US
The private sector added 497,000 jobs in June, payroll-services firm ADP said Thursday. That was well above the forecast from economists. The construction sector added 97,000 jobs in June, the biggest month-over-month increase in at least a decade. Stock indices sold off in response — the market is anticipating more rate hikes (“higher for longer” is the refrain, which we have been saying for a while).
Over in the UK the bond market is pricing in expectations for interest rates to climb to 6.5% by March next year. UK CPI is still running very hot at 8.7% — more needs to be done to get inflation down and we’d be surprised if interest rates only climbed to 6.5% — historically CPI has never decreased without the OCR exceeding it. Big picture — interest rates are going to remain higher for longer; we don’t see any cuts on the horizon. Investors should position themselves accordingly.
Graph of interest – Berkshire vs non-profitable tech (from Greenlight’s recent Sohn presentation)
