• Tag Archives Recession
  • You Can’t Make This Up, But You Can Apparently Just Make Up the Data

    This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
    Back in 2014, the Federal Reserve was convinced that the labor market was better than it appeared to be in various data accounts. Though it was called the ‘best jobs market in decades’, researchers at the central bank were keen on showing it. Primarily lacking in wages and incomes, the labor segment was suspected of missing the very elements of sustainable economic growth.
    They came up with the Labor Market Conditions Index (LMCI), a factor model purported to give less weight to any of the 19 data points embedded within it that might be outliers. I assume they really thought the weaker points would be those outliers, and therefore the LMCI would overall gravitate toward suggesting the very robust jobs market they were sure was there.
    The LMCI, of course, behaved in the opposite fashion. It suggested instead that the labor market was weak and getting weaker, not strong and getting stronger. Worse, after suggesting something like recession, which even GDP revisions have subsequently shown as the correct position, the LMCI failed to indicate a robust rebound befitting the by-then ultra-low unemployment rate.

    This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ September 22, 2017.


  • SEPT 21/USA YIELD CURVE FLATTENS INDICATING RECESSION: GOES AGAINST THE WISHES OF THE FED/GOLD AND SILVER RAID CONTINUES BY OUR BANKERS WITH GOLD DOWN $19.95 AND SILVER DOWN 29 CENTS/HUGE SANCTIO…

    GOLD: $1292.75 DOWN $19.95
    Silver: $17.00 DOWN 29 CENT(S)
    Closing access prices:
    Gold $1291.60
    silver: $16.97
    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: $1303.97 DOLLARS PER OZ
    NY PRICE OF GOLD AT EXACT SAME TIME: $1299.20
    PREMIUM FIRST FIX: $4.77
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    SECOND SHANGHAI GOLD FIX: $1302.97
    NY GOLD PRICE AT THE EXACT SAME TIME: $1298.20
    Premium of Shanghai 2nd fix/NY:$4.77
    xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
    LONDON FIRST GOLD FIX: 5:30 am est $1297.35
    NY PRICING AT THE EXACT SAME TIME: $12.96.08
    LONDON SECOND GOLD FIX 10 AM: $1291.80
    NY PRICING AT THE EXACT SAME TIME. 1291.80
    For comex gold:
    SEPTEMBER/
    NOTICES FILINGS TODAY FOR SEPT CONTRACT MONTH: 29 NOTICE(S) FOR 2900 OZ.
    TOTAL NOTICES SO FAR: 83 FOR 8300 OZ (0.2581 TONNES)
    For silver:
    SEPTEMBER
    225 NOTICES FILED TODAY FOR
    1,125,000 OZ/
    Total number of notices filed so far this month: 6,106 for 30,530,000 oz

    This post was published at Harvey Organ Blog on September 21, 2017.


  • Gold Investment ‘Compelling’ As Fed May ‘Kill The Business Cycle’

    Gold Investment ‘Compelling’ As Fed Likely To Create Next Recession
    – Is the Fed about to kill the business cycle?
    – 16 out of 19 rate-hike cycles in past 100 years ended in recession
    – Total global debt at all time high – see chart
    – Global debt is 327% of world GDP – ticking timebomb…
    – Gold has beaten the market (S&P 500) so far this century
    – Safe haven demand to increase on debt and equity risk
    – Gold looks very cheap compared to overbought markets
    – Important to diversify into safe haven gold now
    ***
    by Frank Holmes via Gold.org
    Global debt levels have reached unprecedented levels, pension deficits are rising and the US interest rate cycle is on the turn. Frank Holmes, chief executive of highly regarded investment management group US Global Investors, believes that investing in gold is a logical response to current, unnerving conditions.
    For centuries, investors and savers have depended on gold in times of economic and political strife, and its investment case right now is as compelling as it’s ever been.

    This post was published at Gold Core on September 21, 2017.


  • Running Out The Clock; They Really Don’t Know What They Are Doing

    This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
    If it wasn’t perfectly clear before, and it really was, there is no way it isn’t now. The Fed is not in any way data dependent. The data on the economy remains in some category of insufficient, longer-term stuck much too far in the direction of atrocious. Yet, the central bank will exit anyway because there is nothing left for them here in the present.
    The economy is, in their judgment, what it is. Monetary policy, such that it is, must now turn toward tomorrow. After fighting yesterday’s battles for ten years, and losing, the FOMC knows that time is against it in more ways than one. Even in traditional terms viewing the period after the Great ‘Recession’ as somehow a business cycle, it is already a long one. Recession is inevitable, and there is no longer anything the Fed can do about the last one to make the next one more tolerable.
    So they will focus entirely on the next one before the clock strikes zero. That means getting their main interest rate levers back up near as normal as they possibly can, and the balance sheet as close to whatever and however they define neutral in this brave new world without actual growth.

    This post was published at Wall Street Examiner on September 20, 2017.


  • The Best Jobs Without A College Degree 2017 (In One Simple Chart)

    The Great Recession destroyed the job market for workers without college degrees, and the situation hasn’t gotten any better.
    This begs the question – can you still enjoy a high standard of living without a college degree? And what are the highest paying jobs for people without a traditional higher education?
    This new chart, from HowMuch.net, sheds some light on these pressing questions.
    ***
    The Bureau of Labor Statistics tracks which professions do not require a college education, how many people currently hold those jobs, and their median salaries. We combined this information into a scatter plot graph. The more dots you see, the more people work in that profession. And the higher the dots on the vertical axis, the more money they make.

    This post was published at Zero Hedge on Sep 20, 2017.


  • What Happens When Inflation Walks In?

    If you watch and participate in markets long enough – and no, we’re not talking about, ‘On a long enough timeline…’ – you’ll appreciate or get bitten (as we certainly have from time to time) by the sardonic irony that often becomes exposed by a market’s cycle. Consider Mohamed El-Erian’s ‘New Normal’ market strategy, that aimed at the start of this decade to capture the anticipated outperformance of emerging over developed markets. Bear in mind that the phrase has stuck around since then, despite the fact that it was largely a narrative for a poor investment strategy.
    What happened? El-Erian and Gross were prescient in inventing the term ‘new normal’ to describe a very slow-growing global economy with heightened risks of recession, as befell much of Europe. But they were dead wrong in predicting that emerging markets would provide outsize stock returns, and they were wildly off base in their notion that developed-market stock returns would be deeply depressed. Emerging market stocks have stumbled since 2011, and emerging market bonds have lost ground this year. Meanwhile, developed-world stock markets have soared. The fund’s use of options and other techniques to hedge against ‘tail risk’ – which essentially means insuring against extremely bad markets – has also surely cost the fund a little in performance. – Kiplinger, November 14, 2013
    Not to overly pick on El-Erian here, who is typically a very thoughtful and creative macro thinker – not to mention many of his new normal predictions did prove prescient, with the very large exception of rising inflation that would have likely driven a successful investment strategy – not just a convenient catch phrase… but, ironically, it appears his timing earlier this year of calling for an end of the new normal, as selectively revisionist as they paint it, might provide a fitting bookend to the market’s wry sense of humor.
    Eight years later – and instead of just getting slow growth right in a developed economy like the US, as he initially suggested in May 2009, his other two major tenets of rising inflation and rising unemployment might eventually be realized domestically in the economy’s next chapter. In fact, from our perspective it seems more likely than not.

    This post was published at GoldSeek on 19 September 2017.


  • “This Is Where The Next Financial Crisis Will Come From”

    In an extensive, must-read report published on Monday by Deutsche Bank’s Jim Reid, the credit strategist unveiled an extensive analysis of the “Next Financial Crisis”, and specifically what may cause it, when it may happen, and how the world could respond assuming it still has means to counteract the next economic and financial crash. In our first take on the report yesterday, we showed one key aspect of the “crash” calculus: between bonds and stocks, global asset prices are the most elevated they have ever been.
    ***
    With that baseline in mind, what happens next should be obvious: unless one assumes that the laws of economics and finance are irreparably broken, a deep recession and a market crash are inevitable, especially after the third biggest and second longest central bank-sponsored bull market in history.
    But what will cause it, and when will it happen?
    Needless to say, these are the questions that everyone in capital markets today wants answered. And while nobody can claim to know the right answer, here are some excerpts from what DB’s Jim Reid, one of the best strategists on Wall Street, thinks will take place.

    This post was published at Zero Hedge on Sep 19, 2017.


  • Riding The ‘Slide’: Is This What the Next Bear Market Looks Like?

    Submitted by ffwiley.com
    Even as the Fed’s decision makers are beginning to worry less about recession and more about bubbly stock prices, we’re not yet moved by their attempts to curb the market’s enthusiasm. After all, the fed funds rate sits barely above 1%, which not too long ago qualified as a five-decade low. And other indicators, besides interest rates, aren’t exactly predicting the next bear, either. Inflation is subdued, credit spreads are tight, banks are mostly lending freely and the economy is growing, albeit slowly. It just doesn’t feel as though we’re close to a major market peak.
    All that being said, we’re not so much about feelings as we are about delving into history (nerds that we are) and seeing if there’s anything we can learn. Let’s look at the last 90 years to see if any bear markets began under similar conditions to those today.
    We’ll consider thirteen bears, as listed in the table below. (Our list may be different to yours, mainly because we use Robert Shiller’s monthly average S&P 500 prices, instead of daily prices, but also because we reset the cycle whenever the market falls 20% from a peak or rises 20% from a trough.)

    This post was published at Zero Hedge on Sep 16, 2017.


  • The Cardinal Sin Of Investing: Permanent Impairment Of Capital

    How to avoid making it
    Last week we presented a parade of indicators published by Grant Williams and Lance Roberts that warned of an approaching market correction as well as a coming economic recession.
    The key message was: When smart analysts independently find the same patterns in the data, it’s time to take notice.
    Well, many of you did, by participating in this week’s Dangerous Markets webinar, which featured Grant and Lance.
    In it, both went much deeper into the structural fragility of today’s financial markets and the many reasons why economic growth will remain constrained for years to come.
    The excessive build-up of debt in the system — and the absolute dependence on its continued expansion to keep the economy from imploding — is, of course, seen as the prime risk to future growth.

    This post was published at PeakProsperity on Friday, September 15, 2017,.


  • SWINDLING FUTURITY

    ‘The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale.’ ‘ Thomas Jefferson

    Yesterday the government reported a ‘modest’ August budget deficit of $108 billion. That’s one month folks. This is another example of how the government and their mainstream media mouthpieces portray horrifically bad, extremely abnormal financial data as normal and expected. They pretend everything that has happened since 2008 is just standard operating procedure. They follow the Big Lie theory to the extreme. The masses have been so dumbed down, desensitized, and taught to believe delusions, they can’t distinguish the abnormal from the normal.
    Those in power pretend near zero interest rates eight years after the recession was supposedly over is normal. They pretend $500 billion to $1.4 trillion annual deficits are normal. They pretend 20% unemployment is really 4.4%. They pretend the stock market is at all-time highs due to an improving economy rather than central bank easy money and corporate stock buybacks. They pretend $20 trillion of debt and $200 trillion of unfunded welfare promises is no problem. We are living in the grand delusion.

    This post was published at The Burning Platform on Sept 14, 2017.


  • Industrial Production Falls -0.9% MoM In August (Worst Since May 2009), But +1.54% YoY [Hurricane Harvey?]

    This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
    US Industrial Production fell -0.9% MoM in August, the worst decline since May 2009 during The Great Recession.

    The Federal Reserve blamed the decline on Hurricane Harvey.
    Hurricane Harvey, which hit the Gulf Coast of Texas in late August, is estimated to have reduced the rate of change in total output by roughly 3/4 percentage point.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 15, 2017.


  • One Bank Calculates The Odds Of A Market Correction In The Next 3 Months

    Yesterday was a historic day for the S&P 500: not only did the index close at a new record high, but it was also 269% higher than its “generational lows” of March 2009, surpassing the 266% increase during the 1949 to 1956 bull market, according to Bloomberg calculations.
    And while there is no reason to doubt that central bankers – who no longer have anything to lose from blowing the biggest, hopefully last bubble in history – can push this artificial “market” to unprecedented levels, even taking out the top spot of the 1990-2000 market run which saw the S&P rise by over 400%, others are less sanguine, and in recent weeks calls for an imminent correction have become a chorus. After all, it has now been years since there was even a modest drop in the S&P500, resulting in an generation of traders who are unfamiliar with using the sell button (for those asking, one definition of correction vs a crash is that the former follow rich valuations, but only crashes are associated with recessions).

    This post was published at Zero Hedge on Sep 14, 2017.


  • NFIB Small Business Survey: Index Maintains Momentum in August

    The latest issue of the NFIB Small Business Economic Trends came out this morning. The headline number for August came in at 105.3, up 0.1 from the previous month. The index is at the 97th percentile in this series. Today’s number came in above the Investing.com forecast of 105.0.
    Here is an excerpt from the opening summary of the news release.
    The NFIB Index rose 0.1 points to 105.3. Five of the components increased, while five declined. The lofty reading keeps intact a string of historically high performances extending back to last November.
    The first chart below highlights the 1986 baseline level of 100 and includes some labels to help us visualize that dramatic change in small-business sentiment that accompanied the Great Financial Crisis. Compare, for example, the relative resilience of the index during the 2000-2003 collapse of the Tech Bubble with the far weaker readings following the Great Recession that ended in June 2009.

    This post was published at FinancialSense on 09/13/2017.


  • Hurricanes Harvey and Irma May Lend Helping Hand to Economy, but Hurricane Iniki and Katrina Tell More Complex Longterm Tales

    It is widely believed that World War II gave us the end of the Great Depression. As a result, people have said for decades there is nothing like a wartime economy to bring recovery from economic recession. War blows apart a lot of things, so you have to make a lot of things, which puts a lot of people to work building a lot of things, which puts a lot of other people to work digging a lot of things from the ground in order to build those things. Hurricanes blow apart a lot of things, too.
    If that logic held completely true, however, the best thing we could do whenever we are trying to come out of economic collapse would be to blow up every city in the nation so we could build it all over again. While WWII did end the Great Depression, logic tells us there is a more complex tale to tell.
    There is a difference between an increase in economic activity, which improves economic statistics and puts people to work, and wealth accumulation. Wars (and hurricanes) create a flurry of economic activity, which may juice the economy as WWII did, but you eventually have to pay for all of that so it doesn’t build wealth for a nation overall because of the debit side of the accounting sheet … unless, of course, one nation takes spoils of war from the nations it defeats, which then bear the burden of doing worse for decades to follow while the victorious nation is better off; but we didn’t do that in WWII. We built up the nations we ravaged. So, how did we wind up better after WWII?
    What gets left out of the wartime economic recovery equation is debt. WWII proved stimulus spending works, but what is not considered it that the US had very little debt before that and enormous debt at the end. What a wartime economy or a hurricane reconstruction economy really do is move spending forward. They force infrastructure spending now, accelerating deficit spending and total debt.

    This post was published at GoldSeek on Wednesday, 13 September 2017.


  • Housing Bubble Symmetry: Look Out Below

    Housing markets are one itsy-bitsy recession away from a collapse in domestic and foreign demand by marginal buyers. There are two attractive delusions that are ever-present in financial markets: One is this time it’s different, because of unique conditions that have never ever manifested before in the history of the world, and the second is there are no cycles, they are illusions created by cherry-picked data; furthermore, markets are now completely controlled by central banks so cycles have vanished.

    This post was published at Charles Hugh Smith on TUESDAY, SEPTEMBER 12, 2017.


  • Goldman Slashes Q3 GDP By 30% Due To Hurricane Disaster

    Yesterday, when commenting on the impact of Hurricanes Harvey and Irma, we noted that even before the two devastating storms were set to punish Texas, Florida and the broader economy, erasing at least 0.4% GDP from Q3 GDP according to BofA and costing hundreds of billions in damages (contrary to the best broken window fallacy, the lost invested capital more than offsets the “flow” benefits from new spending, which is why the US does not bomb itself every time there is a recession to “stimulate growth“), things were turning south for the US economy, which in turn prompted Deutsche Bank to point out that (adjusted) recession risk, at roughly 20%, is now the highest in the past decade, and that it was quite prudent for the Fed, which expects to hike rates at least once more in 2017, to pause its current tightening, especially since a period of both economic and market weakness is imminent.

    This post was published at Zero Hedge on Sep 10, 2017.


  • The Real Estate Market, Explained In One Graph

    The U. S. housing market has now surpassed its pre-recession peak by 4.3%. This is great news for the economy, although there’s still an ongoing debate about the possibility of another housing crash.
    Whatever you believe about real estate, there’s no doubt that prices depend on where you live. HowMuch.net created a new visualization to demonstrate what this looks like…
    According to Zillow, the median price for a house is $200,400, up 7.4% over last year.
    So, naturally, how big of a house can you afford with a mortgage of $200,400? Our visualization answers this question on a sliding color-coded scale. We broke each state into a grid with 25 boxes, representing 2,500 square feet – that’s a large home with at least 3 bedrooms and 3 bathrooms. Green boxes indicate affordability and orange and red boxes mean it’s expensive. We then graphed how much house you can purchase with exactly $200,400.

    This post was published at Zero Hedge on 9, 2017.


  • Deutsche: “Recession Risk Is The Highest In Ten Years; It’s Time For The Fed To Pause Tightening”

    Even before Harvey and Irma were set to punish Texas and Florida, erasing at least 0.4% GDP from Q3 GDP according to BofA and costing hundreds of billions in damages (contrary to the best broken window fallacy, the lost invested capital more than offsets the “flow” benefits from new spending, which is why the US does not bomb itself every time there is a recession to “stimulate growth”), things were turning south for the US economy, so much so that according to the latest Deutsche Bank model, which looks at economic data that still has to incorporate the Irma/Harvey effects, the risk of a recession starting in the next 12 months is near the highest it has been since the last recession.
    As Deutsche Bank’s Dominic Konstam writes, at first glance, the modeled probability is admittedly low at about 8% as of the end of August (down a touch from near 10% in June), but it has been generally trending higher despite a brief post-election dip. As a result, the bank “sees appeal to buying SPX put spreads and bull flatteners in Eurodollars given the emergence of downside risks.”

    This post was published at Zero Hedge on Sep 9, 2017.


  • Deflation and the Markets; are deflationary forces here to stay

    Machines are worshipped because they are beautiful and valued because they confer power; they are hated because they are hideous and loathed because they impose slavery. Bertrand Russell
    Manufacturing output continues to improve, even though the number of manufacturing jobs in the U. S. continues to decline and this trend will not stop. While some Jobs have gone overseas, the new trend suggests that automation has eliminated and will continue to eliminate a plethora of jobs. As this trend is in the early phase, the momentum will continue to build in the years to come.
    Machines are faster, cheaper and don’t complain; at least not yet. So from a cost cutting and efficiency perspective, there is no reason to stick with humans. This, in turn, will continue to fuel the wage deflation trend. Sal Guatieri an Economist at the Bank of Montreal in a report titled ‘Wage Against the Machine,’ states that automation is responsible for weak wage growth.
    ‘It’s unlikely that insecurities from the Great Recession are still weighing, given high levels of consumer confidence,’ he wrote. ‘However, automation could be a longer-lasting influence on worker anxieties and wages. If so, wages could remain low for a while, restraining inflation and interest rates.’
    Guatieri goes on to state that ‘The defining feature of a job at risk from automation is repetition’. This puts a lot of jobs at risk, many of which fall under the so-called highly skilled category today; for example, Accountants, Lawyers, Radiologists, X-Ray technician, etc.
    North American business order record number of robots
    In 2016, they order 35,000 robots, 10% more than in 2015. But that is nothing compared to China, which ordered 69,000 robots in 2016, South Korea ordered 38,000 and Japan for its small size ordered 35,000 robots. This proves that jobs are not going overseas but are being taken over by machines. Nothing will stop this trend; a trend in motion is unstoppable.

    This post was published at GoldSeek on Friday, 8 September 2017.