Evelyn Reynolds

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    The Mystery of the Coin That Shouldn’t Exist

    Scientists recently analyzed a Peruvian 10-cent piece with an unexplained origin.A decade ago, a funny money mystery fell into the hands of scientists and students at the Pontifical Catholic University of Peru in Lima.The university had been acquiring 19th- and 20th-century Peruvian coins from local dealers, and graduate students in the chemistry department were analyzing the pieces for their thesis work. But one coin, a 10-cent piece known as a dinero, stood out.The dinero was marked “1899.” The problem was that official records indicated no coins of that denomination were minted in Peru that year — according to the people who made the money, the coin never existed.Most international coin catalogs don’t list 1899 dineros, said Luis Ortega, a chemist at the university. And in the rare cases that they do, there is often only a note of “counterfeit” with no further detail, Dr. Ortega said. “No one was able to provide more information about it.”Now Dr. Ortega and Fabiola Bravo Hualpa, a doctoral student, believe they have shed new light on the mystery of the coin that came from nowhere. In a paper published last year in the journal Heritage Science, they described how they subjected one of the two known 1899 dineros to a barrage of scientific analyses, illuminating its possible origins and the role it might have played during an unstable era of South American history.To the naked eye, the 1899 coin resembles other dineros: It’s silver in color and features the same coat of arms and seated woman that represents the goddess of liberty. And it’s remarkably similar in size to other dineros minted around the turn of the 20th century — about the dimensions of a U.S. dime.But when Dr. Ortega and Ms. Bravo Hualpa bombarded the 1899 coin with X-rays and measured the light it re-emitted, they determined that the dinero was largely made of copper, zinc and nickel. This alloy is known as nickel silver. It’s commonly used to make silverware and ornamental objects and has a silvery appearance, but it contains no silver. Genuine dineros produced by the Lima Mint, on the other hand, are roughly 90 percent silver.Dr. Ortega and Ms. Bravo Hualpa also found that the 1899 dinero contained traces of iron, cobalt and lead. Those impurities imply that the coin was counterfeited long ago, not more recently, the researchers suggest. Such contaminants are characteristic of older alloys because of limitations in technology at the time. “The refining methods were not as good as they are now,” Dr. Ortega said.The presence of impurities, paired with the coin’s worn faces, suggests that it was produced in the 19th or 20th centuries, the researchers concluded. But given that nickel silver wasn’t widely used for coins or tokens in Peru at that time, it’s likely that this coin was created abroad, the researchers suggest. Its producer might have therefore been wholly unaware that no dineros were officially minted in 1899.“The counterfeiter probably didn’t realize that that coin didn’t exist,” Dr. Ortega said.He said that an influx of low-value coinage would have been welcomed in Peru at the dawn of the 20th century. The country’s economy was reeling from the recent War of the Pacific, and the government was focusing on printing larger-denomination paper bank notes to pay off international loans; in 1899, the Lima Mint produced roughly one-tenth the number of silver coins it produced just five years earlier.As a result, people in Peru were using coins from neighboring nations or even cutting their own country’s coins in half to conduct small transactions. “Counterfeiters found a field of opportunity,” Dr. Ortega said.Dineros were low-denomination coins used by everyday people. Studying this coin, and the economic and political situation that prompted its creation, can therefore be illuminating. “If you want to study our society, you don’t want to look at a Ferrari,” said Laura Perucchetti, an archaeometallurgist at the British Museum in London, not involved in the research. “You want to look at a Volkswagen or a Ford.”Dr. Ortega is not finished studying counterfeit coins and their historical context. He plans to meet with a collector based in Lima who amassed an assortment of coins ostensibly minted from the 1830s through the 1960s. Another 1899 dinero has already surfaced in that collection, and he is on the lookout for more.“There must be a few around,” Dr. Ortega said. More

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    U.S. Added 216,000 Jobs in December, Outpacing Forecasts

    Hiring has throttled back from 2021 and 2022, but last year’s growth was still impressive by longer-term standards.The U.S. labor market ended 2023 with a bang, gaining more jobs than experts had expected and buoying hopes that the economy can settle into a solid, sustainable level of growth rather than fall into a recession.Employers added 216,000 jobs in December on a seasonally adjusted basis, the Labor Department reported on Friday. The unemployment rate was unchanged at 3.7 percent.Although hiring has slowed in recent months, layoffs remain near record lows. The durability of both hiring and wage gains is all the more remarkable in light of the Federal Reserve’s aggressive series of interest rate increases in the past couple of years. But a range of analysts warns that the coast is not yet clear and says the effects of those higher rates will take time to filter through business activity.“The real test for the labor market begins now, and so far it is passing the test,” said Daniel Altman, the chief economist at Instawork, a digital platform that connects employers with job seekers.Financial commentary in the past year has been dominated by dueling narratives about the economy. Most economists warned that the Fed’s driving up borrowing costs at a historically rapid pace would send the economy into a downturn. Heading into 2023, over 90 percent of chief executives surveyed by the Conference Board said they were expecting a recession. And many leading analysts thought that price increases could soften only if workers experienced significant job losses.But the resilience of the overall economy and consumer spending has so far defied that outlook: In June 2022, inflation was roughly 9 percent. Inflation has since tumbled to 3 percent while the unemployment rate has been largely unmoved.The economy gained 2.7 million jobs in 2023.Annual change in jobs More

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    U.S. payrolls increased by 216,000 in December, much better than expected

    December’s jobs report showed employers added 216,000 jobs for the month while the unemployment rate held at 3.7%. That compared with respective estimates of 170,000 and 3.8%.
    The hiring boost came from a gain of 52,000 in government jobs and another 38,000 in health care-related fields such as ambulatory health-care services and hospitals.
    Average hourly earnings rose 0.4% on the month and were up 4.1% from a year ago, both higher than the respective estimates for 0.3% and 3.9%.

    The U.S. labor market closed out 2023 in strong shape as the pace of hiring was even more powerful than expected, the Labor Department reported Friday.
    December’s jobs report showed employers added 216,000 positions for the month while the unemployment rate held at 3.7%. Payroll growth showed a sizeable gain from November’s downwardly revised 173,000. October also was revised lower, to 105,000 from 150,000, indicating a slightly less robust picture for growth in the fourth quarter.

    Economists surveyed by Dow Jones had been looking for payrolls to increase 170,000 and the unemployment rate to nudge higher to 3.8%.
    A more encompassing unemployment measure that includes discouraged workers and those holding part-time jobs for economic reasons edged higher to 7.1%. That increase in the “real” unemployment rate came as the household survey, used to calculate the unemployment rate, showed a decline in job holders of 683,000 as the ranks of those working multiple jobs increased by 222,000.
    The labor force participation rate, or the share of the civilian working-age population either employed or looking for a job, slid to 62.5%, down 0.3 percentage point to its lowest since February and down 676,000 on a monthly basis.
    The report, along with revisions to previous months’ counts, brought 2023 job gains to 2.7 million, or a monthly average of 225,000, down from 4.8 million, or 399,000 a month, in 2022.

    Major averages meandered through the day as markets reacted to a lower than expected reading from the ISM services gauge. The measure posted a lower than expected 50.6 reading, reflecting only narrow expansion, and the lowest level of the employment component since May 2020.

    Treasury yields were mostly higher, particularly in longer duration.
    The December hiring boost as reflected in the Labor Department report came from a gain of 52,000 in government jobs and another 38,000 in health care-related fields such as ambulatory health-care services and hospitals. Leisure and hospitality contributed 40,000 to the total, while social assistance increased by 21,000 and construction added 17,000. Retail trade grew by 17,000 as the industry has been mostly flat since early 2022, the Labor Department said.
    On the downside, transportation and warehousing saw a loss of 23,000.
    The report showed that inflationary pressures, despite receding elsewhere, are still prevalent in the labor market. Average hourly earnings rose 0.4% on the month and were up 4.1% from a year ago, both higher than the respective estimates for 0.3% and 3.9%. The average workweek edged lower to 34.3 hours.

    Fed funds futures markets also reacted, lowering the odds of a March rate cut from the Federal Reserve to about 56%, according to the CME Group.
    “Today’s report speaks to the bumpy road ahead for the Fed’s journey back to 2% inflation,” said Andrew Patterson, senior international economist at Vanguard. “The decision of when to first cut policy rates remains one for the second half of the year in our view.”
    Friday’s data adds to the case that the U.S. economy continues to defy expectations for a slowdown, despite an inflation-fighting campaign from the Fed that has produced 11 interest rate hikes since March 2022 totaling 5.25 percentage points, the most aggressive monetary policy tightening in 40 years.
    At their December meeting, Fed officials released projections that indicate they could enact three quarter-percentage point interest rate cuts this year. Markets, though, expect the central bank to be more aggressive, with futures traders pricing in up to six cuts.

    The belief that the Fed can start cutting is fueled by the view that inflation will continue to recede after peaking at a 41-year high in mid-2022. Inflation is still above the Fed’s 2% target but has been making steady progress lower since the increases began.
    However, Friday’s report could challenge the market narrative of a substantially easier Fed.
    “Jobs growth remains as resilient as ever, validating growing skepticism that the economy will be ready for policy rate cuts as early as March,” said Seema Shah, chief global strategist at Principal Asset Management. “Indeed, the recent run of labor market data generally points in one direction: strength.”
    Economic growth has held solid after consecutive negative-growth quarters to start 2022. Gross domestic product is on track to increase at a 2.5% annualized pace in the fourth quarter, according to the Atlanta Fed’s GDPNow real-time tracker of economic data.
    Consumers have been resilient as well. Holiday spending likely hit a record this year, rising 5% to $222.1 billion, according to projections by Adobe Analytics.
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    Here’s where the jobs are for December 2023 — in one chart

    Getty Images

    The U.S. labor market beat expectations again in December, adding 216,000 jobs to close out the year while the unemployment rate held steady at 3.7%.
    Yet the job gains were slower than the same period a year ago, with the three-month average gain dropping to 165,000 a month compared with an average of 284,000 in December 2022, according to Nick Bunker, director of economic research for North America at the Indeed Hiring Lab.

    “After entering 2023 with a sonic boom, the US job market is headed into 2024 at a comfortable cruising speed,” Bunker said. “The pace of job creation is strong but not overwhelming, unemployment is low and stable, and job openings are plentiful.”

    Bunker noted that just a few sectors – education and health services, government, and leisure and hospitality – accounted for more than 75% of the job growth in December. He cautioned that “turbulence lurks on the edges of the radar” with labor force participation dropping toward year-end while wage growth accelerated.
    “While labor demand may still be high, labor supply may be struggling to keep pace,” Bunker said. Nevertheless, the report should alleviate short-term recession fears, he said.
    “If there’s any surprise emerging in this report, it’s that the labor market might have more momentum than previously thought,” he said.
    The public sector led the way last month with 52,000 jobs, overwhelmingly in local government, according to the Bureau of Labor Statistics.

    Health care also saw solid growth with nearly 38,000 jobs added, primarily in ambulatory care and hospitals. Job growth was strong in the sector throughout 2023, adding 55,000 positions a month on average compared with monthly gains of 46,000 in 2022.
    Social assistance positions rose by 21,000 in December, with jobs gains averaging 22,000 per month in 2023, slightly more than the 19,000 average monthly increase in 2022.
    The leisure and hospitality industry was little changed in December, adding 40,000 positions, with employment in the sector remaining below its pre-pandemic level by 1%, according to the Bureau of Labor Statistics.
    The retail sector added 17,000 jobs to end the year, also little changed, with gains offset by a loss of 13,000 positions in department stores. Employment in the industry has struggled to gain speed since recovering from pandemic losses in 2022, according to the data.
    Construction also trended upward with 17,000 new positions in December. The sector saw monthly gains of 16,000 in 2023 on average, compared with 22,000 in 2022.
    Employment was little changed last month in mining, oil and gas, manufacturing, wholesale trade, information, financial activities, and other services, according to the Bureau of Labor Statistics.
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    Friday’s jobs report will be a big signal for a market looking for good news

    The December jobs report hits Friday morning, with markets looking for a 170,000 increase in nonfarm payrolls and an unemployment rate of 3.8%.
    Art Hogan, chief market strategist at B. Riley Financial, said the acceptable range is really something like 100,000-250,000.
    “This is a market that’s gotten itself a little jazzed up about rate cuts and when they’re going to happen,” Hogan said. “People need to focus on why they’re going to happen.”

    A now hiring sign is posted in front of a U-Haul rental center on November 03, 2023 in San Rafael, California.
    Justin Sullivan | Getty Images

    When the December jobs report is released Friday morning, markets will be looking for a number that hits a sweet spot between not so robust as to trigger more interest rate hikes and not so slow as to raise worries about the economy.
    In market jargon, that quest for the middle is sometimes referred to as a “Goldilocks” number — not too hot, not too cold — that can be difficult to find.

    But in this case, the good news is that the range looks to be pretty wide with a higher probability of good news than bad.
    While the Dow Jones estimate is for a nonfarm payrolls gain of 170,000, Art Hogan, chief market strategist at B. Riley Financial, said the acceptable range is really something like 100,000-250,000.
    “I just feel like we have a much better receptivity to good news being good news now that we know that that’s not going to induce another rate hike,” Hogan said. “It’s just going to push off a rate cut.”

    As things stand, markets figure the Federal Reserve is done hiking rates and could start cutting as early as March, eventually lopping off 1.5 percentage points from its benchmark rate by the end of 2024. Recent news coming out of the Fed is pushing back at least a little on that anticipated trajectory, and a strong jobs number could dampen the likelihood of policy easing that quickly.
    “If we were to get above [250,000], then people might look at that and say we have to cancel March as a potential rate cut and maybe take one off the table for this year,” Hogan said. “Frankly, we know we’re at a place now where the Fed is done raising rates. So if that’s the case, clearly good news could be good news. It’s just how good the news could be before you get concerned that some of the hope for rate cuts might get pushed out into the back half of the year.”

    High hopes for cuts

    Markets have gotten off to a rocky start in the new year as rate-sensitive Big Tech stocks have lagged. Traders are anticipating that the Fed will ease up on monetary policy, though such an aggressive schedule of cuts could imply something more than winning the battle against inflation and instead may infer economic weakness that forces the central bank’s hand.
    Hogan said investors should be taking that into consideration when thinking about the impact of lower rates.
    “This is a market that’s gotten itself a little jazzed up about rate cuts and when they’re going to happen,” he said. “People need to focus on why they’re going to happen.”
    “If the wheels are coming off the economic cart and the Fed has to rush in to stimulate that, that’s bad rate cuts, right?” he added. “The good rate cuts are if the path of inflation continues toward the Fed’s target. That’s a good rate cut. So if that doesn’t happen until the second half, I’m fine with that.”
    As usual, markets will be looking at more than the headline payrolls number for the health of the labor market.

    Digging through details

    Wages have been a concern as an inflation component. The expectation for average hourly earnings is a 12-month growth rate of 3.9%. If that proves accurate, it will be the first time wage gains come in under 4% since mid-2021.
    The unemployment rate is expected to tick up to 3.8%, which will still keep it below 4% for 23 straight months.
    “The overall picture is one in which the labor market is gradually decelerating in a very orderly fashion,” said Julia Pollak, chief economist at online jobs marketplace ZipRecruiter. “I expect December to continue the trend of just gradual cooling to around 150,000 [new jobs], and possibly a small uptick in unemployment because so many people have been pouring into the workforce.”
    The labor force grew by about 3.3 million in 2023 through November, though the trend has had little impact on the unemployment rate, which was up just 0.1 percentage point from the same month in 2022.
    However, Pollak noted that the hiring rate is still below where it was prior to the Covid pandemic. The quits rate, a Labor Department measure that is looked at as a sign of worker confidence in finding new employment, has tumbled to 2.2% after peaking at 3% during the so-called Great Resignation in 2021 and 2022.
    The jobs picture overall has shifted since then, with the once-hot tech sector now lagging in terms of job openings and health care taking the lead, according to Nick Bunker, economic research director at the Indeed Hiring Lab.
    “We’re seeing a labor market that is not as tight and as hot as what we saw the last couple years,” Bunker said. “But it’s got into a groove that seems more sustainable.” More

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    St. Louis Fed names former Tudor executive Alberto Musalem as new president

    St. Louis Fed names Alberto G. Musalem as new president.
    Source: St. Louis Federal Reserve

    Economist Alberto Musalem was named the next president and CEO of the Federal Reserve Bank of St. Louis on Thursday.
    Musalem, 55, will start on April 2. He succeeds James Bullard, who joined Purdue University last August. The St. Louis Fed representative is an alternate member of the rate-setting Federal Open Market Committee and will vote in 2025. St. Louis Fed First Vice President Kathy O’Neill has been holding the position in the interim.

    “Alberto will be an outstanding president and CEO of the St. Louis Fed,” said St. Louis Fed director Carolyn Chism Hardy, president and CEO of Chism Hardy Investments and deputy chair of the bank’s search committee.
    Hardy cited Musalem’s experience as an economist and in financial markets as well as his extensive background with the Fed.
    In his most recent work, he served as co-chief investment officer and was co-founder of Evince Asset Management. Before that, he was executive vice president and senior advisor to the New York Fed.
    In addition, he has financial market experience at Tudor Investment Corp., working with the firm’s founder, Wall Street titan Paul Tudor Jones.
    “Alberto is a mission-focused leader, and I am confident he will work tirelessly to promote a healthy economy for all in representing the diverse views of the constituents across the Fed’s Eighth District,” Hardy said.

    Musalem comes to the St. Louis Fed at a time when the central bank is at what appears to be an important policy pivot, away from inflation-fighting interest rate hikes and toward a normalization of policy and likely rate cuts ahead. However, the trajectory of how that will happen is uncertain as Fed officials have vowed to be data dependent and are holding open the possibility that rates may need to go up more if the inflation data moves the other way.
    “I am deeply honored to serve as the next president of the St. Louis Fed and grateful for the opportunity to promote a strong, resilient and inclusive economy,” Musalem said.
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    Private payrolls added 164,000 in December, beating expectations, ADP says

    Private payrolls increased by 164,000 for the month, higher than the 101,000 in November and better than the 130,000 estimate.
    A rebound in leisure and hospitality led the way, as the sector added 59,000.
    The pace of earnings growth decelerated again, with those staying in their job seeing annual pay increases of 5.4%.

    A worker at a restaurant at Grand Central Market in Los Angeles, California, US, on Thursday, Nov. 2, 2023. 
    Eric Thayer | Bloomberg | Getty Images

    Hiring in the private sector rose at a faster than expected pace in December, closing out a strong 2023 for the resilient U.S. jobs market, ADP reported Thursday.
    Private payrolls increased by 164,000 for the month, a substantial increase from the downwardly revised 101,000 in November and better than the 130,000 estimate from the Dow Jones consensus, according to the payrolls processing firm.

    A rebound in leisure and hospitality led the way, as the sector added 59,000. Hotels, restaurants, bars and similar establishments had led the way in job creation after getting eviscerated in the early days of the Covid pandemic, but job creation in the industry tailed off in recent months. The sector also led in wage gains, with annual growth of 6.4%.
    Construction contributed 24,000 to the total, while the other services category, which includes dry cleaning and other support businesses, added 22,000. Financial activities increased 18,000.
    There were only a few categories down on the month, with manufacturing off 13,000 and information services and natural resources and mining both seeing a decline of 2,000.
    The pace of earnings growth decelerated again, with those staying in their job seeing annual pay increases of 5.4% while job changers saw earnings increase 8%, ADP said.
    “We’re returning to a labor market that’s very much aligned with pre-pandemic hiring,” ADP chief economist Nela Richardson said. “While wages didn’t drive the recent bout of inflation, now that pay growth has retreated, any risk of a wage-price spiral has all but disappeared.”

    From a size perspective, companies with fewer than 50 employees led with 74,000 new jobs. Geographically, the West saw an increase of 109,000 while the Northeast added 94,000.
    The ADP release comes a day ahead of the Labor Department’s more closely watched nonfarm payrolls count, and the two reports can differ substantially due to differences in methodology. Economists surveyed by Dow Jones expect December nonfarm payroll growth of 170,000, after November’s 199,000, which was nearly double the ADP estimate.
    Federal Reserve officials are watching the jobs reports closely for clues on the labor market and its impact on inflation. According to minutes released Wednesday from the December meeting of the Federal Open Market Committee, the central bank’s rate-setting panel, officials see the labor market coming better into balance from the huge supply-demand mismatch over the past few years. More

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    U.S. Awards Chip Supplier $162 Million to Bolster Critical Industries

    The Biden administration said its second grant under a new program would help Microchip Technology expand its facilities in Oregon and Colorado.The Biden administration on Thursday announced plans to provide $162 million in federal grants to Microchip Technology, an Arizona-based semiconductor company that supplies the automotive, defense and other industries.The agreement is the second award announced under a new program intended to help ensure that American companies that rely on semiconductors have a stable supply. Last month, the Biden administration announced a $35 million grant for BAE Systems, a defense contractor.The investment will enable Microchip to increase its production of semiconductors that are used in cars, airplanes, appliances, medical devices and military products. The administration said it expected the award to create more than 700 jobs in construction and manufacturing.“Today’s announcement with Microchip is a meaningful step in our efforts to bolster the supply chain for legacy semiconductors that are in everything from cars to washing machines to missiles,” Commerce Secretary Gina M. Raimondo said in a statement.Microchip plans to use $90 million to modernize and expand a facility in Colorado Springs and $72 million to expand a facility in Gresham, Ore. The administration said the funding would help Microchip triple its output at the two sites and decrease the company’s reliance on foreign facilities to help make its products.The company’s chips aren’t cutting-edge but are key components of nearly every military and space program. Microchip is one of the largest suppliers of semiconductors to the defense industrial base and a designated trusted foundry for the military. It also plays a crucial role in industries that are important for the national economy, U.S. officials said.That role became more obvious during the pandemic, when a global chip shortage cast a spotlight on domestic suppliers like Microchip. With foreign chip factories shut down to help contain the virus, automakers and other companies scrambled to secure supplies. As a result, demand for Microchip’s products surged.Those shortages also helped motivate lawmakers to pull together a funding bill aimed at shoring up American manufacturing and reduce reliance on foreign chips. The 2022 CHIPS and Science Act gave the Commerce Department $53 billion to invest in the semiconductor industry, including $39 billion for federal grants to encourage chip companies to set up U.S. facilities.The Commerce Department is expected to begin announcing larger awards in the coming months for major chip fabrication facilities owned by companies like Intel and Taiwan Semiconductor Manufacturing Company, known as TSMC.Microchip previously announced plans to increase its capacity in both Oregon and Colorado, but the government funding would be used to expand those enhancements and bring more production back to the United States, officials said. According to its filings, Microchip relies on outside facilities to make a significant proportion of its products — roughly 63 percent of its net sales in 2023 — a relatively common practice in the industry.While attention has focused on ensuring that U.S. facilities can manufacture some of the world’s most advanced chips, there are growing concerns about Chinese investments in less advanced semiconductors, also known as legacy chips, which help power cars, computers, missiles and dishwashers.U.S. officials are questioning whether such investments could increase the United States’ reliance on China or allow Chinese firms to undercut competitors. The Commerce Department has said it plans to begin a survey this month to identify how U.S. companies are getting their legacy chips and reduce security risks linked to China.The deal announced Thursday is a nonbinding preliminary agreement. The Commerce Department will carry out due diligence on the project before reaching the award’s final terms.The department said it had received more than 570 statements of interest and more than 170 pre-applications, full applications and concept plans from companies and organizations interested in the funding.Don Clark More