Last week’s JOLTS report surprised to the upside, with the number of job openings coming in ~1M higher than analysts’ expectations at a series-high of 9.28M. As illustrated in the chart, this is not an isolated uptick; rather, job openings have been on the rise over the last year, +1.0M m/m and +4.7M y/y. More remarkable is the fact that the total number of jobs available now nearly eclipses the total number of unemployed Americans, which stands at 9.31M as of May.
This is further heightened by a series-high quit rate of 2.7% in April, a sign that workers are finding it relatively easy to switch jobs if they prefer. This labor market tightness reflects the current low immigration rate and the reality that some Americans are making more money from unemployment benefits than they would working. As a result of this tightening, there is an upward pressure on wages, especially for low-skilled jobs. The current relationship between the total number of jobs available and the total number of unemployed Americans will be interesting to track in the months ahead as pandemic-related benefits will have expired in 25 states by June and in the rest of states by September. If this mismatch continues upon expiration of benefits, inflation may begin to rise long before the unemployment rate falls to a level that the Fed would deem “maximum employmen.t” If higher inflation proves to be less “transitory” than the Fed expects, investors may want to be positioned in value stocks, real assets and inflation-protected bonds to combat mounting inflationary pressure.
J. P. Morgan
Happy Monday. Good Luck out there this week.
Global Spotlight
Biden meets with Putin in Geneva. U.S. President Joe Biden will meet with his Russian counterpart Vladamir Putin in the Swiss city on June 16 in an attempt to de-escalate rising bilateral tensions. The summit will be the first of its kind since Putin met with former President Donald Trump in Helsinki in 2018.
Biden meets with NATO and EU leaders in Brussels. U.S. President Joe Biden will be in Brussels on June 14-15 for meetings with NATO and EU leaders, including bilateral meetings with several EU heads of government.
Biden meets with Erdogan on the NATO summit sidelines. U.S. President Joe Biden will also meet with his Turkish counterpart, Recep Tayyip Erdogan, on June 14 during the NATO summit in Brussels.
The U.S. Federal Reserve’s next policy meeting. The Fed’s Federal Open Market Committee (FOMC) will leave U.S. monetary policy unchanged when it meets on June 15-16, but may start shifting its message about inflation being temporary in light of the most recent data on the price level and employment.
A presidential election in Iran. Iranians will head to the polls on June 18 to select their next president. After an especially intense period of disqualifications by the Guardian Council, most of the seven candidates on the ballot are politically, socially and economically conservative.
Stratfor.com
Economic Calendar
Briefing.com has a good U.S. economic calendar for the week. Here are the main U.S. releases.
The economic calendar thins out but investors will pay close attention to the May Consumer Price Index. Base effects (a rebound from the low levels of a year ago) will continue (the CPI rose 0.1% y/y in April 2020 and is expected to be up about 4.5% y/y in May 2021). Bottleneck pressures and materials shortages are more likely to show up in the PPI, but some may add to the CPI in the near term.
Briefing.com
Last Weeks Numbers
Review Last weeks numbers here.
Sector Performance (YTD)
Earnings
Source I/B/E/S data from Refinitiv
Aggregate Estimates and Revisions
- 21Q1 earnings are expected to increase 52.7% from 20Q1. Excluding the energy sector, the earnings growth estimate is 53.4%.
- Of the 497 companies in the S&P 500 that have reported earnings to date for 21Q1, 87.3% have reported earnings above analyst expectations. This compares to a long-term average of 65% and prior four quarter average of 76%.
- 21Q1 revenue is expected to increase 13.5% from 20Q1. Excluding the energy sector, the growth estimate is 14.4%.
- During the week of June 14, five S&P 500 companies are expected to report quarterly earnings.
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