REPLAY| Monthly | Employment Conference Call|Labor Market, the Economy, the Fed—How Long Strong? – 1/6/23

Posted January 6, 2023 by rvillareal

[private]

[/private]

Labor Market, the Economy, the Fed—How Long Strong?

• End-of-Year Labor Market (Dec.)—How Long Strong?
  • Jobs (Headline Nonfarm Payrolls)—Weak?  Strong?  Mixed?
  • Persons Working (Hh. Survey)—Weak?  Strong?  Mixed?
  • Unemployment Rate (Hh. Survey)—Still Essentially a Fully-Employed Labor Market or Weakening?
  • Wages (Avg. Hrly. Earns.)—Cost-Push Wage Spiral?  Or Not?
• Economy “Baseline Prospect”—Economy OK—“Soft-Landing?” (60% Odds)
  • Recession?  (25% Odds)—If One, When?  Mild or Deep?
  • Alternative Macro Scenarios—Fed View “Growth Recession” (10% Odds); Other (5% Odds)
• Fed Still on a Mission!  2% Price Inflation Target “Price Stability” Locked-In
  • Fed Message Clear So Pay Attention
  • Fed Policy Rate Forecast—50 bps. (Feb. 1), Perhaps Some Spacing After
  • No Terminal Funds Rate Until at Least 1% “Real”
• Financial Markets—Interest Rates Still Up, On Average; Dollar Mixed; Equity Market Muck-a-Muck
  • Funds Rate in 2023 Up to Another One Point Higher; 10 Year T-Bond Yield Up As Well
  • Fair Value S&P 500 Still 3850; Range 3500 to 4200
  • Earnings Uncertainty the Next Hurdle—Current DE Forecast Pre-Earnings Reports