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If you are unemployed, you probably already know it

| Posted by: Paul Donovan | Tags: Paul Donovan

  • The US employment report today has almost no meaningful significance for the election. If you are out of work, you already know it, and that fact will already be reflected in your intention to vote, which will be captured by current opinion polls (to the extent opinion polls are accurate).
  • The trends in the labor market that have shaped this election have evolved over a quarter of a century. The group left behind by economic prosperity tends to be lower income, lower skilled, and rural. This demographic plays almost no role in financial markets, hence the gulf of incomprehension between investors and populists.
  • The Bank of England has signaled reduced prospects of additional easing, with higher inflation projections. The decision of the High Court that Parliament needs to approve Article 50 EU divorce proceedings impacted markets. Most market participants wanted the UK to remain in the EU, so they may just be over-emphasizing supportive news points.
  • Service sector sentiment comes out of the EU today. No one cares.