Former FDIC Chair Sheila Bair says regulators are allowing banks to artificially boost their capital ratios, arguing that the Fed should suspend dividends instead.
(Bloomberg) -- The U.S. labor market continued to regain ground in July, though at a slower pace, indicating the economic rebound is still making headway despite a surge in coronavirus infections.Payrolls increased by 1.76 million in July, beating estimates for a 1.48 million gain and after a 4.79 million advance in June, according to data Friday from the Labor Department. The unemployment rate fell by more than expected, to 10.2%, while a broader gauge of joblessness also declined to 16.5%.The data point to a labor market that’s on the mend as the economy crawls its way back from the depths of a virus-induced recession. At the same time, the jobless rate remains high and the path forward will be uneven, with higher-frequency indicators turning more negative as businesses use up the last of their federal loans and reduced unemployment benefits pressure consumer spending.Read more: Bloomberg’s TOPLive blog on the jobs report“There is some moderation in the pace of job creation, naturally, as you get past the initial bounce in activity upon reopening,” said Michelle Meyer, head of U.S. economics at Bank of America Corp. “It’s still a long road ahead in terms of fully recovering the labor market, but progress is being made.”U.S. equities dipped amid growing speculation that lawmakers won’t be able to agree on a new round of economic stimulus. The dollar strengthened and the yield on the 10-year Treasury note rose slightly.With lawmakers and administration officials struggling to reach an accord on a new relief package, President Donald Trump said on Thursday he’s likely to sign an order Friday or over the weekend extending the enhanced unemployment benefits and imposing a payroll tax holiday.“The talks are rather stalemated right now,” White House economic advisor Larry Kudlow said on Bloomberg TV after the report. Despite that, Trump plans to use executive orders to get “certain priorities through,” including a payroll tax cut and eviction moratorium, he said. Kudlow continued to call the economic recovery “V-shaped”.Employment remains about 13 million below the pre-pandemic level in February, when the recession officially started, the July data show.Adjusted for the misclassification of unemployed Americans as employed -- an issue that’s plagued the data to varying degrees since March -- the jobless rate would have been about 1 percentage point higher, the Labor Department said.What Bloomberg’s Economists Say“Following an unprecedented swing from severe drop to sharp rebound, the economy is entering more conventional recession dynamics. A prolonged period of elevated unemployment and subdued participation in the labor market will weigh heavily on income growth, personal spending and top-line growth.”\-- Yelena Shulyatyeva, Andrew Husby and Eliza WingerClick here for the full noteThe increase in employment reflected further reopening effects on the leisure and hospitality industry, where payrolls at restaurants jumped by a half million. Retail trade employment also increased, though at a slower pace, with more than 250,000 jobs added. Health care and social assistance payrolls rebounded as doctors’ offices continued to open and as demand for day care increased.At the same time, manufacturing employment rose just 26,000 in July, well below forecasts and held back by declines in payrolls at producers of fabricated metals, machinery and computers and electronic products. Auto makers added more than 39,000 workers.Government PayrollsThe report also showed a 241,000 jump in local government employment, reflecting seasonal adjustments. Federal government employment increased 27,000 in July, boosted by hiring of temporary workers for the Census.Layoffs have been piling up in the past several weeks, particularly in industries most affected by the pandemic. American Airlines Group Inc. advised that 25,000 jobs are at risk when aid expires and United Airlines Holdings Inc. said it would furlough one-third of its pilots. L Brands Inc., which owns Victoria’s Secret, said it would lay off 15% of its workforce.On the other hand, Amazon Inc., Alphabet Inc., Ford Motor Co. and D.R. Horton Inc., are among companies that have been adding, or plan to increase, headcount.Black American unemployment dropped to 14.6%, compared with 9.2% for Whites and Hispanic unemployment of 12.9%, the Labor Department’s jobs report showed. The jobless rate for women, who carry the most responsibility for childcare and homecare duties, fell to 10.5% and for men it dropped to 9.4%.The data showed little change in the number of Americans who lost their jobs permanently in July. The number remains well below that during the financial crisis.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Saturday is Berkshire Hathaway Inc. earnings day, but don’t count on there being many insights from Warren Buffett himself.As Berkshire prepares to report its latest operating results and an update to its even more closely followed cash figure, what investors want most of all is to hear from the Oracle of Omaha. But unlike other companies, Berkshire’s quarterly earnings aren’t that illuminating. They usually entail only a perfunctory statement of the overarching numbers, with no prepared remarks or chance to ask questions.Berkshire’s longstanding tradition of not hosting earnings calls has always made it an outlier in Corporate America — that and the unconventional practice of reporting on weekends. But not having any regular forum to hear from Buffett and Berkshire’s other executives is especially unfortunate during a global pandemic and recession in which shareholders are seeking direction.Buffett has lived through numerous crises, and each time he remained sanguine about America’s economic prospects, while the conglomerate and reputation he built always emerged relatively unscathed. Covid-19 changed that. Shares of Berkshire have fallen 10% this year, while the S&P 500 index is back in positive territory.The last time shareholders heard directly from Buffett, he was in a lonely auditorium sounding dispirited during what should have been Berkshire’s annual investor summit. The company, which in the past has taken advantage of downturns to vacuum up good companies, was instead selling stocks as the virus worsened. Meanwhile, some of the most resilient members of the market have been technology companies and dividend payers — Berkshire is adamantly neither. Buffett did warm to two tech giants in recent years: Apple Inc. and Amazon.com Inc., investments valued at $108 billion and $1.7 billion, respectively. But Buffett was a latecomer to the space, which has boasted a 208% return over the past five years, compared with Berkshire’s 42% gain. Increasingly, observers are questioning whether Buffett has lost his touch. Berkshire’s operating results, which are fairly predictable, have become less relevant to its shareholders over time. That’s not just because its stock-market investments now account for more than half the company’s value. It’s also that so much of the reason for owning Berkshire stock is the prospect of what Buffett does with the company’s cash. Lately, that’s been very little. Berkshire did buy more shares in Bank of America Corp. in recent days, after ditching most of its Goldman Sachs Group Inc. stake, but investors won’t find out what else Berkshire bought and sold until next week. Last month, it agreed to acquire $10 billion of natural-gas assets and associated debt from Dominion Energy Inc., a deal that had strategic logic, but fell well short of the fireworks moment investors have long awaited. (In June, I wrote that Costco Wholesale Corp. should be Buffett’s next takeover target — now that would set off fireworks.) Bill Ackman, the widely followed hedge-fund manager, even exited a position in Berkshire in May after determining Buffett’s reluctance to do deals may hold back its stock price. If not a deal, there’s at least one other announcement investors are bracing for: Buffett stepping down. He’s set to turn 90 years old at the end of the month, which he jokes is “urgent” territory. He has taken notable steps in recent years to line up his succession, such as elevating Greg Abel from the energy side of the business and Ajit Jain from the reinsurance side to vice chairmen. Abel also joined Buffett on stage during the virtual May meeting, as opposed to Charlie Munger, who is 96.Earnings calls can be mundane, especially when executives waste the time rattling off a financial report card that can be found in public filings. But they can also be fascinating opportunities to hear from people with a special vantage point in the broader economy. In the case of Berkshire, it would also be a chance for shareholders to get better acquainted with Abel or whoever is tasked with someday filling Buffett’s shoes, as well as the many other executives that run Berkshire’s dozens of businesses. And plus, how can Buffett retire without ever getting to hear “Nice quarter, guys?”This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Tara Lachapelle is a Bloomberg Opinion columnist covering the business of entertainment and telecommunications, as well as broader deals. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.