Last quote by Michael Arone
Michael Arone quotes
The GDP confirms what we already knew. The U.S. economy is stuck in this growth range. Investors are wary of taking positions in Europe, but the underlying [data] is improving.
The fantastic thing here is the jump in hourly wages.
One of the ways we've been describing 2017 is 'the new abnormal.
Remember the so-called earnings recession just ended in the third quarter. However, it started after the strength in the dollar at the end of 2014 and early 2015 when the Fed promised to raise rates at a more aggressive pace.
If the Chinese economy is struggling it is a problem for the global economy and you're seeing that reflected in the capital markets, whether it be the strength in the dollar or the volatility in equities.
Government austerity is over, and monetary policy will pass the baton to aggressive fiscal policy.
Let's get on with it already.
It will increase the cost of capital, and flush out some riskier assets in the short term. But that is probably the right thing to do.
I think what's interesting is how companies are forecasting the rest of the year – if they're signaling slowdowns or concerns, I think the market will continue to be in this directionless mode. If they're a little more optimistic about the second half, that will be interesting.
I think the Fed will remain on hold. This is just one number. The three-month average remains around 140,000. Net revisions for April and May were down a little bit. Combine that with Brexit and the (U.S.) election, this keeps the Fed on hold. Just (with) some of the broader market uncertainties out there, I think the Fed is going to be reluctant to raise rates in that environment, despite what is a strong June employment number.
If they tell you it's nearly balancing, that'll be a signal that June is on the table.
I don't think this Fed, and Yellen in particular, likes to paint themselves into a corner. The statement will acknowledge that growth in the economy is modest. They haven't seen the flow through to inflation and they'll remain data dependent going forward.
I think what markets are going to be looking to see is if that remains the message or if we're back in this kind of limbo.
The unemployment rate ticked down, wages ticked up a bit. Net-net this is a good report for the economy. Although the top-line number is certainly lower than people we're expecting, we're coming off a couple months of 200,000-plus jobs, so a little mean reversion was expected.