REPLAY | DE | Monthly | Employment Conference Call | DE | Monthly | Employment Conference Call | Labor Market, Economy, Fed Amid COVID-19 Increased Risk – 09/03/21

Posted September 3, 2021 by rvillareal

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Labor Market, Economy, Fed Amid COVID-19 Increased Risk

Both Hiring and Not Hiring; Still “Army of Unemployed?”

• Labor Market in Late Summer with COVID Increased Risks—Strong?  Weak?  Mixed?
  • Jobs (Nonfarm Payrolls); Unemployment and the Unemployment Rate (Household Survey); Wage Inflation
  • Special Factors—Seasonal; COVID-19 Resurgence; Hurricanes Both Hiring and Not Hiring; Still “Army of Unemployed?”

• DE Basic Prospect “Boomlet and Expansion” (75% Odds)
  • 2021-23—Growth, Inflation, Unemployment, Profits (S&P 500 Op. EPS)
  • Themes—1) Sustained Expansion; 2) Higher Inflation But Not Acceleration; 3) Sticky-High Unemployment; 4) Fed Emphasis “Full Employment” vs. “Inflation”; 5) Macro Fundamentals Positive for Expansion
  • Risks—COVID-19; Inflation Acceleration—Too Much of A Good Thing (10% to 15%); Underperformance (5%); Recession (5%)
• Fed and Monetary Policy—Breaking Historical Rules
  • Tapering—On the Way; Powell Commentary
  • Funds Rate Hike Timing—Uncertain
  • Main Goal—Full Employment Not Price Inflation
  • Inflation “Transitory?”
• Fiscal Stimulus—Unprecedented Even for 1930s and W.W. II
  • $5.9 Trillion in 2020-21 and $600 Billion Traditional Infrastructure on Tap—A Spend-and-Tax Future?
  • $6.5 Trillion Biggest Stimulus Ever Including W.W. II
  • $3.5 Billion Biden Budget—Spend-and-Tax
• Earnings and Equity Market Valuations
  • S&P 500 Fair Value and Ranges—4600+
  • Downside on Consensus Earnings but Above 4300
  • Upside—Looking to 2023—5200 plus; For 2022, 5000?
• Note—Midterm Elections, Federal Budget, and “Human Infrastructure” Potential Negatives for a Deficit and Debt-Crisis?