What we’re reading (8/5)
“Payrolls Increased 528,000 In July, Much Better Than Expected In A Sign Of Strength For Jobs Market” (CNBC). “Nonfarm payrolls rose 528,000 for the month and the unemployment rate was 3.5%, easily topping the Dow Jones estimates of 258,000 and 3.6%, respectively. The unemployment rate is now back to its pre-pandemic level and tied for the lowest since 1969, though the rate for Blacks rose 0.2 percentage point to 6%. Wage growth also surged higher, as average hourly earnings jumped 0.5% for the month and 5.2% from the same time a year ago.”
“Jobs Report To Keep Fed On Aggressive Tightening Path” (Wall Street Journal). “The Fed is trying to slow economic activity and hiring to bring down inflation that is running at 40-year highs. Friday’s job report shows the economy is still firing on many cylinders, making it more likely central bank officials conclude they need to raise rates to higher levels and to keep rates at those levels for longer to cool the economy. The Fed raised rates by 0.75 percentage point at its meeting last week, following a similar increase in June, which was the largest since 1994. ‘Another unusually large increase could be appropriate at our next meeting,’ but the decision ‘will depend on the data we get between now and then,’ Fed Chairman Jerome Powell said at a July 27 news conference.”
“Summers Warns Fed On 1970s-Style Mistake With CPI Set To Slow” (Bloomberg). “‘I’m worried we’re going to see some good news on non-core inflation,’ Summers said on Bloomberg Television’s ‘Wall Street Week’ with David Westin, ahead of consumer price data due Wednesday that are set to show a retreat in inflation, thanks especially to a slide in gasoline costs. Combined with some signs of economic slowing, the danger is that that’s ‘going to lead the Fed to think that things are under control.’”
“A Tax Loophole’s Powerful Defender” (DealBook). “Sinema had one main request before she would sign on [to the so-called Inflation Reduction Act]: Remove a provision that would have partly closed the carried interest loophole. This bit of wiggle room in the tax code mainly benefits private equity professionals, allowing them to pay lower investment tax rates on compensation that should almost certainly be considered ordinary income. The loophole’s expected survival is being cheered by the private equity and real estate industries, but it is also causing a lot of head-scratching.”
“Asset Management Compensation Takes a Hit — And Headcount Could Be Next” (Institutional Investor). “At traditional asset management firms, employee incentives declined 17.5 percentage points from 2021 to the end of fiscal year 2022, according to a Johnson Associates report expected to be released Thursday. Incentives are a massive part of the allure of asset management firms, making up any compensation — primarily bonuses — that isn’t a part of the employee’s initial base salary.”
