The September BLS Employment report will be released at 8:30. Analysts are expecting a 150k and 125k increase in non-farm and private sector payrolls, a 4.2% unemployment rate, a 0.3% increase in hourly earnings, a 34.3 average workweek and a 62.7% labor participation rate.
Broad based conclusion can be made from this data, conclusions that could either validate or nullify current expectations.
A major question at hand is whether cost push inflation (wage inflation) is and will continue to accelerate.
Are the Longshoremen emboldened by the success of the strikers from the UAW, Fed Ex, UPS and Boeing? The Longshoremen are demanding an 80% increase, exceeding the 40% to 50% gains won by the groups mentioned above. The head of the union stated “I will cripple you” if you don’t give us this increase.
Will public service sector union workers demand similar increases. Will these wage demands gravitate to nonunion workers.
A prominent central banker stated
Wages at smaller firms are being influenced by those of major firms. I am worried that how many smaller firms will be able to raise wages in fiscal 2025 and the differential between firms that can raise wages and firms that cannot, as well as the over macroeconomic impact of rising wages will have on current and future inflationary expectations as well as on monetary policy.”
Speaking of expectations, will the US follow Italy in its efforts to reduce that country’s deficit. The Italian government plans to institute a windfall tax on companies that benefited most from the economic turbulence of recent years to help lowers the country’s budget deficit.
The Italian government defined the who the tax will affect; “Taxing profits made, and revenues made, and it is an effort that the whole country must undertake which means individuals but also small, medium and large companies.”
Is this a harbinger of things to come given the massive amount of sovereign debt outstanding. How will this debt be serviced? What is most concerning is that most western governments are still spending like “drunken sailors,” quoting the Father of Modern Monetary Theory.
England instituted a windfall tax on its oil industry about 2 years ago, a tax that has not provided the revenues forecasted.
Commenting on yesterday’s market activity, equities were choppy on middle East tensions and monetary policy questions. Oil surged over 5% as Iran “drew a red line.” The Administration adamantly warned Isreal not to bomb Iranian nuclear facilities.
Late Thursday morning, the President was asked whether the US would support an attack on Iranian oil facilities. The President responded, “We are discussing that.” The President did not complete his next sentence…”I think that would be a little—anyways.”
Treasuries sold off across the curve. The yield curve steepened as the data exceeded expectations.
Last night the foreign markets were up. London was down 0.54%, Paris up 0.47% and Frankfurt up 0.18%. Japan was up 0.22% and Hang Seng up 2.82%.
Dow and NASDAQ futures are up 0.15% and 0.25%, respectively but this could change radically given the potential significance of the 8:30 data. Oil is up another 2%. The 10-year is off 5/32 to yield 3.87%. The longshoremen strike is temporarily resolved with a huge pay hike. What will be the ramifications?
