What we’re reading (7/16)
“A $10 Trillion Stock Market Rally Faces Crucial Test In Earnings” (Bloomberg). “S&P 500 firms are expected to post a 9% drop in profits in the second quarter, making it the worst season since 2020, according to data compiled by Bloomberg Intelligence. In Europe, it may be even worse, with a projected 12% slump. But with the bar already low — and some indicators suggesting an earnings recovery next year — strategists are split on how the market will react.”
“What Markets Are Saying About The Fight Against Inflation” (Wall Street Journal). “U.S. Treasury yields closely track investors’ expectations for interest rates and dropped sharply when bonds rallied last week after the release of lower-than-expected readings on consumer and supplier prices. Yet yields remain well above their lows for the year, suggesting many aren’t convinced that the Fed’s work is done.”
“Pay Raises Are Finally Beating Inflation After Two Years of Falling Behind” (Wall Street Journal). “Inflation-adjusted average hourly wages rose 1.2% in June from a year earlier, according to the Labor Department. That marked the second straight month of seasonally adjusted gains after two years when workers’ historically elevated raises were erased by price increases.”
“Media Titan Barry Diller Delivers Doomsday Forecast: Actor And Writer Strikes Could Lead To Hollywood’s ‘Absolute Collapse’” (Mediaite). “Appearing on CBS’ Face the Nation Sunday, Diller — the head of the media conglomerate IAC, who previously served as CEO for Paramount and 20th Century Fox — weighed in on the state of the industry amid the SAG-AFTRA and Writers Guild of America strikes. Diller called the current challenges facing the industry a ‘perfect storm.’”
“Bottlenecks: Sectoral Imbalances And The US Productivity Slowdown” (Acemoglu, Autor, & Patterson, NBER Working Paper). “Despite the rapid pace of innovation in information and communications technologies (ICT) and electronics, aggregate US productivity growth has been disappointing since the 1970s. We propose and empirically explore the hypothesis that slow growth stems in part from an unbalanced sectoral distribution of innovation over the last several decades. Because an industry's success in innovation depends on complementary innovations among its input suppliers, rapid productivity growth that is concentrated in a subset of sectors may create bottlenecks and consequently fail to translate into commensurate aggregate productivity gains.”
