DC Lite #500

1. Unemployment Rate. "It continues to be a ‘low fire, low hire’ labour market, with the rise in unemployment driven entirely by new and re-entrants to the labour force, as opposed to temporary or permanent layoffs. That's a big difference compared to the norm during recessions."

2. Wage growth. "Wage growth slowed for all private workers but held strong if you exclude managers and just look at production and non-supervisory wages."

3. Financial conditions. "If the market decides rates hikes are appropriate for the US economy late next year, and a captive Fed is unable to deliver them, then the risk is that long-end yields will do the work for the Fed in delivering the required financial conditions tightening ... A transition from high-growth / easy-policy to high-growth / tight-policy (via FCI, not policy rates) could be challenging for markets. The tails are getting fatter."

4. Fed chair. Betting market odds for the next Fed chair continue to evolve: Hassett retook the lead while Christopher Waller gained ground after the WSJ reported he would be interviewed by Trump on Wednesday.

5. SPX earnings growth. According to Jefferies, 2026 EPS estimates have climbed "to $310 per share, implying a 13% year-over-year earnings growth. The figure is expected to rise to 14% in 2027. In the past 35 years, there have only been two other instances when the S&P 500 posted double-digit earnings growth for three straight years: in 1993-1995 and 2003—2005."

ICYMI