Political analysts over the next year or so, and historians well into the future, are likely to point to the fall of 2013 as a fundamental inflection point in American politics. That period, they will say, is when the American people forced a major new direction in American foreign policy. Before the events of this fall, the country’s electorate largely delegated foreign policy to its political elite—and largely supported that elite as it projected American military power with more abandon than the country had ever before seen. Even as the government steadfastly expanded the range of international problems that it said required U.S. military action, the electorate accepted that expanded international role and that increasingly promiscuous use of force. Those days are gone now.
There is also consensus among the people inhabiting the real world -the one that is found outside the ivory towers of the economics departments of all US and global Tier 1, 2 and 3 universities - that the only reason the world is currently in its sad, deplorable and deteriorating economic state (which however keeps making the rich richer), is precisely due to these same economists, whose tinkering and experimentation with DSGE models, differential equations, curved lines, and all such things all of which have no real world equivalent, and specifically due to economists like Greenspan and Bernanke. These two men, both of whom barely have seen the real world for what it is or held a real job outside of their academic outposts, who surround themselves with brownnosing sycophants and who do the bidding of Wall Street, are the primary reason for the current centrally-planned quagmire. Which is why we wonder: is the fact that some 313 economists (and counting) have signed a petition pushing for Janet Yellen (aka Freudian slip "he" if you are the president), and against Larry Summers, sufficient grounds to actually like the outspoken former Harvard head?
San Francisco Fed head John Williams - known for his extremely dovish views on monetary policy (and support of record accomodation) - appears to have taken some uncomfortable truth serum this morning. In a speech reminiscent of previous "froth" discussions and "irrational exuberance" admissions, Williams explained:
- *WILLIAMS SAYS POLICY MAY YIELD ASSET BUBBLES, UNINTENDED RESULT
- *WILLIAMS: ASSET-PRICE BUBBLES AND CRASHES 'ARE HERE TO STAY'
- *WILLIAMS: ASSET-PRICE BUBBLES ARE 'CONSEQUENCE OF HUMAN NATURE'
His words appear to reflect heavily on the Fed's Advisory Letter (from the banks) from 3 months ago - warning of exactly this "unintended consequence." This, on the heels of Plosser's recent admission that the Fed was responsible for the last housing bubble, suggests with the black-out period before September's FOMC about to begin, the Fed is sending us a message that Taper is coming - as we know they are cornered for four reasons (sentiment, deficits, technicals, and international resentment).
The data is getting painfully laughable: on one hand Gallup says unemployment is soaring to two year highs, on the other, the ISM non-manufacturing report just printed at 58.6: for those keeping track, and who enjoy laying along, this was the highest since December 2005, and the 2nd largest two month increase in the index on record. Of course, this means unless NFP tomorro comes at -1,000,000, the Taper is a done deal as the 10 year, which just printed 2.969% and surging, indicate. Stocks continue to do their own thing, blissfully ignorant of the debalce that will take place once the 3.00% yield stops are hit. The good news for bond bulls: this index can only go down from these ridiculous levels.
With ADP out of the way, and providing no guidance to an extreme NFP print one way or another, we once again turn to Gallup. As a reminder, a few days ago we showed that things are bad and getting worse for America's job prospects following direct polling land as relates to unemployment on a seasonally unadjusted basis. Today, the polling group has released its seasonally adjusted unemployment number and how it compares to the BLS' own estimation of the labor market. In a word: it is not pretty (which, again, is good for those who are hoping and praying St. Ben will keep the monetary Kool Aid running for a little bit longer): at 8.6% it is over 1% higher than the BLS' reported print, and is the highest since the end of 2011.
"I have met a number of politicians over the years, but lately it has dawned on me that very few of them are seriously prepared to stand up for their beliefs, if indeed they have any. ...
Ideologies and courage have been consigned to the past and, as I see it, Europe’s Achilles’ heel is the German Chancellor Angela Merkel, the de facto leader of the EU, and her lack of vision for the single-currency bloc. ... Her lack of vision stands as a striking contrast to the emotional feelings that dominated much of post-war European political thinking. ...
As I see it, the research is done. The verdict is out. We have to re-evaluate the EU."
Gallup, which every week polls thousands of adults to get an unadjusted, snapshot picture of who has a job, who has a part-time job and who has no job has released its latest weekly results which have some good and some bad news. Good for those who fear that the NFP print on Friday will be so bad Bernanke will have no choice to delay (or reduce) the taper; bad for the economy. Because at 8.5%, unemployment for the week ended September 1 is now near the highest levels it has been in one year, following a spike in mid-August that sent it all the way to 8.8%.
Consumer sentiment and confidence has been a smorgasbord of confusion recently. Bloomberg's Consumer Comfort index just had its biggest 3-week plunge in 16 months falling back to its lowest since the first week of April. Conference Board confidence was 'stable' at 5.5 year highs and now UMich Confidence, which missed expectations for the first time in 2013 last month in its preliminary print, has been revised up with its final data to the best level in 4 months. The schizophrenia is completed with this little beauty from Gallup. As we have warned before, beware 'the big con' and as these two charts suggest, confidence seems very much in the eye of the beholder.
Gallup tracks daily the percentage of U.S. adults, aged 18 and older, who are underemployed, unemployed, and employed full-time for an employer, without seasonal adjustment. Due to the lack of Arima-X 'magic' the results are specifically not comparable to the BLS data, but, as the chart below suggests, the correlation is high. What is most worrying about the latest data is the rapid rise in both unemployment and underemployment that the Gallup poll finds (to 8.9% unemployment and 17.9% underemployment. Unemployment rates have jumped notably in the last month to their highest in 13 months. Will the Fed 'allow' this data to filter into the BLS data and 'avoid the Taper' or are there non-economic reasons (G-20, deficits, technicals, sentiment) that the Fed needs to SepTaper.
With record-breaking gridlock a reality, it is not a great time to be a member of Congress if you like getting things done. Nor is it a great time to be in Congress if you like people thinking you’re doing a good job. In a recent Gallup poll, Americans gave the current Congress the lowest confidence rating ever measured for any institution in 40 years. But what does having “confidence” in Congress mean? How does confidence affect our legislature’s ability to implement new laws? In the Infographic below we walk through why Congress has such a low approval rating, how that affects legislators who want to pass bills, and how the leaders of the Senate and Congress compare.
Congress Is Less Popular than Cockroaches, Lice, Root Canals, Colonoscopies, Genghis Khan, Communism, King GeorgeSubmitted by George Washington on 07/14/2013 14:02 -0400
Exactly HOW MUCH do Americans Hate Congress?
As the EU agrees to fund another bailout deal to help Greece rise from the ashes, providing them with another $8.7 billion in financial aid, the question that begs an answer is: will this have any effect on the austerity that is being imposed on the country. Throwing good money after bad?
Two days ago, when Pew Research came out with a poll showing that a majority (56%) of Americans replied affirmatively to the question if "the National Security Agency’s (NSA) program tracking the telephone records of millions of Americans is an acceptable way for the government to investigate terrorism," we were disappointed if not shocked. However, what is surprising, is that moments ago Gallup has released its own poll conducted on June 10-11 "with a random sample of 1,008 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia" and which finds precisely the opposite: "More Americans disapprove (53%) than approve (37%) of the federal government agency program that as part of its efforts to investigate terrorism obtained records from U.S. telephone and Internet companies to "compile telephone call logs and Internet communications." ... The reactions to these types of government programs have remained constant over the past seven years, although Republicans and Democrats have essentially flipped their attitudes over that time period, reflecting the change from Republican President George W. Bush to Democratic President Barack Obama.
As the world waits breathless for some Goldilocks print in tomorrow's non-farm payroll data, Gallup's most recent survey of employment trends does not paint a pretty picture for the real economy. Though, by the 'adjustment bureau' and their Arima-X goal-seeking, nothing is ever clear, not only is the payroll-to-population (the number of people working) worse than a year ago but the unemployment rate is also rising with under-employment - at 18.0% - near 15 month highs. If the NFP print plays out in line with this, the estimate of 165k will be woefully over-optimistic, leaving the question of whether bad-is-good, or have we crossed the Rubicon of belief in moar is better.
We have often spoken of the disconnect between Wall Street and Main Street. While asset prices are inflated by continued interventions of monetary policy from the Federal Reserve, boosting Wall Street profits and widening the wealth gap between the top 20% of Americans and the rest, "Main Street" continues to suffer a from a rising cost of living and falling wage growth. "How long can the disconnect last between Wall Street and Main Street?" There is no clear answer for that as consumers have shown a willingness to draw down savings rates to historically low levels while quickly returning to cheap credit forgetting the disaster that it caused them not so long ago. However, in reality, when you have a family to feed, clothe and house - it really doesn't matter what is logical, but what is necessary, regardless of the consequences down the road. Of course, for many American's today, the only real difference between now and the "bread lines" of the 30's is that the "bread" is delivered in the mail rather than at the "soup kitchen" on the corner.