Bloomberg Weekend Reading: The High Price of a Strong US Labor Market
This week may have dashed any hopes on Wall Street that the US Federal Reserve would back off from its aggressive efforts to bring inflation under control. He did, however, present other good news for Americans looking for a job. The September jobs report showed that unemployment had returned to a historic low in 50 years, as employers continued to hire at a brisk pace. But consumer spending and accompanying wage growth likely mean that another 75 basis point rate hike is set for November, a reality that has some investors again worried about a recession. It is also doesn’t look good for earnings: Big US banks report next week while earnings from several semiconductor makers (a gauge of economic growth) telegraphed a profound technological slowdown. And it gets worse: oil prices could rally above $100 a barrel given OPEC’s recent decision to cut production, likely accelerating inflation even as the Fed strives to slow. As far as the global economy is concerned, there are other traffic signs. While Britain’s U-turn on tax cuts for the rich has calmed nerves, bond markets are facing a potential cliff.
As Ukrainian forces reclaiming more of their territory in the northeast, Vladimir Putin’s weaponization of energy continues to reverberate around the world. As winter approached, Italy rushed to restore cut gas supplies. Blackouts in the UK and the rest of Europe may be unavoidable. And in Poland people are burn trash to stay warm. The decision taken this week by OPEC could exacerbate the crisis. He definitely left the White House seething and showed that Putin has a friend in Saudi Arabia. Together, Javier Blas writes in Bloomberg reviewthey form adangerous” when it comes to the future of energy security.