As one witty observer noted over the weekend, "no one with an IQ greater than their shoe size, save corrupt, captured American economists, buys the fake October unemployment report," and while we agreed with the pretext of his thesis, we thought a quick sanity check on the sudden surges in Retail employment and Construction jobs and wage growth would help clarify a few things for those who 'believe' in miracles. As the following two simple charts show, we have seen this odious pattern of mal-investment, mis-allocation, and erroneous executuve extrapolation before... and it did not end well.
First - Retail..
Something stinks. Retail stock prices have been plunging (despite the promises of increased spending amid expectations of wage growth - which today NYFed admitted was at its lowest on record) and just tonight we see Banana Republic see Same Store Sales collapse 15% and Gap overall down 4%.
We have seen this before...
Coincidence we are sure.
Second - Construction.
Having already pointed out the anomalous surge in construction jobs weekly payrolls print, we thought exposure of the raw underbelly of the construction industry would help. As Framing Lumber prices crash over 21% year-over-year, it just seems odd that construction jobs would keep surging onwards and upwards as if nothing had happened. Of course, this 'confidence' in the face of market-implied doom has been seen before...
And did not end well.
* * *
So apart from Retail and Construction sectors entirely decoupling - in an almost perfect replay of the lead-up to the last crash - it seems everything is on target for a rate hike.