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  • Monday's Scoop: Complacent 🌤️

Monday's Scoop: Complacent 🌤️

Rio Tinto solves sustainable steel & Virgin Galactic makes it to space

 
Hey friend - welcome back to Monday.
Insiders, catch up with our Weekly Scoop. If you’re not an Insider, refer, open, vote, or upgrade to unlock your status!
Here’s what you need to know today to inform your work, spending, and investments…

 

🌎 Big picture

  1. Wages soared in May.

  2. Hiring surged last month, and it may be thanks to higher immigration.

  3. Americans are starting to feel better about the economy.

How are you feeling about the economy?

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 💼 Work trends

Unemployment Rate: 4.0%
Still near the lowest rate in 50+ years

Hiring surged last month, and it may be thanks to higher immigration. The Labor Department reported employers added 272,000 more workers last month, way more than economists expected amid a slowing economy. Economists consider around 150,000 new jobs per month to be normal. The unemployment rate rose slightly to 4.0%, the highest level in over two years, but not far from record lows. The increase in the unemployment rate was driven by a decrease in the labor force participation rate to 62.5%. Rising unemployment and lower workforce participation are negative trends that conflict with surging hiring. The divergence may be caused by an influx in immigration that hasn’t been captured by the Household Survey, which is responsible for the unemployment and participation rates and uses adjusted 2020 census data to scale its numbers. The Establishment Survey, responsible for the hiring numbers, tracks direct payrolls and verifies numbers annually with tax filings. It may be picking up a surge in immigration. Overall, hiring in May was more widespread across industries than in over a year.

Wages surged in May, hopefully gaining ground on the rising cost of living. The Labor Department reported that average hourly earnings rose 0.4% in May after only 0.2% growth in April. Wages have climbed 4.1% over the past twelve months. American income levels still have some catching up to do with the rising cost of living of the past few years. The increased wage growth is a welcome sign for workers, but economists worry that rising incomes could lead to more inflation. Policymakers have restricted spending and business activity with higher borrowing costs in an effort to stop the economy from overheating and inflating prices. Wages rising more than 2-3% per year can signify that the demand for workers exceeds the supply, and that imbalance can be indicative of an overheating economy.

 

 🤓 Inside Scoop: How does the unemployment rate relate to the labor force participation rate?

The unemployment rate and the labor force participation rate are two key metrics policymakers track to understand the state of the jobs market. The labor force is defined as everyone who is employed or unemployed. The participation rate is that number divided by the whole working-age population.

The most important part to understand is that the government only defines the unemployed as those who have actively looked for a job in the past four weeks. The unemployment rate does not track those who have stopped looking for a job, like discouraged workers or people who stopped working to care for their children or elderly parents.

Comparing these two measures can provide more insight into the economy. A declining unemployment rate paired with a declining participation rate might indicate structural problems keeping people from working. Both metrics declining is not typically a good sign.

 👜 Cost of living trends

Inflation Rate: +3.4% (YoY), +0.3% (MoM)
Policymakers aim for 2% YoY inflation (April CPI)

People seem to be feeling a little better about the economy. The New York Federal Reserve’s May Survey of Consumer Expectations revealed increased optimism across the economy. People aren’t as worried about inflation, expecting the cost of living to rise only 3.2% over the next year, lower than the last reading. Inflation expectations are important because they can be self-fulfilling, as businesses raise prices in anticipation of higher costs and consumers spend more to get ahead of rising price tags. Workers also reported a lower expected probability of losing their jobs in the next 12 months. People don’t expect to spend more but feel more optimistic about the potential for higher income and better investment returns. Consumer spending powers the economy, so it’s crucial to track sentiment.

 

 📈 Investment trends

The Market: ⬆️ +0.3%
S&P 500: 5,360.79
1Mo: +3% | 1Yr: +24% | 5Yr: +86%

The market drifted higher on Monday as investors hoped that recent data showing more robust hiring, improving wages, and greater optimism will help the economy grow without overheating and causing more inflation. Investors await the May inflation report and Federal Reserve policy decision on Wednesday.

 

🏭 Companies worth watching

👍👎 APPROVAL RATINGS 

Act like a boardmember and judge how companies behave. Engaging helps build your financial confidence and hold corporations accountable. (+2pts)

Virgin Galactic

Visiting Astronauts

Virgin Galactic completed its second successful tourist flight to the edge of space, soaring 55 miles high for about an hour at over $250,000 per ticket.

The space tourism company made a comeback this year after several production disruptions.

Tell Virgin Galactic's CEO how you feel

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 💭 Broader perspectives… (+2pts)

Would you board a rocket to space today if offered (for free)?

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Adobe

Building Trust

Adobe promised to update its terms of service to reassure customers that their designs and creations will not be used to train Adobe's artificial intelligence tools after immense backlash toward its vague terms.

The software giant says its AI has only been trained on Adobe-owned, licensed, and public content.

Tell Adobe's CEO how you feel

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Snowflake

Accountability Debate

Snowflake faces data security concerns as increasing corporate clients, from Ticketmaster to LendingTree, suffer data breaches due to compromised login credentials from malware attacks.

The cloud services provider claims it was not breached despite acknowledging unauthorized access to limited accounts without multi-factor authentication.

Tell Snowflake's CEO how you feel

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Abbott Labs

Wider Access

Abbott gained regulatory clearance for two new over-the-counter continuous glucose monitors - one for health-conscious users monitoring metabolism and another for those with Type 2 diabetics who don't rely on insulin.

The health giant's new glucose monitors aim to improve accessibility and insight into metabolic health.

Tell Abbott's CEO how you feel

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Rio Tinto

Bio-Iron Breakthrough

Rio Tinto will invest $143M to build a sustainable steelmaking factory that uses renewable energy, biomass, and microwaves to create steel using 70% less electricity and emitting 95% less carbon pollution than alternatives.

The metal and mining giant aims to reduce steelmaking emissions to reach net zero by 2050.

Tell Rio Tinto's CEO how you feel

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