The following charts were included in our daily Closer report on 9/4/24.  You can receive our Closer in your inbox with a two-week trial to Bespoke Institutional.

July data on job openings and labor market turnover (JOLTS) showed a larger-than-expected drop in job openings, which came in 5% lower than estimated with a 3% downward revision to June data. The JOLTS data has been very consistent for some time in terms of showing a slowdown in hiring. Hires were over 4.5% of the labor force at the peak in late 2021 but have been trending lower for almost three years now; the same goes for the quits rate. Both those metrics improved this month despite weaker openings, but the weaker trend is very clear. One final note that is arguably the most concerning: while layoffs are still low, gross job terminations were 1.68mm in July. That’s not unusually high compared to pre-COVID levels, but firings may be starting to pick up. If slow hiring is now being matched by outright firings, problems could mount.

To read the rest of The Closer from 9/4 which also included our analysis on the Fed’s Beige Book, mega-cap AI mentions, and the latest job opening data from Indeed, sign up for a Bespoke Institutional trial today.

The following charts were included in our daily Closer report on 9/4/24.  You can receive our Closer in your inbox with a two-week trial to Bespoke Institutional.

Our Bespoke Beige Book Index measures the relative frequency of positive and negative terms reported in the Federal Reserve’s Beige Book.  In general, a higher relative frequency of positive terms equates to stronger GDP and vice versa (though the correlation is by no means perfect).  Below is an updated chart of our Beige Book Index following this week’s release.  In the chart, the dark blue line shows our Beige Book Index advanced six months forward, while the light blue line shows actual YoY GDP growth.  Based on our index, the current backdrop is consistent with much weaker GDP than the current ~3% pace (US GDP was up 3.1% YoY and 3.0% annualized QoQ in Q2, while the Atlanta Fed’s GDPNow tracker is sitting at 2.1% for Q3 after yesterday’s data).

This week’s Beige Book release on the qualitative economic backdrop was unimpressive to say the least.  Activity was reported as “flat or declining” in nine of twelve Federal Reserve districts with employment “steady overall” despite some reports of reduced labor utilization.  Consumer spending “ticked down in most districts” and manufacturing activity “declined in most districts.”

One more observation: the Beige Book was consistent with a bottoming of commercial real estate markets.  Below is a look at some of the commentary surrounding CRE in the latest Beige Book release:

In Boston, CRE activity was “flat” with “improvements along some dimensions.”  NY reported CRE markets “held steady” with “some decline in vacancy rates and an increase in asking rents.”  Philadelphia noted “steady construction” with a range of projects entering the pipeline.  Cleveland’s numbers were “mixed,” in Richmond “activity picked up,” and Atlanta reported that “vacancy rates rose” but “a slight uptick” in property transactions.  In Chicago’s district, vacancies “edged down,” and St. Louis noted “more properties on the market in anticipation of lower interest rates.”  Results weren’t universally positive: Minneapolis was weaker noting CRE “remained soft” while San Francisco noted CRE “weakened slightly overall.”  Still, on balance we can see a clear trend across these markets: the shock to CRE appears to have mostly played out, and while that doesn’t mean it’s all sunshine and roses, the market looks likely to firm going forward.

To read the rest of The Closer from 9/4 which also included our analysis on the JOLTS report, mega-cap AI mentions, and the latest job opening data from Indeed, sign up for a Bespoke Institutional trial today.

In today’s “$10,000 in…” post, we’re looking at the silver ETF (SLV) that began trading back in 2006.  Similar to the gold ETF (GLD), SLV allowed investors to gain exposure to silver in traditional brokerage accounts.

So how would an investor have done hypothetically putting $10,000 into the silver ETF (SLV) back in 2006 when it launched?  As shown below, that $10k would be worth a little more than $18,500 today.  You would still not even have a doubling of your money more than 18 years later.

As shown below, instead of buying SLV when it launched in 2006, had you bought the gold ETF (GLD) instead, the $10k would now be worth about $35,400.

Back in the early 2010s, SLV kept up with GLD for a bit, but it has lagged pretty badly for the last ten years.

As always, past performance is no guarantee of future results.