====================SPECIAL SATURDAY POST========================
The 312,000 new jobs reported for December is a huge green flag for the Trump administration.
To reach that level — almost double the Wall Street estimates — this late in the economic cycle is off the charts. Firms added 2.64 million employees in 2018 with wages climbing 3.2% for the year.
Fed chair Jay Powell blinked yesterday in a speech in Atlanta by making a more dovish statement on 2019 rate rise. As well he should. Powell should take a look at the carnage his December rate rise caused in the stock market.
His talking about the hike in the fall and his press conference comments after the rise took markets took the Dow Jones index the woodshed during the last quarter of 2018.
I have often said that Powell is tilting to windmills searching for inflation in this economy, which at 1.8% is below the Fed’s 2% target. He has pricked the asset bubble of stocks to take away the middle class wealth effect and also hurt them with cheapening home values as mortgage rates rise.
The Fed needs to understand that most of the wage increases in 2018 — while healthy — are more a mechanism of raising minimum wage in many states than overall salary increases for the US workers.
So the inflationary value of the 3.2% is muted at best due to the expendable income these households have.
While the naysayers on Wall Street are still predicting an economic slowdown here in 2019 due to tariff tiffs, Trump’s nationalistic agenda of bringing jobs back to the US is resonating with US companies.
Certainly the employment gains are testament that US companies don’t see China and a trade war as a detriment, in fact it may be creating a boost as more manufacturing jobs are being created here.
I’m sure Powell took notice of the stock market’s explosion higher on his more dovish stance. The 747-point rise erased all of the bad Apple news on Thursday and perhaps set up a new takeoff for shares to soar.
Listen we need to go back to the days when three percent of the US population knew who the Fed chairman was and take ego and hubris out of the monetary equation.