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Astonishingly strong US jobs report sends stocks wavering

97 points by ianai 4y ago

netfortius 4y ago
Hopefully this brings back the (a) strong(er) dollar, so we could balance market losses via euro acquisitions (as it was the case a few months ago)
- time_to_smile 4y ago
  We've worked to keep the dollar less strong since a rapid increasing in the value of the dollar risks a global debt crisis. A lot of people in finance were quite concerned earlier this fall when the dollar started to rise rapidly.
techdmn 4y ago
To me the headline says it all. Those workers, being in demand, asking for higher wages. What about our profits! We need a level of desperation in our work force, at least that caused by 4% unemployment, if we can expect to maintain the wealth gap that has been built up over the last years! (If it's not clear from the above, personally I am in favor of low unemployment and higher income equality.)
- deleted 4y ago
  [deleted]
- zdragnar 4y ago
  You should have read the article. The fear is that we are going to see yet another round of interest rate hikes to slow down inflation. Unemployment (according to the article) is also closer to 3% than 4 at the moment.
  - fassssst 4y ago
    Low unemployment leads to inflation > fed raises rates to counteract inflation > stocks are less appealing Therefore the stock market hates workers.
  - Ericson2314 4y ago
    Why are we fixing inflation that doesn't exist? Sounds to me like a scapegoat. https://delong.typepad.com/kalecki43.pdf https://delong.typepad.com/kalecki43.pdf oh wait, the O.G. wrote about this 80 years ago.
  - horsawlarway 4y ago
    You seem to be saying essentially the same thing. The fed has been pretty clear that it sees wage growth as a serious inflation problem (because it's sticky) and they're intentionally raising rates to force cuts to wages and employment. Personally - I'm a little mixed, since I believe rates were far too low and have created a very strange economy where you have companies that never actually make money become household names (ex: WeWork, Carvana, Uber, Zillow, Pinterest, etc...) because they gobble up debt banking on some mythical future profits once they capture the market. But on the other hand, I feel like the current stance of the fed - "raise the rates to stop hot employment and wage growth" - is a cop out. Inflation control is the second of their two mandates, employment is the first. They could have been raising rates during good years before this to curtail some of the bubbles we're seeing, but instead they only chose to do it to protect businesses from wage growth. Which... feels a bit scummy, and much like they're protecting the wealthy at the expense of increasing wage equality. --- Now, on the other hand - the market's reaction is not at all surprising, I agree that given what the fed is saying, this will likely push the balance back towards a larger rate hike, and the market is predicting that as well, and dropping to account.
    - mastax 4y ago
      The Fed did raise rates during the good years before this. And that was with a certain president threatening to fire the Fed chair for raising rates.
      - horsawlarway 4y ago
        raised 225 points in the years between 2015 & 2018 (very slow return to some sanity after the cuts in 2008 down to nearly 0) Immediately dropped by 75 points in 2019 due to trade war concerns (pre covid), then dropped another 150 points in 2020 due to covid. So back to 2008 levels. Raised by 450 points at the threat of "wage growth" and hot employment causing inflation over the last 11 months. --- So yes, they were ever so slowly hiking rates back up, but I think the current approach definitely hints at what their priorities are. To be fair - I don't really believe the fed is entirely responsible - they don't have many good levers to pull to influence the things they've been tasked with influencing. But I think the timing shows the priorities pretty well. The existence of huge zombie companies hollowing out real markets, only alive because of incredibly cheap cash, was not a serious problem. Wage growth - now that's a thing to be feared.
  - tootie 4y ago
    As much as it's biased take, OP isn't wrong. Yes, the proximate motivating factor is interest rates, but it does show how economic incentives have gotten misaligned. So long as investors fear something that is a positive for workers, there will be conflict. An educated observer will know this is an emergent conflict and not a conspiracy, but it's still a problem.
- lr4444lr 4y ago
  People employed can afford to buy stuff though, which also increases profit. The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases, which will hurt stocks.
  - lapcat 4y ago
    > The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases But there's a direct relation, because the Fed has been very explicit that they're worried about employment and wage growth, and they're raising interest rates in order to depress those. The Fed operates according to the interests of the wealthy.
    - toomuchtodo 4y ago
      Good luck to them. 10K boomers retire a day, there are less workers than jobs, and no benchmark rate will change that. https://news.ycombinator.com/item?id=34601350 https://news.ycombinator.com/item?id=34601350
      - Loughla 4y ago
        Not interest rates, but tanking stocks and investments absolutely will change that. If my retirement investments lose 50% of their value, I'll have to go back to work.
        netfortius 4y ago
        I can't believe how fewer people see that side! It's good for the working folks to get competitive wages, but what are you doing with the troves of people who had to embark in the 401k/IRA/etc. "trains"? Are they expected to get back to work in their 60s/70s/80s, to make up for inflation and purchasing power
        lapcat 4y ago
- andsoitis 4y ago
  The reason you cite is not why stock prices are lower. The reason is in the 3rd bullet: > US stock futures were lower Friday as Wall Street feared a still-hot economy could give the Fed more room to hike rates. And more detail on this further down the article.
- looping__lui 4y ago
  Did you read the article? It’s the anticipation of higher interest rates by the stock markets that send stocks down. And the Fed may do so because they want to raise them “just so much to counter inflation without drifting into a recession”. For Tech that may mean that the focus will shift towards profitability which may increase pressure on the workforce. What do you mean by “higher income equality”? E.g., people earning the same irrespective of their capability, effort, working hours and “value creation contribution in the economy”? Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective?
  - pjc50 4y ago
    > Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? Watch the elision between this and the next sentence: > So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The bit that's gone is "their ability to negotiate", which depends to a great extent on how wealthy you are already. BATNA, and so on. Also, conflating income from labour with income from capital confuses the issue further.
    - looping__lui 4y ago
      Income from capital is generally lower in low-interest regimes. We probably saw inflation in asset classes such as housing and stock as a result of monetary oversupply and cheap access to capital. Not factoring in such things into inflation is a question the Fed would have to address. With a sufficient social net and minimum wages, even poorly qualified have good negotiation power. No offense, but I’m also not sure how paying 30 USD/h to somebody who doesn’t speak the language and is performing low complexity work is doing society any good. I live in Europe and there is no way anybody would come for house cleaning, shopping or whatnot below that - because they are just better off with free housing, free healthcare, free schooling and money on top.
- cscurmudgeon 4y ago
  > (If it's not clear from the above, personally I am in favor of low unemployment and higher income equality.) So is everyone but it is easier to wish for something good publicly than have a logical way to get that. The investors are not the ones that will cause loss of jobs it is the Fed that will soon.
- adam_arthur 4y ago
  Wages rising due to inflation does not lead to income equality. Higher rates will lead to lower wealth disparity though. Asset values over the past decade have been largely driven by ZIRP Buying power in real terms is mostly driven by productivity and technological advancement driving deflation of goods
- refurb 4y ago
  Your take is not off base. If the economy hasnt slowed because of the hike in rates, that means inflation could easily spike again (as it did in the 70’s). That means more hikes, potentially pushing future profits down. The stock market isnt priced for what happening today, its priced for what the market thinks will happen.
- BurningFrog 4y ago
  You're anthropomorphizing the stock market into some club of mustache twirling billionaire villains. In reality it's mostly just math in action. And, of course, headline writing doing its job of making you engaged (angry).
- insane_dreamer 4y ago
  it feels like no one even cares about the elites anymore; sad, just sad.
- deleted 4y ago
  [deleted]
Ancalagon 4y ago
Still too few participants and too much (expensive) training required… Maybe, I dunno, we could raise taxes to contract demand from those giant corporations earning record profits? (I know the FED doesn’t have this power) Raise taxes on corporate profits I mean
Multicomp 4y ago
I can't read the article, so this is one of those shoot from the hip comments. With that health warning out of the way, I am surprised that a strong jobs report would sink stocks, unless those stocks expected to be able to get some benefit from a weak jobs report like slowing the increase in interest rates, or a cheaper labor market because there were lots of tech workers recently laid off and would therefore have downward pressure on their salaries? Strong jobs should provide confidence. Maybe just maybe we aren't going to have a big recession any second.
- lapcat 4y ago
  > unless those stocks expected to be able to get some benefit from a weak jobs report like slowing the increase in interest rates, or a cheaper labor market because there were lots of tech workers recently laid off and would therefore have downward pressure on their salaries? This is the point. The Fed has been very explicit lately that they've raised interest rates in order to depress wages. They said the quiet part out loud.
  - whitemary 4y ago
    The extent of denial about this is terrifying. I mean, the Fed literally gave that exact reason for the first rate increase. They could not have been anymore explicit.
- SaintGhurka 4y ago
  > unless those stocks expected to be able to get some benefit from a weak jobs report like slowing the increase in interest rates, or a cheaper labor market I'm pretty sure it's the former. Higher rates wallop stocks in multiple ways. They slow the economy in general, they directly raise the cost of borrowing for debt-addicted corporations, and they create an attractive alternative for investors. If you had a lot of money in 2020, you could buy 10-year treasuries yielding less than a percent, or you could take your chances in the stock market that was down 25% off it's highs. Today, it's completely flipped. You can make 3.5% in the bond market with no risk, or you can roll the dice on a stock market that's up pretty substantially.
zelias 4y ago
Considering that most of the growth was in leisure/hospitality, I interpret this move as the official "end" of the lockdown era. We have achieved full reopening/replacement of the bars, restaurants, and hotels that shut down during COVID, who proceeded to hire back all their low wage service workers. This explains the explosion in job growth with a stagnant avg hourly earnings rate - the new jobs are mostly low wage jobs! This might be what the fabled "soft landing" looks like.
- n8cpdx 4y ago
  Anecdotally, there has been a striking increase in the amount of new service workers in training at restaurants and coffee shops in Portland. There was a very acute sense of labor shortage for the last few years, and that has gone. I’m hoping that we might see coffee shops (other than Dutch Bros) open past 3 PM someday. Enough operators to keep the buses, trains, ambulances, and 911 call center working are probably higher priority though; those orgs have started reporting better hiring results recently as well.
  - jjulius 4y ago
    >Anecdotally, there has been a striking increase in the amount of new service workers in training at restaurants and coffee shops in Portland. Continuing on that anecdote, I've read two reviews of restaurants in the Portland metro area in the past week where the customer left a negative review because they were being served by a new, untrained server (each time, the restaurant responded that their experienced server was sick that day). There's definitely a bump in hiring happening.
  - hedora 4y ago
    Also anecdotally: We went to $CASUAL_DINING_MEGACHAIN recently. The food was much better than I remembered, but they were so understaffed the greeter was also working the kitchen. It took 20 minutes to be seated (due to the greeter stand being unmanned; there were plenty of tables), and about 2 hours to eat and pay. I suspect people are still being very picky about where they work.
    - 4y ago
noobermin 4y ago
I feel like while there is a correlation between trends in the stock market and the general economy'a well-being, a lot of these kind of stories can be explained by remembering they are correlated but not perfectly. According to the article, this is on fears of fed interest rate hikes. It's easier to accept the stock market has it's own logic which may not necessarily mean what is good for the economy or not.
- mogacom 4y ago
  This is an important point. The title is implying not just correlation but causation. Often financial news articles are phrased differently to avoid this, for example using something like "amid strong US jobs report". Sounds pedantic but it's a subtly pernicious thing.
mensetmanusman 4y ago
The wealthiest 10% of Americans own 90% of these stocks. Most of you reading this are in the top 10%. Stock prices are a game among the wealthy who haven’t demanded that workers should be paid more to lower the absurdly high corporate profits.
- Loughla 4y ago
  Context, for those that were interested like I was. According to Investopedia, based on SSI data. Top .1% is $3,212,486/year 1% is 823,763 5% is 342,987 10% is 173,176 I am waaaaay under that. Education is a joke.
  - hedora 4y ago
    Check numbers for your profession, and if you are way below norms, consider looking for a new job (perhaps in a high wage geographic region), or ask for a raise. There are serious labor shortages throughout the job market.
  - dougmwne 4y ago
    I am seeing significantly lower numbers which I look at the 2020 SSA data. I question if Investopedia got their number right. 5th percentile would appear to be about 150k. https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2020 https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2020
  - neogodless 4y ago
    It looks like you're sharing income distribution, not wealth. This is a bit hard to parse - you might have to multiple the distributions by population and/or total national wealth to get household amounts: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/ https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr... This is interesting, as it shows wealth inequality with a breakdown by educational attainment: https://www.stlouisfed.org/open-vault/2020/december/has-wealth-inequality-changed-over-time-key-statistics https://www.stlouisfed.org/open-vault/2020/december/has-weal... 2019 > To be in the top 10%, a family needed $1.22 million or more (slightly less than in 2016). > To be in the bottom 50% meant a family had less than $122,000 in wealth.
WalterBright 4y ago
Isn't it awful that the Fed is trying to force the economy down?
- bubbleRefuge 4y ago
  Yes it is. You are right.
staringback 4y ago
[flagged]
- dang 4y ago
  Please don't do that here. Also, please stop posting flamebait and/or unsubstantive comments to HN. You've been doing it repeatedly and we eventually have to ban that sort of account. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
  - staringback 4y ago
    Sorry, but I don't care if you ban my account. I have absolutely zero connections to this account or its username and would just simply create another account if it did get banned.
    - dang 4y ago
      Sure, people do that. But I'd rather try to persuade you to use the site as intended. If it has value, it's worth preserving, and if it doesn't have value then I don't think you'd be here. Right?
d23 4y ago
I really hate financial headlines. The S&P is still up 3.08% this week. This headline makes today's 0.65% drop sound catastrophic.
- ecf 4y ago
  Why yes, because stories of tech layoffs and stocks buybacks were the focus earlier in the week. Now these same investors wake up to some news about low wage job growth and all of a sudden their sky is falling again and the market shrinks like a petulant child throwing a temper tantrum.
- hedora 4y ago
  In related news, annualized GDP growth from the start of the pandemic to the end of the recession panic was about 6% (~2x of normal).
- dwaltrip 4y ago
  Yeah… Now, 2 hours after open, the market is flat from yesterday. So much for sinking.
- abirch 4y ago
  What I hate about financial headlines is the ease of causational attribution. The same event can be used to explain two diametrically opposed outcomes.
resuresu 4y ago
Just last month we were in a supposed labor shortage and now the jobs report is strong?
- Ligma123 4y ago
  >we were in a supposed labor shortage That's the routine justification for "we need to flood the country with cheap workers from the third world" to lower wages.
- smith7018 4y ago
  It's funny how "no one wants to work" has quietly turned into "we hired too much and are laying off large swathes of people" and "record level of unemployment"
ramphastidae 4y ago
So tired of hearing how America is a free market. Supply / demand doesn’t matter here. We’re all owned by the banks, and ultimately the Fed and government pick the winners and losers.
skizm 4y ago
SPY and VTI are down like 0.65% right now and haven't even given up yesterday's gains. Plus a bunch of non-Meta tech companies missed on earnings yesterday. Come on.
- time_to_smile 4y ago
  I regularly keep up with financial news and it's hilarious how each morning financial reporters quickly rush together articles about "<direction market moved> caused by <current top news story>". I really enjoy the pre-market opening reports, always trying to predict the direction of the market (usually based on the current futures direction) that are, as expected, wrong about half the time. The best are when you can catch two contradictory headlines based on when they were published relative to market movements. A stock movement that's within two standard deviations of typical price movements is very likely not the result of a single new piece of information.
- jnsie 4y ago
  Before reading this headline I was sure that the market was down specifically because of those underwhelming tech earnings. Futures were down when I checked in last night and before the jobs report news broke. I think the claim that the jobs report is influencing anything is unproven at best, willfully misleading at worst.
Longlius 4y ago
This is going to keep happening because the underlying issues of why the labor market is tight still haven't been internalized by managers. Baby boomers are retiring and there comparatively aren't many zoomers entering the labor market. Aggregate supply of labor is shrinking every year. I don't think rate hikes are going to be able to solve this problem because it's not an issue of "there's too much money" but rather an issue of "there's just not enough labor."
- Ancalagon 4y ago
  I think the managers have actually rationalized and come to terms with it - after all, they’re the ones raising pay. It’s the FED that hasn’t seemed to have figured it out yet.
bubbleRefuge 4y ago
The fed is stimulating the economy by raising interest rates. Interest rate increases mean more federal funds flow into the economy via increased paymentsto treasury bond holders and the like. Since our national debt outstanding vs GDP is very high its having a large effect and the is seemingly blind to this.
francisofascii 4y ago
It seems like tech and discretionary stocks have gone up and consumer staples stocks have stayed flat gone down in the last few days to month. See VCR and VDC.
jacknews 4y ago
In what kind of world does a strong jobs number, implying a strong economy, sink stock prices? There is a clear dichotomy between the 'financial' economy, and the actual economy. The pre-eminence of 'Shareholder value' should be relegated to the 20th century, and this century we should focus on making the economy serve society.
- troad 4y ago
  > In what kind of world does a strong jobs number, implying a strong economy, sink stock prices? > There is a clear dichotomy between the 'financial' economy, and the actual economy. The pre-eminence of 'Shareholder value' should be relegated to the 20th century, and we should focus on making the economy serve society. Low unemployment means wage inflation (as companies compete for scarce labor), which means more inflation in general, which raises the odds that the Fed - which is currently fighting very hard to try to constrain inflation, as the law requires it to do - will have to raise interest rates. This is good in the long run, in that inflation is very bad (and particularly bad for poorer households), but in the short run it hits stock prices because company borrowing will become more expensive, and there's some risk of over-correcting the economy into a recession. I wish people making political points about economic news would at least try to understand the economic news first.
  - jacknews 4y ago
    You've provided an explanation (which I'm also completely familiar with) but not a rationale. What is really happening is that corporate profits are set to be squeezed (slightly) by rising costs, both labor and capital, and so that provides a reason why stock prices go down. But it doesn't answer the actual question, of why everything going great should be a bad thing.
    - BurningFrog 4y ago
      That question is answered quite well in the post you're commenting.
      - 4y ago
sublinear 4y ago
"Curiously strong mints"

97 points by ianai 4y ago

Hopefully this brings back the (a) strong(er) dollar, so we could balance market losses via euro acquisitions (as it was the case a few months ago)

time_to_smile 4y ago
We've worked to keep the dollar less strong since a rapid increasing in the value of the dollar risks a global debt crisis. A lot of people in finance were quite concerned earlier this fall when the dollar started to rise rapidly.

techdmn 4y ago

To me the headline says it all. Those workers, being in demand, asking for higher wages. What about our profits! We need a level of desperation in our work force, at least that caused by 4% unemployment, if we can expect to maintain the wealth gap that has been built up over the last years! (If it's not clear from the above, personally I am in favor of low unemployment and higher income equality.)

deleted 4y ago
[deleted]
zdragnar 4y ago
You should have read the article. The fear is that we are going to see yet another round of interest rate hikes to slow down inflation. Unemployment (according to the article) is also closer to 3% than 4 at the moment.
- fassssst 4y ago
  Low unemployment leads to inflation > fed raises rates to counteract inflation > stocks are less appealing Therefore the stock market hates workers.
- Ericson2314 4y ago
  Why are we fixing inflation that doesn't exist? Sounds to me like a scapegoat. https://delong.typepad.com/kalecki43.pdf https://delong.typepad.com/kalecki43.pdf oh wait, the O.G. wrote about this 80 years ago.
- horsawlarway 4y ago
  You seem to be saying essentially the same thing. The fed has been pretty clear that it sees wage growth as a serious inflation problem (because it's sticky) and they're intentionally raising rates to force cuts to wages and employment. Personally - I'm a little mixed, since I believe rates were far too low and have created a very strange economy where you have companies that never actually make money become household names (ex: WeWork, Carvana, Uber, Zillow, Pinterest, etc...) because they gobble up debt banking on some mythical future profits once they capture the market. But on the other hand, I feel like the current stance of the fed - "raise the rates to stop hot employment and wage growth" - is a cop out. Inflation control is the second of their two mandates, employment is the first. They could have been raising rates during good years before this to curtail some of the bubbles we're seeing, but instead they only chose to do it to protect businesses from wage growth. Which... feels a bit scummy, and much like they're protecting the wealthy at the expense of increasing wage equality. --- Now, on the other hand - the market's reaction is not at all surprising, I agree that given what the fed is saying, this will likely push the balance back towards a larger rate hike, and the market is predicting that as well, and dropping to account.
  - mastax 4y ago
    The Fed did raise rates during the good years before this. And that was with a certain president threatening to fire the Fed chair for raising rates.
    - horsawlarway 4y ago
      raised 225 points in the years between 2015 & 2018 (very slow return to some sanity after the cuts in 2008 down to nearly 0) Immediately dropped by 75 points in 2019 due to trade war concerns (pre covid), then dropped another 150 points in 2020 due to covid. So back to 2008 levels. Raised by 450 points at the threat of "wage growth" and hot employment causing inflation over the last 11 months. --- So yes, they were ever so slowly hiking rates back up, but I think the current approach definitely hints at what their priorities are. To be fair - I don't really believe the fed is entirely responsible - they don't have many good levers to pull to influence the things they've been tasked with influencing. But I think the timing shows the priorities pretty well. The existence of huge zombie companies hollowing out real markets, only alive because of incredibly cheap cash, was not a serious problem. Wage growth - now that's a thing to be feared.
- tootie 4y ago
  As much as it's biased take, OP isn't wrong. Yes, the proximate motivating factor is interest rates, but it does show how economic incentives have gotten misaligned. So long as investors fear something that is a positive for workers, there will be conflict. An educated observer will know this is an emergent conflict and not a conspiracy, but it's still a problem.
lr4444lr 4y ago
People employed can afford to buy stuff though, which also increases profit. The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases, which will hurt stocks.
- lapcat 4y ago
  > The simpler reason is that it means that people believe Fed will read this as a license to not have to slow down rate increases But there's a direct relation, because the Fed has been very explicit that they're worried about employment and wage growth, and they're raising interest rates in order to depress those. The Fed operates according to the interests of the wealthy.
  - toomuchtodo 4y ago
    Good luck to them. 10K boomers retire a day, there are less workers than jobs, and no benchmark rate will change that. https://news.ycombinator.com/item?id=34601350 https://news.ycombinator.com/item?id=34601350
    - Loughla 4y ago
      Not interest rates, but tanking stocks and investments absolutely will change that. If my retirement investments lose 50% of their value, I'll have to go back to work.
      - netfortius 4y ago
        I can't believe how fewer people see that side! It's good for the working folks to get competitive wages, but what are you doing with the troves of people who had to embark in the 401k/IRA/etc. "trains"? Are they expected to get back to work in their 60s/70s/80s, to make up for inflation and purchasing power
        lapcat 4y ago
andsoitis 4y ago
The reason you cite is not why stock prices are lower. The reason is in the 3rd bullet: > US stock futures were lower Friday as Wall Street feared a still-hot economy could give the Fed more room to hike rates. And more detail on this further down the article.
looping__lui 4y ago
Did you read the article? It’s the anticipation of higher interest rates by the stock markets that send stocks down. And the Fed may do so because they want to raise them “just so much to counter inflation without drifting into a recession”. For Tech that may mean that the focus will shift towards profitability which may increase pressure on the workforce. What do you mean by “higher income equality”? E.g., people earning the same irrespective of their capability, effort, working hours and “value creation contribution in the economy”? Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective?
- pjc50 4y ago
  > Isn’t income equality (government interventions in some aspects aside) a mere reflection of people’s contribution to a economy and their ability to negotiate? Watch the elision between this and the next sentence: > So, are you assuming/applying everyone more or less has the same contribution or do you want everyone to be paid the same irrespective? The bit that's gone is "their ability to negotiate", which depends to a great extent on how wealthy you are already. BATNA, and so on. Also, conflating income from labour with income from capital confuses the issue further.
  - looping__lui 4y ago
    Income from capital is generally lower in low-interest regimes. We probably saw inflation in asset classes such as housing and stock as a result of monetary oversupply and cheap access to capital. Not factoring in such things into inflation is a question the Fed would have to address. With a sufficient social net and minimum wages, even poorly qualified have good negotiation power. No offense, but I’m also not sure how paying 30 USD/h to somebody who doesn’t speak the language and is performing low complexity work is doing society any good. I live in Europe and there is no way anybody would come for house cleaning, shopping or whatnot below that - because they are just better off with free housing, free healthcare, free schooling and money on top.
cscurmudgeon 4y ago
> (If it's not clear from the above, personally I am in favor of low unemployment and higher income equality.) So is everyone but it is easier to wish for something good publicly than have a logical way to get that. The investors are not the ones that will cause loss of jobs it is the Fed that will soon.
adam_arthur 4y ago
Wages rising due to inflation does not lead to income equality. Higher rates will lead to lower wealth disparity though. Asset values over the past decade have been largely driven by ZIRP Buying power in real terms is mostly driven by productivity and technological advancement driving deflation of goods
refurb 4y ago
Your take is not off base. If the economy hasnt slowed because of the hike in rates, that means inflation could easily spike again (as it did in the 70’s). That means more hikes, potentially pushing future profits down. The stock market isnt priced for what happening today, its priced for what the market thinks will happen.
BurningFrog 4y ago
You're anthropomorphizing the stock market into some club of mustache twirling billionaire villains. In reality it's mostly just math in action. And, of course, headline writing doing its job of making you engaged (angry).
insane_dreamer 4y ago
it feels like no one even cares about the elites anymore; sad, just sad.
deleted 4y ago
[deleted]

Ancalagon 4y ago

Still too few participants and too much (expensive) training required… Maybe, I dunno, we could raise taxes to contract demand from those giant corporations earning record profits? (I know the FED doesn’t have this power) Raise taxes on corporate profits I mean

Multicomp 4y ago

I can't read the article, so this is one of those shoot from the hip comments. With that health warning out of the way, I am surprised that a strong jobs report would sink stocks, unless those stocks expected to be able to get some benefit from a weak jobs report like slowing the increase in interest rates, or a cheaper labor market because there were lots of tech workers recently laid off and would therefore have downward pressure on their salaries? Strong jobs should provide confidence. Maybe just maybe we aren't going to have a big recession any second.

lapcat 4y ago
> unless those stocks expected to be able to get some benefit from a weak jobs report like slowing the increase in interest rates, or a cheaper labor market because there were lots of tech workers recently laid off and would therefore have downward pressure on their salaries? This is the point. The Fed has been very explicit lately that they've raised interest rates in order to depress wages. They said the quiet part out loud.
- whitemary 4y ago
  The extent of denial about this is terrifying. I mean, the Fed literally gave that exact reason for the first rate increase. They could not have been anymore explicit.
SaintGhurka 4y ago
> unless those stocks expected to be able to get some benefit from a weak jobs report like slowing the increase in interest rates, or a cheaper labor market I'm pretty sure it's the former. Higher rates wallop stocks in multiple ways. They slow the economy in general, they directly raise the cost of borrowing for debt-addicted corporations, and they create an attractive alternative for investors. If you had a lot of money in 2020, you could buy 10-year treasuries yielding less than a percent, or you could take your chances in the stock market that was down 25% off it's highs. Today, it's completely flipped. You can make 3.5% in the bond market with no risk, or you can roll the dice on a stock market that's up pretty substantially.

zelias 4y ago

Considering that most of the growth was in leisure/hospitality, I interpret this move as the official "end" of the lockdown era. We have achieved full reopening/replacement of the bars, restaurants, and hotels that shut down during COVID, who proceeded to hire back all their low wage service workers. This explains the explosion in job growth with a stagnant avg hourly earnings rate - the new jobs are mostly low wage jobs! This might be what the fabled "soft landing" looks like.

n8cpdx 4y ago
Anecdotally, there has been a striking increase in the amount of new service workers in training at restaurants and coffee shops in Portland. There was a very acute sense of labor shortage for the last few years, and that has gone. I’m hoping that we might see coffee shops (other than Dutch Bros) open past 3 PM someday. Enough operators to keep the buses, trains, ambulances, and 911 call center working are probably higher priority though; those orgs have started reporting better hiring results recently as well.
- jjulius 4y ago
  >Anecdotally, there has been a striking increase in the amount of new service workers in training at restaurants and coffee shops in Portland. Continuing on that anecdote, I've read two reviews of restaurants in the Portland metro area in the past week where the customer left a negative review because they were being served by a new, untrained server (each time, the restaurant responded that their experienced server was sick that day). There's definitely a bump in hiring happening.
- hedora 4y ago
  Also anecdotally: We went to $CASUAL_DINING_MEGACHAIN recently. The food was much better than I remembered, but they were so understaffed the greeter was also working the kitchen. It took 20 minutes to be seated (due to the greeter stand being unmanned; there were plenty of tables), and about 2 hours to eat and pay. I suspect people are still being very picky about where they work.
  - 4y ago

noobermin 4y ago

I feel like while there is a correlation between trends in the stock market and the general economy'a well-being, a lot of these kind of stories can be explained by remembering they are correlated but not perfectly. According to the article, this is on fears of fed interest rate hikes. It's easier to accept the stock market has it's own logic which may not necessarily mean what is good for the economy or not.

mogacom 4y ago
This is an important point. The title is implying not just correlation but causation. Often financial news articles are phrased differently to avoid this, for example using something like "amid strong US jobs report". Sounds pedantic but it's a subtly pernicious thing.

mensetmanusman 4y ago

The wealthiest 10% of Americans own 90% of these stocks. Most of you reading this are in the top 10%. Stock prices are a game among the wealthy who haven’t demanded that workers should be paid more to lower the absurdly high corporate profits.

Loughla 4y ago
Context, for those that were interested like I was. According to Investopedia, based on SSI data. Top .1% is $3,212,486/year 1% is 823,763 5% is 342,987 10% is 173,176 I am waaaaay under that. Education is a joke.
- hedora 4y ago
  Check numbers for your profession, and if you are way below norms, consider looking for a new job (perhaps in a high wage geographic region), or ask for a raise. There are serious labor shortages throughout the job market.
- dougmwne 4y ago
  I am seeing significantly lower numbers which I look at the 2020 SSA data. I question if Investopedia got their number right. 5th percentile would appear to be about 150k. https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2020 https://www.ssa.gov/cgi-bin/netcomp.cgi?year=2020
- neogodless 4y ago
  It looks like you're sharing income distribution, not wealth. This is a bit hard to parse - you might have to multiple the distributions by population and/or total national wealth to get household amounts: https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/table/ https://www.federalreserve.gov/releases/z1/dataviz/dfa/distr... This is interesting, as it shows wealth inequality with a breakdown by educational attainment: https://www.stlouisfed.org/open-vault/2020/december/has-wealth-inequality-changed-over-time-key-statistics https://www.stlouisfed.org/open-vault/2020/december/has-weal... 2019 > To be in the top 10%, a family needed $1.22 million or more (slightly less than in 2016). > To be in the bottom 50% meant a family had less than $122,000 in wealth.

WalterBright 4y ago

Isn't it awful that the Fed is trying to force the economy down?

bubbleRefuge 4y ago
Yes it is. You are right.

staringback 4y ago

[flagged]

dang 4y ago
Please don't do that here. Also, please stop posting flamebait and/or unsubstantive comments to HN. You've been doing it repeatedly and we eventually have to ban that sort of account. https://news.ycombinator.com/newsguidelines.html https://news.ycombinator.com/newsguidelines.html
- staringback 4y ago
  Sorry, but I don't care if you ban my account. I have absolutely zero connections to this account or its username and would just simply create another account if it did get banned.
  - dang 4y ago
    Sure, people do that. But I'd rather try to persuade you to use the site as intended. If it has value, it's worth preserving, and if it doesn't have value then I don't think you'd be here. Right?

d23 4y ago

I really hate financial headlines. The S&P is still up 3.08% this week. This headline makes today's 0.65% drop sound catastrophic.

ecf 4y ago
Why yes, because stories of tech layoffs and stocks buybacks were the focus earlier in the week. Now these same investors wake up to some news about low wage job growth and all of a sudden their sky is falling again and the market shrinks like a petulant child throwing a temper tantrum.
hedora 4y ago
In related news, annualized GDP growth from the start of the pandemic to the end of the recession panic was about 6% (~2x of normal).
dwaltrip 4y ago
Yeah… Now, 2 hours after open, the market is flat from yesterday. So much for sinking.
abirch 4y ago
What I hate about financial headlines is the ease of causational attribution. The same event can be used to explain two diametrically opposed outcomes.

resuresu 4y ago

Just last month we were in a supposed labor shortage and now the jobs report is strong?

Ligma123 4y ago
>we were in a supposed labor shortage That's the routine justification for "we need to flood the country with cheap workers from the third world" to lower wages.
smith7018 4y ago
It's funny how "no one wants to work" has quietly turned into "we hired too much and are laying off large swathes of people" and "record level of unemployment"

ramphastidae 4y ago

So tired of hearing how America is a free market. Supply / demand doesn’t matter here. We’re all owned by the banks, and ultimately the Fed and government pick the winners and losers.

skizm 4y ago

SPY and VTI are down like 0.65% right now and haven't even given up yesterday's gains. Plus a bunch of non-Meta tech companies missed on earnings yesterday. Come on.

time_to_smile 4y ago
I regularly keep up with financial news and it's hilarious how each morning financial reporters quickly rush together articles about "<direction market moved> caused by <current top news story>". I really enjoy the pre-market opening reports, always trying to predict the direction of the market (usually based on the current futures direction) that are, as expected, wrong about half the time. The best are when you can catch two contradictory headlines based on when they were published relative to market movements. A stock movement that's within two standard deviations of typical price movements is very likely not the result of a single new piece of information.
jnsie 4y ago
Before reading this headline I was sure that the market was down specifically because of those underwhelming tech earnings. Futures were down when I checked in last night and before the jobs report news broke. I think the claim that the jobs report is influencing anything is unproven at best, willfully misleading at worst.

Longlius 4y ago

This is going to keep happening because the underlying issues of why the labor market is tight still haven't been internalized by managers. Baby boomers are retiring and there comparatively aren't many zoomers entering the labor market. Aggregate supply of labor is shrinking every year. I don't think rate hikes are going to be able to solve this problem because it's not an issue of "there's too much money" but rather an issue of "there's just not enough labor."

Ancalagon 4y ago
I think the managers have actually rationalized and come to terms with it - after all, they’re the ones raising pay. It’s the FED that hasn’t seemed to have figured it out yet.

bubbleRefuge 4y ago

The fed is stimulating the economy by raising interest rates. Interest rate increases mean more federal funds flow into the economy via increased paymentsto treasury bond holders and the like. Since our national debt outstanding vs GDP is very high its having a large effect and the is seemingly blind to this.

francisofascii 4y ago

It seems like tech and discretionary stocks have gone up and consumer staples stocks have stayed flat gone down in the last few days to month. See VCR and VDC.

jacknews 4y ago

In what kind of world does a strong jobs number, implying a strong economy, sink stock prices? There is a clear dichotomy between the 'financial' economy, and the actual economy. The pre-eminence of 'Shareholder value' should be relegated to the 20th century, and this century we should focus on making the economy serve society.

troad 4y ago
> In what kind of world does a strong jobs number, implying a strong economy, sink stock prices? > There is a clear dichotomy between the 'financial' economy, and the actual economy. The pre-eminence of 'Shareholder value' should be relegated to the 20th century, and we should focus on making the economy serve society. Low unemployment means wage inflation (as companies compete for scarce labor), which means more inflation in general, which raises the odds that the Fed - which is currently fighting very hard to try to constrain inflation, as the law requires it to do - will have to raise interest rates. This is good in the long run, in that inflation is very bad (and particularly bad for poorer households), but in the short run it hits stock prices because company borrowing will become more expensive, and there's some risk of over-correcting the economy into a recession. I wish people making political points about economic news would at least try to understand the economic news first.
- jacknews 4y ago
  You've provided an explanation (which I'm also completely familiar with) but not a rationale. What is really happening is that corporate profits are set to be squeezed (slightly) by rising costs, both labor and capital, and so that provides a reason why stock prices go down. But it doesn't answer the actual question, of why everything going great should be a bad thing.
  - BurningFrog 4y ago
    That question is answered quite well in the post you're commenting.
    - 4y ago

sublinear 4y ago

"Curiously strong mints"