Unemployment

Peter Schiff: Meet "Lowflation" - Deflation's Scary Pal

In recent years a good part of the monetary debate has become a simple war of words, with much of the conflict focused on the definition for the word "inflation." Whereas economists up until the 1960's or 1970's mostly defined inflation as an expansion of the money supply, the vast majority now see it as simply rising prices. Since then the "experts" have gone further and devised variations on the word "inflation" (such as "deflation," "disinflation," and "stagflation"). And while past central banking policy usually focused on "inflation fighting," now bankers talk about "inflation ceilings" and more recently "inflation targets".  The latest front in this campaign came this week when Bloomberg News unveiled a brand new word: "lowflation" which it defines as a situation where prices are rising, but not fast enough to offer the economic benefits that are apparently delivered by higher inflation. Although the article was printed on April Fool's Day, sadly we do not believe it was meant as a joke.

 

The Pretense Of Forward Guidance

Guess what? There is none. Rather, the Federal Reserve practice of Delphically divulging its intentions ought to be understood as the master pretense of US economic life — the delusion that wise persons are actually in control of anything. The result of this guidance continues to be the mis-pricing of everything, especially the cost of money as represented in the operations of debt, and hence the value of everything denominated in money. One thing we really do know, as good old Herb Stein put it, is that things go on until they can’t, and then they don’t.

Key Events In The Coming Week

There is a reasonably quiet start to the week before we head into the highlights of the week including the start of US reporting season tomorrow, FOMC minutes on Wednesday and IMF meetings in Washington on Friday. On the schedule for today central bank officials from the ECB including Mersch, Weidmann and Constancio will be speaking. The Fed’s Bullard speaks today, and no doubt there will be interest in his comments from last week suggesting that the Fed will hike rates in early 2015.

No BTFD In Overnight Yen Carry/Spoos Means Momo Confusion Continues

No Yen carry levitation overnight and, naturally, no Spoo levitation, with the futures struggling following the Nikkei's -1.7% drubbing (pushing it back to nearly -10% on the year) and down well from Friday's closing print. Risk averse sentiment following on from lower close on Wall Street on Friday, NASDAQ 100 (-2.7%) marked the worst session since 2011 dominated the price action in Asia, with JGBs up 32 ticks and the Nikkei 225 index (-1.7%). The Shanghai Composite was closed for a market holiday. Overall, stocks in Europe have recovered off lows but remain in negative territory (Eurostoxx50 -0.64%), with tech sector under performing in a continuation of sector weakness seen in the US and Asia, however Bunds remained under pressure as speculation of QE by ECB continued to undermine demand for core EU bonds. No major tier 1 releases scheduled for rest of the session, with focus likely turning to any policy related comments from ECB’s Weidmann, Constancio and Fed’s Bullard.

All The Presidents' Bankers: The Hidden Alliances That Drive American Power

"The global financial landscape was evolving. Ever since World War II, US bankers hadn’t worried too much about their supremacy being challenged by other international banks, which were still playing catch-up in terms of deposits, loans, and global customers. But by now the international banks had moved beyond postwar reconstructive pain and gained significant ground by trading with Cold War enemies of the United States. They were, in short, cutting into the global market that the US bankers had dominated by extending themselves into areas in which the US bankers were absent for US policy reasons. There was no such thing as “enough” of a market share in this game. As a result, US bankers had to take a longer, harder look at the “shackles” hampering their growth. To remain globally competitive, among other things, bankers sought to shatter post-Depression legislative barriers like Glass-Steagall. They wielded fear coated in shades of nationalism as a weapon: if US bankers became less competitive, then by extension the United States would become less powerful. The competition argument would remain dominant on Wall Street and in Washington for nearly three decades, until the separation of speculative and commercial banking that had been invoked by the Glass-Steagall Act would be no more."

Christine Lagarde Is Clueless: 70 Words Of Pure Keynesian Claptrap

The world’s official economic institutions are run by people who believe in monetary fairy tales. The 70 words of wisdom below from IMF head Christine Lagarde are par for the course. She asserts that a new jabberwocky expression called “low-flation” is the main obstacle to higher economic growth in Europe and the DM areas generally and that it can be cured by more central bank money printing.

The Shocking Truth About The Deindustrialization Of America That Everyone Should Know

How long can America continue to burn up wealth?  How long can this nation continue to consume far more wealth than it produces?  The trade deficit is one of the biggest reasons for the steady decline of the U.S. economy, but many Americans don't even understand what it is. Our current debt-fueled lifestyle is dependent on this cycle continuing.  In order to live like we do, we must consume far more wealth than we produce.  If someday we are forced to only live on the wealth that we create, it will require a massive adjustment in our standard of living.  We have become great at consuming wealth but not so great at creating it.  But as a result of running gigantic trade deficits year after year, we have lost tens of thousands of businesses, millions upon millions of jobs, and America is being deindustrialized at a staggering pace.

Every New Job Created Is "Not" The Same

Following the March Jobs Report, ConvergEx's Nick Colas got to thinking about the composition of employment growth rather than just the headline number. Is every new job created really the same when it comes to overall economic impact? Consider that the average household income in Maryland is $69,920, versus $39,592 in Mississippi. Or that Mining and Logging jobs pay, on average, $28.77/hour and Retail Trade positions average only $14.22/hour. To expand on this point, Colas came up with three 'Ideal' marginal hires, when considering which jobs bring the most "bang" for the wage/employment "buck". At this point in the cycle we should be focused on job quality as much as quantity.

ECB "Models" €1 Trillion QE

Update: in direct flashback from the summer of 2011 when the ECB leaked news only to retract it within minutes, this just happened: CONSTANCIO: DOESN'T KNOW ABOUT 1 TLN-EURO QE MODEL REPORT

When in desperate need to crush your currency (being bought hand over fist by the Chinese), so urgently need to boost German exports, since you are unable to actually do QE as per your charter, what do you do if you are Mario Draghi? Well, you leak, leak, leak that you are contemplating QE, and then you leak some more. Such as today.

  • ECB HAS MODELED BOND PURCHASES UP TO 1 TLN EUROS, FAZ SAYS
  • ECB TESTS SHOW INFLATION COULD BE BOOSTED 0.2% TO 0.8%: FAZ

Like US inflation soared on the $1 trillion QEternity? Can't wait. In other news, expect zero reaction from gold on this latest news that another $1.4 trillion in fiat is about to flood the market. If only inbetween Mario Draghi's jaw bones.

Stocks, Bonds, And Gold Surge On Dismal Jobs Data Miss

Bad news is the best news this morning. A higher unemployment rate and worse than expected job creation is the new mother's milk for stocks which kneejerked instantly to new record highs. Bond yields are tumbling and gold is surging (back over $1300) as 'investors' believe this will signal an un-taper (because QE did so much good for so long) or lower-for-longer chatter (so more buybacks?). The USD is fading fast also.

March Payrolls Miss 192K, Below 200K Expected, Unemployment Rate 6.7% Above 6.6% Expected

Here are the key numbers: March payrolls +192K, below the 200K expected (LaVorgna 275K). This was a drop from the upward revised February print of 197K. The unemployment rate was unchanged at 6.7%, and above the 6.6% expected. The participation rate rose modestly from 63.0% to 63.2% as the labor force rose by 500K to 156,226 while the people not in the labor force declined by over 300K to 91,030. Manufacturing jobs had the largest drop since July. The number of unemployed rose 27K to 10,486K.  Conclusion: it snowed in March too, but judging by the perfectly expected stock reaction, it snowed in a good way.

Unemployment Rate By Industry

With the market focus at the NFP number release will be on one simple statistic: did the March Payrolls number beat or miss the nice round number expected of 200K (after all algos can't process more than that in 1 nanosecond), the real story in the past several years has been not about the headline establishment survey trend but everything else, especially the labor force participation (plunging), average weekly hours (plunging) average weekly compensation (plunging), and the demographic change in the labor force (will workers aged 55 and over hit a new record high? Why yes). All these are metrics and dynamics we, unlike the vacuum tubes, follow closely and will summarize after today's number. Yet one aspect of the jobs data we haven't shown before, and which BofA focuses on this morning, is the unemployment rate by industry. For all those curious what the data looks like, here is the summary.