What Job Openings Might Really Be Telling Us

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Typically when any statistic gets way out ahead of itself it will eventually revert toward its prior state. That is the nature of stochastic modeling in economic accounts and it presents a great weakness. It is not unshared, however, as that is nothing more than recency bias applied to a quite dynamic world. The great flaw in any stochastic model is that very starting assumption – that the future will look reasonably like the recent past.

From that structural standpoint, you can begin to appreciate the problem at various agencies in dealing with the aftermath of the Great Recession. Since this “recovery” looks nothing like any others, assuming statistical trajectories that conform to prior versions is not just a potential mistake it may be highly misleading. That point has already been stated repeatedly and is still being revealed with further benchmark revisions.

That brings us to the case of the BLS’s JOLTs survey and the utter chaos in the Job Openings component. Dating back to January 2014, we are supposed to accept that businesses suddenly and sharply deviated from their prior “recovery” doldrums to gain employees at an outlier pace. While that has been more or less the case for the past year and a half, the BLS just published an estimate for July that does not revert toward something more sensible but rather pushed unbelievably toward a world all its own; job openings apparently surged by 430k in July alone to more than 5.7 million!

ABOOK Sept 2015 JOLTS JO

Continue reading

The Absurdity of the “Living Wage”

Submitted by William Bonner, Chairman – Bonner & Partners

A “Living Wage”

GUALFIN, Argentina – Monday was Labor Day. Most of the world pays homage to its sweating, busing, trucking classes, its poor huddled masses… yearning for a cushier seat and a better deal… on May 1. President Grover Cleveland chose the first Monday in September.

proletariansПролетарии всех стран, соединяйтесь! (workers of all countries, unite!) – the state motto of the thankfully expired Soviet Union. When the proletarians actually did unite there under the wise guidance of the socialist vanguard, it proved to be a death sentence for millions of people who didn’t fit the mold of the “new socialist superman” as determined by the leadership of the party (see: The Human Cost of Socialism in Power at the Daily Bell).

Image credit: ITAR / TASS

On Friday, the Dow fell again – down 272 points. But don’t worry, Tobias Levkovich, Citi’s chief U.S. strategist, told CNBC there was a 96% chance (96%, not 95%!) that the Dow would be higher one year from now. Well, we can’t fight those odds, can we? So b … b … buy!

No, wait. What does he know? Nothing! Just like the rest of us. We’re all guessing. But our guess is that the risk of losing money is 82.7% greater than the risk of not making more. No, make that 82.8% …

DJIA, dailyThe DJIA, daily – Citi’s guesser-in-chief knows exactly what’s going to happen! You can’t lose! – via StockCharts, click to enlarge. Continue reading

French Socialists Launch Another EU Centralization Trial Balloon

Submitted by Pater Tenebrarum  –  The Acting Man Blog

Never let a Crisis go to Waste

As is well known, the EU’s socialist centralizers and “harmonizers” have always fully expected the adoption of the euro to lead to a crisis that would allow them to push through policies that would otherwise never have seen the light of day. Italian socialist and former EU Commission president (i.e., chief commissar) Romano Prodi told the Financial Times in 2001:

“I am sure the euro will oblige us to introduce a new set of economic policy instruments. It is politically impossible to propose that now. But some day there will be a crisis and new instruments will be created.

(emphasis added)

Montgolfiere_1783Montgolfière – engraving by Claude-Louis Desrais, 1783

Of course it wouldn’t be a problem for the EU to use a common currency if it consisted of a sound, market-chosen money. It is only a problem and was always likely to produce a crisis because it is a central bank-administered fiat money the supply of which can and has been expanded willy-nilly.

Euro Area M1The current rate of expansion of the euro zone’s true money supply has hit nearly 14% annualized. This is utterly crazy, particularly when considering what happened after the last major money and credit expansion – via ECB, click to enlarge. Continue reading

HOW EUROPE CRASHED GREECE – Yanis Varoufakis’ op-ed in the NYT

Submitted by Yanis Varoufakis  –  The Yanis Varoufakis Blog

ATHENS — Since the beginning of Greece’s financial crisis in 2010, two prime ministers have been swept from office after they were forced to adopt an unfeasible package of austerity measures in exchange for a bailout from the troika, as the eurozone authorities — the European Commission, the European Central Bank and the International Monetary Fund — are known. It pains me to watch the same fate befall a third prime minister, my friend and comrade Alexis Tsipras. (To read the rest of the article click here)

If The Corporate Bubble Doesn’t Do Much On The Way Up, It Will In The Other Direction

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The update to the S&P/LSTA Leveraged Loan Index was pretty much as expected following the interpretations I suggested Friday. Despite the alleviation of direct “dollar” pressure on liquidity subtracting from asset prices, there is a very distinct lack of enthusiasm to, at this point, rebid for margined assets or to pick up “bargains.” The index itself rebounded from a low of 947.85 (market value component) on August 26 to just 950.10 by September 1. However, the index remained almost unchanged from that level all last week (pricing irregularities?).

That is a sharp contrast to the trough of the last time junk credit was so conspicuously under leverage calls dating to December 16. From a low of 957.70 that day, the index had jumped to 970 just three days later, finishing 2014 at 973. For the index to remain pretty much at the lows for almost two weeks (below 952 since August 21) is, I believe, significant.

ABOOK Sept 2015 Crunch LSTA 100

The end game, so to speak, for this junk as the corporate credit bubble overall is in issuance. Once the funding game runs its course into the sustained downswing of the “cycle” the extent of marginal economic as well as financial diminishment is simply unknowable. The size and reach of the corporate credit bubble is immense, beyond much description especially as the huge numbers themselves don’t really illustrate the penetration of this financial bastardization (such as how much the stock repurchase bubble might similarly suffer the fate of marginal economic activity just from troubled companies no longer able to add debt and hang on). Continue reading

Britain’s £173 Billion “Debt Timebomb”

Submitted by Mark O’Byrne  –  GoldCore

UK households are sitting on a £173 billion debt time bomb after once again being lured into a spending splurge by banks and credit card companies.

The startling rise in debt levels due to people splashing out on new cars, TVs, conservatories, luxury items, consumer goods and home improvements was uncovered in an investigation by Money Mail.

With a rise in interest rates imminent for the first time in more than eight years, fears are growing that many families will be left struggling with repayments.

The debt mountain stacks up

The amount of borrowing being taken on by households continues to grow at a startling rate, spurred on by hundreds of offers for credit cards and loans.

Bank of England governor Mark Carney has sent a letter to all fund managers asking for reassurance they are able to deal with an anticipated rush of investors making emergency cash withdrawals to cover their mortgages and other debts.

Read full This Is Money article

DAILY PRICES
Today’s Gold Prices: USD 1122.30, EUR 1002.50 and GBP 730.38 per ounce.
Yesterday’s Gold Prices: USD 1120.85, EUR 1003.49 and GBP 728.27 per ounce.
(LBMA AM)

GoldCore Bullion Coin & Bars

Note: Premiums on gold have remained steady but silver premiums continue to move higher – especially on silver eagles.

Gold has moved marginally lower today but remains just above $1,120 per ounce, not far from where they were this time yesterday, after they snapped four days of losses yesterday to rise 0.2%.

Gold in Singapore was marginally lower and in early European trading as it gave up the gains from yesterday. Lacklustre trading continues and gold remains locked in a tight $19 range between $1,117.50/oz and the high yesterday of $1,126.30/oz for the last three days.

Silver is down 0.3%, after it outperformed yesterday rising 1.8%, its biggest one-day rally in nearly two weeks.
Platinum’s down 0.3%, and palladium is up 0.6% up for a third day and up 11% in recent days as it bounces from five year lows.

IMPORTANT NEWS

Gold Climbs for Second Day on Dollar Weakness Amid Asian Rally – Bloomberg
Gold firms above 3-wk low as traders await Fed’s rate view – Reuters
Gold prices gain in Asia as investors cautious ahead of Fed next week – Investing.com
Palladium Poised for Biggest Gain This Month on Supply Threat – Bloomberg
Treasure hunter says he has found 100 tons of Soviet gold hidden from Nazis during WWII – RT Question More

IMPORTANT COMMENTARY

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• Japan Shares Jump Most in Seven Years (WSJ) 
• Bond Market Sends Fed All-Clear to Raise Interest Rates (Bloomberg) 
• World Bank Economist Warns Fed Hike Could Harm Emerging Economies (WSJ) 
• Deutsche Bank: The U.S. Dollar Rally Is “Rotating, not Ending” (Bloomberg) 
• Market Volatility Has Changed Immensely (Tracy Alloway) 
• China Just Killed the World’s Biggest Stock-Index Futures Market (Bloomberg) 
• Perfect Storm Continues To Hammer EM Currencies (BNE) 
• China Slowdown Hits Major African Economies Hard (WSJ) 
• Boom, Bust And Broken Trust Mark The Ages Of Finance (John Kay) 
• Germany To Receive More Than 800,000 Refugees This Year (Reuters)
• Europe’s Alarming Lack Of Unity Over Refugees Could Break Up The EU (Ind.) 
• Concern Over Burgeoning Trade In Fake And Stolen Syrian Passports (Guardian) 
• Citi: Capital Markets Now Control Oil Prices (Tracy Alloway) 
• China Intends To Oust Dollar From Oil Trade (RT) 
• Obscure Hedge Fund Is Buying Tens of Billions of Dollars of US Treasurys (WSJ) 
• Yet Another Measure Of Risk In Junk-Bond Market Flashing Red (MarketWatch) 
• The City’s Stranglehold Makes Britain An Oh-So-Civilised Mafia State (Monbiot) 
• Majority of Greeks Say Adopting Euro Has Harmed Country (Gallup) 
• EU Nations Must Support UN Sovereign Debt Restructuring Proposals (19 Economists) 
• Russia Demands Answers As Bulgaria, Greece Deny Syria Flights (AFP) 
• How Europe Crushed Greece (Yanis Varoufakis) 
• Can Hobbits Save New Zealand? (CNBC)