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S&P 500 Posts Fourth Weekly Gain
Fundamentals Outweigh Trade Concerns
Happy Memorial Day
Remember. Honor. Reflect.
How do employers lure staff in a tightening labor market? The curly tail grubs and spinnies of the business world are higher wages and better benefits.
During the past decade, the employment picture in the United States has shifted dramatically. In mid-2009, 15.4 million unemployed Americans were chasing 2.2 million available jobs. At the end of 2017, just 6.6 million Americans were unemployed, and employers were casting eagerly to fill 6.6 million open jobs, reports Barron’s.
Bloomberg offered some colorful examples:
“Want ads for truck drivers to haul crude oil in Texas are touting salaries as high as $150,000 a year. Some nurses are getting $25,000 signing bonuses. The U.S. unemployment rate just fell to 3.9 percent, one tick away from its lowest since the 1960s. And, on May 8, the Bureau of Labor Statistics reported there are 6.5 million unfilled jobs in the United States, the most on record. Some employers say they’re feeling the squeeze.”
What in the world?
A lot happened last week. Some of the notable events included:
- Trade talks between the United States and China. The talks were described as “frank, efficient, and constructive,” although significant issues have yet to be resolved.
- A Federal Open Market Committee meeting. The Federal Reserve indicated it expects to raise rates during 2018, but did not do so last week.
- Low unemployment in the United States. U.S. unemployment fell to 3.9 percent, which is the lowest it has been since 2000. Typically, low employment is a sign of a strong economy.
- Sky-high rates in Argentina. In an effort to shore up the nation’s currency, Argentina’s central bank “…hiked rates to 40 percent from 33.25 percent, a day after they were raised from 30.25 percent.”
- Katy Perry roasted Warren Buffett. Katy Perry revealed the ‘Left Shark’ – a backup dancer famous for being out of sync during Perry’s 2015 Super Bowl performance – was Warren Buffett.*
A meeting of the minds.
The Federal Reserve and the U.S. bond market appear to be in agreement about the direction of interest rates. For more years than anyone cares to count, investment professionals have been predicting the end of the bull market in bonds. Bond guru Bill Gross called the end of the bond bull in 2011 – and called it again in 2013. He wasn’t alone. Strategists who participated in Barron’s Outlooks anticipated rising interest rates in 2014 and 2015, too.
The Federal Reserve began encouraging interest rates higher in December 2015 when it increased the Fed funds rate for the first time in a decade. However, the yield on 10-year Treasuries remained stubbornly low. In fact, it fell below 2 percent following the rate hike and stayed there until November 2016.