While Mr. Dimon's view - "Amerca has the best hand ever dealt right now." is certainly uplifting, it is a bit delusional. But of course, give any person a billion dollars and they will likely become just as detached from economic realities. Does America have "greatest hand ever dealt." The data certainly doesn't suggest such. However, that can change. We just have to stop hoping that we can magically cure a debt problem by adding more debt and then shuffling it between Central Banks.
What the Fed really decided Thursday was to ride the zero-bound right smack into the next recession. When that calamity happens not too many months from now, the 28-year experiment in monetary central planning inaugurated by a desperate Alan Greenspan after Black Monday in October 1987 will come to an abrupt and merciful halt. Yellen and Co should be so lucky as to only face torches and pitch forks.
As if there was not enough negative data for the Fed to contend with, and make the case for a rate hike delay already, moments ago the BLS released the preliminary estimate of its "annual benchmark revision to the establishment survey employment series" for the 12 month period ended March 2015. While the final report will not be released until February 5, 2016, with the publication of the January 2016 Employment Situation news release, today's release will give the Fed yet another reason for concern as the BLS just admitted that at least 208K total jobs (and 255K private jobs) were overestimated in the year ending March 2015.
As the final inflation data before the FOMC decision, some have argued that this print matters most as an excuse to stay in 'emergency mode' - perhaps they are right. Consumer Prices dropped 0.1% (as expected) in August - this is the first 'deflation' since January - great news for consumers. Gasoline and airline tickets saw the biggest drops dragging down YoY CPI but The Fed will shrug its "transitory" shoulders but ex-food-and-energy did miss expectations, rising 1.8% YoY (against 1.9% exp). Notably food prices rose 0.2% in August, driven by a surge in egg prices. So WWJYD?
Despite all the confidence-inspiring propaganda from any and every mainstream talking-head, CEOs are cautious about the U.S. economy’s near-term prospects and are trimming business plans for hiring and capital investment over the next six months. According to The Business Roundtable, the CEO Economic Outlook Index tumbled 7.2 pts, from 81.3 in Q2 to 74.1 in Q3 with the disparity between CEO's employment perspective and the BLS 'augmented reality' having never been higher.
One of these days, the people of main street will rediscover their torches and pitchforks. But until they do, Goldman has apparently invented still another ruse to keep the Fed doing Wall Street’s bidding, and to thereby keep its wretched jihad against savers fully in force.
"A 'policy error' rate hike might well result in positive correlations among equities, commodities and bonds, due to a combination of risk off and higher rates. In this case it is not entirely clear how risk-parity funds would rebalance: A potential candidate for inflows would be currencies, and in particular the dollar. This would only put additional upward pressure on the dollar, reinforcing the “policy error” nature of the hike."
The question on everyone's mind is whether the economy is strong enough to withstand rate hikes by the Federal Reserve? In our opinion, the answer is no. The economy continues to ebb and flow between weak growth and no growth. This puts the Federal Reserve at risk of a policy mistake that could trip the economy into an outright recession. While there have certainly been positive bumps in the data, as pent-up demand is released back into the economy, the inability to sustain growth is most concerning.
In a word, the official unemployment rate is now in what has been the macroeconomic end zone for the past 45 years. Might this suggest that the emergency is over and done? Self-evidently, the only “incoming” information that can matter between now and next Wednesday is the stock market averages. If the Fed takes no action in September, it’s hard to imagine any economic or jobs report that wouldn’t support ZIRP or near-ZIRP in the minds of the money printers and the Wall Street gamblers they pleasure.
698K Native-Born Americans Lost Their Job In August: Why This Suddenly Is The Most Important Jobs ChartSubmitted by Tyler Durden on 09/08/2015 05:14 -0500
Over the past year, some have asked - is there any labor-related chart that matters any more? The answer: a resounding yes, only it is none of the conventional charts that algos and sometimes humans look at. The one chart that matters more than ever,has little to nothing to do with the Fed's monetary policy, but everything to do with the November 2016 presidential elections in which the topic of immigration, both legal and illegal, is shaping up to be the most rancorous, contentious and divisive.
Back in May we highlighted a study from Georgetown that endeavored to show which college majors were most likely to help students land high-paying jobs upon graduation. The report was unequivocal. To wit: "STEM (science, technology, engineering, and mathematics), health, and business majors are the highest paying." Here's where to look for lucrative STEM employment.
Since the start of the Second Great Depression, the US economy has lost 1.4 million manufacturing workers, but has more than made up for this with the addition ff 1.5 million waiters and bartenders.
According to the BLS, the main reason why the unemployment rate tumbled to the lowest since April 2008 is because another 261,000 Americans dropped out of the labor force, as a result pushing the total number of US potential workers who are not in the labor force, to a record 94 million, an increase of 1.8 million in the past year, and a whopping 14.9 million since the start of the second great depression in December 2007.
If wage growth for supervisory workers was indicative of the overall work force, the Fed could indeed claim mission accomplished and hike not 0.25% but 2.5%. There is a problem: supervisory workers only make up 17.5% of the US work force. As such, their wage gains are anything but indicative of the vast 140 or so million US workers. What about the wages for the remaining 82.5% of US workers: the non-supervisory one. Here is the answer...
The stability of global capital markets, the ECB meeting and US employment data are highlights. Risk seems to be greater than discounted that Sept rate hike is still a distinct possibility.