Unemployment

BLS, We Have A Problem: Polled Unemployment Soars To March 2012 Levels

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.

 

Frontrunning: August 22

  • SURPRISE - Goldman Sachs won a preliminary victory to limit losses from a wave of erroneous trades that roiled U.S. options markets (WSJ)
  • HP’s Whitman abandons 2014 revenue growth target (FT) - just keep doing those buybacks and ignore CapEx: revenue growth estimated in 2022
  • Republicans in Echo Before Big Burn Defy Affordable Care (BBG)
  • China's banks to take next step in rate reform push  (Reuters)
  • Berlin’s Consistency on Greece’s Rescue (FT) and lack thereof
  • Summers as Obama Voice of Authority Rides Car Rescue in Fed Race (BBG)
  • Cuomo in Manure Fight as New York Promotes Yogurt (BBG)
  • Yellen’s Ties From London to Shanghai Bypass White House (BBG)
  • Sanctions Gap Allows China to Import Iranian Oil (WSJ)

Jackson Hole Begins As 10 Year Slouches Toward 3.00%

Following the market's shocking realization that the taper is coming prompting a kneejerk to the kneejerk reaction after the FOMC minutes, and yet another painful session in Asia, stocks were desperate for some good news from somewhere, which they got thanks to a Goldilocks PMI from China printing by the smallest possible expansionary quantum, or 50.1, and well above expectations, as well as a continuation of better than expected European PMI data with the August composite rising from 50.5 to 51.7 vs. Exp. 50.9, based pm a Services PMI rising into expansion to 51.0 from 49.8, (Exp. 50.2), and Manufacturing at 51.3 vs. Exp. 50.8 up from 50.3, the highest since June 2011. It is perhaps stunning just how conflicting this "improving" data is with private sector industrial and manufacturing company metrics, but with the credit creation situation in Europe (read: all that matters) at record lows, and with banks retrenching and needing to delever by trillions, it is only a matter of time before this latest propaganda wave is exposed for what it is. The net effect of the overnight data is to push the USDJPY to nearly 99.00 which thanks to the ubiquitous correlation algos has dragged US equity futures higher, if only briefly (the 10 Year is at 2.91% - under 10bps from redline territory), while slamming the offsetting EURUSD despite the "better" than expected European data.

33 Shocking Facts Which Show How Badly The Economy Has Tanked Under Obama

Barack Obama has been running around the country taking credit for an "economic recovery", but the truth is that things have not gotten better under Obama.  Compared to when he first took office, a smaller percentage of the working age population is employed, the quality of our jobs has declined substantially and the middle class has been absolutely shredded.  If we are really in the middle of an "economic recovery", why is the homeownership rate the lowest that it has been in 18 years?  Why has the number of Americans on food stamps increased by nearly 50 percent while Obama has been in the White House?  Why has the national debt gotten more than 6 trillion dollars larger during the Obama era?  Obama should not be "taking credit" for anything when it comes to the economy.  In fact, he should be deeply apologizing to the American people.

Spain's 'Real' GDP Could Be 21% Lower Than Reported

With Spanish unemployment surging, tax collection so low, and delinquent loans soaring (though understated due to shifts in the Sareb 'definition's which means an ~11% levels is more like ~14%), it is 'odd', as El Confidencial notes, that GDP has only modestly declined. The fact of the matter is - things do not add up and the following three charts highlight the dramatic divergences between official (government-supplied) data and synthetic (market-based) measures of activity in the construction, industrial, and services industries. Given these 'real' levels, El Confidencial suggests real Spanish GDP would be 21% lower than reported.

Goldman's FOMC Post-Mortem: "Tapering Likely In September"

While we found it modestly comedic (and certainly ironic) that CNBC's crack team celebrated the recovery from the initial knee-jerk drop in stocks after the FOMC by top-ticking that suspension of reality; we suspect the following post-mortem from Goldman on the minutes is what confirmed concerns across the street... "Minutes from the July 30-31 FOMC meeting were generally consistent with our view that tapering of asset purchases is likely to occur at the September meeting, coincident with an enhancement of the forward guidance."

Private Banker: "Is There Any Good News?"

“Is there any good news?”

You bet.

The good news is that this fraudulent system of unchecked, unbacked paper currency is finally coming to an end.

"Broad Support For Bernanke Tapering Timeline" FOMC Minutes Say

While some read the FOMC statement in July as more 'dovish' than expected - even though the market's performance since suggests otherwise -, it appears the actual conversations from the minutes point in a more 'Taper'-on direction (though clearly uncertainty remains high):

  • *A FEW ON FOMC URGED PATIENCE, OTHERS FAVORED QE TAPERING SOON
  • *FOMC MINUTES SHOW BROAD SUPPORT FOR BERNANKE TAPERING TIMELINE
  • *FOMC PARTICPANTS SAID SEQUESTRATION 'CLOUDED THE OUTLOOK'
  • *FOMC PARTICIPANTS PREDICTED GDP TO PICK UP IN 2ND HALF 2013
  • *ALMOST ALL FOMC PARTICIPANTS BACKED 'CONTINGENT OUTLOOK' FOR QE
  • *FOMC SAID JUNE PAYROLL REPORT SHOWED 'CONTINUED SOLID GAINS'

Pre-minutes: S&P (Fut) 1646, 10Y 2.8125%, USD 81.2, WTI $104.11, Gold $1371

Goldman Previews The Fed Minutes

The July FOMC statement was a bit more dovish than expected, including (1) an explicit reference to the risks posed by higher mortgage rates, (2) more dovish language on below-target inflation, and (3) a statement that the Committee "reaffirmed its view" that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends. We will read the minutes from the July meeting with an eye toward any clues on the likelihood of near-term tapering and potential changes to the forward guidance.

Spanish Bad Loans Re-Spike To 50-Year High

The surge in Spanish (in fact broadly European) equity and bond markets of the last few weeks has been suspiciously one-way and based (seemingly) on the hopes-and-dreams of the world's liquidity-based marginal investor finding another new normal momentum 'clean shirt' to pile into. However, despite the uptick in some data in Europe, the structural problems remain entirely unfixed and nowhere is that more evident than in the chart below. As European stock and bond markets suffer their worst 2 days in 2 months, Spanish bad loans (after a very brief pause in the exponential surge that also provided hope that the worst was over) have re-surged to a new all-time record high. At 11.61% of total lending, bad loans are now at their highest since records began in 1962.

Has It Been A Year Since You Filed For Bankruptcy? Then This Mortgage Is For You

There was a time when those who defaulted on their debt, especially mortgages, had to wait 3-5 years before they became eligible for any form of new credit, let alone a brand new mortgage. That, however, was in the Old Normal. In the New one things are different: so different, that for anyone who filed a bankruptcy on or before July 2012, we have good news for you - the FHA (subject to an explanation and several almost painless conditions) will be happy to provide you with a brand new mortgage.

What Every Fed Head Will Be Looking At For The Next Month

While it appears to be increasingly likely (odds) that the Fed will Sept-Taper (desperate to use economic data to cover the fact that they are cornered due to deficits, sentiment, and technicals), in the lead-up to the next FOMC meeting on September 17-18, as Stone McCarthy notes, there are some significant developments regarding the outlook for the Fed and monetary policy between then and and now that everyone should be paying attention to...