07 Aug JOBS DATA AT 8:30…AND “MAKE BILLIONAIRES PAY ACT”
Today the all-inclusive BLS Employment report is released. The employment data released this week was contradictory. The ADP survey had a large negative miss. Weekly unemployment and continuing claims had a big positive miss as weekly claims unexpectedly fell to a pandemic low.
In my view the data has the ability to change the prevailing narrative. Currently analysts are expecting a 1.5 million increase in both non-farm and private sector payrolls, a 10.5% unemployment rate, a 0.5% decline in hourly earnings, a 34.4 hourly work week and 61.8% labor participation rate.
At the time of this writing, a stimulus compromise has not yet been reached. A major issue is the additional $600-week insurance benefit. As widely noted and validated by a plethora of government and educational organizations, because of this additional $600-week unemployment benefit, approximately 65% of filers are receiving 134% more than if they were working.
In other words, the government is paying many people more not to work rather to work. Some have argued that since many cannot find a job anyway the data above is meaningless.
There are several mega sized firms, including Goldman and Blackrock, who recently warned about potential inflationary implications with the passage of another gargantuan stimulus, a warning based upon the explosion of the national debt and the potential cost push inflationary environment, partially the result of this additional $600-weekly benefit that will stifle job creation.
I will not moralize about paying someone more not to work rather than to work but most will agree that there are massive socio-economic ramifications of such policies. There is a debate that such is wrong, counterproductive, destroys self-confidence and self-esteem, and creates an inferior and weaker society and economy.
Wow! That statement is a great discussion to have at an extended Thanksgiving gathering, what ever year that may again occur.
Last night the foreign markets were down. London was up 0.03%, Paris down 0.24% and Frankfurt up 0.26%. China was down 0.96%, Japan down 0.39% and Hang Sang down 1.60%.
The Dow should open but this could change radically given the significance of the 830 data. Also weighing on the markets is the potential impasse on stimulus talks, an impasse focused on the $600 per week additional stipend and additional aid to states. In my view a high staked political gambit is occurring but the market is believing additional stimulus will be passed as evidenced by gold, the dollar and other indicators.
Also weighing on the markets are trade tensions and the “Make Billionaires Pay Act” proposed by Bernie Sanders and endorsed by several leading democrats which would impose a one-time 60% tax on wealth gains made by billionaires between March 18, 2020 and January 1, 2021.
Top tech leaders and other billionaires whose fortunes have sky rocketed because of the unrelenting advance in the handful of social media and tech companies would be forced to pay a 60% tax on over $731 billion in wealth accumulated by 467 billionaires since March 18 according to the press release obtained by CNBC.
In my view such a proposal is extremely dangerous…. taxing unrealized gains but such is a platform plank of the 2020 Democratic Party. According to the Democratic Party platform such taxes may start at unrealized gains of $3.5 million.
The 10-year is unchanged at a 0.53% yield.