With the labor force participation rate at 35 year lows still being shrugged off as some 'cyclical' (definitely not structural) issue that will correct just around the corner, we thought it perhaps worth taking the long view, the really long view, of jobs in America. As the following two charts show, all was apparently 'sustainable' until the mid 1970s and then things changed...
"When it comes to market events, there have been no impactful black swans - the so-called unexpected 'tail events," Mark Spitznagel notes in his excellent new book, The Dao Of Capital: Austrian Investing in a Distorted World, explaining that, "what were unseen by most, were indeed highly foreseeable" by others. The Fed planted the seeds for the last financial crisis and "when you prevent the natural balancing act, you get growth that shouldn't be happening."
The financial crisis of 2008 could have been the wake-up tall that, like the Yellowstone fires of 1988, alerted so-called managers to the dangers of trying to override the natural governors of the system. Instead, the Federal Reserve, with its head "ranger," Ben Bernanke, has deluded itself into thinldng ft has tamped down every little smolder from becoming a destructive blaze, but instead all it has done is poured the unnatural fertilizer of liquidity onto a morass of overgrown malinvestment making a even more highly flammable. One day - likely sooner than later, it will burn, and when that happens, the Fed will be sorely lackng in buckets and shovels and must succumb to the flames.
As fast-food workers of the world unite under a common banner of "higher minimum 'livabale' wages", one can't help but reflect on the terrible jobs data this morning and the potential inability of workers to get anything but a low-skill 'part-time' job flipping burgers. But most importantly, these workers may soon not be able to afford the product they manufacture. Concerns over rising wage costs can be put aside for now as it is the soaring costs of beef (as we discussed here previously) that are causing "Dollar Menu" items to be adjusted upwards. "You can't sell a burger for $1 anymore because the cost of beef has gone up so much," and sure enough, as Bloomberg reports, McDonalds is testing a new version, dubbed 'Dollar Menu and More', that includes items selling for as much as $5. As one analyst notes, the industry's "definition of value has moved up from the Dollar Menu to $1.50 or $2.”
With gold 'handled' back below $1,400 and bonds 'tapering' through 3.00% yields as equity bulls proclaim 'Mission Accomplished' today on the Dow 15,000 trigger, it seems markets remain entirely confused as to whether there will be moar printing, less-and-then-moar printing, or no moar printing. The following 61 page compendium from Incrementum offers 'everything you wanted to know about gold and bonds' but were afraid to source yourself as a guide for debt bears and bullion bulls... with a sprinkling of china bubbles, wealth effect lies, and regulation imbecilities.
Today's price action in Chevron will come as no surprise to any reader of ZH, but maybe, just maybe, in flipping from porn site to porn site, the SEC will stumble across our earlier note on unemployment in the 'adult movie' business and will look at the following remarkable charts. As Nanex shows, with 37 seconds to the close, one of the largest market-cap firms in the entire world saw its stock price attacked by an HFT algo that oscillated it by +/-2% about twice-per-second. As Nanex exclaims, "no longer can any HFT'ers or exchange or regulator blame THIS on humans." Perhaps the odds of another black-out on NASDARK should be higher than the current 28%.
Frequent readers are well aware that in addition to having broken the story about America's conversion to a part-time worker nation nearly three years ago, another topic we have been closely tracking over the past year has been its conversion to a gerontocratic worker society (from October 2012: "55 And Under? No Job For You"), which confirms that contrary to yet another urban legend that old workers are retiring in droves, it is the old workers who are getting the bulk of the jobs, at the expense of everyone else (those 55 and younger). Which brings us to today's chart of the day which shows the August job additions broken down by age group, and as tracked monthly by the household survey. The additions, or rather job losses, need no additional commentary aside from what we have provided so far.
An impressive chaotic day in stocks and bonds as both markets appeared confused as to whether jobs bad news was good, if the jobs bad news was bad enough, and if Syrian bad news was actually good news in holding off the Taper a little longer. The Dow seemed the trigger for all things today as the collapse on Putin's statement slammed the Dow into the red for the week (which would have made 5 weeks in a row, something we haven't seen since the US downgrade in 2011). That was clearly unacceptable to someone, and the Dow soared 220 points on no news whatsoever to break the all-important "Mission Accomplished" level of 15,000. Once that farce was over, we started to fade and then on news of Syrian government "gas" shelling, we tumbled back into the red (with the Nasdaq and S&P practically unchanged again). Treasuries rallied off their just-greater-than 3.00% yields with their biggest intraday plunge in yields in weeks on a slow-growth (or Taper-off) bid exaggerated by Putin's comments, only to sell-off back to pre-Putin by the close. Gold, Silver, and Oil (highest clsoe since May 2011) all surged not looking back after the jobs and Putin news.
As President Obama continues to push for a plan of limited military intervention in Syria, a new poll of Americans has found that though the nation remains wary over the prospect of becoming involved in another Middle Eastern war, the vast majority of U.S. citizens strongly approve of sending Congress to Syria. "There’s no doubt in my mind that sending Congress to Syria - or, at the very least, sending the major congressional leaders in both parties - is the correct course of action," one respondent noted, adding "sooner rather than later, too, this war isn’t going to last forever."
So totally unexpected:
SYRIA GOVT FORCES SHELL QABUN, DAMASCUS WITH GAS: AL-ARABIYA
AL-ARABIYA CITES UNIDENTIFIED ACTIVISTS - so the same CIA-trained, al Qaeda funded, Qatari mercenaries?
Actually it is surprising: the odds were today's false flag would take place in Iran to get the Israel card in play. Apparently nobody was dumb enough to assume the government would go with two false flags in a row in the same place. And now bring on the 1000 YouTube clips of "undisputed proof."
- Government has too much debt to issue more debt
- Government nationalizes private pension funds making their debt holdings an "asset" and commingles with other public assets
- New confiscated assets net out sovereign debt liability, lowering the debt/GDP ratio
- Debt/GDP drops below threshold, government can issue more sovereign debt
Today's jobs number (and revisions) are sparking some initial vain hope that SepTaper is delayed and providing enough 'optimism' that Fed spice will flow just a little longer. However, as we have noted numerous times, the Fed is cornered and has to taper for four more critical reasons (sentiment, deficits, technicals, and international resentment) and Obama has already confirmed that the Fed will be Tapering 'gradually'. This leads us to the Fed's next 'tool' - forward guidance. Explaining to the world how they will keep rates lower for longer and longer, however, in the face of the following chart suggests either, i) the Fed has zero interest in anything but feeding easy money to the banking system, and/or ii) jobless claims data has become less than irrelevant. We suspect both.
The ultimate killer app in the U.S. economy is convenience. Convenience sells in every market and every sector. Convenience and comfort have long replaced need as the driver of developed economies. Since the economy depends on convenience as the one surefire motivator of sales, no one dares admit that convenience has reached diminishing returns. We are so habituated to absurd marketing "innovations" offering some tiny additional gain in convenience that we may not notice that the gains in convenience have slipped to near-zero. It turns out that convenience is truly the killer app, as it ultimately leads to diabesity, chronic disease and early death. Convenience has gone from diminishing returns to negative returns. Staying fit and preparing real meals are intrinsically inconvenient. Convenience, it seems, is the killer app we'll die for.
Earlier we pointed out the latest amusing scapegoat for the "soft" jobs report: it wasn't the weather this time, but the porn inudstry, and specifically the exodus of 22k "actors" due to an HIV scare. Whether or not this truly amusing justification for the recent, and ongoing, weakness is relevant is unknown, but what is known is that there appears to have been another great rotation to take place in the just as amusingly-called US economic "recovery" - a rotation out of actors and into, where else, waiters and bartenders.