After analyzing a “crazy week” Jan. 3-7 in the markets and covering the latest batch of macro readings, Jeff Mayberry and Samuel Lau dig into two indicators to gauge the future direction of the cost of labor and ultimately that of inflation: the Atlanta Fed Wage Growth Tracker and the Employment Cost Index (23:23). Both these indicators run on data gathered by the Bureau of Labor Statistics. A key advantage of the Atlanta Fed measure is that it relies on a stable sample set of surveyed workers. Thus, it does not suffer from the statistical noise created by changing sample sets that afflicts Average Hourly Earnings data. In their summary of the market week (1:24), Jeff and Sam survey negative returns across a broad swath of markets, including stocks, high yield bonds, investment grade bonds and Bitcoin. Two bright spots: bank loans, which are floating rate, and the commodities complex, led by energy.
Topping the week’s macro news events was the release of the minutes of the Dec. 15 meeting of the Federal Open Market Committee (14:27). While Jeff and Sam found no surprises in the minutes, the market sold off on the news of a Fed apparently turning more hawkish with respect to the pace of ending asset purchases (quantitative tightening) and timing of initial hikes of the official short-term rates in 2022, which could begin as early as March. Looking ahead to the week of Jan. 10 (34:01), Sam and Jeff will be on the lookout for the Consumer Price Index for December, which comes out on Wednesday Jan. 12; the Producer Price Index, Thursday; and retail sales, Friday.
Mr. Mayberry joined DoubleLine in 2009. He is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives‐based and multi‐asset strategies. Mr. Mayberry is a Strategist on the Fixed Income Asset Allocation (FIAA) committee and a contributing member on our Global Asset Allocation and Macro committees. He also co-hosts DoubleLine’s weekly Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) podcast. Prior to DoubleLine, Mr. Mayberry was a Senior Vice President at TCW for nine years within the Mortgage Group, where he specialized in portfolio and fund monitoring and analytics. He holds a B.S. in Engineering from Harvey Mudd College and an M.S. in Financial Engineering from the Peter F. Drucker Graduate School of Management at Claremont Graduate University.
Mr. Lau joined DoubleLine in 2009. He is a Strategist on the Fixed Income Asset Allocation (FIAA) Committee and a contributing member on the Global Asset Allocation and Macro committees. Mr. Lau is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives-based and multi-asset strategies, including DoubleLine's Shiller Enhanced CAPE®, Shiller Enhanced International CAPE®, Real Estate and Income, and Multi-Asset Trend strategies. He also co-hosts the Sherman Show (Twitter @ShermanShowPod, ShermanShow@Doubleline.com) and Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) podcasts. Prior to DoubleLine, Mr. Lau was a Vice President at TCW where he worked under Jeffrey Gundlach as a Research Analyst in the Mortgage Group. He holds a B.S. from the University of Wisconsin, Madison and an MBA from the Marshall School of Business at the University of Southern California.