation also helps people with…

You seem to be making a number of assumptions here that don't necessarily hold. For instance, yes, a house is often a middle class family's biggest asset. But, there's no way to directly tap into that asset without selling or taking out some kind of loan against it (second mortgage, HELOC, even a reverse mortgage if they're old enough). All of those things have, let's say, significant costs and disadvantages. Yes, "i…

> For instance, yes, a house is often a middle class family's biggest asset. But, there's no way to directly tap into that asset without selling or taking out some kind of loan against it (second mortgage, HELOC, even a reverse mortgage if they're old enough). All of those things have, let's say, significant costs and disadvantages.

You're missing the biggest advantage: They bought the house with a fixed mortgage payment (assuming US and 30-year mortgages).

Their monthly housing payments stays the same in absolute dollar numbers, but it's constantly going down in inflation-adjusted numbers.

Meanwhile rents are going up for everyone who rents.

It's not hard to get a HELOC if necessary for expenses, but the real benefit is in forced retirement savings into house equity.

> given that just over 50% can't cover a $1000 emergency expense from savings[1],

Nope, this is clickbait financial pseudo-journalism.

The headline is a lie. Scroll down and look at the chart and the questions they asked. They did a telephone survey (which has massive selection bias. Would you answer an unknown number and spend time taking a survey? Or would you be busy doing your job and living your life?) and asked people how they would pay an emergency $1000 bill. They didn't ask if they could pay from savings, they asked how they would pay the bill. If the person responded, for example, that they'd "pay the bill and cut other expenses" then they were counted as being unable to handle the emergency expense.

Ignore the clickbait finance headlines. They're deliberately misleading and designed to make you think the economy is on fire and everyone's drowning.

Read the fine print on these surveys. The questions are also deliberately slanted, and the survey respondents are always biased toward specific groups (e.g. people who are bored enough to answer random phone numbers and take a phone survey from a stranger). These are not representative of the U.S. population as whole. Do you know anyone who would answer random phone numbers and take a phone survey, for example?

Re: Astonishingly strong US jobs report sends stocks wavering

#140

Post by lapcat »

Aunche wrote: post #108
lapcat wrote: post #12

Earlier quoted context omitted.

> The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases But there's a direct relation, because the Fed has been very explicit that they're worried about employment and wage growth, and they're raising interest rates in order to depress those. The Fed operates according to the interests of the wealthy.

This is the nonsense narrative the mainstream media is trying to pedal to drive populist engagement, but it doesn't make any sense. The interest rate hikes have dramatically decreased wealth inequality and tempered inflation without affecting unemployment. The Federal Reserve has shown that they don't care that their high interest rates are driving down stocks, so they'll continue to allow them to tumble. By contrast…

> The interest rate hikes have dramatically decreased wealth inequality

Citation please.

> tempered inflation without affecting unemployment

If they've tempered inflation, then why did the Fed just raise them again, and suggest they might be raised even more?

> people think that it means that it's their goal to decrease employment

No, the Fed has explicitly said that their goal is to reduce wage growth. They're happy to have people employed, as long as the workers don't ask for higher wages.

You're painting a false dichotomy: employed or unemployed. But how much you make while employed is crucial.

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