Gold gave back overseas gains after the dollar rebounded on news of record jobs openings in June. The dollar index slightly exceeded Friday’s post-NFP high, before dipping back into the range.
JOLTS jobs openings surged to a record high 6.163 million in June and based on the reactions of stocks and the dollar, that number was initially interpreted as being a positive. In reality, the inability of companies to find suitable employees for so many jobs is suggestive of a systemic problem in the labor market.
If there is that much competition for quality employees, it seems wages should be rising rapidly. “Are you really struggling to find workers? If so, the proof for me is you are raising wages. If you are not raising wages, then it just sounds like whining,” said Minneapolis Fed President Neel Kashkari yesterday. If businesses are disinclined to pay-up to lure employees, and immigration is going to be curtailed as well, it seems like this is likely to become a growing headwind for the economy.
Another troubling record was hit in June as well: Outstanding credit card debt in the U.S. reached $1.021 trillion in June. The previous record was set in April 2008, just 5-months before Lehman Brothers collapsed and the global financial crisis reached its zenith.
Not to worry though, everyone who wants a job has a job and if they need another one in order to service their credit card debt, there are more than 6 million job openings to choose from! Americans are more leveraged than ever and I’m afraid this is not going to end well.
And speaking of debt, word from Washington is that the House is unlikely to pass a “clean” debt ceiling bill. “Most Republicans want to do something to lower the trajectory of the debt,” said Rep Representative Tom Cole (R-OK). That’s going to rankle both Democrats and the Trump administration, adding fuel to the already contentious situation in our nation’s capitol.
Congress will only have about 3-weeks to come to terms on some sort of deal to raise the debt ceiling, once they return from the August recess. They will of course raise the debt ceiling. They always do.
However, as the competing camps thrash it out, there may well be some period of market upheaval. With the solvency of our federal government hanging in the balance, gold would benefit from a safe-haven bid.