This was a good — but not great — NFP report. In fact, its one of the better reports we’ve seen. It points to an ongoing improving economy, and continued Fed hikes — possibly for the rest of our natural lives, or until the next recession, which ever comes first.
The market is obviously concerned about the ratcheting up of rates, especially now with real rates above zero. As MFR’s Josh Shapiro explained:
"Average hourly earnings were up a m/m 0.4% in July (above market expectations of a 0.2% gain) after increases of 0.2% in the preceding two months. The y/y increase was steady at 2.7%, which continued a string of y/y gains that have been essentially flat for many months. However, the 0.4% m/m change definitely caught the eye of the bond market, and the Fed will be keeping a close eye on wage data in the coming months."
Thats more fuel for the Fed fire.
Since I’ve been such a curmudgeon lately, let’s dissect the data, looking for some hair on the deal:
Here is a Surprise: Temporary Jobs were flat — and have been since
April. We like to see temp work tick up, as cautious employers tend to
use temps prior to hiring. An uptick in temp #s often precedes an
uptick in permanent new hires.
Retail was a solid +50k, which surprises only so far as knowing what we know about the Challenger, Gray data, showing big layoffs in Retail. BTW, Retail in July was not bad — only below Wall St expectations. Maybe the stores that did well (Target, Costco, WalMart) made up for the ones that missed (Abercrombie, Nordstroms, Gap). Perhaps GM Dealers had to hire more bodies to help them give away cars at cost.
A few other items of note: Leisure and hospitality: of the +33k positions, 30k was food and drink; These tend towards lower paying McJobs. Also of note: 26k new Government employees.
Lastly, MS Howell’s & Co. Chief Market Strategist Brian Reynolds notes that Aggregate hours worked were far less than you would expect in a plus 207k report (with 64k upwardly revised new jobs).
One of the more interesting items we’ve discussed has been the different pricing strategies that studios use with DVDs versus what the labels do with CDs.
The studios, to their credit, use a form of dynamic pricing — they intelligently recognize that a content item’s value is highest when first released, and then subsequently fades. That’s why DVD prices come down over time, to capture those marginal buyers. The consumers who will not pay $49.99 for Seinfeld Season 1 & 2, might pay $29.99.
The labels have mostly avoided this strategy — but perhaps that’s changing. I had just finished reading a post about Amazon’s conference call, and on it Amazon’s management discussed their Long Tail strategy. I went over to the site, and thru some random clicking and scrolling, noticed this little tidbit: a long list of interesting CDs for sale on Amazon for between $6 and $10:
Here’s my short list of favorite moderate priced CDs off of the Amazon sale:
Jack Johnson : Brushfire Fairytales – another great one — grab it.
Stripped — an under appreciated stone album
Tattoo You the same — kicked off the modern Stones, and it rocks
It’s Only Rock N Roll classic
James Brown – 20 All-Time Greatest Hits! If you you don’t have the 4 CD set, go with this
Bruce Springsteen – Greatest Hits I prefer the individual CDs, but if you want a full dose of Bruce in one shot, this is it.
Wish You Were Here I have the full box set, but after Dark Side of the Moon, this is it.
Motown an interesting twist on Motown
Fashion Nugget Killer album that introduced me to the band:
"He’s going the Distance, he’s going for speed . . ."
We have been watching, with no small degree of skepticism, a stream of improving Macro-economic data. Color us unconvinced. Many of the key releases have been fraught with misleading headlines obscuring much weaker data beneath, and last month was no different. From Inflation to Federal Deficit to Unemployment Rates to Industrial Output to recent GDP…Read More