Too Hot
It's hot. Too hot.
Both here, on the island where I reside, and also across the US economy where, according to the latest ADP report, the labor market is adding jobs at the briskest pace in 16 months. After 500bps of Fed hikes and counting.
If NFP underwhelms, or just matches expectations, Thursday's flaming-hot ADP report will be a distant memory, but the combination of a stunningly robust read on private sector hiring, still elevated vacancies, a sharp drop in announced job cuts and an above
Are you still looking for new digs on higher ground?
My happy place is a couple more hikes, kicking fixed income prices down and rates up 50-70bp higher. That would continue the mess I have in bond values (assigned to “not available for sale” anyway). But nice opportunities will abound. I figure even with only two more hikes, there will be plenty of cheap bonds about and the Fed will keep rates up until the end of H1 ’24, leaving plenty of time to pounce. Everyone will be lathered up for a pivot to cuts and “Bob’s yer Uncle.” I am packing in some cash to get in on the fun.
As matters are in this economy, greed and its natural outcome,”greed-flation,” can be expected to persist and be difficult to tame. My wife and I live modestly in a condo. We drive a 22-year- old Volvo.
Raise income taxes on the wealthy and there will be a favorable impact on inflation. The exceedingly well-to-do will scream the loudest but will not be impacted. Their lifestyle needs to reflect their participation not just in the economy, but also their civic duty to pay their fair share.
Such taxes shouldn’t raise the tax burden on any similar couple making less than $400,000. We would not be affected by such a tax unless the market and our investments enable greater returns, in which case we would happily pay our fair share.