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What I Think I Learned Last Week #2

US payroll numbers were solid across the board with 209,000 jobs created in July above expectations of 180,000. The 4.3% unemployment rate was in line with what was expected and the labor participation rate continued to grind ever-so-slowly higher to 62.9%. Even average hourly earnings came in solid at 0.3%.

Canada joined the job party as its unemployment dropped to its lowest level since October 2008.

In the US, we have FANG: Facebook, Amazon, Netflex, Google. In Mexico, they have the FAB: FEMSA, American Movil, and Banorte, which have accounted for 48% of the Mexican index move this year. I love FAB FANGs.

Now those are some FAB FANGS!

And they call this an Emerging Market?: Mexico’s government posted a primary budget surplus of 2.0% of GDP in the first half of 2017, its first positive first half year figure in nine years. Mexico’s debt to GDP ratio is at 43.9%. Meanwhile developed countries struggle to keep their debt ratios below 100%.

Beating the estimates for 0.2% growth, Mexico’s economy posted 0.6% GDP growth, marking the 16th straight quarter of sequential growth. Estimates for Mexico’s growth will have to go up.

Also posting 0.6% GDP growth for the second quarter was the Eurozone. This marked the 17th  consecutive quarter of growth. Unemployment is at a nine-year low of 9.1%.

Dollar dumped: US Dollar hits 31 month low against the euro as it hit $1.1868 during the week. The jobs number helped the dollar regain a little composure at the end of the week.

India’s central bank reduced its interest rate by 25bps to 6%. A good monsoon season has kept food prices low. With consumer price inflation of 1.5% well below the target of 4%, it allows the central bank to focus on growth via lower rates.

Alan Greenspan, the greatest of all-time central bank bubble-blowers due to his role in creating the internet bubble of 2000 and the mortgage crisis of 2007, says there is no bubble in stocks. However, he did say « We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.”

Bond Market Bubble? Greenspan might be on to something. This week Iraq issued its first independent bond sale in more than a decade. The billion dollar offering was more than 6 times oversubscribed. This follows last week’s €3 billion offering from perpetually bailed out Greece and last month’s $2.75 billon dollar offering of 100 year bonds from that paragon of sovereign virtue, Argentina.

Wall Street Journal reports that credit-card losses are rising in the US as more consumers fall behind on their bills, ending a six-year long streak of declining write-offs for card issuers.

The Institute for Supply Management’s US manufacturing index slowed to 56.3 in July, down from the previous month’s 57.8 and below the expected 56.4. Meanwhile, China’s version of this index also slowed more than expected to 51.6.

Under Armour = Under Performer. The once high-flying sportswear maker tumbled again after reporting its second straight quarter of losses and lowering guidance.

Former FBI Director James Comey is writing a book on the topic of ethical leadership. He is being paid $2 million, which works out to be a rate of $1489 for each of the 1343 days he was FBI Director. At that rate, Anthony Scaramucci would be paid $14,890 for his book. I doubt his book topic would be ethical leadership.

Robots taking over the world (1): CEO at Credit Suisse, Tidjane Thiam, anticipates putting 150 robots into production this year. With 58 robots already in production, he expects to get to 150 by the end of the year. He said “In operations, a robot manages five times more transactions than a human being.” And they do not need big bonuses.

Robots taking over the world (2): JPMorgan has developed an artificial intelligence robot to execute trades at maximum speed at the best price. By using machine learning from billions of past trades, the robot will decide how to sell big equity positions without moving the market.

Out of the mouth of babes, even if they are robots taking over the world (3): Chinese social media giant Tencent had a bot called BabyQ mysteriously disappear after it started truthfully answering questions such as “Do you love the Communist party?” with a simple “No”. Time to start a « Free BabyQ » campaign.

And that’s what I think I learned last week.