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Got to start things off with this excellent graphic via the Washington Post 👇👇


It's great news. Wage growth has been sluggish for years and was just showing signs of life pre-pandemic.

Now we're seeing wages increase at the lower end, which should push wages up across-the-board.

However, the wage gains are not keeping pace with inflation right now and there are two big trends to monitor:

A) Is there a genuine shift in pricing power for workers?

B) Do the increasing wages lead to greater automation?

It's too soon to answer either of these questions for sure, although there has definitely been a slight rethink for companies as workers have been hard to come by more demanding with working from home than before.

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What's in an index anyway? More than you might think!  

And this superb thread will take you through some of the misconceptions...

Take the differences between the S&P & the Dow...

Via 👇👇👇

When viewing market index performance numbers, it is important to remember the difference between capitalization-weighted indices such as the S&P 500 Index (SPX) and price-weighted indices like the Dow Jones Industrial Average (DJIA).
While a cap-weighted index derives its performance from the movement of the underlying holdings multiplied by their respective allocations as determined by market cap, the Dow Jones Industrial Average is a price-weighted index, which simply means that stocks with the highest share price receive the greatest weighting in the index.

That's one of the simpler ones.

Now, you might be wondering why anyone should care anyway...

Number go up or number go down, K.I.S.S!!

There's definitely a balance to be found, but if you don't know how the impact of Apple's stock split was completely different on the S&P (no impact) vs the Dow, then you're at an information disadvantage.

The Dow is deeply flawed and it baffles me that people even trade it.

For more read this

Dipping a little deeper, you might have seen the Baltic Dry Index quoted as a benchmark for the price of moving goods by sea.

However, BIMCO (Baltic & International Maritime Council) had this to say 👇👇👇

There's loads of good info in the thread, so I won't cover them all.

Let's round off the preview with my pet hate: the DXY 👇👇👇

The DXY is LITERALLY an inverted EURUSD chart. Proof 👇👇👇

MAYBE (and it's just a theory), that's because the DXY is 58% weighted to the euro.

It's just not a good proxy for the dollar, as the dollar behaves differently against different currency 'groups'.

You could make the case that it's a good proxy for how the dollar trades against low yielders such as the euro and the yen, but that's just pure laziness...

Why would anyone need an index to save them the trouble of looking at two charts instead of one?

What's the lesson?

Don't trust an index unless you know what's in it!

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Loads of Fed taper talk lately, and it certainly looks like the end of August or September will see some strong hints, and perhaps even a decision on tapering.

Dallas Fed president Kaplan has been one of the most hawkish members and he gave some clues in this Odd Lots interview 👇👇👇

Dallas Fed President Rob Kaplan on the Economy and Monetary Policy Right Now
How one powerful policymaker sees the current situation

He argued that the efficacy of QE purchases is decreasing and wants to begin a gradual taper soon, ideally across 8 months ($15bn taper per month).

While Kaplan worries that QE exacerbates inequality & incentivises risk-taking, he took care to differentiate QE from low rates, and doesn't see rate hikes discussions until well into 2022.

For anyone who thinks that the Fed will rush to hike as soon as QE ends, he made the argument that an earlier taper actually allows them to be more patient on hikes.

It's an important distinction, and one that market commentators frequently overlook...