The US economy continues to confound today, as new data shows that hiring once again surged in July, with 255,000 new jobs created in July versus expectations of just 180,000. The big gains follow very strong June numbers which were revised higher to 292,000. Hourly wages are increasing at a 2.6% annual clip and the unemployment rate held steady at 4.9%. The data comes following a dismal GDP report which showed the US was growing only around 1%, marking the third straight quarter of poor growth.

FINSUM: The market has been feeling “on again off again” about the Fed, and with these strong numbers it is now seeming more likely that a Fed hike in the near term might be possible.

Source: Reuters


For at least a few months the correlation between stocks and oil seemed to have been broken. However, as oil has recently moved sharply lower, briefly touching the $39 range, that correlation may be rising again. The oil market is currently plagued by a new kind of glut—refined products. It is key to remember that refineries, which turn oil into products like gasoline, are the only buyers of crude oil, and currently, they are cutting back. The market is presently seeing a huge glut of gasoline which has slowed down refinery buying, weakening the prospects for crude oil.

FINSUM: If oil continues to move lower, it could start to once again drag stocks down with it, though hopefully investors are sharp enough to realize that the issues are not necessarily representative of a doomed global economy.

Source: Wall Street Journal

(New York)

A former president of the Federal Reserve Bank of Minneapolis has published an article arguing that the US government can and should do more to stimulate the US economy. The article is comprised of three key suggestions to boost growth. The first is that the US should undertake a lot more infrastructure spending and start an initiative to rebuild the country’s crumbling roads and bridges. Secondly, the government should eliminate the employer portion of the social security tax in order to stimulate more hiring and create the competition for workers necessary to drive up wages. Thirdly, and most interestingly, the government should give $10,000 to every household over the next decade; the spending of which would stimulate the economy.

FINSUM: These are very good suggestions and we are in support of all of them, with the obvious caveat that the money giveaway would need to be very well planned.

Source: Bloomberg

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