Morgan Stanley har analyseret konsekvensen af den gode forbedring af beskæftigelsen i USA – job-rapporten fra sidste uge. Med en høj vækst i økonomien på 10 pct. burde det fjerne behovet for stimuli, og det ser ud til, at centralbanken er bagefter, dvs. at den ikke er begyndt at skære ned på sine opkøb og dermed lade renten stige. Den situation vil uvægerligt påvirke værdisætningen af aktier, mener Morgan Stanley. Samtidig ligger virksomhedernes indtjening 21 pct. over et tidligere topniveau. Det er alt sammen en usædvanlig kombination. Det indikerer, at nogle aktiekurser er overvurderede, især i nogle dele af forbrugs- og industrisektoren.
Could Upbeat Jobs Data Weigh on Stocks?
Last week, financial market participants were highly focused on one particular event that could impact financial markets for the next several months—the July labor report on Friday. This report is an important input to the Fed’s timing for the removal of monetary accommodation. Meanwhile, it’s getting difficult to argue we still need emergency monetary policy at a time when the U.S. economy is growing close to 10% on a year over year basis. In its defense, the Fed has argued it wants evidence of substantial further progress in the recovery and has explicitly cited full employment before it begins the process of tightening.
Well, Friday’s labor report did not disappoint those looking for substantial further progress. Not only did the U.S. economy generate close to 1 million new jobs in July but we saw a solid participation rate and June’s initial estimate of new jobs was revised higher. Unemployment is now back to 5.4% and average hourly earnings are up 4% year over year against very difficult comparisons.
This level of wage growth is already higher than at any time during the prior economic expansion and suggests labor supply may be lower today than during the last cycle. We’ve discussed in prior podcasts why this may be the case and continue to think inflationary pressures will prove to be more structural rather than transient as the Fed hopes. Higher wages are a big part of that view.
Friday’s price action suggests the markets may agree. More specifically, bonds sold off significantly with 10-year Treasury yields reclaiming its 200-day moving average. Equity markets took their cue from this move in rates with the Russell 2000 small cap index up and the Nasdaq down. Cyclicals had their best day in weeks and growth stocks underperformed. Defensives were in the middle. Our preferred barbell of defensive quality—healthcare and consumer staples—paired with financials outperformed the S&P 500 on Friday and over the course of the week.
The bottom line is that Friday’s labor report suggests the Fed may be behind the curve more than they think and markets could start to notice. Our rates strategists have a 1.8% year-end target for 10-year Treasury yields, and that may prove to be conservative if the Fed is forced to move faster than what the bond market is currently expecting. Higher interest rates will weigh on equity valuations which is in line with our mid-cycle transition call and outlook for stocks this year.
Meanwhile, S&P 500 quarterly earnings are 21% above prior peak and valuations are still near record highs. This is an unusual combination and the rationale has been lower rates than normal at this stage of an economic recovery thanks to a Fed that may be falling too far behind the curve for markets to ignore. All of this suggests valuations look vulnerable.
Finally, our analysis suggests earnings and margins look most unrealistic for consumer discretionary, and industrials given higher costs and taxes we model for next year. Conversely, healthcare, utilities, financials and staples are showing less extreme assumptions on margins relative to history and another reason why we favor a barbell of defensive quality and financials.
