Off the Charts

According to this morning’s Job Openings and Labor Turnover Survey (JOLTS), the ratio between the number of open jobs and the number of unemployed US workers fell dramatically in October, helping drive yields and the greenback lower.  The “everything rally” that powered most asset classes higher through the month of November is back on, with investors betting on a historically-unusual scenario occurring – one in which a softening labour market clears the way for an aggressive course of rate cuts in 2024, even as the economy skirts recession. This is, admittedly, quite possible. The evolution of the post-pandemic business cycle...

Investors are increasingly convinced that the Federal Reserve will cut rates aggressively next year as inflation slows – even if the economy experiences a “soft landing”, with growth and employment holding up relatively well. We’re not so sure. Scientists have long known that we tend to carry the macroeconomic lessons learned in our youth throughout our lives. People who lived through the Great Depression remained less likely to participate in stock markets throughout their investing careers, more favourable economic conditions led the early Baby Boomers to maintain persistently higher allocations to equities, and individuals who came of age around the...