Today’s Payroll Jobs Report

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

The 142,000 September payroll jobs reported today (2 Oct 2015) by the Bureau of Labor Statistics is too small to be consistent with the still high stock averages or the alleged economic recovery. Moreover, the BLS says that it over-estimated the July and August payroll jobs by 59,000. The average workweek declined to 34.5 hours. The labor force participation rate fell further and is now the lowest in about 40 years. This is especially damning when we remember that in those long ago years many more households could exist as one-earner households.

The 5.1 percent reported unemployment rate is inconsistent with the collapse of the labor force participation rate and stands at 5.1 percent only because it includes not a single one of the millions of discouraged workers. The way BLS gets a low and comforting rate of unemployment is not to include most of the unemployed. Continue reading

A Spot of Unenjoyment

Submitted by Pater Tenebrarum  –  The Acting Man Blog

No Lipstick Can be Thrown on this Pig

The markets have been hit with yet another negative economic surprise today, this time concerning the indicator that is thought to have the full attention of the representatives of Anglo-Saxon central banking socialism huddling in the Eccles building. The professional soothsayer class has once again failed to foresee this development, but we hereby predict that won’t keep it from continuing to apprise us of the results of its entrails readings.

unsmiley-face-400x406

Oh well, at least we will continue to get to make fun of the economic theory challenged “science is prediction” class of econometrists.

PayrollsUS payroll gains sag – and once again, the always sunny expectations of the professional soothsayer class have been disappointed – click to enlarge. Continue reading

The Slippery Slope of Denial

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The ISM Manufacturing PMI was “unexpectedly” weak yet again in September. Continuing the theme spelled out by the regional manufacturing surveys (the Fed’s and the Chicago BBI), economic momentum has clearly stalled right where the “dollar” said it would. The pattern is blindingly obvious, with a huge slowdown to start the year (coincident to the first “dollar” disruptions including crude oil prices), a pause around May/June (with the “dollar” much quieter after the March FOMC) and then a pickup in August and now more dramatic deceleration in September (after the July start to the latest “run”).

At just 50.2, the headline ISM estimate was the lowest since May 2013. New orders fell sharply from 51.7 in August (which was a multi-year low) to just 50.1. While most fixate on the assumed 50 level as an actual dividing line between growth and contraction, these sentiment surveys aren’t nearly that precise and at most offer relative interpretations about the economic direction, trends and the perhaps even the strength of those directions and trends.

ABOOK Sept 2015 ISM-US Demand PMIABOOK Sept 2015 ISM-US Demand PMI New Orders

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Downgrading Manufacturing

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

The last few pieces of data for Q3 more than suggest the US economy faltered in August/September. That trend would be alarming on its own had it occurred in a financial vacuum (as if ceteris paribus actually existed), but following along against the “dollar” is especially so. There was the initial, large decline in early 2015 that “unexpectedly” shocked economists and commentary off their 2014, GDP is 5% perch. That slump was initially met by derision and disembodiment as if it were yet another aberration (continuous anomalies tend to be something other than anomalous) to be discarded in serious analysis.

When the “slump” continued on past snowfall and port strikes, it was upgraded to “transitory.” That even appeared to be the reflection of the data as it, again, followed the “dollar” out of the first wave. The idea of “transitory”, then, meant expectations (and monetary promises) that there would be no second wave.

Obviously, starting around July 6, there was a second hitting everything from oil to China to even the here-to-fore unthinkable denting of stock market certainty. With economic data, especially spending and related manufacturing (since inventory is stuck in between them), now falling again as the “dollar”, all those prior benign interpretations risk undoing if not full repudiation. That is a big risk to markets in terms of prices caught wrong-footed about expectations (reordering assumptions to incorporate “transitory” being not that) but there is also great economic risk as at some point inventory imbalances demand correction.

The idea of “transitory” in that context is for manufacturers, wholesalers and retailers (to a more limited extent) to only make slight adjustments to production and trade levels to reflect inventory (and the “dollar”, by extension) but maintaining a positive outlook once the “temporary” problems abate and that 5% GDP comes roaring back as is proclaimed at every juncture. That had already occurred, as production levels have been declining but not sharply so. If business outlooks suddenly shift away from that orthodox tendency, then the inventory problem becomes much, much more than a temporary nuisance; deeper and sharper cuts to production become necessary.

ABOOK Sept 2015 Manufacturing ISM ChiABOOK Sept 2015 Manufacturing ISM Chi 6M

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How Bad Can This Get, And How Fast?

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth


NPA Fifth Avenue at W. 54th Street 1954

There’s so much negative real bad economic and financial news out there that it’s hard to choose a ‘favorite’, but I guess I’m going to have to go with what underlies and ‘structures’ it all, the IIF stating that for the first time since 1988 and the Reagan presidency, there’s more money flowing out of emerging markets than there’s flowing in. That is for sure a watershed moment.

And no, that trend is not going to be reversed either anytime soon. Emerging economies, even if they wouldn’t include China -but they do-, have relied exclusively on selling ‘stuff’ to the rich world which combined cheap commodities with cheap labor, and now they see their customer base shrink rapidly just as they were preparing to harvest the big loot.

Now, I hope I can be forgiven for thinking from the get-go that this was always a really dumb model. That emerging nations would provide the cheap labor, and the west would kill of its manufacturing base and turn into a service economy.

This goes very predictably wrong if and when we figure out that A) economies that don’t manufacture anything can’t buy much of anything, and B) that we can sell those services our economies are ‘producing’ only to ourselves, as long as the emerging nations maintain a low enough pay model to make their products worth our while to import.

It makes one wonder how many 6 year-olds would NOT be able to figure this out. In the same vein, how many of them would be hard put to understand that our economies, overwhelmed by, and drowning in, debt, cannot be rescued by more debt? Here’s thinking the sole reason so many of us don’t get it is that we’ve been told it’s terribly hard to grasp, and you need a 10-year university course to ‘get it’. Continue reading

Russian (Vestnik Kavkaza) Interview With PCR on US/Russia Syria Cooperation

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

A long-awaited meeting between Presidents of Russia and the U.S. will take place tomorrow in New York, apparently, in the room of the Russian delegation in the UN SC. Paul Craig Roberts, professor, Chairman of The Institute for Political Economy, the former Aid of the Financial Minister in the administration of Ronald Reagon, told Vestnik Kavkaza about his view on the Russian-American relations.

–    Do you believe that the fact that presidents Barak Obama and Vladimir Putin agreed to meet is the sign of thaw in bilateral relations?

–    No. Of course, not.

–    What does it mean then?

–    I think, it means that Putin is too hopeful. It can also mean that he went every possible length to calm down the hostility flowing towards Russia from Washington; but it does not really mean anything, because Putin wants to talk about Syria and ISIS, and Obama wants to talk about the breakaway republics and Ukraine and wants Putin to turn it all back to Kiev.

Therefore, they have no common purpose in the talks. Obama intends to overthrow Assad, one of the reasons, of course is to get rid of the Russian naval base at Tartus, which was the reason Washington overthrew the Ukrainian government, he wanted to get rid of the Russian Black Sea naval base. So, the two countries have different intentions. The neo-conservative strategy is that the United States must prevent the rise of Russia, because Russia could be a constraint on unilateral US actions. So, if you intend to prevent the rise of a country and you have demonized it, Russia is demonized: it is a threat worse than Ebola, the threat worse than Islamic State. American politician and top government officials even compared the president of Russia to Hitler. So, you cannot create a threat in the minds of the American people and the minds of the Europeans, and then turn around and work with that threat, because it undermines the success of the propaganda in demonizing Russia. So, there is nothing to be expected. Continue reading

How Can China Blame Exports, Too?

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

Concurrent to more survey-based indications of a US manufacturing slowdown, economists have been quick to blame overseas problems such that it leaves a “strong” US economy as a baseline. On the other side of that equation, China’s manufacturing likewise is rapidly declining but somehow with the same point of blame. Both Chinese PMI’s were decidedly weak, with the private version far more so than the government’s number.

The government’s official gauge of factory activity improved with the manufacturing PMI rising to 49.8, up from August’s three-year low of 49.7 but still marking two straight months of decline. Meanwhile, a private survey by Caixin/Markit revealed PMI fell to a fresh six-and-a-half year low of 47.2, ticking down from August’s reading of 47.3 but still better than an earlier flash estimate of 47.

A big part of this renewed descent is apparently Chinese exports:

Total new work fell at the quickest rate in over three years, partly driven by a steeper fall in new export business, Markit said in a report. As a result, companies cut output at the sharpest rate in six-and-a-half years, while staff numbers fell at the quickest pace since the start of 2009.

US manufacturing declines on “overseas” weakness while Chinese manufacturing declines on “overseas” weakness as if the two economic systems never deal with each other, only the same, non-specific “global economy” that doesn’t somehow count either of them within its growing malaise? It seems far more likely, beyond a doubt, actually, that with the amount of trade between them (especially from China to the US) if Chinese manufacturing is declining than US “demand” is a problem.

Any chronology of China’s post-Great Recession descent follows exactly that relationship. US economists are quick to assert a break, where the US economy has surged since the unemployment rate is so low but China’s economy, which certainly feels instead the effects of the denominator in the unemployment rate as much if not more so now than the statistical outlet of the numerator, begs to differ. Continue reading

The Baby Boomer Survival Guide (Part II)

Submitted by William Bonner, Chairman – Bonner & Partners

A Lehman Moment for Commodities?

LONDON – Today, we continue our philosophical look at what you should do if you are running out of time and money. (You can catch up on Part I here.)

Where do we begin? With how to add wealth? Or how to lose it? The way to lose it is simple. You buy something that is not worth the money you paid for it. You are instantly poorer, whether you know it or not.

fat_spies_by_jdeer69-d60927gThe pleasingly plump.

Illustration by jdeer69

DJIADJIA, daily – still unsettled – click to enlarge.

That is what is happening today to stock market investors. The stocks they bought were not worth the money; now Mr. Market is letting them know. On Monday, the Dow dropped almost 2% to 16,002 points. Next stop: 15,000. Continue reading

Silver coin demand is absolutely through the roof” – Perth Mint

Submitted by Mark O’Byrne  –  GoldCore

If the continuing depression in precious metal prices has a silver lining, it is the enormous surge in demand world-wide for silver.  With most mints & brokers experiencing higher than expected demand for silver coins, many are having to set weekly sales quotas after record coin sales.

According to Nicholson, Ananthalakshmi and Harvey, reporting for Reuters yesterday, this rapid surge in demand for silver is due to unprecedented interest in coins from ‘mom & pop’ buyers in the US. “Dealers and mints trace the supply squeeze to a burst of buying by mom-and-pop investors in the United States, who scrambled to scoop up coins they considered to be at bargain levels after spot silver prices in early July sank to six-year lows.”

In addition, there is a perceived shortage in the market of silver coin supply which, according to a Perth Mint spokesperson, “is in fact a (crunch in) manufacturing capacity.”

With North American mints overwhelmed by orders, investors and collectors were forced to look overseas for increasingly scarce supplies, triggering a domino effect in Europe and Asia.

Read the full article: Silver-coin shortage shows bright side of precious metal collapse

See also our recent blog on “Premiums Rise and Delivery Delays Increase on Silver Bullion Coins” for further analysis. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

‘Destruction Of Wealth’ Warning Looms Over Stocks (MarketWatch)
Key Global Equity Index Has Fallen Off The Precipice (Dana Lyons)
Is This The Mother Of All Warnings On Emerging Markets? (CNBC)
Global Investors Brace For China Crash (Guardian)
Over Half Of China Commodity Companies Can’t Pay The Interest On Their Debt (ZH)
Here’s How Ugly The Third Quarter Was For Stocks And Commodities (MarketWatch)
This Is The Endgame, According To Deutsche Bank (Jim Reid)
Goldman: Buyback Burst Could Be Enough to Save the S&P 500’s Year (Bloomberg)
There Are Five Times More Claims On Dollars As Dollars In Existence (Brodsky)
Few Understand Why Glencore Lost 1/3 Of Its Value. That’s Worrying (BBG)
Global Economy Loses Steam As Chinese, European Factories Falter (Reuters)
BOE Says Market May Be Underpricing Risks of Falling Liquidity (Bloomberg)
JPMorgan Said to Pay Most in $1.86 Billion CDS Rigging Settlement (Bloomberg)
IMF’s Botched Involvement In Greece Attacked By Former Watchdog Chief (Telegraph)
Volkswagen Too Big to Fail For Germany’s Political Classes (Bloomberg)
VW Says Emissions Probe Will Take Months as It Faces Fines (Bloomberg)
World’s Biggest Pension Fund Is Moving Into Junk and Emerging Bonds (Bloomberg)
How The Banks Ignored The Lessons Of The Crash (Joris Luyendijk)

Read much more here: Debt Rattle October 2 2015 – TheAutomaticEarth.com