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non-farm payrolls and “
U-2,” or the overall unemployment rate (not the band):
While employment has risen steadily and unemployment has fallen likewise, neither has recovered their level from prior to the onset of the COVID-19 pandemic.
The Richmond Federal Reserve Bank forecasts further declines in the headline U-2 number, especially following the recent passage of the $1.9 trillion fiscal stimulus package:
When looking at employment and payroll numbers, it is helpful to distinguish between the
household and
establishment survey numbers. The household number is calculated by surveying 60,000 families about their employment status, and any individual with more than one job is only counted once. This data is the source for the reported unemployment rate number in the chart above.
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A bird in the hand is worth two in the bush.[1]
In investing, this describes investors’ preference for dividends (the bird in the hand) relative to future price appreciation (two in the bush).
While this preference is undeniable, the impact of dividends on company valuation represents a fault line between a traditional finance view and a behavioral finance view of markets:
From a
traditional finance standpoint where all investors are rational and markets efficient the relevance of dividends on firm valuation can be tenuous because investors should be indifferent between dividends and capital gains.
A
behavioral finance perspective gives license to the impact of dividends on firm value because investors may prefer firms that pay dividends, assigning value to a steady payout and thus increasing the value of these companies.