It is perhaps too early to claim 2020 will be a repeat of last year. But the first ten days or so suggest very little has changed in the US. IT companies are in the ascendancy and there is scant evidence to show that the US has breached its NAIRU.
The 145k m/m increase in non-farm employment for December was still above levels implied by the weaker business surveys. The U3 and U6 jobless rates both dropped to new secular lows.
But this has failed to translate into cost-push inflation. That should not be a big surprise: many of the big performances in technology shares have been for companies that are delivering services more efficiently, and in some cases, for free. Facebook and Alphabet saw their share price hit new highs last week as the FAANGs climbed 3.28%. Other notable winners last week include companies related to cloud services, including Salesforce (up 10.9%) and Akamai Technology (up 8.3%). The rapid expansion in cloud computing is helping companies across all sectors and industries to control costs while innovating more quickly.
