October Macro Update: Hurricanes End 83-Month Employment Expansion

Summary: The macro data from the past month continues to mostly point to positive growth. On balance, the evidence suggests the imminent onset of a recession is unlikely.
The bond market agrees with the macro data. The yield curve has ‘inverted’ (10-year yields less than 2-year yields) ahead of every recession in the past 40 years (arrows). The lag between inversion and the start of the next recession has been long: at least a year and in several instances as long as 2-3 years. On this basis, the current expansion will last well into 2018 at a minimum. Enlarge any image by clicking on it.

This post was published at FinancialSense on 10/06/2017.

Market Talk- October 6th, 2017

The end of a holiday week for markets in Asia. We have to wait until Monday to see mainland China, South Korea and Hong Kong’s reaction to the US NFP’s release and also the reaction to the turn of the US Dollar Index. Markets that were opened were seeing futures initial response trading firmer as the US number is ‘accepted’. Lets just concentrate on the afternoons events, as it only feels the markets just smelt the coffee and woken-up – now that the weekend is upon us!
The alarm clock came in the shape of a negative headline number to the US No-Farm Payrolls at -33k, with a 13k upward revision to previous release. Unemployment rate (September) came in 4.2%, participation rate 63.1% and a +0.5% average hourly earnings increase. The response was higher bond yields, stronger US Dollar, weaker oil (probably because of the USD strength), marginally weaker gold price – although the bias remains negative. Still, many question this US rally and even more are awaiting (or hoping for) a pullback. This remains the most unloved rally in years and now the market questions, ‘Is the FED about to get the blame for ending the anguish’! We won’t hear until December, but meanwhile the continued speculation on who gets next FED Chair remains a top talking point.

This post was published at Armstrong Economics on Oct 6, 2017.

New Robot Equity Analyst Hits Facebook And Google With A Sell Rating

It should come as a surprise to precisely no one reading this post that wall street equity analysts have a ‘slight’ bias toward “Buy” ratings. After all, equity analysts aren’t really in the business of helping clients make buy/sell decisions, their only real value comes from acting as an intermediary to setup the coveted 1×1’s at lavish conferences in Miami between the hedge funds who pay them and the management teams of the companies they cover. And, of course, it’s much harder to get those management teams to attend your conference if you spread too much truth about their future potential.
But, for those who still aren’t convinced, the Economist took a look at wall street equity research ratings for the S&P 500 last year and found that just 6% of all ratings were “sell/underperform” ratings.
In December 2016, the Economist conducted a study off all the equity analyst ratings for the 500 or so stocks in the Standard and Poor’s 500 index. The study found that 49 percent of the total ratings on those stocks were “buy/outperform” ratings, 45 percent were “hold/neutral ratings” and only 6 percent of total ratings were “sell/underperform” ratings.
Roughly half of S&P 500 stocks underperformed the overall index in 2016, and about 30 percent of the stocks generated negative overall returns on the year.
All that said, a new A. I. equity analyst created by Wells Fargo doesn’t seem to care one bit about the politics of the equity research business and slapped both Google and Facebook, two cornerstones of Jim Cramer’s beloved FANG stocks, with ‘sell’ ratings. Per Bloomberg:
Late last month, Wells Fargo analyst Ken Sena introduced AIERA, short for artificially intelligent equity research analyst, a bot that does massive automated grunt work to support human analysts as they track stocks and make trade recommendations. And while analysts are known to skew toward buy ratings, the new bot doesn’t seem to share the bias.

This post was published at Zero Hedge on Oct 6, 2017.

Spain Teaches Catalonia a Lesson about the Power of Money

Money is fickle and fearful.
Within 48 hours this week, Catalonia, Spain’s largest regional economy, lost three of its seven biggest homegrown multinational corporations and several large national companies – at least on paper – to cities in other regions of Spains.
The first important company to leave since Sunday’s referendum was mid-sized pharmaceutical company Oryzon Genomics SA, which announced on Wednesday that it was departing Catalonia for Madrid. The same path has been traveled recently by firms like Derby Hotels, Unico Hotels, WPP and Schibsted.
But it wasn’t until Banc Sabadell, Spain’s fifth largest bank, announced that it was changing its registered company address to Alicante, a provincial city on Spain’s south-eastern coast, that the threat of a corporate exodus from Catalonia began to be taken seriously.
Banc Sabadell is as Catalan as the town that bears its name, but its management has been warning for years that it would move out of the region in the event of Catalan independence. That threat wasn’t taken seriously until Thursday.

This post was published at Wolf Street by Don Quijones ‘ Oct 6, 2017.

The Last Time Gold Coin Sales Were This Low…

The first nine months of 2017 have seen demand for gold coins slump. As stocks soar unendingly (and vol drops unerringly) the US Mint notes that sales of coins is at its weakest in a decade as complacency in the face of ever-increasing potential-crisis-events nears record highs.
The question is – what happened the last time the public gave up on buying “protection against the idiocy of the political cycle”?
The answer is awkwardly simple… everything collapsed.

This post was published at Zero Hedge on Oct 6, 2017.

Betrayal!

Let me apologize in advance for what may be an upsetting piece of writing for some of you. If you’re in a state of shock or exhaustion from recent events, perhaps you should skip this one.
I don’t offer this analysis in order to further distress anyone — but until you understand what is happening and how that influences your psychological state, you’ll remain the emotional equivalent of a rag doll shaken to-and-fro by events.
Such understanding may not bring you to a place of calm acceptance. But it will set you free.
Betrayal
The recent acts of violence in the US, especially the horrific mass shooting in Las Vegas, are not arising out of a vacuum. Nor are the Brexit vote, the election of Trump, or the recent Catalonian vote for secession, random unconnected acts.
These — and future similarly disruptive events sure to come — are all arising out of the fact that we all have been betrayed.
For the purposes of this article, let’s define betrayal as:
the sense of being harmed by the intentional actions of a trusted person or institution. The emotional impacts of betrayal may include shock, a sense of loss, grief, damaged self-esteem, humiliation, self-doubt, shame, and anger.
We’re betrayed every time our trust is violated, in small ways or large. An example of a small betrayal might be hiding a frivolous purchase fro your partner when you’ve both agreed to stick to a shared budget. A larger betrayal would be infidelity.

This post was published at PeakProsperity on Friday, October 6, 2017,.

Trade Wars Escalate: Trump Admin Hikes Tariffs On Bombardier To 300%

In a decision that’s bound to infuriate the leaders of Canada and the UK, the US Commerce Department on Friday tacked on an additional 80% tariff against Bombardier C-Series Jets imported from the US’s northern neighbor, adding to a 220% preliminary levy authorized last week. The ruling is the culmination of a long-running feud between Boeing and Bombardier; Boeing accused its rival in April of benefiting from anticompetitive government subsidies. US customs will now begin imposing the now 300% combined tariff, potentially complicating Delta Air Lines’ pending purchase order of 75 C-Series jets, a deal that would’ve been worth some $5 billion to Bombardier. As the National Post noted, the decision will make it effectively impossible for Bombardier to sell its planes in the US. It also has important ramifications for the aerospace industry in both Canada and the UK, and also casts doubt on Bombardier’s future after a rocky stretch of thin sales.
“The United States is committed to free, fair and reciprocal trade with Canada, but this is not our idea of a properly functioning trading relationship,” Commerce Secretary Wilbur Ross said in a statement. “We will continue to verify the accuracy of this decision, while do everything in our power to stand up for American companies and their workers.”
Bombardier hasn’t responded to the decision, but last week said the 220% tariff was “absurd and divorced from the reality about the financing of multibillion-dollar aircraft programs” and that it would push for the decision to be reversed in the coming months. Bombardier has long maintained that Boeing can’t justify its claim of being harmed by the C-Series since it doesn’t manufacture any jets of comparable size.

This post was published at Zero Hedge on Oct 6, 2017.

Here’s How the Unemployment Rate Dropped Last Month While U.S. Lost 33,000 Jobs

This morning’s September jobs data from the Bureau of Labor Statistics (BLS) does not actually capture the extent of the economic misery in the U. S. mainland last month. The data showed a stunning loss of 33,000 jobs (the first time the U. S. has had a negative figure since 2010) while simultaneously reporting that the unemployment rate dipped to 4.2 percent from 4.4 percent in August.
But here’s the quirky thing about how the U. S. government’s counts people as being employed: according to the official web site of the U. S. Department of Labor’s Bureau of Labor Statistics, an individual can be counted as employed even if they didn’t receive a dime in salary during the week the data is collected. The BLS explains its rationale as follows: (Italic emphasis added.)
People are considered employed if they did any work at all for pay or profit during the survey reference week. This includes all part-time and temporary work, as well as regular full-time, year-round employment. Individuals also are counted as employed if they have a job at which they did not work during the survey week, whether they were paid or not, because they were:
On vacation;
Ill;
Experiencing child care problems;
On maternity or paternity leave;
Taking care of some other family or personal obligation;

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.

WTI/RBOB Plunge On Saudi, Russia Comments; Rig Count Resumes Decline

WTI and RBOB are plunging following comments from the Saudi minister that “he doesn’t know” if November meeting will agree on a production cut deal extension, and Russia’s Novak confirmed that there is “no clarity” on a deal extension.
Saudi Arabia will work with Russia to reach a consensus in the next few weeks before the Nov. 30 OPEC/non-OPEC meeting in Vienna, Saudi Energy Minister Khalid Al-Falih says at a meeting with Russian counterpart Alexander Novak in Moscow. OPEC and non-OPEC producers will discuss ‘what to do beyond March’ at that meeting: Al-Falih
Both ministers say it’s too early to say whether or not the November meeting will yield an agreement to extend the production cuts
Amid higher OPEC production and the prompt return of supplies from Libya, futures prices are under pressure.
After last week’s surprise rise (+6) in the rig count, the US Oil rig count declined by 2 this week to 748…

This post was published at Zero Hedge on Oct 6, 2017.

Economic Slowdown Confirmed: The U.S. Economy Lost Jobs Last Month For The First Time In 7 Years

Don’t worry – even though the employment numbers are terrible the mainstream media insists that everything is going to be wonderful for the U. S. economy in the months ahead. According to the Bureau of Labor Statistics, the U. S. economy lost 33,000 jobs during September. That was the first monthly decline in seven years, and as you will see below, overall 2017 is on pace for the slowest employment growth in at least five years. But the Bureau of Labor Statistics insists that the downturn in September was due to the chaos caused by Hurricane Harvey and Hurricane Irma, and they are assuring us that happier times are right around the corner.
Economists were projecting that we would see an increase of around 80,000 jobs last month, and we need to add at least 150,000 jobs each month just to keep up with population growth. So the -33,000 number was a huge disappointment.
But even though we lost 33,000 jobs last month, the Bureau of Labor Statistics says that the unemployment rate fell from 4.4 percent to 4.2 percent.
Yes, I know that doesn’t make any sense at all, but that is what they are telling us.
Perhaps if several volcanoes go off inside this country, terrorists detonate a dirty bomb in one of our major cities and Godzilla invades the west coast next month the unemployment rate will drop all the way to zero.
Of course I am being facetious, but I just want to point out the absurdity of what we are being told. There is no way in the world that the official unemployment rate should be at ‘a new 16-year low’.

This post was published at The Economic Collapse Blog on October 6th, 2017.

6/10/17: Life-Cycle Wages and Trends: September US Wage Inflation in Perspective

Last month, I wrote an editorial for @MarketWatch on the declining fortunes of the American wage earners. And this week, the BLS released new data on wage growth in the U. S. economy. The new numbers are ‘shiny’.
Per headlines reported in the media, the BLS reported that the annual increase in Average Weekly Earnings was an impressive 2.9%, which is:
Well above the 2.5% rate of growth expected in prior estimates, Well above the 2.5% reported last month, and The highest since the financial crisis This is a great print. Except, it really is not all that exciting, when one reaches below the surface.
Take the following summary of recent growth rates (H/T @BySamRo):

This post was published at True Economics on Saturday, October 7, 2017.

OCT 6/NORTH KOREA’S KIM FOILS ATTEMPT BY BANKERS TO MANIPULATE GOLD/SILVER AS ‘GOLDEN WEEK’ HOLIDAY ENDS TONIGHT/GOLD RISES $1.40 AND SILVER IS UP 10 CENTS/

GOLD: $1274.50 UP $1.40
Silver: $16.70 UP 10 CENT(S)
Closing access prices:
Gold $1276.30
silver: $16.81
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $n/a DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $n/a
PREMIUM FIRST FIX: $8.24 (premiums getting larger)

This post was published at Harvey Organ Blog on October 6, 2017.

“This Is The Elephant In The Room”: Even SocGen Is Now Calling It A Bubble

Two weeks ago, Janet Yellen finally – and shockingly – admitted that neither she, nor her Fed peers, “fully understand inflation” and that the “shortfall of inflation this year is more of a mystery.” This, after engaging for nearly a decade in actions designed to stimulate said “mysterious” inflation, including injecting nearly $4 trillion in liquidity into the economy. We quickly came to aunt Janet’s rescue, showing in one chart that while the Fed may have failed to stimulate inflation in real economic prices – and especially wages – it had unleashed hyperinflation in asset prices.

This post was published at Zero Hedge on Oct 6, 2017.

Federal Reserve President Kashkari’s Masterful Distractions

Authored by MN Gordon via EconomicPrism.com,
How is it that seemingly intelligent people, of apparent sound mind and rational thought, can stray so far off the beam? How come there are certain professions that reward their practitioners for their failures?
The central banking and monetary policy vocation rings the bell on both accounts. Today we offer a brief case study in this regard.
Minneapolis Federal Reserve President Neel Kashkari is a man with strong convictions. He’s what the late Eric Hoffer would’ve classified as ‘the true believer.’ According to Hoffer:
‘It is the true believer’s ability to ‘shut his eyes and stop his ears’ to facts that do not deserve to be either seen or heard which is the source of his unequaled fortitude and constancy. He cannot be frightened by danger nor disheartened by obstacle nor baffled by contradictions because he denies their existence.’ For starters, Kashkari believes the Federal Reserve, an unelected board of appointments, can crunch economic data into pie graphs and bar charts and draw conclusion as to what they should fix the price of credit at. Moreover, he believes that by fixing credit at the ‘correct’ price, the Fed can somehow ‘optimize’ the economy.
This idea is patently false. Remember, the economy is comprised of billions of people with ever changing interactions. Activities and exchanges are always adapting.

This post was published at Zero Hedge on Oct 6, 2017.

Wall Street Hypocrisy Exposed: Bank Behind “Fearless Girl” Statue Fined For Systemically Underpaying Women

The bar for Wall Street hypocrisy has just been raised.
In a controversy that can only be described as hilariously ironic, Boston-based bank and asset manager State Street Corp – which famously created and installed the ‘fearless girl’ statue, purportedly symbolizing Wall Street’s progress toward gender equality in the workplace – to be a symbol of Wall Street’s progress toward gender equality, earlier this year – has agreed to pay $5 million to settle claims that it systematically underpaid female and minority employees, according to the New York Post.
State Street assented to the fine – but refused to admit wrongdoing – after being audited by the US Department of Labor’s Office of Federal Contract Compliance Programs. The DOL alleges that the firm’s systemic pay discrimination dates back to at least 2010 and affected hundreds of employees, primarily in senior-level positions.
‘OFCCP’s analysis demonstrates that a statistically significant disparity in compensation remained even when legitimate factors affecting pay were taken into account,’ the Labor Department said Thursday in its filing. The department alleges that black employees were also discriminated against, with at least 15 individuals being paid less in base salary and total compensation than their ‘similarly-situated’ white peers.
By installing the statue, State Street hoped to kill two birds with one stone: Burnishing its reputation as a female-friendly employer while helping to market its new ‘SHE’ ETF, which invests in female-led companies.

This post was published at Zero Hedge on Oct 6, 2017.

The US government lost nearly $1 trillion in FY2017. Again

There was a time, centuries ago, that France was the dominant superpower in the world.
They had it all. Overseas colonies. An enormous military. Social welfare programs like public hospitals and beautiful monuments.
Most of it was financed by debt.
France, like most superpowers before (and after), felt entitled to overspend as much as they wanted.
And their debts started to grow. And grow.
By the eve of the French revolution in 1788, the national debt of France was so large that the government had to spend 50% of tax revenue just to pay interest to its lenders.
Yet despite being in such dire financial straits the French government was still unable to cut spending.
All of France’s generous social welfare programs, plus its expansive military, were all considered untouchable.

This post was published at Sovereign Man on October 6, 2017.

Where The September Jobs Were: Waiter And Bartender Devastation

The September jobs report was a bizarre exercise in “goalseeked” data: from the first drop in Establishment Survey payrolls in 7 years, to the near record monthly surge in full-time jobs and Household Survey employment, to the erroneous calculation in average hourly earnings, virtually everything about the latest payrolls report was off.
Still, accurate or fabricated, here is the breakdown of the seasonally-adjusted job gains and losses that took place in the hurricane-impacted month.
As SouthBay Research points out, the biggest sign of Hurricane drag was found in Leisure and Hospitality which plunged by -111K, a drop due to a loss of 105K waiter and bartender jobs: the one category that for the past 7 years was the “plough hourse” of the so-called US recovery; this was the worst monthly drop in history for this category.

And while we find it delightfully ironic that in the one month in which waiters/bartenders lost the most jobs on record is when average wages (allegedly) soared, the September drop will be revised in the coming days and should move higher next month. After all, many people fleeing Florida and Houston had to stay in hotels and motels, for example. And certainly eat out more.

This post was published at Zero Hedge on Oct 6, 2017.