Market Week in Review

Can people quitting jobs be a good economic sign?

In this week’s video update:

  • See what flat ECB interest rates mean for consumer consumption and credit expansion.
  • The U.S. Labor Department’s jobs survey shows more people are quitting. Is that a good thing?
  • Emerging markets (EM) may be starting to payoff, potentially benefitting investors’ overweight in EM.

On this week’s update, Rob Cittadini, regional director, consultant relations, interviews Chief Investment Strategist Erik Ristuben to explain why more people quitting their jobs may be a good sign for the economy’s health.

Ristuben begins with an update on the European Central Bank (ECB), which kept interest rates at zero and deposit rates at negative 40 basis points, while also sharing their intention to continue to purchase 80 billion euros worth of instruments every month. The one surprise Ristuben shares is that ECB President Mario Draghi didn’t even discuss extending quantitative easing past April 2017. Draghi again defended current ECB policies as having a positive impact and continued to focus on three things: inflation, increasing consumption and credit expansion.

In U.S. economic news, Ristuben observes continued positive signs: consumer credit rose in August at an almost six percent annualized rate. Ristuben shares that wage pressure has increased and salaries have responded by rising slightly. This positive news was echoed in the U.S. Labor Department’s most recent Jobs Openings and Labor Turnover Survey, known as Jolts. Ristuben notes that, ironically, the number that gives the most comfort is what he calls the “quits,” which is currently at 2.1 percent. According to Ristuben, this means people are so confident in the economy and in the jobs market that they feel safe in quitting their current jobs.

Emerging markets (EM) have also been making some positive movements. The Russell Emerging Markets Index® is up about one percent this week. In the same period, the Russell 1000® dropped by about one percent. Ristuben points toward a few key causes: the U.S. dollar has behaved itself this year, EM earnings have broadly turned positive and the market is finally recognizing that EM equities were undervalued at the beginning of the year. Ristuben believes this points toward emerging markets continuing to outperform for the remainder of 2016.

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