New Jobs Report, Corporate Virtue Signalling, And Bernie's Stop Bezos Tax

Posted: Sep 07, 2018 7:47 AM
New Jobs Report, Corporate Virtue Signalling, And Bernie's Stop Bezos Tax

Thursday was a real sluggish session on the eve of the jobs report that could set the tone for the markets and Federal Reserve for the remainder of the year. 

Market breadth was ugly and more negative than we’ve seen in a few weeks. 

One issue for investors is where to invest when big tech is under pressure. Over the past month, we saw some rotation into other niches of tech, mostly semiconductors. Yesterday, the chip names were crushed after cautionary comments from Micron Technology (MU) on DRAM and NAND pricing. 

There was some buying in software names, and after the bell, Palo Alto Networks (PANW) and Finisar Corporation (FNSR) moved higher on earnings, but these names can’t pick up the slack. However, beyond near-term struggles with market leadership, we are reminded of the underlying strength in the economy with trucker Old Dominion Freight Line (ODFL) moving to a new all-time high.

While anxiety is increasing, major indices are still higher for the year, including the NASDAQ, which is nearing key support at 7,825, where it has to make a stand or be vulnerable to 7,500.

Where’s The Fed?

Coming into the week, the Atlanta Fed modeled a 4.7% growth for the quarter, and it’s possible a strong jobs report could move the needle even higher. 


Of course, there are other issues that could influence the Fed, including the outcome of the trade showdown. Nothing matters more than the broader economy, and the most important economic release in any given month is the jobs report.

The question is: should we root for a jobs report that beats consensus of 190,000 with a strong wage growth, or hope for something meddling – the slow and steady pace that allows the Fed to hold off?  

Yesterday morning, New York Fed Vice Chair John Williams gave a speech that signaled a shift from a hawk to a dove, according to remarks from observers. If that is the case – as it is coupled with comments from Jay Powell - perhaps this Fed will allow Main Street America to get a raise without hitting the brakes on the economy.

So, all eyes are on this morning’s jobs report with the Street already prepared for two more rate hikes this year. I don’t think three rate hikes would be devastating as long as it’s warranted by the data.

Handicapping The Fed ActionConsensus

September 26

25 bps rate hike


November 8

No rate hike



No rate hike


December 19

25 bps rate hike



50 bps rate hike


CME Group


Jerome H. Powell, Board of Governors, Chairman

John C. Williams, New York, Vice Chairman

Thomas I. Barkin, Richmond

Raphael W. Bostic, Atlanta

Lael Brainard, Board of Governors

Loretta J. Mester, Cleveland

Randal K. Quarles, Board of Governors

Alternate Members

James Bullard, St. Louis

Charles L. Evans, Chicago

Esther L. George, Kansas City

Eric Rosengren, Boston

Michael Strine, First Vice President, New York

Corporate virtue-signally is all the rage these days. Will it be enough to turn the anti-capitalism tsunami that’s upsetting the world of politics, and one day in the not-too-distant future, roil and turn our entire political world upside down?

Big business is trying to get in front of the movement by appearing “woke” and concerned. Heck, some have even decided to let anyone use their restrooms.

This week’s activist action:

  • Marketing that takes on the national anthem and respect for the flag
  • Taking on guns and the second amendment
  • Ditching furs
  • Recycling unsold products
  • Removing plastic straws

The #ShreddTheStraw movement seems like low-hanging fruit with United Airlines (UAL) joining rivals American Airlines (AAL) and Alaska Airlines (ALK) by removing plastic straws and stirrers.  The announcement came two days after announcing an increase in baggage fees. 

United Baggage Fees



First Bag



Second Bag





There was a time when airlines couldn’t make a dime until they found the magic of taxing our luggage and flight changes. Last year, the industry took in $7.4 billion in fees associated with bags and changes.

That cash has gone straight to the bottom line, fueling monster gains in the airline stocks, including United, which has seen its shares rally 170% over the past five years versus 69% for the Dow Jones Industrial Average.

No one is against a nice gesture, but there are six items littering the world, even more, including cigarette butts.

The problem is that as companies make these “grand” public gestures, they have been slow to raise wages, and some continue to eliminate jobs while simultaneously buying back their own company stock.  Record corporate profits help millions of Americans, including people not directly invested in the stock market.

However, each tick higher in the stock market and reports of record corporate profits stoke a greater resentment, and corporate virtue-signaling may actually make things worse.

Meanwhile, Bernie Sanders is taking direct aim at one of the coolest billionaires in the country. The “Stop Bezos” tax is aimed at Amazon (AMZN), Walmart (WMT), McDonald’s (MCD), and other big companies with a lot of minimum-wage employees and part-timers. 

A few years ago, this tax would have been called “Stop Walmart.” The world’s richest man can’t escape scrutiny, as he is considered a liberal hero because of his newspaper The Washington Post, and the daily war against President Trump.

In the history of wealth, perhaps Marcus Licinius Crassus was the only person ever to have more money than Bezos. He made a large chunk of that fortune through his fire brigade. Essentially, his firefighters would show up to raging fires and make an offer on the home, leaving the owner the choice of taking a sharply discounted price or watching their abode burn to the ground.

Hence, the term: Fire Sale.