5 Things To Ponder: Perspicacious Observations

This past week has seen the market repeatedly attempt new “all-time” highs only to be found wanting. There has been plenty of headline data for the “bulls” to feast on from the ECB announcing a program to buy bonds, surging ISM data and improvement in productivity. However, the underlying data has kept the “bears” in the game with new orders and employment showing weakness, unit labor costs shrinking and the realization that the ECB’s plans are likely be ineffectual.
I thought one of the most interesting comments this week came from Brad Delong with reference to the exit of the Federal Reserve from its monetary campaigns:
“Meanwhile, in the US, the Federal Reserve under Janet Yellen is no longer wondering whether it is appropriate to stop purchasing long-term assets and raise interest rates until there is a significant upturn in employment. Instead, despite the absence of a significant increase in employment or a substantial increase in inflation, the Fed already is cutting its asset purchases and considering when, not whether, to raise interest rates.“
There is mounting evidence that these monetary campaigns have very little effect on stimulating economic growth, yet the ECB specifically noted yesterday that they are engaging in the same program in hopes of stimulating economic growth and inflation. What the actual outcome will be is yet to be seen, but over the last 24-hours the markets seem to less convinced of a positive outcome.
This weekend’s reading list covers a rather wide range of topics to contemplate between football games, “couch naps” and junk-food. Since my goal is to be of service to you, here is the official schedule of games this weekend via NFL:

This post was published at StreetTalkLive on 05 September 2014.

Nonfarm Payrolls 142,000; Unemployment 6.1%; Employed 16K; Labor Force -64K

Initial Reaction The payroll survey shows a net gain of 162,000 jobs vs. an expectation of 230,000 jobs. This broke a six-month string of 200,000 jobs. Digging into the details, things look far worse. The household survey shows a gain in employment of only 16,000. This is the fourth month in the last five that the household survey was substantially weaker than the headline number. The average employment gain in the past five months is 125,200 vs. an average gain in jobs over the same period of 230,800 per month. Is a trend forming? If so, it doesn’t bode well. That said, the household survey is volatile and over time the data series merge. The question now is which one is right? At turns, the household survey tends to lead.
The labor force fell by 64,000. Those not in the labor force increased by 268,000. The unemployment rate fell by 0.1% thanks to a decline in the labor force greater than the rise in employment.

This post was published at Global Economic Analysis on September 05, 2014.

WHAT COULD BE WORSE THAN THE DOLLAR COLLAPSE? THIS.

I hate to always be the bearer of bad news but while we focus a lot on The End Of The Monetary System As We Know It (TEOTMSAWKI) there is one event that could be more catastrophic and is well within the realm of distinct possibility… actually a virtual certainty.
I pointed it out years ago as being the actual number one real, factual threat to human life on Earth and still believe that to this day. And based on a few recent events I think it begets reminding.
What I am talking about is an Electro-Magnetic Pulse (EMP). An EMP, also sometimes called a transient electromagnetic disturbance, is a short burst of electromagnetic energy. Such a pulse may occur in the form of a radiated electric or magnetic field or conducted electrical current depending on the source, and may be natural or man-made.
The last natural, major EMP to affect Earth was in a solar storm in 1859, also known as the Carrington Event. It was a powerful geomagnetic solar storm that fried telegraph machines all over Europe and North America. At some point we will experience another such solar storm, and some scientists believe that we are already 50 years overdue for another one. Of course, as with ‘global warming’ we also should keep in mind that scientists are often very wrong. But the issue is that an EMP can also be manmade and that is looking like it is a possibility as we discuss below.

This post was published at Dollar Vigilante on September 5, 2014.

Big Tech Teeters, May Sack Most People since 2009

There is one thing for sure that big American tech companies, many of them severely revenue-challenged, excel at: buying other companies. They’re all doing it. And the price they pay? The higher, the better. They’re paying for these overvalued acquisitions with their overvalued stock, of which they can print an unlimited amount; and they’re paying for them with money they can borrow at nearly no cost after inflation.
When the cost of capital is near zero, thanks to the Fed’s machinations, it doesn’t really matter on what this nearly free capital gets blown. So long as it doesn’t get spent on people.
Acquisitions bestow a lot of benefits on the acquirer, including obtaining instant revenues, in-the-can technologies, and possibly top-notch people. But no benefit is more important than the liberal use of ‘acquisition accounting’ which allows the company to lump all kinds of real expenses, paid for with real dollars or real stock, into a massive ‘non-cash acquisition-related’ write-off that analysts are well trained to ignore. And it makes the resulting ‘adjusted earnings’ smell like a rose.

This post was published at Wolf Street on September 5, 2014.

5/9/2014: Investment and Foreign Exchange Reserves: Latest Data from Russia

Some recent news from the Russian economy’s front.
In recent months we have witnessed some significant slowdown in both investment in Russia and economic growth (see here for the latest signals and here for the longer range data: But we now have some interesting data on the compositional changes in investment and the numbers are puzzling. As reported by BOFIT, aggregate decline in domestic investment in H1 2014 in Russia was driven by the smaller firms and the ‘grey’ economy. This was offset, to a large extent but not fully, by a rise in investment by large and mid-size firms, households and the government which (combined) increased investment by 3%. As BOFIT noted, “the situation differs from 2012 and 2013, when investments of large firms stumbled”. On private sector side, large and mid-sized companies investments rose in energy sector, industry, manufacturing, transport and food processing.

This post was published at True Economics on September 5, 2014.

Gold slips on dollar strength, rises in euros

Gold has slipped overnight as investors weighed the impact of the European Central Bank’s more accommodative policy stance, while palladium posted its steepest gain in nearly three months on escalating tensions between Russia and Ukraine.
Gold prices spent the day meandering between slight gains and losses as investors weighed the ECB’s surprise decision to cut interest rates in addition to announcing two bond purchasing programs. The more aggressive policy move reflects that officials have grown increasingly concerned over the recent period of very low inflation and the threat it holds to the region’s economic recovery.
But for gold, the ECB’s easing efforts are widely seen as a mixed blessing. While gold can benefit from greater investment demand as traders often seek hard assets as a hedge against excessive monetary stimulus, the policy shift can also weaken the euro and strengthen the dollar, making gold more expensive for buyers who use other currencies.

This post was published at TruthinGold on September 5, 2014.

US Dollar and Yen Update…

Tonight is a good time to look at some long term charts for the US Dollar and the Japanese Yen. I’ve been waiting for this day for more than a year now when I first created this long term US dollar chart. Some of our long term members will recall this monthly fractal chart that I labeled as having a Big Base #1 and Big Base #2 which are fractals as shown by the numbers on each base. At the time I thought we were ready to breakout above the almost 14 year S&R rail but as you can see the US dollar needed one more small move lower to finish off the big base #2. The breakout doesn’t look very impressive on this bar chart but it is happening.

This post was published at GoldSeek on 5 September 2014.

Strong Reversal Augurs for Rough September

In recent weeks we wrote about the ongoing consolidation in precious metals miners. We touched on the history of September, not as a bullish month but as an important inflection point. With the miners holding up well and Gold still holding its lows we thought a breakout could be coming. Yet we’ve been whipsawed before. Several times over the past year (and as recently as late July) we’ve written about the possibility of a final low in Gold to precede the next impulsive advance in the miners. These scenarios came to a major head this week and the nasty decline across the entire sector suggests the bears are back for one last time.
Below is our chart for Gold’s bear markets which are scaled to the 2011 peak. We exclude the two extreme bears (one lasted six years while the other was the post bubble crash). Longer bears tend to be less severe in price whereas the most severe bears in price tend to be short in time. Examples of that include the 1975-1976 and 1983-1985 bears. The 1987-1993 bear (the longest) only shed 35% while the 1996-1999 bear, which lasted three and a half years bottomed well above $1100 on the current scale. History makes a strong argument that while a new low is likely, anything much below $1100 appears unlikely.

This post was published at GoldSeek on 5 September 2014.

53 Million Temps: All You Need To Know About The “Jobs Recovery”

After years of ignoring the obvious, the Federal Reserve has been finally forced to admit that the labor force participation rate matters, and in fact has started to point it out as a clear negative when it comes to Yellen’s “dashboard” of thresholds which will allow the Fed to raise rates (for the obvious reason that the Fed is desperate to delay ZIRP as long as possible and is now highlighting all that is wrong with the economy, contrary to Obama who is still focusing on all the rigged greatness of the US recovery) and to do so is going through Zero Hedge archives to note all those things which everyone had ignored for years and which we have pointed out as structural failures of the so-called recovery.
So while we are happy to oblige the Fed with our tens of thousands of articles summarizing what is broken with the US economy thanks to, well, the Fed, here is another one: one which the Fed can use next year when the time to hike rates has come and gone, and when the Fed is once again scratching its head what to blame it on.

This post was published at Zero Hedge on 09/05/2014.

“The People On Wall Street Aren’t Seeing What’s Really Going On In America”

Today’s jobs data was almost 5 standard deviations below Wall Street’s best-and-brightest’s estimate and has already been dismissed by many as an ‘anomaly’ or ‘unbelievable’. Despite the fact that the National Retail Foundation noted over 17,000 layoffs in August “calling into question how much momentum the economy really has,” one member of the public was able to #NailTheNumber on CNBC’s great payroll-guessing game. Ronnie Squires explains to a silenced CNBC anchor the real state of America…
Apologies for audio quality…


This post was published at Zero Hedge on 09/05/2014.

Today’s Jobs Report And The Cult Of Central Banking: Counting Angels On The Head Of A Pin While Main Street Flounders

That didn’t take long. The Fed’s unpaid PR flack at the Wall Street Journal, Jon Hilsenrath, was out with hardly an hour to spare after the August jobs report – relaying word from the Eccles Building that ZIRP is in no danger of being rescinded early.
When at the July meeting our monetary plumbers saw ‘significant underutilization of labor resources’, which is code for continued zero interest rates, they were looking at an unemployment rate in June of 6.1%. So according to Hilsenrath, today’s weakish jobs report is good news for Wall Street’s free money crowd.
The fact that unemployment hasn’t fallen since the July meeting -and that job growth slowed in August – suggests Fed officials won’t make big changes to their policy statement and the signal they’re sending about rates when they meet Sept. 16 and 17.
Indeed, the Fed’s other unpaid spokesman, Steve Leisman at CNBC, had already made the point within minutes of the release. ZIRP will now last until next July, he opined. The danger that money market rates would rise, to say 40 bps, as early as March has been alleviated by the ‘disappointing’ 142,000 print for August. Whew!

This post was published at David Stockmans Contra Corner on September 5, 2014.

Quality Of Jobs Created In August Deteriorates Again

Back in January 2012 we noted that while the market, and at the time the Fed, have been focused exclusively on the quantity of jobs created each month, a far more important aspect of the US economic recovery is the quality of newly created jobs. It took the Fed about three years to catch up but it finally did, and Yellen no longer cares so much about the headline NFP print or the unemployment number but rather how good the newly created jobs are, manifesting in the quality of wages and earnings. So what was the quality of seasonally-adjusted job gains in August? In a word: disturbing. Of the 142K jobs created, just under half came from the lowest paying jobs possible: education and health; leisure and hospitality; and temp-help. The best paying jobs, finance and information, added a whopping 4K jobs between them. Finally, about that much delayed US manufacturing renaissance: stick a fork in it – in August the number of manufacturing jobs created was exactly 0.

This post was published at Zero Hedge on 09/05/2014.

CNBC Viewership Plunges To 21 Year Lows

It’s over: whether due to the complete domination of centrally-planned markets by a few central banks, whether as a result of HFTs forcing out all human traders and investors, whether due to volatility plunging to record lows and complacency at record highs, whether viewers simply aren’t impressed by the new young, female faces that are increasingly taking over the primetime financial TV slots, because people just are tired of Cramer’s endless “caffeine” high and the attempt to justify a record disconnect between manipulated markets and a stagnant economy in which some 53 million workers are “freelancers“, or simply because video game consoles don’t watch TV, America’s interest with finance and the stock market is over.
Exhibit A: The chart below shows CNBC’s Nielsen rating for August.

This post was published at Zero Hedge on 09/05/2014.

Who Will Defend the Rule of Law in Europe?

ECB surprises markets with rate cut and purchases of private assets; Ruparel: Pressure rises on eurozone governments as ECB nears end of its policy tools The ECB yesterday surprised markets by cutting interest rates and announcing a programme to purchase private sector assets, in the form of asset-backed securities and covered bonds. In his press conference, ECB President Mario Draghi said that the decision was not unanimous, with reports suggesting Bundesbank President Jens Weidmann was opposed. Draghi reiterated his call for flexibility in fiscal policy across the eurozone, but warned that structural reforms must come first. In response to the move, the euro hit its lowest level for 14 months and equity markets across Europe hit their highest point for six years.
Here is a direct quote from the Maastricht Treaty:

This post was published at Mises Canada on September 5th, 2014.

The Great Silver Subsidization

Sep 04, 2014
Modern achievements, especially in medicine and technology (fueled by cheap energy), have made the human experience longer and easier.
Yet, at the base of it all lays the irrational man, still flinging immorality from the cages of his ongoing existential dilemma.
Despite the existence of natural governors, humans are still prone to abuse of power for the sake of power alone.
Unsound money and finance are not immune. They are fuel for the fire. They play an evermore powerful role in the rationalization of this age-old abuse.
Whatever you want to call the system that makes the modern civilization go around, there are four basic sub-systems at work here:
Finance Politics The Media/Academia Energy/Economy
These four areas are in a constant state of fluctuating overlap. We can separate them just enough to observe the interactions. I’m lumping energy in with what I see as the ‘raw economy” experienced by most people.
Finance is enormous. Way beyond anything the world has ever seen.
Finance is sector of the economy. But it is so big that it wields influence as if it were a separate entity.
Politics will always be around. It could be worse. In a real crisis, a political vacuum can lead to much worse than we see. More extremes.

This post was published at Silver-Coin-Investor on Dr. Jeffrey Lewis /.

Remember, Remember, Gold in September

In American poet W. S. Merwin’s poem ‘To the Light of September,’ the speaker calls the ninth month ‘still summer,’ yet with a ‘glint of bronze in the chill mornings.’
I agree – to an extent. Here in San Antonio, Texas, home of U. S. Global Investors, we’re most definitely still in the summer season. But in the investing world, when we talk about September, there’s a glint not of bronze but another precious metal: gold.
That’s because September is historically gold’s best-performing month of the year, returning 2.16 percent on average since 1969.
I invite you to compare the chart above, updated to reflect the most recent monthly returns, to the one published this time last year.
Drivers of Gold
There are several seasonal factors that explain why gold glitters a little more brightly in September. The most notable reason is what I call the Love Trade. In India, this month marks some of the most spirited gold-buying in anticipation of Diwali, which falls on October 23 this year. Following closely behind is the Indian wedding season, when gold is purchased for the bridal trousseau and as gifts in jewelry form. And September is normally when retailers restock their wares ahead of Christmas and after the Islamic month of Ramadan, at the end of which gold jewelry is commonly exchanged.

This post was published at GoldSeek on 4 September 2014.

The Market Reacts To Mark Zandi’s “I Don’t Believe It” Jobs Data

While Mark Zandi may not “believe the data,”
It appears the market does (for now). The dismal jobs data sparked a kneejerk bond rally, sending yields plunging from the week’s highs, and stocks and gold jumped higher (we assume on hopes that bad news is great news for assets as Yellen will have an excuse to be more dovish). The initial moves are fading (as always) but stocks are still pushing higher.

This post was published at Zero Hedge on 09/05/2014.

Gold Miners to Gold ratio rolling over

It has become axiomatic, for good reason, that the mining shares tend to lead the gold price whether they are moving higher or moving lower. For whatever reason, the connection is fairly solid and has been for many years. That being said, the combination of a deteriorating chart for the metal and the fact that the ratio ( HUI to Gold) is rolling over, does not bode well for gold at the moment. Take a look at the following chart noting the HUI/Gold ratio and comparing that to the Gold price ( dark blue line). Can you see the very close connection? You can almost lay the gold price atop this ratio and see where it is generally headed as the lines follow each other quite closely.

This post was published at Trader Dan Norcini on September 4, 2014.