US has Lost 1.4 Million Full Time Jobs Since 2008, Thanks To The Fed

Let’s cut to the chase: There were 1,446,000 fewer people working full time in August 2014 than in August 2008, according to the Bureau of Labor Statistics household survey (CPS).

That’s after an increase of 210,000 full-time jobs in August. That’s the actual count, not the seasonally adjusted abstraction. So we have to compare that with past Augusts to get an idea if its any good or not. August is a swing month, sometimes up, sometimes down. The average change over the prior 10 years, which included a couple of ugly years in the recession, was -63,000. So this number wasn’t bad. It was slightly better than August of last year and 2012, but come on….

This post was published at Wolf Street on September 8, 2014.

Deutsche’s David Bianco “Forecasts” The S&P (In One Simple Chart)

While not exactly a “bear”, Deutsche Bank’s David Bianco – until this weekend – had the lowest S&P 500 target for 2014 year-end at 1,850. That’s all changed now…
Laszlo Birinyi would be proud…

Via Deutsche Bank,
We raise 2015 yearend S&P 500 fair value target 7.5% to 2150 from 2000
We still expect a long lasting economic expansion of moderate growth, which should rival the US record of 10 years with S&P EPS growth averaging 6% until the next recession, on 5% sales growth, flat margins, 1% share shrink. Despite entering the latter years of a typical expansion and high margins vs. history, we now think the trailing S&P PE should average 17 vs. 16 until elevated recession risk returns. This is because we now expect long-term real interest rates to stay below normal through 2016 and thus lower our S&P 500 real cost of equity estimate from 6.0% to 5.5%. We raise 2014 and 2015 yearend S&P targets to 2050 and 2150 from 1850 and 2000 and introduce 2300 for 2016 yearend.

This post was published at Zero Hedge on 09/08/2014.

If The Economy Is Recovering, Why Is The Labor Force Participation Rate At A 36 Year Low?

Should we be concerned that the percentage of Americans that are either working or looking for work is the lowest that it has been in 36 years? In August, an all-time record high 92,269,000 Americans 16 years of age and older did not “participate in the labor force”. And when you throw in the people that are considered to be “in the labor force” but are not currently employed, that pushes the total of working age Americans that do not have jobs to well over 100 million. Yes, it may be hard to believe, but there are more than 100 million working age Americans that are not employed right now. Needless to say, this is not a sign of a healthy economy, and it is a huge reason why dependence on the government has soared to absolutely unprecedented levels. When people can’t take care of themselves, they need someone else to take care of them. If the percentage of people in the labor force continues to decline like it has been, what is that going to mean for the future of our society?
The chart below shows the changes in the civilian labor force participation rate since 1980. As you can see, the rate steadily rose between 1980 and 2000, but since then it has generally been declining. In particular, this decline has greatly accelerated since the beginning of the last recession…

This post was published at The Economic Collapse Blog on September 7th, 2014.

RED ALERT: The Velocity Of The Monetary Base Collapsed 75%, Europe Is Slipping Back Into A Recession

During the first and second quarters of 2014, the velocity of the monetary base was at 4.4, its slowest pace on record. This means that every dollar in the monetary base was spent only 4.4 times in the economy during the past year, down from 17.2 just prior to the recession. This implies that the unprecedented monetary base increase driven by the Fed’s large money injections through its large-scale asset purchase programs has failed to cause at least a one-for-one proportional increase in nominal GDP. Thus, it is precisely the sharp decline in velocity that has offset the sharp increase in money supply, leading to the almost no change in nominal GDP.
The hoarding of money, then, is attributed to two factors:
A (gloomy) economy after the financial crisis.
The dramatic decrease in interest rates that has forced investors to readjust their portfolios toward liquid money and away from interest-bearing assets such as government bonds
Why you should worry about Europe
It’s not ‘Credit Crisis 2′ but Europe is in rough economic waters again.
Even anemic growth has evaporated and the eurozone risks slipping back into recession. The euro has fallen 5% against the dollarover the past three months.
Here’s The Global Economic Chart Of The Summer

This post was published at Investment WatchBlog on September 7th, 2014.

A Lie that serves the rich – Roberts, Titus, Kranzler

The labor force participation rate has declined from 66.5% in 2007 prior to the last downturn to 62.7% today. This decline in the participation rate is difficult to reconcile with the alleged economic recovery that began in June 2009 and supposedly continues today. Normally a recovery from recession results in a rise in the labor force participation rate.
The Obama regime, economists, and the financial presstitutes have explained this decline in the participation rate as the result of retirements by the baby boomers, those 55 and older. In this five to six minute video, John Titus shows that in actual fact the government’s own employment data show that baby boomers have been entering the work force at record rates and are responsible for raising the labor force participation rate above where it would otherwise be. It is not retirees who are pushing down the participation rate, but those in the 16-19 age group whose participation rate has fallen by 10.4%, those in the 22-14 age group whose participation rate has fallen by 5.4%, and those in the 24-54 age group whose participation rate is down 2.5%.

This post was published at Paul Craig Roberts on September 4, 2014.

Labor Participation Rate Drops To Lowest Since 1978; People Not In Labor Force Rise To Record 92.3 Million

It is almost as if the Fed warned us this would happen. In a note released yesterday, a Fed working paper titled “Labor Force Participation: Recent Developments and Future Prospects“, looked at the US labor force and concluded that “while we see some of the current low level of the participation rate as indicative of labor market slack, we do not expect the participation rate to show a substantial increase from current levels as labor market conditions continue to improve.” But don’t blame it on the greatest recession/depression since 1929: “our overall assessment is that much – but not all – of the decline in the labor force participation rate since 2007 is structural in nature.”
Well that’s very odd, because it was only two months ago that the Census wrote the following: “Many older workers managed to stay employed during the recession; in fact, the population in age groups 65 and over were the only ones not to see a decline in the employment share from 2005 to 2010 (Figure 3-25)… Remaining employed and delaying retirement was one way of lessening the impact of the stock market decline and subsequent loss in retirement savings.”

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

Canadian Banks Got $114 Billion from Governments During Recession

Canada's biggest banks accepted tens of billions in government funds during the recession, according to a report released today by the Canadian Centre for Policy Alternatives.
Canada's banking system is often lauded for being one of the world's safest. But an analysis by CCPA senior economist David Macdonald concluded that Canada's major lenders were in a far worse position during the downturn than previously believed.
Macdonald examined data provided by the Canada Mortgage and Housing Corporation, the Office of the Superintendent of Financial Institutions and the big banks themselves for his report published Monday.

This post was published at CBC News

3 Things Worth Thinking About (Vol. 7)

[‘3 Things Worth Thinking About’ is a weekly publication of ideas, usually contrarian to the consensus, to provoke thoughtful discussions and decision-making processes. As a portfolio manager and strategist, I am sharing things that I am considering with respect to current investment models and portfolio allocations. Please feel free to email or tweet me with your comments and ideas.] Surge In Sentiment Surveys
There is an interesting divergence going on between sentiment based surveys, specifically the ISM Manufacturing and Non-Manufacturing surveys, and actual underlying economic data. This week saw both surveys rise sharply to cyclically high levels despite weakness in actual new orders and consumer consumption.
It is also somewhat intriguing that two groups measuring the same data are getting vastly different results. While the Institute of Supply Management survey saw sharp increases in optimism, Markit’s surveys of the same manufacturing and services related data saw declines. This is one of those cases where only one can be right.
The chart below shows the composite index of the ISM surveys (simple average of manufacturing and services data).

There is a running pattern in the surveys which the initial decline mid-economic cycle reverses back up to cycle peaks. The next decline in sentiment is during the latter stage of the economic cycle prior to the onset of the ultimate recession. The recent surge in survey activity, ex-underlying strength in the actual data, suggests that sentiment is anticipating a recovery that may or may not occur.

This post was published at StreetTalkLive on 04 September 2014.

What Mario Draghi Really Did

New ECB actions were specifically intended to reap benefits through Euro currency devaluation. To achieve this aim, Draghi announced cuts in interest rates as well as administering Euro ‘printing’ through balance sheet expansion (1,000bln or so). The ECB has had recent success as the EUR/USD dropped over 1.5% today and has fallen 5% since July.
A weaker currency is desirable during periods of recessions and subdued inflation. Doing so, however, is not always seamless or the most ideal policy. Many global central banks, for instance, needed to follow the Fed’s lead in cutting rates after the 2008 crisis or risked having an undesirable appreciation of their home currency. Tensions can periodically arise, because two countries cannot become ‘more competitive’ at the same time (‘a race to the bottom’). Clearly, a weaker currency in one country means a stronger currency in another.
There are times, however, when currency movements are mutually beneficial. Against the USD, Draghi is maximizing his efforts to weaken the Euro by trying to utilize ideal timing; expanding the ECB balance sheet at precisely the same time that the Fed’s is flat lining. The widening of interest rate differentials also helps. The FOMC likely welcomes today’s actions. Ideally, Draghi would have also wanted a Quid Quo Pro with Italy and France regarding economic reform; this sounds good in theory, but it is not how politics work.
Despite Draghi’s vacant pleas for fiscal ‘arrows’, he had to ‘do his part’, particularly after backing himself into a corner after his Jackson Hole speech. Nonetheless, ECB actions surpassed expectations today. However, this probably means that the bazooka of sovereign QE is off the table for a while.

This post was published at Zero Hedge on 09/04/2014.

Economist: ‘This is Far From Over… They Know There Is a Problem Coming’

Well known Shadow Stats economist John Williams has warned time and again that the narrative being crafted by government statisticians, elite bankers and politicians is nothing but smoke and mirrors. With an election coming up in just a couple months, it’s highly unlikely that they’ll come out and tell us right now how fundamentally troubled our financial, economic and monetary systems really are.
But that doesn’t change the facts. The reality, as Williams notes in a recent interview with Greg Hunter’s USA Watchdog, is that the U. S. economy is in severe trouble and we may be just months away from the beginning of the next leg down, especially for the U. S. Dollar.
If we were to go back to the levels before the recession, we would need at least 11 million new jobs. That’s 11 million more than we have now. . . . We are in serious trouble here.

One of the best indicators is how people on Main Street, USA feel.
I found that those who live in the real world have a pretty good sense of what’s really going on.
If you don’t believe in the numbers coming out of the government, you’re probably right.
Over time… actual experience that trumps the romanticized numbers they’ve put together and we’re not seeing a recovery here. [We] haven’t had a recovery… the economy plunged into 2009… we had a financial panic… none of the issues have been resolved.
The economy has bottomed out. The banks are still in trouble. This is far from over.

This post was published at shtfplan on September 3rd, 2014.

Jim Rickards: 2014 Expectations

In this audio clip from Physical Gold Fund, James Rickards of Tangent Capital talks about the Fed’s alternatives in 2014 and how they may carry out their tapering plans.  Rickards reviews the Fed’s actions, and how they’ve been unable to attain their specific goals, the forces of deflation versus inflation, as well as affects of nominal GDP growth in lieu of real GDP growth.  He also discusses gold and gives some interesting comments regarding why he holds it, how much of it should be a part of any investment portfolio, and its current trading environment  (specifically, that the current set-up could yield a major short-squeeze opportunity).  Listen to mp3 audio.

And in the following Bloomberg interview, Rickards talks more about gold and how even though 2013 has seen a bad year for the metal in paper terms, there is still major demand for obtaining gold in physical form.  Physical gold has been leaving the GLD ETF and going straight to China.  That the central banks have to drain the ETF in order to get the physical metal shows that there is very little of the stuff available elsewhere.  This is a must watch interview with James Rickards.