Daily Commentary

MarketMinder’s View: As always, we are politically agnostic, preferring no party nor any politician and assessing developments for their potential market implications only. Earlier this week, UK Prime Minister Andy Burnham announced his plan to amend the formula for calculating state pension payment increases, known as the “triple lock” because it raises payments every April by whichever is highest of the prior summer’s average wage growth, the prior September’s inflation rate or 2.5%. Burnham’s plan would swap the summertime wage growth rate for a (currently unspecified) longer-term wage growth rate, with the aim of reducing state pension growth in order to fund a new social care system. Labour’s 2024 manifesto pledged to preserve the triple lock, and Burnham stated change wouldn’t happen until 2030, leading everyone to presume Labour would fight the next election (due by 2029) on this issue instead of pushing it through this Parliament. But today, his office clarified the legislation will come during this Parliament because it amends the triple lock rather than ending it, keeping with the manifesto commitment. That is a political issue, which isn’t our interest here. Rather, look at this from markets’ standpoint and you will see a couple of things. One, there is a lot of fear about the potential for retirees to endure smaller payment increases and hamstring their spending, which probably exceeds the reality of any pinch. A “double lock” will still keep payments growing at a decent clip and preserves the 2.5% floor, and broader consumer spending generally doesn’t depend on the amount of state pension increases. Two, if this is indeed how Burnham funds his spending plans instead of the widely feared big tax hikes, that would likely also present modest relief for stocks.

MarketMinder’s View: Despite the big numbers being thrown around here, not much has changed on the employment front. Yes, July and August nonfarm payrolls got revised down by a combined -60,000, leaving July with a small contraction and August with slower-than-estimated growth. And September’s small gain of just 29,000 nonfarm payrolls is rather teensy. But step back and look at the longer-term trend. This is still the same low-hire, low-fire dominating headlines for two-plus years. Industry-level trends are the same, too, with healthcare leading hiring. Job losses in other sectors aren’t new, either, but rather late confirmation of many cost-cut plans announced in recent months. Stocks look forward, not backward, and are busy pricing how growth and corporate earnings over the next 3 – 30 months unfold relative to expectations, not how many positions companies filled over the summer.

MarketMinder’s View: Here is some news you can use if you have a young’un or if you are a grandparent (or aunt, uncle, godparent, family friend) of a kid who won’t turn 18 before this calendar year ends. All kiddos are eligible for the titular accounts, which are savings and investment vehicles aiming to give the youngest Americans little nest eggs while teaching the magic of compound growth and regular contributions. But so far, only 10% of eligible children had accounts, so the Treasury has now auto-enrolled every eligible American kid—about 60 million of them. Those born last year or this year will already be eligible for $1,000 in government seed money, while those born from 2016 – 2024 may receive $250 from a massive philanthropic donation. But there are some steps parents will need to take to get everything corralled, and this piece has the details. “The Treasury assigned Bank of New York Mellon as the trustee to handle the accounts until a parent or guardian claims it and assumes control. Parents can do that through the Trump account mobile app. During that process, parents or guardians must verify their identity, confirm their relationship to the child, review their child’s information and accept the account terms, a Treasury spokesman said.” They will also need to choose to receive the seed money during this process. So if you have eligible kids, get the app and go to town. And please do what you can to ensure all parents of kids in your life are up to speed, too.