US jobs data

Just a gargantuan jobs and wages data outcome from Friday in the US.

Key one is the acceleration in AHE mom (average hourly earnings, top right graph below) and means the “dovish interpretation” of Powell from a fortnight ago is unjustified, by the market.

The odds of a policy error (error here defined by one in which the Fed tightens “too hard”, which is a cruel benchmark because no-one has any idea how high the cash rate needs to go, at present, to engineer a soft landing) continue to rise, which in the short to medium run is a threat to shares.

We placed a small trade to lighten some of our Australian equity exposures (which has a very high risk beta, both the shares and currency) and will likely continue to reduce into relative strength.

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