The Takeaway …
One of the surprises over the last six months has been the reshuffle in job placement in the “knowledge industry.” Artificial intelligence, machine learning, data mining, and robotics were supposed to set their sights primarily on the lower income worker, those who hand us our bacon and egg croissants or make us a cafe mocha. What has been revealed is that jobs requiring the simplest of dexterity like making that cafe mocha or walking dogs are the jobs that may stick around a little longer. Human beings still prefer to engage with other human beings. This is why I love Trader Joe’s. Not an automated cashier in sight.
The knowledge worker may be finding that it takes more than being able to manage the process of drilling, analyzing, packaging, and distributing data. The high salaries paid to the data miners may be a temporary event, kind of like the last gasp of the Titanic before she eventually headed down to the seafloor. In a market-based political economy, the real trade is between the owners of the capital. Everyone else in between is merely there to produce yield within certain costs and production constraints. When those costs and production constraints are modified, so too will be the need for labor, including the worker with three degrees and the ability to create a spreadsheet.
The upside for the “knowledge worker” is that if she plays her cards right, she can go from being a digital version of a tenant farmer and trade her own coin. She has the research ability and given the digital tools that she likely helped develop, she can identify opportunities for trade and actively enter the markets. This is why I shed no tears about engineers being laid off from Facebook, Google, or Twitter. You have the digital skills and the severance pay to become traders.
For the rest of us traders, we should remain on the lookout for those nation-states that can manage for value. Can I as a nation-state manage my human, financial, and natural resources in order to generate demand for my currency? One signal, in my opinion, where demand for labor is shifting, is how well that nation-state incentivizes labor to move into other areas of work including how it subsidizes that shift. The nation-state that does this best will see demand increase for its currency and also an increase in demand for the securities denominated in its currency.
16 May 2023
The Stats ….
30-day Federal Funds Futures and Options (ZQV3): 95.13
Source: CME Group.
Effective Federal Funds Rate: 5.08%
Federal Funds Target Rate: 5.00% to 5.25%
Discount Window Rate: 5.25%
Interest on Reserve Balances: 5.15%
10-year Treasury Note: 3.46%
Source: Board of Governors-Federal Reserve System.
Today’s Definition: Primary Dealer
“A bank or other financial institution that has been approved to trade securities with a national government. A primary dealer in the US may thus underwrite new government debt and act as a market maker for the Federal Reserve.” Investopedia.