Recap :


The … chart of wages, frequently cited, is deceptive in two respects. First, it doesn’t include benefits such as employer contributions to healthcare and retirement, which are a type of wage. Second, it doesn’t account for the enormous rise in transfer payments–income that accrues almost entirely to the non-equity-owning, wage-earning lower and middle classes via the redistribution of pre-tax income. The following chart shows wages as a percent of GNP (green), wages plus benefits as a percent of GNP (blue), and wages plus benefits plus transfer payments as a percent of GNP (red), from 1947 to 2013. As you can see, total non-capital income properly measured to include supplements paid to the poor and middle class (the red line), is at a record high relative to GNP.

the top 10% pay roughly 70% of all federal income taxes, up from roughly 49% in 1980. On the income side, the top 10% earn roughly 45% of all income, up from roughly 32% in 1980. So their tax share has grown much more than their income share.

It is true that the actual corporate profit margin is higher now than in the past, reflecting a transfer of wealth from the lower and middle class to the wealthy. But the transfer is sustainable because the wealth is ultimately being transferred back, via higher levels of redistribution and higher levels of taxation of wealthy households relative to the past. That sustainability is reflected in the fully-taxed profit margin, which is roughly on par with its historical average


  • US ISM rose to 55.4 vs 55.5 exp and 54.9 prev. It was initially reported as a decline to 53.2, then 56, following a mis-application of seasonal factors
  • UK Mfg PMI declined to 57 as exp vs 57.3 prev
  • Italy Mfg PMI declined to 53.2 vs 53.6 exp and 54.0 prev
  • Final EM Mfg PMI for May was revised lower to 52.1 vs 52.4 prev, down 1.2 pts vs April.
  • China Mfg PMI improved to 50.8 vs 50.7 exp and 50.4 prev
  • AU Mfg PMI rose to 49.2 vs 44.8 prev
  • Germany CPI dropped sharply to 0.6% YoY vs 1.0% exp and 1.1% prev
  • Australia Building Approvals dropped -5.6% MoM vs +2.0% exp and and -3.5% prev. This took the YoY figure to just +1.1% vs 12.3% exp and 20.0% prev
  • Japan Capital Spending jumped 7.4% YoY vs 5.8% exp and 4.0% prev
  • The Spanish government is planning to bolster the country’s nascent economic recovery through tax cuts and a €6.3bn stimulus package, in what is likely to be the last significant economic reform effort before next year’s general election. The measures – which include lowering the top corporate tax rate from 30% to 25% – were outlined by Mariano Rajoy, the prime minister
  • According to a front-page article in the China Securities Journal, PBOC officials are growing concerned about growth and weakening bank credit quality and are considering whether to conduct QE-style asset purchases. The PBOC would most likely buy government bonds, financial and railroad debt, and state-backed housing bonds.

Upcoming Data:

  • Tue: RBA, UK Nationwide House Px, EU Unemployment, CPI, Turkey CPI, Australia GDP,
  • Wed: EU Services PMI, US ADP Employment, BoC, US ISM Non-Mfg, Australia Trade Balance, HSBC Services PMI
  • Thu: BoE, ECB, CanadaBuilding Permits, US Jobless Claims,
  • Fri: German Current Account, UK Trade Balance, US Employment Canada Employment