Hashtag PopYourCollar- Goodbye Janet Yellen

January 31, 2018

Mish's Daily

By Mish Schneider

blankI’m sure you have heard the saying, “Try doing it in heels!” How about try horse-riding sidesaddle?

Many successful women not only have to work harder to prove themselves in a man’s world, but they must also look good doing it.

Janet L. Yellen’s leadership of the Federal Reserve came to an end today.

By anyone’s standards, we can all tip our hats to her hugely successful years at the helm.

In four years, we have better inflation numbers (albeit still low), record highs in the stock market, and an unemployment rate of 4.1%.

The economy is humming along.

As the first woman to lead the central bank, Yellen leaves a legacy of being one of the best, if not the best leader the Federal Reserve has ever had.

And, although she wears sensible shoes, she still manages a fashion statement signature to her legacy-the popped-up collar!

Yellen created a dashboard with many different factors to assess the health of the economy.

I like to think that her multi-tasking approach has something to do with her gender. Maybe or maybe not.

Regardless, what she leaves us with is a list of gauges that broaden the analysis for the Fed to use in their decision-making going forward.

Rather than list her entire “dashboard,” instead I look at the wage tracker, average hourly earnings, the employment cost index and the long-term unemployed share.

All underperforming.

Wage tracker is the Atlanta Fed Wage Tracker. It measures the median percent change in hourly wages over 12 months using a 3-month moving average.

Currently, with a 3.8% target, it’s at 3.2%.

Average hourly earnings measure the total compensation paid to workers, divided by hours, year-over-year.

Target is 3.2%. It is currently at 2.5%.

Employment Cost Index is what employers spend on wages and benefits and tracks the same job over time, year-over-year.

Target is 3.36%. Currently, it’s at 2.5%.

Long-term unemployed share measures the number of unemployed who have been out of work for 27 weeks or longer.

Target is 19.1%. It is currently at 22.9%.

Now, granted, I am focused on the weaker links of the dashboard. Many of the gauges are overperforming, such as job openings rate, unemployment rate, and hires rate.

Of the 12 gauges that measure employment-related indicators and wage growth, 7 are back to where they were before 2009.

No other recent Fed chair has seen the market climb as far or as fast as it has under Yellen.

Yet, lethargic inflation (although improved) and dull wage growth, remain the horse’s bridle in Yellen’s legacy.

Now that Jerome Powell takes over, he is inheriting a mixed bag filled with mainly goodies.

I remain steadfast in the opinion that watching the dollar (still declining) and interest rates (on tap to continue to rise) as the key to not only future Fed policy, but also the next market direction.

S&P 500 (SPY) Still like to see 284.50 clear to get more enthusiastic Today’s rally didn’t incite any.

Russell 2000 (IWM) 158.45 is resistance and the place to clear with 154 some support

Dow (DIA) 264 the place to clear. Under 260 will bring more sellers

Nasdaq (QQQ) 170 the place to clear. Look here for some leadership as it’s the only index to hold the fast-moving average under 167.50 some trouble.

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