Making America Great Again

That’s the slogan Trump has used from day one to tap into the discontent within that nation.  That ‘policy’ has been scant and inconsistent at best hasn’t mattered; the people are not happy.  As we mentioned in last week’s Weekly Wrap, all eyes were on the US non farm payrolls employment data on Friday night for cues as to whether there was enough in it to support a rate hike in December.

The data again disappointed with 161,000 new jobs created in October against expectations of 173,000 and taking the 2016 average to 181,000 per month compared with 229,000 in 2015.  The household survey actually saw a drop, its first since April, of 43,000 for the month.  The unemployment rate fell to 4.9% because the participation rate dropped, i.e. more people gave up or dropped out of the workforce altogether.  425,000 people left, taking non participants to 94.6m.  The headlines were neither bad enough to rule out a rate hike nor good enough to bake the cake.  But it was what was behind the headlines that brings us back to The Donald’s slogan.

The all important ‘average hourly earnings’ rose 0.4%, a little above expectations of 0.3%.  That was received well by markets as it supports the Fed’s aim of higher wages translating into more consumption and hence demand lead inflation.  Inflation is their number one aim as that is the only tool left to address all the debt that’s been racked up.  However drill down on that number and you find that 82% of the workforce, in the subsets of production and non-supervisory private workers (the do-ers) were about half that rate at 0.2%.  Annualising that and you find that it is almost the same as core inflation.  i.e. they are going nowhere.  One of Trump’s core ‘policies’ is to tear up all the trade agreements and clamp down on imports to support domestic manufacturing.  Why?  Well again the data behind the headline shows a continuation of a loss of manufacturing jobs, once the backbone of the nation.  According to ZeroHedge “In October, according to the BLS, while the number of people employed by "food services and drinking places" rose by another 10,000, the US workforce lost another 9,000 manufacturing workers….. since 2014, the US had added 547,000 waiters and bartenders, and has lost 36,000 manufacturing workers.”

People vote with their wallet and that Trump’s policies could cause a global financial crisis appears to be lost on many of those 82% who likely see a sharemarket crash only affecting the rich and Clinton as the embodiment of them.  Should she win then the ensuing social unrest could manifest in a completely different but equally destructive way.  322 million people and we have these two. Incredible.