We have jobs!
So the unemployment data came out and turns out that US unemployment has dropped to a half-century low in September. On the one hand, investors are worried about the broader macroeconomic slowdown, and on the other, you have the strongest job market in the United States’ recent 50-year history. 136,000 new jobs were added, but I assume some will be lost in the next few months as The We Company cuts jobs and the billion-dollar loss-making companies go bankrupt. Despite poor manufacturing data, investors think job growth has cushioned the economy against rising uncertainty, trade tensions, and the changing geopolitical order.
The S&P and the Dow both closed in 1.42% higher.
Powell wants unicorns
Fed Chairman Jerome Powell made a short speech today suggesting that the US economy is “in a good place”, citing low unemployment and low inflation (<2%) as proof. The Fed has cut rates twice this year to shelter the US economy, and Mr Powell has failed to give the market any certainty about what he’s about to do next. Because the Fed doesn’t know what to do, it’s going to host a series of events called “Fed Listens” to gather opinions from academics, companies and everybody else about what it should do.
Powell wants “inflation to be a little bit higher”, and so he’s loosened the regulation surrounding post-crisis bank liquidity regulation. Life is about to be easier for lenders with under $700 billion under assets.
When Powell says that it’s the Fed’s job to keep the economy in a “good place” for “as long as possible”, it sounds to me a little like kicking the can down the road. The business cycle with booms, busts, and yes, recessions, is part of any healthy economy, so when the Fed wants to pull out a unicorn of its hat to keep things awesome for as long as possible, I’m a little sceptical.
I wish the markets were Narnia, but they’re not – they’re a system that relies on purging the shit, rewarding the great, and directing the good.
HP is Done
HP ($HPQ) shares sunk to their lowest levels in more than two years today after the company announced a restructuring plan designed to cut costs and boost sales growth. The firm is planning to cut about 16% of its workforce, costing its balance sheet about $1 billion. With all the activism surrounding climate change, one could argue that people just aren’t printing as much or buying as many printers anymore, but I don’t think that’s the case. I think inkjet printing is the equivalent of $10 lattes – it’s good once in a while, but there’s no way its good enough to get one every day.
The stock closed at $16.64 today.
Here’s what we’re talking about
- Nexus Gold ($NXS.V) Canada’s empty houses are now worth $600 billion – should you sell your house and buy gold?
- A bird’s-eye view of the blockchain markets: who survived the crypto-winter and why
- Hut 8 Mining ($HUT.V) gets to play in the TSX’s sandbox for a year
- PayPal ($PYPL.Q) breaks up with Facebook’s ($FB.Q) Libra project
— Arth Gupta
Disclaimer: ALWAYS DO YOUR OWN RESEARCH and consult with a licensed investment professional before making an investment. This communication should not be used as a basis for making any investment.
Latest posts by Arth Gupta (see all)
- Powell: “Nothing about this expansion that is unstable” - February 12, 2020
- The story of Amazon’s trillion dollar empire - January 31, 2020
- Cannabis M&A Gone Wrong or Ponzi Scheme in Disguise? You Decide - January 27, 2020