The “Need” To Raise Interest Rates

Dear CIGAs,
This past Friday the BLS released another ‘whopper’ set of employment numbers. The economy supposedly created 271,000 new jobs. I was fortunate to be able to speak with John Williams (I encourage you to subscribe to his service at http://www.shadowstats.com) and asked him two questions. First, with the current backdrop of an extremely weak global economy, how was this whopping big number generated? Mr. Williams believes the ‘seasonal adjustment’ has been an extreme outlier this month and last, a seasonal adjustment of near 70,000 jobs were added. This would have left the jobs number at close to 200,000 jobs. I also asked what the ‘birth death’ model added and he responded 165,000 jobs. If you do the math, between the unusual seasonal adjustment plus the birth-death model addition, 235,000 of the 271,000 in job gains are ‘fictional’!
Switching gears but still looking at macro economics, the Baltic Dry Index just hit the lowest level ever forthe month of November. (While editing, this story came out). It confirms what we knew and tells us global trade is quite weak and shrinking. This is important because it flies in the face of the Fed looking at ‘BOGUS’ employment numbers and deciding to raise rates next month. I do want to remind you, two weeks ago on Monday and Tuesday we heard two separate trial balloons for negative interest rates …and then BAM! … Janet Yellen and company strongly hint they will raise rates! So which is it? Will they raise rates, lower them or do nothing?

This post was published at JSMineSet on November 9th, 2015.