It’s a bull market

US hourly wages continue to grow at a subdued 2.5% per year. The Fed will normally only move to tighten monetary policy when annual growth exceeds 3.0%.

Hourly Wage Growth

Currency in circulation, growing at a healthy annual rate of 7.3%, shows the Fed stance remains supportive.

Currency in Circulation

Turning to corporations (excluding the financial sector), employee compensation remains low relative to net value added (below 70%), while corporate profits are high at 12%. Economic contractions are normally preceded by rising employee compensation and falling profits as in 1999/2000.

Employee Compensation & Corporate Profits Relative to Net Value Added

The rising Freight Services Index indicates that economic activity is strong.

Freight Services Index

While a low corporate bond spread — lowest investment-grade (Baa) minus the equivalent Treasury yield — indicates the absence of stress in financial markets.

Corporate Bond Spreads

What more can I say: It’s a bull market.

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