Tuesday, September 15, 2015

Fed hike: Sooner, faster

"Life is pleasant. Death is peaceful. It's the transition that's troublesome."
- Isaac Asimov (American, 1920-1992)
Word for the day
Genesis (n)
An origin, creation, or beginning.
(Source: Dictionary.com)
Malice towards none
After KM Birla, now Cyrus Poonawala buys an expensive (Rs725cr) property to live.
What about investing in Make in India?
Ain't it more Italian or Greek than American?

Fed hike: Sooner, faster

David Rosenberg, chief economist and strategist at Gluskin Sheff, highlights, in one of his recent reports, that the US labor market is on the verge of becoming a sellers' market.
Rosenberg writes—
"The ratio of the unemployed to the level of job openings has decline to 1.43x, far below the near-7x peak at the worst part of the Great Recession and a place we have been at just two other times before (since the JOLTS data were first published.)
This may well be the most accurate measure of just how tight the labor market is - we are heading to an environment where we are down to one person competing for one job.
The sands have shifted towards this being a sellers' market for labour.
Wage acceleration either starts real soon or we can simply take the laws of supply and demand and throw them in the dustbin."
This essentially means two things:
(a)   The wages in US are likely to begin their northward journey soon; and
(b)   the US Fed may begin to hike soon and complete the task faster than most are expecting.
 
In an unrelated but still pertinent move the New York State has decided to raise minimum wage for fast-food workers to US$15. Political observers expect the move to reverberate in other States also.
The positive demand-supply gap in US labor market combined with (a) stronger USD; and (b) pressure on export prices due slower European and Chinese demand may be a good news for Indian technology services outsourcing companies.
Regardless of Trump's rhetoric, we may actually see relaxation in H1b quotas in next few years.
Good times may be round the corner for India IT, ITeS, and CRAMS companies. Just watch out for more competitive devaluation of CNY.
 
 

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