fbpx

New on XETRA: WTI Oil Gold Mercedes Germany 40 Linde Siemens Volkswagen

Learn More

ARKs, Alibaba & 0% Fee -3x NIO on Xetra

Learn More

Education Series: Single-Stock ETPs

Introducing Our Single-Stock ETPs
Short and Leveraged ETPs Explained
Rebalancing and Compounding
A Built-in Airbag to Limit Losses
ETPs vs Leveraged Alternatives
Six Things To Know About Our ETPs

Mixed Signals: US Wages Belie End of Recession

  • MARKET INSIGHTS

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Websim is the retail division of Intermonte, the primary intermediary of the Italian stock exchange for institutional investors. Leverage Shares often features in its speculative analysis based on macros/fundamentals. However, the information is published in Italian. To provide better information for our non-Italian investors, we bring to you a quick translation of the analysis they present to Italian retail investors. To ensure rapid delivery, text in the charts will not be translated. The views expressed here are of Websim. Leverage Shares in no way endorses these views. If you are unsure about the suitability of an investment, please seek financial advice. View the original at

Last week, it was confirmed that the US Consumer Price Index (CPI) rose 8.3% year-on-year. Given that July’s CPI of 8.5% was a little less than the previous month’s 9.1%, a continued downtrend would have been an indicator that US recession was showing signs of recovery. August’s number – in slight excess of forecasted estimates – this indicator doesn’t hold water. Since the announcement, the S&P 500 dropped 4.32% over the day.

In Bank of America’s Fund Manager Survey edition in July (which was discussed in an earlier article), it was estimated by the survey organizer that CPI month-on-month pivots has no means for reducing inflation rises by the end of the year.

One means of combating inflation would be for the US Federal Reserve raising rates to mop up the money supply. However, as per estimations made of CPI changes versus that in the Fed Rate, it would be around a year until CPI changes stabilize.

Now, an earlier article had indicated how data suggests that both the “working-class” population segment (i.e. predominantly those without a college degree) and the “middle-class” segment (i.e. predominantly those with a college degree) in the U.S. had been driven to consider debt as a primary spend versus consumption. This affects growth outlook in the U.S. economy that is already battling inflation woes. However, despite over a year of steady inflationary pressure, U.S. authorities have been unwilling to call the current period a recession. The primary reason for this is the U.S. job market: data indicates that unemployment is low, thus rationalizing their argument that there is no potential recession.

On a purely quantitative basis, this argument holds water. However, on a qualitative basis, this argument has some worrying trends to contend with. The first one is trends in CEO pay vs average pay. As per a study published by the Economic Policy Institute (EPI) in August 2021, CEO pay in the US has been skyrocketing relative to that of average worker pay (which includes both “working-class” and “middle-class” segments) since the mid-nineties.

In total terms, from 1978 to 2020, “realized” CEO compensation increased 1,322.2% — more than 60% faster than stock market growth (depending on the market index used) and substantially faster than the slow 18.0% growth in the typical worker’s compensation over the same period. From a relatively humble ratio of a little over 30X in the late seventies, this gap was 351X by the end of 2020. Also, interestingly, big pay gap highs have nearly always been followed by an economic downturn in the 21st century, following which the pay gap rationalizes to a degree.

The same study by EPI also examined evidence to conclude that CEO compensation grew much faster than the earnings of the top 0.1% of wage earners in the country, thus putting paid to arguments in some circles that increasing CEO compensation also implies a commensurate increase in pay of “productive workers”. For instance, data showed top 0.1% annual earnings growing 341% from 1978 to 2019, which is only a third as much as the 1,096% growth of our measure of realized CEO compensation for the same period. As of 2020, the gap between CEO pay gap was at a near-8 year high and trending further upwards.

In another study published in May this year that examined historical data, the EPI arrived at an interesting conclusion: low wage earners are less likely to leave an employer and seek higher wages elsewhere.

When this tendency was analyzed in residual terms (i.e. one that accounts for living costs across the board), it becomes clearer that low-wage earners and very high wage earners are less likely to while those in the “middle class” are more likely to. While very high wage earners are likely to have an inherent ownership interest, low wage earners typically used to find no significant upgrades in wages.

Given the middle class’ relative proximity to the top 0.1% wage earners and CEO – at least in terms of working relationships – this implies that the wage gap affects the middle class on a qualitative basis far more. However, in an inflationary setting, “labour elasticity”, i.e. an ability to jump from one employer to another, stiffens considerably. This leads to a phenomenon known as “non-engagement” wherein an employee does the bare minimum in order to remain employed and have no psychological connection to their workplace as opposed to those striving (“engaging”) to make personal gains via achievements. “Disengagement”, on the other hand, implies that employees feel their needs are not met.

Earlier this month, survey specialist Gallup published the results of a survey which showed an interesting phenomenon: while average disengagement has largely stabilized, average engagement has been dropping for nearly two years now.

During Q2 2022, the proportion of “engaged” workers remained at 32% while the proportion of “actively disengaged” increased to 18%. The ratio of engaged to actively disengaged employees is now 1.8 to 1, the lowest in almost 10 years. Managers, i.e. those more likely to be “middle class”, experienced the greatest drop in engagement. This means that 50% of the U.S. workforce is “not engaged”.

Given the trends in “engagement” loss, productivity now becomes incumbent on fewer and fewer people than ever before. The intertwining factors are thus: with rising inflation affecting input costs and high CEO/top 0.1% wage earners pay comes pressure on maintaining bottom lines. Maintaining wages along “other ranks” becomes the go-to option in many cases.

Interestingly, the US Federal Reserve’s Wage Growth tracker confirms this trend and adds a lot of interesting subtext to make inferences from.

Firstly, college degree holders – the “middle class” hasn’t experienced as great an increase in wages as “hourly wage” earners. This shows that, despite a lesser elasticity being imputed, the “working class” is both keenly affected by inflation and demanding a redressal in their situation. Secondly, “job stayers” – generally long-term “active engagers” – have seen the least wage increase while “job switchers” – generally “non-engaged” workers – have seen the highest increase in wages.

Qualitatively, “active engagers” tend to be have a positive impact on company profitability. Sacrificing them on the altar of expediency, if true, is a dire indicator for the outlook. There’s also another perspective: today’s “job switcher” is tomorrow’s “job stayer”. If “job stayers'” wages continue to flounder, increasing “active engagers” and stabilizing strong contributors will be increasingly difficult for companies. In this event, maintaining a positive outlook on corporate growth has yet another impediment.

Exchange-Traded Products (ETPs) offer substantial potential to gain magnified exposure with potential losses limited to only the invested amount and no further. Learn more about Exchange Traded Products providing exposure on either the upside or the downside to the S&P 500 as well as the upside or the downside to the Nasdaq-100.

Your capital is at risk if you invest. You could lose all your investment. Please see the full risk warning here.

Back to Market Insights

Education Series: Single-Stock ETPs

Introducing Our Single-Stock ETPs
Short and Leveraged ETPs Explained
Rebalancing and Compounding
A Built-in Airbag to Limit Losses
ETPs vs Leveraged Alternatives
Six Things To Know About Our ETPs

Authored by

Category: MARKET INSIGHTS

Learn more

Share this:

Related Posts

  • MARKET INSIGHTS

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
  • MARKET INSIGHTS

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Violeta-540x540-1.jpg
Violeta Todorova
  • MARKET INSIGHTS

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Markets Cautious Ahead of Inflation Data icon

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
  • MARKET INSIGHTS
Read
Markets Cautious Ahead of Inflation Data icon

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Read
  • MARKET INSIGHTS

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
  • MARKET INSIGHTS

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
Violeta-540x540-1.jpg
Violeta Todorova
  • MARKET INSIGHTS

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
NVIDIA

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
  • MARKET INSIGHTS
Read
NVIDIA

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
Read
  • MARKET INSIGHTS

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
  • MARKET INSIGHTS

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
Violeta-540x540-1.jpg
Violeta Todorova
  • MARKET INSIGHTS

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
DAX 40 Near 15-Month High Icon

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
  • MARKET INSIGHTS
Read
DAX 40 Near 15-Month High Icon

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
Read
  • MARKET INSIGHTS

AI Bubble Props Up Market and Big Tech

Recent price spikes in AI stocks help mask overall market decline as recession nears.
  • MARKET INSIGHTS

AI Bubble Props Up Market and Big Tech

Recent price spikes in AI stocks help mask overall market decline as recession nears.
Violeta-540x540-1.jpg
Sandeep Rao
  • MARKET INSIGHTS

AI Bubble Props Up Market and Big Tech

Recent price spikes in AI stocks help mask overall market decline as recession nears.
AI Icon

AI Bubble Props Up Market and Big Tech

Recent price spikes in AI stocks help mask overall market decline as recession nears.
  • MARKET INSIGHTS
Read
AI Icon

AI Bubble Props Up Market and Big Tech

Recent price spikes in AI stocks help mask overall market decline as recession nears.
Read
  • MARKET INSIGHTS

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
  • MARKET INSIGHTS

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Violeta-540x540-1.jpg
Violeta Todorova
  • MARKET INSIGHTS

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Markets Cautious Ahead of Inflation Data icon

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
  • MARKET INSIGHTS
Read
Markets Cautious Ahead of Inflation Data icon

Debt-Ceiling Deal Lifts Markets

As the U.S. farewells the debt-ceiling crisis, global markets have received a boost.
Read
  • MARKET INSIGHTS

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
  • MARKET INSIGHTS

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
Violeta-540x540-1.jpg
Violeta Todorova
  • MARKET INSIGHTS

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
NVIDIA

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
  • MARKET INSIGHTS
Read
NVIDIA

Nvidia Stock is Strongly Overbought

The rally has fizzled out as the stock is overbought and ripe for a retreat.
Read
  • MARKET INSIGHTS

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
  • MARKET INSIGHTS

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
Violeta-540x540-1.jpg
Violeta Todorova
  • MARKET INSIGHTS

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
DAX 40 Near 15-Month High Icon

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
  • MARKET INSIGHTS
Read
DAX 40 Near 15-Month High Icon

DAX Hovers Near All-Time High

The DAX posted a fresh all-time high in May despite the challenging global macro backdrop.
Read
  • EDUCATION

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
  • EDUCATION

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
Violeta-540x540-1.jpg
Sandeep Rao
  • EDUCATION

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
ETPs Versus CFDs and Leverage Certificates - Icon 2

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
  • EDUCATION
Read
ETPs Versus CFDs and Leverage Certificates - Icon 2

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
Read
  • EDUCATION

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
  • EDUCATION

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
Violeta-540x540-1.jpg
Boyan Girginov
  • EDUCATION

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
What is leverage trading - Icon

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
  • EDUCATION
Read
What is leverage trading - Icon

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
Read
  • EDUCATION

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
  • EDUCATION

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
Violeta-540x540-1.jpg
Sandeep Rao
  • EDUCATION

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
ETPs Versus CFDs and Leverage Certificates - Icon 2

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
  • EDUCATION
Read
ETPs Versus CFDs and Leverage Certificates - Icon 2

ETPs vs CFDs and Leverage Certificates

Key differences in structured product construction highlight advantages in ETPs
Read
  • EDUCATION

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
  • EDUCATION

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
Violeta-540x540-1.jpg
Boyan Girginov
  • EDUCATION

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
What is leverage trading - Icon

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
  • EDUCATION
Read
What is leverage trading - Icon

What is leverage trading?

What it is, how does it work and what are the pros and cons of using it.
Read

Our ETPs

Company

Trading Hub

Legal

Stay connected

Youtube Linkedin Twitter Instagram Telegram Facebook
The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investors as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer. This material is not intended to be relied upon as a forecast, research or investment advice and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy. Any decision to invest should be based on the information contained in the relevant base prospectus after seeking independent investment, tax and legal advice.
© Leverage Shares 2023

Search

[wd_asp id=1]

White Label

Top Performers

ETP Heatmap

Market Insights

Education

Careers

Sandeep Rao

Research
Twitter Linkedin

Sandeep joined Leverage Shares in September 2020. He leads research on existing and new product lines, asset classes, and strategies, with special emphasis on analysis of recent events and developments.

Sandeep has longstanding experience with financial markets. Starting with a Chicago-based hedge fund as a financial engineer, his career has spanned a variety of domains and organizations over a course of 8 years – from Barclays Capital’s Prime Services Division to (most recently) Nasdaq’s Index Research Team.

Sandeep holds an M.S. in Finance as well as an MBA from Illinois Institute of Technology Chicago.

Violeta Todorova

Senior Research
Linkedin

Violeta joined Leverage Shares in September 2022. She is responsible for conducting technical analysis, macro and equity research, providing valuable insights to help shape investment strategies for clients.

Prior to joining LS, Violeta worked at several high-profile investment firms in Australia, such as Tollhurst and Morgans Financial where she spent the past 12 years of her career.

Violeta is a certified market technician from the Australian Technical Analysts Association and holds a Post Graduate Diploma of Applied Finance and Investment from Kaplan Professional (FINSIA), Australia, where she was a lecturer for a number of years.

Julian Manoilov

Senior Analyst
Twitter Linkedin

Julian joined Leverage Shares in 2018 as part of the company’s premier expansion in Eastern Europe. He is responsible for web content and raising brand awareness.

Julian has been academically involved with economics, psychology, sociology, European politics & linguistics. He has experience in business development and marketing through business ventures of his own.

For Julian, Leverage Shares is an innovator in the field of finance & fintech, and he always looks forward with excitement to share the next big news with investors in the UK & Europe.

Oktay Kavrak

Director
Twitter Linkedin

Oktay joined Leverage Shares in late 2019. He is responsible for driving business growth by maintaining key relationships and developing sales activity across English-speaking markets.

He joined LS from UniCredit, where he was a corporate relationship manager for multinationals. His previous experience is in corporate finance and fund administration at firms like IBM Bulgaria and DeGiro / FundShare.

Oktay holds a BA in Finance & Accounting and a post-graduate certificate in Entrepreneurship from Babson College. He is also a CFA charterholder.

Get the Newsletter

Never miss out on important announcements. Get premium content ahead of the crowd. Enjoy exclusive insights via the newsletter only.
Short e a leva
I stock tracker
Tutti prodotti
Top Performers
ETP Heatmap
Su di noi
Perché sceglierci
FAQ
Contatti
Approfondimenti di mercato
Formazione scolastica
Guida
White Label
Short e a leva
I stock tracker
Tutti prodotti
Top Performers
ETP Heatmap

Su di noi
Perché sceglierci
FAQ
Contatti

Approfondimenti di mercato
Formazione scolastica
Guida

Careers
How to Invest

Welcome to Leverage Shares

Terms and Conditions

Notice

If you are not classified as an institutional investor, you will be categorised as a private/retail investor. At this time, we cannot send communications directly to private/retail investors. You are welcome to view the contents of this website.

If you are an ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Eligible Counterparty Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.

Risk Warnings

The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

United States Visitors

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area

Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).

Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.

Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2. 

By clicking you agree to the Terms and Conditions displayed.