Aurelia Butler

Macron in a Tuesday interview with Le Parisien used salty language — saying he wants to “p— off” people refusing inoculation — to express zero-tolerance for failing to get fully vaccinated. The government, he said, will keep up the pressure on the holdouts as a way to contain skyrocketing case counts. “You can get upset about ways of talking which may sound colloquial, for which I take full responsibility. But what upsets me is the situation in which we are in,” Macron said at a Friday news conference in Paris. “It was my responsibility to ring the alarm. That’s what I did this week so that things will move faster.”France is battling a record surge of cases and is struggling to contain the spread of the omicron variant that’s sweeping Europe and nations worldwide, threatening economic recoveries and overextended health care systems. The stakes for the 44-year-old president are also heightened as he’s expected to soon announce he’ll seek a second term in the April presidential election.The president’s verbal broadside, which sparked a political uproar, comes as parliament is pushing ahead with legislation to restrict access to restaurants, museums, concerts and public transportation to the fully vaccinated. The lower house has approved the bill, the Senate will take it up next week and the government expects it to come into force Jan. 15.While almost 80% of the French population is fully vaccinated, preliminary findings suggest that anti-Covid jabs are less effective against the omicron variant, now dominant in France and many other countries. French health officials reported a record 332,252 daily new infections Wednesday, 261,481 on Thursday and 328,214 on Friday.While early data point to lower hospitalization and mortality rates from the omicron variant, its far higher transmissibility means that even if a smaller fraction of those infected become severely ill, the sheer numbers risk overwhelming hospitals and clinics. Macron hasn’t confirmed he’ll be a candidate in the upcoming election, but he told Le Parisien newspaper that he wants to run again while stressing that he hasn’t fully made up his mind.The president has vowed to contain the virus spread while attempting to “limit the restrictions” in order to preserve the economy.©2022 Bloomberg L.P. More

US jobs growth slowed sharply in December, according to data released by the Bureau of Labor Statistics on Friday, suggesting the labour market’s recovery could be running out of steam.But looking beyond the headline figures, which showed just 199,000 positions were created, a different picture takes shape: economists argue the labour market is much stronger than it first appears, and is in fact in one of the most solid positions in history.“The employment market is hot,” said Rick Rieder, chief investment officer of global fixed income for BlackRock. “It is arguably the hottest it has ever been.”Here’s the evidence economists, investors and chief executives see:A plunging unemployment rateDespite the drop in the pace at which employers are adding jobs to the world’s largest economy, the unemployment rate has plummeted dramatically in recent months. At 3.9 per cent, it now sits at its lowest level since before the pandemic.To calculate the jobless rate, the BLS surveys about 60,000 households about their employment activity for the month. In December, it showed 651,000 jobs were created, far more than the headline figure of 199,000.The latter number is derived from a different source, the employers-focused “establishment survey”, which surveys about 144,000 employers and is affected by pandemic-related data distortions.A similar dynamic played out last month, with the household survey suggesting employment gains of 1.1m. That helped to push the unemployment rate down to 4.2 per cent and presented a rosier outlook for the labour market than the 210,000 jobs reported in the initial November figures.‘The Great Resignation’ and record job openingsAs the number of Americans quitting their jobs has hit records in recent months, existing labour shortages have grown more acute.More than 4.5m workers quit in November, figures from the BLS showed this week, eclipsing the previous record of 4.4m set in September and well above the 4.2m reached in October.That has contributed to a near-record number of job openings, with 10.6m unfilled positions at the end of November, just short of the 11.1m figure reported a month earlier.Economists have dubbed the trend the “Great Resignation”, as workers capitalise on an aggressive search for new hires that has prompted employers to raise wages to spur demand.Tyson Foods cautioned in their latest earnings announcement that the competition for talent was “impacting our operational efficiencies”, and FedEx said that labour shortages cost it about $470m in its latest quarter.Meanwhile Mark George, chief financial officer of Norfolk Southern, told analysts in December that a “white hot” trucking market, a strong construction market and Amazon warehouses “popping up all over the place” now meant that “people have a lot of options”.Covid-related concerns and childcare issues have also deterred workers from returning more quickly to the workforce, leading to a more muted rebound in the share of people employed or looking for a job.The so-called labour force participation rate improved further in December, inching up to 61.9 per cent, but still remains more than 1 percentage point below its pre-pandemic level.The participation rate for those aged between 24 and 54 is higher, at 81.9 per cent, but is also similarly short of its February 2020 rate.Surging wage growthIn a bid to entice workers, employers have raised wages by such a magnitude that economists and Federal Reserve officials say they are watching the pick-up closely for any signs that it is leading to persistently higher inflation. Fast-food restaurants, retailers and logistics companies are among those boosting the terms they offer starters. Lowe’s, the DIY retailer, recently warned of higher wage costs as a result of the labour shortage.Average hourly earnings rose 0.6 per cent from the previous month, which translates to an annual gain of 4.7 per cent. In its latest survey of big company chief executives, the Business Roundtable found that the higher wage costs caused by labour shortages had risen to the top of the list of concerns of chief executives, far outstripping issues such as supply chain disruptions or the rising cost of materials. “It’s a tight labour market, and it takes a lot of ingenuity and creativity and effort to attract and retain employees to the best of our ability,” Sean Connolly, chief executive of ConAgra, told analysts this week. “I feel good about where we sit right now but, there’s no denying, it’s a daily grind.”Data distortions Economists have also recognised that the initial estimate for headline jobs growth could be revised substantially in future reports due to the difficulty of economic measurement during the pandemic.The payroll figure for December will be updated in February, and again in March. It is likely the figure has been under-reported; over the course of 2021, upward revisions have added more than 1m jobs — a record high for a single year.Measuring payrolls during the pandemic is particularly challenging for two main reasons. First, businesses have been slower to respond to the establishment survey, from which the payroll estimates are derived, meaning the initial estimate is based on incomplete data.In December, 71 per cent of businesses responded by the deadline, compared to 81.5 per cent in December 2019. Economists say businesses with the most activity, such as the ones hiring most rapidly, are likely to be among the slowest to respond, contributing to an initial underestimate of payrolls.Second, the pandemic has disrupted seasonal patterns, complicating the statistical models that the BLS uses to strip out seasonal effects, such as holiday hiring, from the raw data.In December, the raw numbers showed payroll growth of 72,000, which the BLS adjusted upward by 127,000. This is smaller than the typical December adjustment, according to Gregory Daco, chief US economist at Oxford Economics. The seasonal adjustment model is also tweaked as data come in, which will lead to more revisions down the line. More

The first trading week of 2022 went with a bang in financial markets, and sent a clear message that this year will not be for the faint-hearted.In fairness, investors and analysts knew it was likely to be lively. The US Federal Reserve — the markets’ firefighter-in-chief — had made clear that it was winding down its Covid-era stimulus in the face of bubbling inflation. At its policy-setting meeting in December, it had already bumped up the pace at which it will reduce asset purchases in what has become known as its “hawkish pivot”. Casting ahead into this year, it does not take a markets savant to figure out that the full withdrawal of support and the introduction of US interest-rate rises (remember them?) will present a challenging environment for risky assets pumped higher by the Fed’s economic largesse. In layman’s terms: what goes up must come down. So, fund managers were prepared for volatility. Even if we end up higher in major stocks indices by the time the year is out, setbacks are inevitable.Nonetheless, the release this week of the minutes of the last Fed meeting left a mark.“The minutes are usually uneventful, but certain statements suggest that the Fed is willing to hike rates sooner and faster than what investors were assuming,” said Solita Marcelli, chief investment officer for the Americas at UBS Global Wealth Management, acknowledging that she, along with plenty of other investors, had been caught somewhat off guard.In combination with signs that the Fed is looking at the details of how to cut back its $9tn balance sheet, Wednesday’s minutes prompted traders to amp up bets on a rate rise as soon as March.“Much to the surprise of the market, [rate setters] seem to agree that the balance sheet needs to be reduced even faster than in 2018, an episode often seen as a policy mistake,” said Markus Allenspach, head of fixed income research at Julius Baer.First against the wall, predictably enough, were highly speculative tech stocks. Or, as Hani Redha, a portfolio manager at PineBridge Investments, put it: “Spec-tech is getting wrecked.” An early contender for markets quote of the year, there.The tech-heavy Nasdaq Composite index closed more than 3 per cent lower on Wednesday in its worst performance in almost a year. Cathie Wood’s flagship exchange traded fund, famed for its bets on often unproven technology companies that do not yet turn a profit, continued its miserable run, leaving it down almost 10 per cent just this year. Crypto, the planet’s most speculative bet, also suffered, with bitcoin down nearly 10 per cent at $41,450 a pop. Aside from a weekend flash crash in early December, that is the lowest since October.Government bond prices have also taken a knock. Yields on benchmark 10-year US government bonds ended 2021 at just 1.5 per cent, well below most predictions. But they have swept up to about 1.75 per cent. This inevitably dulls the comparative allure of long-term speculative investments.

It all sets the scene for a tense tug of war between the Fed and fund managers this year. Mark Dowding, chief investment officer at BlueBay Asset Management, notes that in this process, the Fed’s messaging is tightly choreographed.“Last year, the Fed wanted to move quite cautiously away from being ultra-accommodative to more neutral. They didn’t want to upset markets, and wanted to tread ever so carefully,” he said. “But lately it has been taking baby steps to see if the market will throw its toys out of the pram.”After the last Fed decision, one of the central bank’s governors, Christopher Waller, firmly planted the notion that rate rises start in March to tackle “alarmingly high inflation”. Toy check: still in the pram. Then at the very start of 2022, right before the minutes were released and with stocks indices still close to record highs, The Wall Street Journal gave some tasters on policymakers’ thinking, reporting that officials are “beginning to map out how and when” to shrink the central bank’s balance sheet. Again, toys remained in place. “It turns out that markets are comfortable with three hikes this year, and three the following year, which still only takes us to 1.5 per cent by the end of 2023,” said Dowding.Some of the froth has been blown aside, for sure. But a drop in the US’s benchmark S&P 500 stocks index of around 2 per cent on the week is hardly enough to spark soul-searching at the Fed over some terrible error. Crucially, too, the declines we have seen are from extremely elevated levels.The Fed is still likely to consider pulling back if fund managers really start bawling. As Marcelli at UBS has suggested, the game remains the same: stick to cyclical bets. “Growth companies had been the main beneficiaries of extraordinarily low real and nominal interest rates,” she wrote. “As the Fed begins to normalise policy, it’s logical that these stocks will face the strongest headwinds. Within the US equity market we continue to have a preference for value stocks over growth stocks.”Growth stocks fanatics who have not figured this out yet will have to learn to cry it out. [email protected] More

Economists have warned of wealth inequality rising in Great Britain owing to the pandemic after 14 years of relative stability, which has bucked the trend of many other countries where divides have been steadily widening.The wealthiest 10 per cent of households owned 43 per cent of all the wealth in Britain between April 2018 to March 2020, data from the Office for National Statistics showed on Friday. In contrast, the bottom half of the population held only 9 per cent. However, over the past 14 years wealth inequality measured by the Gini coefficient has remained by and large stable, according to the ONS.This is in contrast with many countries where wealth inequality increased between 2000 and 2019, including in the US, Italy, Russia and China, according to estimates by Credit Suisse. Over that period, wealth inequality also remained largely stable or fell in France and Germany. The data also revealed that the wealth of the richest 1 per cent of households in Great Britain was more than £3.6 million per household on average, 230 times higher than the £15,400 or less for the least wealthy 10 per cent. These are “striking findings” said Arun Advani, assistant professor at the University of Warwick, adding the wealth gap had likely been underestimated as “the wealthiest are less likely to respond to the survey”. Furthermore, wealth derived from the ownership of businesses is not included in the survey, creating a further distortion. Robert Palmer, executive director at Tax Justice UK, said that even before the coronavirus crisis “it was clear that wealth inequality was entrenched”.While Krishan Shah, researcher at think-tank Resolution Foundation, noted that “with limited financial resources to protect them from economic shocks, the poorest households were undoubtedly in the worst position heading into the pandemic”. The latest ONS figures are the most comprehensive set of data on wealth distribution available but do not cover the period of the pandemic. Separate ONS data released last month showed that total UK wealth increased during the crisis as economists warned of profound consequences for income equality and social mobility.“Strong growth in global stock markets and in UK house prices has yielded significant gains in the wealth of pension holders and homeowners, who sit in the middle and upper part of the wealth distribution,” said David Sturrock, economist at the Institute for Fiscal Studies think-tank.He added that much of the savings accumulated during the pandemic had been on the part of higher-income households, while those on lower incomes “have drawn down on their savings and increased debt”. ONS data showed that the wealthiest top 1 per cent held average household pension assets of around £2m in the two years leading up to March 2020. Whereas the least wealthy 10 per cent only held wealth in physical assets, such as cars and furniture.Financial wealth, such as that held in stock, for the richest 1 per cent was greater than for the bottom 80 per cent of the population.The ONS data also revealed striking differences between age groups, with the median wealth of those aged 55 to 65 about 25 times higher than those aged 16 to 24, reflecting differences in property and pension assets.Median wealth in the south east, the wealthiest region, of £503,400 was about three times higher than the north east, which has the lowest assets with £168,500.In London, the wealth of an average household was £340,300 — marginally above the national average but well below the wealthiest region. This reflected the capital having the lowest property ownership rate in the country, low participation in private pensions and decreasing median wealth. It remained the region with the most uneven wealth distribution. More