Aurelia Butler

Brieana LaCaze had 30 days to hire a dozen employees after she bought a women’s clothing boutique in the Galleria Dallas mall last month. She found only six. “We hit a bump in the road,” the Texas businesswoman said. “Operations work now falls on me.” Her predicament is common one for American store owners. As the unemployment rate drops back to extreme lows, no sector has struggled more than retailers to fill jobs. Retailers posted 155,000 new positions in March, bringing their total number of openings to 1.3mn, according to data released on Tuesday. Yet in April, retailers filled only 29,200 jobs, Friday’s US payrolls report showed, out of a total 428,000 added in the month. Retailers’ labour troubles are one factor behind rising prices in the checkout line, which along with food, energy, housing and other essentials have helped push US inflation up 8.5 per cent annually, the fastest rate of increase in 40 years. The sector experienced sharp sales growth in 2021 as the economy rebounded from the coronavirus pandemic, and retailers expect demand to remain elevated in 2022. Business owners including LaCaze say that a tight labour market is making it increasingly difficult to keep up. Wages in retail trade rose by 4.9 per cent year on year in April, the payrolls report said, less than the 5.5 per cent jump for average the US private sector worker. Retail workers on average earned about $684 a week, compared to a private sector average of more than $1,100. Fears that a hot labour market, and the higher wages that come with it, will exacerbate the acute inflation problem has the Federal Reserve poised to rapidly tighten monetary policy in the coming months. The concern is a potential “wage-price spiral” in which workers demand higher pay in order to keep up with higher consumer prices.“We can’t allow a wage-price spiral to happen, and we can’t allow inflation expectations to become unanchored,” Fed chair Jay Powell said on Wednesday, though noted that this dynamic has not taken hold so far.“It’s a good time to be a worker looking to either change jobs or get a wage increase in your current job,” he added after the central bank raised interest rates by half a percentage point and signalled more such moves to come this year. According to estimates, there were roughly 1.9 job openings for every unemployed person as of March. Walmart raised hourly pay twice in 2021, bringing the average wage for its 1.4mn workers to $16.40 an hour. Target has raised wages even higher and in March said it would spend $300mn to boost pay and benefits for its 409,000 employees, with starting wages at between $15 and $24 an hour based on location.Employers have also embraced creative ways to draw in new employees. Home Depot announced that it would start making job offers the day after interviews. Walmart, Target and Amazon have all introduced tuition benefits for hourly employees.Russ Reynolds, chief executive of car wash operator Spotless Brands, offers bonuses to employees to persuade their relatives to join the company. Reynolds wants to open 75 new locations across the country by the end of the year. But without more staff, not all of those locations are the chain’s typical full-service washes. Some more closely resemble express car washes, where customers pull up to a gate and use an automated machine to select a service with minimal help from workers.“It helps us adapt in a market where we aren’t able to find people,” Reynolds said.LaCaze, the Dallas boutique owner, cut the interview for new roles at her boutiques to just three questions and structured a training program that will allow her to get new employees, called “stylists”, on the sales floor in less than a week. Hiring incentives have lured many employees away from their old jobs, helping to push the number of those who voluntarily quit to a record-high 4.5mn in March. Stores have also become recruiting grounds for businesses in other, sometimes higher-paying industries, said Mark Mathews, a vice-president at the National Retail Federation.Retailers now receive fewer applications for each role they post, according to talent acquisition firm iCIMS, which has worked with Chipotle, Dollar General and Foot Locker. Employers received an average of 17.8 applicants for each opening in March, down 19 per cent from the 22 they received in January 2021.“From a worker’s point of view, this is something to celebrate,” says Nick Bunker, an economist for jobs site Indeed, who said that workers in retail, restaurants and other traditionally low-wage industries have benefited the most from the strong labour market. Retailers answered surging demand during the pandemic in part by expanding in ecommerce. There are now signs that growth is levelling off: Amazon, the online retail giant, said last month that its aggressive push to expand had left it overstaffed and with surplus capacity.Reynolds said that business owners like him were not expecting hiring to get easier anytime soon.“Our jobs have a lack of flexibility in some ways,” he said. “You cannot wash cars through a Zoom call. So we have to make up for it in other ways.” More

“I think it would be appropriate to take at least two or even three steps. These could be smaller ones, i.e. 0.25 percentage points each. If this were to happen by December, it would have the effect that by 2023 the deposit rates for banks, which are now minus 0.5 percent, would be in positive territory,” the Austrian central bank governor was quoted as saying. “You’ll still be quite a bit away from the natural nominal interest rate. So there is still a long way to go. But it would be a good signal to the public.”ECB policymakers are becoming more vocal about normalising monetary policy more quickly than previously expected, with more publicly backing a July rate hike.Asked if the ECB was too late to act, Holzmann said: “I would not say too late. But perhaps action could have been taken earlier. The U.S. is about half a year earlier in the economic cycle. In this respect, it is fitting that the ECB is acting later. Perhaps the Fed was also a little late.”Asked about the U.S. Federal Reserve’s move to raise rates by half a percentage point, which supported the dollar against the euro and could fuel imported inflation, Holzmann said: “The ECB does not pursue an exchange rate target. But we are watching it closely and taking it into account in our decisions. We will probably not be able to compensate for the difference we have now by raising interest rates, but at least the gap will in all likelihood not increase significantly.”He also played down the danger of a wage-price spiral in which demands for higher salaries lock in inflation. “We are looking closely at wage settlements. And that does not worry us for the time being. But the danger is always there in principle. If it came to that, we would have to raise interest rates more strongly to avoid possible second-round effects. That could affect the real economy, but at the moment that is not yet the case.” More

The Washington-based fund warned in February that Somalia’s delayed legislative and presidential elections put the renewal of the three-year budget support programme, worth nearly $400 million, at risk of automatic expiration this month.The presidential election, which is carried out by lawmakers, is now set for May 15. The government has written to the IMF’s board asking for more time to conclude talks on the budget support programme’s renewal, said Laura Jaramillo, IMF’s mission head. “The extension is expected to provide the time needed to confirm policy understandings with the new government after presidential elections are completed,” she said.She did not comment on whether the automatic expiration of the programme will be extended. Officials at Somalia’s ministry of finance and the central bank were not immediately available for comments.The conclusion of negotiations for renewal of the programme is also a required part of a deal to slash Somalia’s debt from more than $5 billion to around a 10th of that. More

(Reuters) -Two of the Federal Reserve’s most outspoken policy hawks on Friday pushed back on the view that the U.S. central bank missed the boat on the fight against high inflation, citing a tightening of financial conditions that began well before the Fed began raising interest rates in March.”How far behind the curve could we have possibly been in terms of time if, using forward guidance, one views rate hikes effectively beginning in September 2021?” Fed Governor Christopher Waller said, noting that yields on the two-year Treasury note rose last fall as the Fed began to signal the end of its super-easy policy. The move reflected the equivalent of two Fed rate hikes through December, he said. Speaking at the same Stanford University conference, titled “How monetary policy got behind the curve,” St. Louis Fed President James Bullard argued that the Fed is “not as far behind the curve as you might have thought.” Earlier this week the Fed raised its policy rate to a range of 0.75% to 1%. Critics say that is far too low to fight inflation running at three times the Fed’s 2% target. Bullard said he agrees, calling inflation “far too high,” and call for rates to rise “expeditiously,” to perhaps 3.6%, to bring inflation under control. But he noted that markets are already pricing much of that increase in. Traders of rate futures are currently pricing in a Fed funds rate of 3% to 3.25% by year end. “It’s going in the right direction … hopefully we’ll be able to get away from this behind-the-curve characterization soon,” Bullard said. The two were among the first Fed policy makers last year to call for a rapid removal of easy monetary policy and a quicker start to raising interest rates. Bullard, in fact, dissented on the Fed’s March quarter-point rate hike as too little. But both joined their colleagues in approving the half-point rate hike delivered this week. Fed Chair Jerome Powell, speaking after the rate decision was announced, signaled further increases ahead, including half-point rate hikes in both June and July.Waller used his talk Friday to trace how economic data first seemed to ratify, then challenge, his own view from last spring: that inflation would prove transitory as supply chains healed and one-time fiscal stimulus faded, and that the labor market was primed to roar back as COVID-19 receded. Most of his colleagues shared in the first view; opinions were more divided on the second. In the end, Waller said, inflation proved to be much higher and more persistent than he had thought. At the same time he described the “punch in the gut” he felt as two weaker-than-expected monthly jobs reports in August and September seemed to undercut the thesis of labor market healing. As it turned out, later data revisions showed the U.S. labor market had been stronger than the real-time data suggested. “If we knew then what we know now, I believe the (Fed) would have accelerated tapering and raised rates sooner,” Waller said. “But no one knew, and that’s the nature of making monetary policy in real time.”By early November, most policymakers had come around to the view that high and rising inflation would not drop quickly enough on its own, and business demand for workers was far outpacing a slow-to-recover labor market supply.”It was at this point … that the FOMC pivoted,” Waller said. The Federal Open Market Committee, known as the FOMC, is the Fed’s policy-setting body.The conference featured several former Fed policymakers and economists who argued that the Fed had fallen so far behind the curve that it would almost surely end up causing a recession as it sought to catch up by raising rates faster.Former Fed Vice Chair of Supervision Randal Quarles, who says he was the Fed’s most hawkish member until Waller joined late last year, told the conference that in hindsight it’s clear “it would have been better to start raising rates last September.”It wasn’t a failure of nerve, or politics, or stupidity, he said Friday. “It was a complicated situation with little precedent, and people make mistakes.” More

NEW YORK (Reuters) – U.S. stocks’ tumble this year is putting an increased focus on equity valuations, as investors assess whether recently discounted shares are worth buying in the face of a hawkish Federal Reserve and widespread geopolitical uncertainty.With the benchmark S&P 500 index down 13.5% year-to-date, valuations stand at their lowest levels in two years, putting the index’s forward price-to-earnings ratio at 17.9 times from 21.7 at the end of 2021, according to the latest data from Refinitiv Datastream.Although many investors tended to brush off elevated valuations during the market’s dynamic surge from its post-COVID-19 lows, they have been quick to punish companies viewed as overvalued this year, as the Fed rolls back easy money policies that had kept bond yields low and buoyed equities.While recently discounted valuations may boost stocks’ appeal to some bargain hunters, other investors believe equities may not be cheap enough, as the Fed signals it is ready to aggressively tighten monetary policy to fight inflation, bond yields surge, and geopolitical risks such as the war in Ukraine continue roiling markets.”Stocks are getting close to fair valuation … but they’re not quite there yet,” said J. Bryant Evans, portfolio manager at Cozad Asset Management in Champaign, Illinois. “If you take into account bond yields, inflation, what is going on with GDP and the broader economy, they’re not quite there yet.”Wild swings shook markets in the past week after the Fed delivered a widely expected 50 basis point rate increase and signaled similar moves for the meetings ahead as it tries to quell the highest annual inflation rates in 40 years. The index has declined for five straight weeks, its longest losing streak since mid-2011.More volatility could be in store if next week’s monthly consumer price index reading exceeds expectations, potentially bolstering the case for even more aggressive monetary policy tightening from the Fed.”There has … been a healthy reset in valuations and sentiment,” wrote Keith Lerner, co-chief investment officer at Truist Advisory Services, in a recent note to clients. “For stocks to move higher on a sustainable basis, investors will likely need to have greater confidence in the Fed’s ability to tame inflation without unduly hurting the economy.”Though valuations have come down, S&P 500’s forward P/E stands above its long-term average of 15.5 times earnings estimates. Graphic- U.S. stock market valuations: https://graphics.reuters.com/USA-STOCKS/WEEKAHEAD/znpnemgxyvl/chart.png Potentially burnishing stocks’ appeal, S&P 500 companies are expected to increase earnings by about 9% this year, according to Refinitiv data, as they wrap up a better-than-expected first-quarter reporting season.One likely factor is whether Treasuries extend a sell-off that has lifted the benchmark 10-year note yield, which moves inversely to prices, to its highest since late 2018.Higher yields in particular dull the allure of technology and other high-growth sectors, as their cash flows are often more weighted in the future and diminished when discounted at higher rates.The forward P/E for the S&P 500 technology sector has declined from 28.5 times to 21.4 so far this year, according to Refinitiv Datastream data as of Friday morning.”In terms of growth valuations, they have been hit the hardest and likely the most oversold,” said Art Hogan, chief market strategist at National Securities.But the sector continues to trade at a nearly 20% premium to the overall S&P 500, above the 15% premium it has averaged over the broader index over the past five years.If the 10-year yield hovers between 3% to 3.5%, after being a “fraction” of that level for a long period, “that is going to continue to be a weight on the P/E and therefore the discounting mechanism for the growth and technology space,” said John Lynch, chief investment officer for Comerica (NYSE:CMA) Wealth Management, which favors value over growth shares.”To a large extent, (the pressure from higher yields) has been baked in,” Lynch said. “But I don’t think it is going to go away. I think it is going to persist.” More

CGI Merchant Group had agreed to buy the rights of the hotel from the Trump Organization for $375 million in a deal reports have said was to be finalized in late April and could net Trump $100 million. Trump bought the rights to the property – located in the historic Old Post Office Building four blocks from the White House – from the federal government in 2013, before he ran for president and won the 2016 election. House Oversight and Reform Chair Carolyn Maloney and House Subcommittee on Government Operations Chair Gerald Connolly, in a letter to CGI Chief Executive Raoul Thomas, said the firm did not give the U.S. General Services Administration all of the investors’ identities. “Far from resolving the Committee’s grave concerns regarding this lease, the high sale price and lack of transparency surrounding the ultimate purchasers have heightened concerns that former President Trump will receive a final, significant windfall from a lease that he should have never retained while in office,” the two Democrats wrote.Trump never formally divested himself from his business during his term in the White House, although he said he handed over day-to-day operations to two of his sons. The hotel served as a gathering point for his supporters and some foreign government officials during his presidency, raising concerns over violated ethics laws and prompting legal fights. On Tuesday, Trump’s company settled one lawsuit brought by Washington, D.C.’s attorney general, alleging his inauguration committee had funneled excessive amounts of charitable funds to the hotel. The company denied any wrongdoing.That settlement has only increased the lawmakers’ concerns, they said, setting a May 20 deadline for CGI to respond. CGI, which has said it planned to operate the property as a Hilton-affiliated Waldorf Astoria hotel, could not be immediately reached for comment. The Trump Organization also could not be immediately reached. More

Macro hedge funds, which bet on macroeconomics trends, rose 5.49% in the quarter, according to a macro fund asset weighted index. HFR said results were driven by strategies that benefited from skyrocketing inflation, rising interest rates and the Russia-Ukraine conflict.In the first four months of 2022, macro hedge funds gained 13.37%, while the S&P 500 index declined almost 13%.The industry as a whole was up 4.22% in the year.”Hedge fund managers and investors have effectively adapted to the current fluid market paradigm defined by extreme volatility, massive dislocations, and tremendous uncertainty, demonstrating tactical flexibility and operating as liquidity providers through the volatility,” said Kenneth J. Heinz, President of HFR in a statement.At the other end of the spectrum, equity hedge funds lost 3.62% in April, but they still outperformed the S&P index, which was down 8.71% in the month. More