• Bull.




Below is a chart and brief excerpt from today’s Market Situation Report written by Tier 1 Alpha. If you’re interested in learning more about the Hedgeye-Tier 1 Alpha partnership, there’s more information here.

Chairman Powell will bravely try to save Halloween and keep people employed simultaneously. The price of sweets and sugar is up 28% since 2019, running 10% higher than broader CPI over the same period. Dear readers, we have an existential Halloween crisis!

Another Chart to Keep Powell Flying High as a Hawk - 11.1

Halloween snark to one side; what you are looking at is a chart that presents two metrics over time from 2004 to 2024 – the Employment Cost Index or ECI and the unemployment rate. And while the BLS data is lagging and flawed in many ways, it’s charts like these that keep Chair Powell steadfast to flying high as a hawk. Remember the Fed’s dual mandate, price stability, and full employment. (And at times prioritizing trading their own PA).

The Employment Cost Index (ECI) tracks the changes in labor costs for U.S. businesses, encompassing wages, salaries and benefits. This index provides a lens into wage inflation, encompassing both potential wage increases and the associated costs of benefits. Yet, a significant challenge that hasn't garnered adequate attention is on the horizon. While wage inflation has picked up over the past three years, we're concurrently witnessing an insurance crunch. Premiums for homeowners, auto and health insurance have gone Saturn V to the upside.

In 2023, the average annual health insurance premiums are $8,435 for individual coverage and $23,968 for family plans. These premiums rose by 7% in 2023 alone. Moreover, the average family premium surged by 22% since 2018 and a 47% since 2013. While there are variables like company size and demographics, the overarching trend remains consistent. Simply put, for an individual with coverage working 160 hours a month, the cost equates to $4.54 per hour. When juxtaposed with a minimum wage of $7.25, health coverage bolsters that wage cost by 62%. Assumptions aside, the Federal Reserve's challenge extends beyond moderating labor costs; it's also about managing the soaring benefits expenses.

Learn more about the Market Situation Report written by Tier 1 Alpha.

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Another Chart to Keep Powell Flying High as a Hawk - large The Pitch Banner 11.1.2023