QUICK QUILL — It won’t matter, until it does, that empirical evidence makes plain that inflation is no existential threat a la 1970s. QI is no longer in the minority recognizing that the Bureau of Labor Statistics is either cooking the books or wholly incompetent. To press a fine point, the UAW strike has pressed into its 25th day. If it goes through Thursday, the 12th day of the month, the number of striking workers will be tabulated into October’s jobs data as that is the day the BLS takes its survey. Even with a 42% response rate, it will be impossible to hide the strike. The clock on wholesale disregarding the fundamentals is ticking.
TAKEAWAYS
- Though financial media is sure to stoke fears of structurally higher inflation, Truflation, with its 0.97 correlation with headline CPI, sits near 2.50%; unlike the 1970s, there is no evidence of a demand shock, as seen by the current downward trend in CPI Wage Earners Ex-Shelter
- Per Equifax, 60-day delinquencies for auto accounts and balances are at their highest since exiting the GFC; as the pool of underwater borrowers grows as joblessness rises, spreads on BB-rated paper, at 550 bps, are 2 bps below where they were when SVB went under
- When adjusted to nonfarm payrolls methodology, the household survey, which produces the unemployment rate, saw employment fall by -7,000 in September; directionally, the adjusted data aligns with LinkUp job postings, which fell 5% in August and are down -10.4% YoY