How Good was the Payrolls Report Really?

Submitted by Pater Tenebrarum  –  The Acting Man Blog

A Lagging and Imprecise Indicator

As we have pointed out in our most recent update on manufacturing data, last Friday’s payrolls report will eventually be revised out of recognition (in previous months, a number of reports have at first been subject to an upward revision, only to be revised significantly downward again a month later. The final numbers will take still longer to arrive, up to a year if memory serves).

workersHammer guy is included the non-farm payrolls report, Ms. Sickle isn’t …

Photo via

This fact and the fact that employment is a lagging economic indicator makes it extremely odd that it is held to be the most important data point on the radar of the central planners at the Federal Reserve. However, the FOMC’s own statements indicate as much, and this policy focus is after all in line with the Fed’s bizarre mandate, which enjoins it to both keep price inflation low and employment high, by means of manipulating interest rates and the money supply.

1-PayrollsChange in non-farm payrolls, monthly – total (black bars) and private sector payrolls (red bars). Last month the government was quite busy hiring – private sector employment actually grew at a slower pace than in the two downwardly revised previous months. Government drones are not creating wealth – they are consuming it – click to enlarge.

This is of course in keeping with the Keynesian philosophy – Keynes’ system can be called a “labor-based macro-economics”, as Roger Garrison points out in Time and Money. Primarily Keynes was concerned with fighting unemployment by means of inflation – i.e., by lowering the real wages of workers by pulling the wool over their eyes. Continue reading

America’s Factories Are in Recession

Submitted by William Bonner, Chairman – Bonner & Partners

Working Boots no Longer Needed for Work

NORMANDY, France – We needed a pair of good work boots; on weekends we’re fixing up an 18th-century farmhouse. We’ve never found a French-made boot that fits well. So we went online to see if we could get a pair of American boots delivered.

To our great delight, an old favorite – Red Wing – has stores in several cities in Europe; it ships to France. They were absurdly expensive – $299 – but we figured we would have them for the rest of our lives.

red wing bootsAssorted red wing boots. Hip celebrities wear them, so you should too (says Red Wing).

The boots arrived on Saturday and were just like the ones we bought 40 years ago. Same stiff, solid construction. Same rich smell of leather and last. Same Minnesota simplicity.

But something was different. In with the boots was a magazine celebrating the history of the company. It was a stylish advertising piece; we wouldn’t have expected it from such a sweaty, shop-floor boot company. Even more remarkable were the photos. They showed young people in various chic urban settings: Brooklyn. San Francisco. Berlin. They were all hipsters! Continue reading

The Central Focus of China

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

For most of the world’s inhabitants, so long as they reside connected to some form of modern economy inflation is an unwelcome event even in the smallest doses. Central banks have made it their very business to control it, or at least its form in consumer prices, in order that their assessment of the Great Depression might not be ever repeated. From that mistaken view of history, which only serves to carve out a more than technical role for economists within the political structure, almost everything a central bank does is in some way related to “controlled” price increases.

The obvious rebuke to that effort has been the obvious destruction caused by asset bubbles in the 21st century whereby central banking is and has been at its highest settings. In the latest “cycle”, that point has been pushed beyond excess to extreme levels and yet there is startlingly little of it (official count of consumer prices, anyway). Not only does that betray the philosophical arrangement that supports the entire monetarist framework (“easing”) it might actually and completely substantiate that central banks don’t really know what they are doing.

Again, this is not a unique situation where other geographies are sailing along with QE-inspired monetary debasement; the debasement continues but without that expected “beneficial” byproduct. From Europe to Japan to America to China, all with central banks actively promoting consumer prices via rational expectations, this year continues to progress in the opposite as if the real economy and any anticipated financial mechanisms are truly unimpressed.

The latest “unexpected” setback came from the one country that finds itself at the very center of the gathering economic storm. Thus, “inflation” is not just a mangled attempt at measuring the idea with a degree of precision, it is and has become the very point of monetarism itself. The People’s Bank of China, self-described, has been dishing out monetary “stimulus” for almost a full year now. That has taken the form of six rate cuts and 300 bps in unleashed reserve requirements. And still “inflation” surrenders to none of it. Continue reading

“I Can’t Deny It – The Outlook For Gold Isn’t Pretty Right Now”

Submitted by Mark O’Byrne  –  GoldCore

Today we turn our attention to the precious metal that once brought joy and riches to its owners, but now seems to bring nothing but despair and disappointment. I’m talking, of course, about gold.

GoldCore: Gold in focus
There’s no point fighting it – gold is in a bear market – Money Week

It’s taken yet another tumble. After a miserable early summer, which saw new lows at $1,080 an ounce, gold enjoyed a pleasant August to October with a nice 10% rally. But it didn’t last writes Dominic Frisby in his just released article for Money Week.

Why it is I’m not sure, but the second half of October rarely seems to be a good time for gold – and so it proved this year. All those late summer gains have now been given back and, once again, gold is flirting with its lows in the $1,080-$1,090 area.

For all the excitement, it was just another ‘dead cat bounce’ – a so-called ‘suckers’ rally’, as the Americans so cruelly put it – in an ongoing bear market.

I’d love to tell you that $1,080 is the low – that this is the mother of all buying opportunities, that you should all max out your credit cards and buy every flake you can possibly get your hands on.

But gold-lover though I may be, that is not what I see next.

Until Monday’s stabilisation, we’d had something like 13 down days in a row, which is extreme, even by the standards of this bear market, so some kind of steadying of the ship is likely.

But the bottom line is that this is a bear market. And the trend is down. Fighting the trend is no more effective than fighting the tide or fighting the wind. You’re better off accepting it for what it is, and going with it. Continue reading

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• We’re in the Early Stages of Largest Debt Default in US History (Stansberry)
• It’s Not The Record High US Corporate Debt That Is The Biggest Risk (ZH)
• US Banks Said To Hold $10 Trillion Of Risky Trades (FT)
• US Banks Are Not “Sound”, Fed Report Finds (Simon Black)
• Chinese Defaults Spread as Cement Maker to Miss Bond Payment (Bloomberg)
• China Factory Output, Investment Sluggish As Old Economy Slows (Bloomberg)
• Goldman Sachs Says Corporate America Has Quietly Re-Levered (Tracy Alloway)
• Credit Suisse CEO Sees ‘Traumatic’ Event If Rates Increase (Bloomberg)
• Oil Prices Drop On Rising Stockpiles, Slowing Asian Economies (Reuters)
• ECB Faces Three Suits Over Quantitative Easing in Germany (Bloomberg)
• VW Only Carmaker Found Cheating By US Regulator (Reuters)
• Minsky, Financial Instability, Great Depression & GFC (Steve Keen)
• Bitcoin’s Place In The Long History Of Pyramid Schemes (FT)
• Abortions Up 50% In Greece Since Start Of The Crisis (Kath.)
• More Misery Ahead For Greeks As Economy Set To Shrink Again (Reuters)
• EU Fears Greek Debt Deal Would Unleash Mass Write-Off Calls In Spain (Telegraph)
• Germany May Need €21 Billion To House And Educate Refugees (Reuters)
• No One Is Really In Charge Of The Refugee Crisis (Reuters)
• Germany Sends Syrians Back To EU Borders (
• Austria Calls For Greece, Italy Border Controls (AP)
• Refugee Boat Sinks Off Western Turkey, 14 Dead, 7 Children (AA)