Morning Note: Jobs Galore! — And — “A Messy Multipolar World”

From last Tuesday’s morning note:

“Presumed noble intentions notwithstanding, and while, indeed, the Delta variant may represent heightened deterrent for the careful would-be job-seeker, aggressive government intervention can’t help but lead to market distortions; labor market included…”

Our graph of the BLS JOLTS (job openings and labor turnover) Report, capturing yesterday’s (10 million job openings) record release:


I recently asked a friend of mine who happens to be in the hotel business — after he exclaimed how much he’s having to offer by way of higher wages to attract folks back to work (btw, his hotel is back to offering all pre-covid amenities, while remaining half-staffed [not by choice]) — if he’s ever actually reduced someone’s pay. He answered “never.”

Here, courtesy of Bespoke Investment Group, is a visual on wages in the services space:


For all the debate over whether inflation is likely to run, or settle in, at a higher pace in the years to come (as employers adjust to a much higher wage regime)well, hmm… Please read the opening quote one more time…


Asian equities leaned green overnight, with all but 3 of the markets we track closing higher.

Europe’s up nearly across the board, with all but 1 of the 19 bourses we follow trading higher as I type.

US major averages (save for small caps) are up to start the day. Dow up 70 points (0.19%), SP500 up 0.18%, SP500 Equal Weight up 0.23%, Nasdaq 100 up 0.14%, Nasdaq Comp up 0.16%, Russell 2000 down 0.11%.

The VIX (SP500 implied volatility) is down 1.61%. VXN (Nasdaq 100 i.v.) is down 1.42%.

Oil futures are up 2.62%, gold’s down 0.40%, silver’s down 0.46%, copper futures are up 1.24% and the ag complex is up 1.07%.

The 10-year treasury is down (yield up) and the dollar is up 0.18%.

Led by metals miners, ALB (lithium miner), uranium miners, ag futures and energy stocks — but dragged by gold miners, MP (rare earth miner), Viacom/CBS, bank stocks and silver — our core mix is up 0.17% to start the session.


We’ve cited herein aplenty the developments that have us sympathetic with the structural inflation argument going forward. One of them being a move away from disinflationary globalization that results from “messy” geopolitics. 

Here’s Marko Papic, in his insightful book Geopolitical Alpha, on the matter:

“By ushering in stability and globalization, the US allowed countries to set aside their challenges to US hegemony and focus on economic development. But those material gains ultimately allowed these challengers to get to the point where they could challenge the US for hegemony.”

In the wake of the Great Recession, a messy, multipolar world has replaced American hegemony.

“…multiple countries pursue their national interests independently, an arrangement that forecasters know – from history and political science theory – produces high geopolitical volatility.


Have a great day!
Marty
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