Tag Archives: John Williams

ZeroHedge: Paul Craig Roberts: “The US Economy’s Phantom Jobs Gains Are A Fraud”

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Authored by Paul Craig Roberts,

Washington can’t stop lying. Don’t be convinced by last Thursday’s job report that it is your fault if you don’t have a job. Those 288,000 jobs and 6.1% unemployment rate are more fiction than reality.

In his analysis of the June Labor Data from the Bureau of Labor Statistics, John Williams (www.ShadowStats.com) wrote that the 288,000 June jobs and 6.1% unemployment rate are “far removed from common experience and underlying reality.” Payrolls were overstated by “massive, hidden shifts in seasonal adjustments,” and the Birth-Death model added the usual phantom jobs.

Williams reports that “the seasonal factors are changed each and every month as part of the concurrent seasonal-adjustment process, which is tantamount to a fraud,” as the changes in the seasonal factors can inflate the jobs number. While the headline numbers always are on a new basis, the prior reporting is not revised so as to be consistent.

The monthly unemployment rates are not comparable, so one doesn’t know whether the official U.3 rate (the headline rate that the financial press reports) went up or down. Moreover, the rate does not count discouraged workers who, unable to find a job, cease looking. To be counted among the U.3 unemployed, the person must have actively looked for work during the four weeks prior to the survey. Read more »

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ZeroHedge: Guest Post: Proof That Government Economic Numbers Are Being Manipulated

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Submitted by Michael Snyder of The Economic Collapse blog,

How in the world does the government expect us to trust the economic numbers that they give us anymore?  For a long time, many have suspected that they were being manipulated, and as you will see below we now have stone cold proof that this is indeed the case.  But first, let's talk about the revised GDP number for the first quarter of 2014 that was just released.  Initially, they told us that the U.S. economy only shrank by 0.1 percent in Q1.  Then that was revised down to a 1.0 percent contraction, and now we are being informed that the economy actually contracted by a whopping 2.9 percent during the first quarter.  So what are we actually supposed to believe?  Sometimes I almost get the feeling that government bureaucrats are just throwing darts at a dartboard in order to get these numbers.  Of course that is not actually true, but how do we know that we can actually trust the numbers that they give to us?

Over at shadowstats.com, John Williams publishes alternative economic statistics that he believes are much more realistic than the government numbers.  According to his figures, the U.S. economy has actually been continually contracting since 2005. Read more »

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ZeroHedge: Has The Next Recession Already Begun For America’s Middle Class?

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Submitted by Michael Snyder of The Economic Collapse blog,

Has the next major economic downturn already started?  The way that you would answer that question would probably depend on where you live.  If you live in New York City, or the suburbs of Washington D.C., or you work for one of the big tech firms in the San Francisco area, you would probably respond to such a question by saying of course not.  In those areas, the economy is doing great and prices for high end homes are still booming.  But in most of the rest of the nation, evidence continues to mount that the next recession has already begun for the poor and the middle class.  As you will read about below, major retailers had an absolutely dreadful start to 2014 and home sales are declining just as they did back in 2007 before the last financial crisis.  Meanwhile, the U.S. economy continues to lose more good jobs and 20 percent of all U.S. families do not have a single member that is employed at this point.  2014 is turning out to be eerily similar to 2007 in so many ways, but most people are not paying attention.

During the first quarter of 2014, earnings by major U.S. retailers missed estimates by the biggest margin in 13 years The "retail apocalypse" continues to escalate, and the biggest reason for this is the fact that middle class consumers in the U. Read more »

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ZeroHedge: Even The Fed Admits The “Natural” Rate Of Interest Is Lower Than Markets Are Pricing

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One of the most important, but difficult to measure, concepts in macroeconomics is the natural or equilibrium real interest rate. This is the rate of interest consistent with full employment and stable inflation. The last few weeks have seen bond yields tumble and a rising cacophony of market participants questioning both the Fed's central tendency of terminal or natural rates (around 4%) and the market's perception of how fast we get there. SF Fed Williams models see a 1.8% natural rate, BofA also believes it is between 1.5 and 2%; and now Citi admits, "fair value of long-term rates may be lower than we and other market participants judged them to be."

As BofA explains,

The natural rate is unobservable and varies considerably over time. In particular, it tends to be low during recessions and high during recoveries. However, over the long term, it tends to gravitate toward a slowly evolving normal level. Thus, it is useful to think of both a shortterm natural rate—the level needed to counter short term shocks — and the longterm natural rate—the level once the economy settles down. Pin-pointing the natural rate is important because it helps us gauge how stimulative current monetary policy is, and it helps forecast how far the Fed will eventually hike rates.

Recently, a number of analysts have suggested that the natural rate is much lower today. They point to the low average rates of the last decade. They note that the current period may be similar to the pre-Volcker years of low real rates. They also argue that the drop in trend growth in the economy may mean a lower natural rate. According to our rates team, this talk of a lower natural rate has helped push long-run market expectations for the nominal funds rate down to just 3%. Assuming the Fed hits its 2% inflation target, this implies just a 1% real rate. Read more »

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ZeroHedge: Equity Blow Off Top Takes Brief Overnight Rest, Prepares For Another Session Of Low Volume Levitation

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Last night’s docket of atrocious Japanese economic data inexplicably managed to push the Nikkei lower, not because the data was ugly but because the scorching inflation – the highest since 1991 – mostly driven by import costs, food and energy as a result of a weak yen, and certainly not in wages, has pushed back most banks’ estimates of additional QE to late 2014 if not 2015 which is as we predicted would happen over a year ago. As a result the market, addicted to central bank liquidity, has had to make a modest reassessment of just how much disconnected from reality it is willing to push equities relative to expectations of central bank balance sheet growth. However, now that the night crew trading the USDJPY is replaced with the US session algo shift which does a great job of re-levitating the pair, and with it bringing the S&P 500 higher, we expect this brief flicker of red futures currently observable on trading terminals to be promptly replaced with the friendly, well-known and “confidence-boosting” green. The same goes for Treasurys which lately have been tracking every directional move in stocks not in yield but in price.

Yesterday’s latest record US session close petered out in the Asian session and most bourses are trading a little weaker today. Losses are being paced by the Nikkei. It’s a different picture in China where Bloomberg is reporting that there is growing consensus that China’s targeted stimulus is beginning to morph into something larger. The PBoC has made a few changes to policy around the edges to ease pressures for some banks (e.g. targeted RRR cuts), complementing the State Council’s recent announcements on tax breaks and faster railway spending.

In Europe, BNP Paribas (-5.4%) are the notable underperformer after pre-market reports the US DoJ are to seek more than USD 10bln penalty from the Co., a value which is twice as large as figures reported last week. This has seen both Credit Agricole and SocGen trade lower who are also ex-dividend and therefore cementing the CAC’s position as Europe’s underperformer (-0.3%). Elsewhere, despite metals markets holding steady throughout the session, the recent losses across the complex have weighed on the basic materials sector and consequently pushed the FTSE 100 lower due to the number of mining names in the index.

Looking ahead, today’s session sees the release of the US PCE deflator, Chicago PMI, University of Michigan confidence, a host of Fed speakers and ECB’s Costa. Read more »

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ZeroHedge: The Number Of Working Age Americans Without A Job Has Risen By 27 Million Since 2000

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Submitted by Michael Snyder of The Economic Collapse blog,

Did you know that there are nearly 102 million working age Americans that do not have a job right now?  And 20 percent of all families in the United States do not have a single member that is employed.  So how in the world can the government claim that the unemployment rate has "dropped" to "6.3 percent"?  Well, it all comes down to how you define who is "unemployed".  For example, last month the government moved another 988,000 Americans into the "not in the labor force" category.  According to the government, at this moment there are 9.75 million Americans that are "unemployed" and there are 92.02 million Americans that are "not in the labor force" for a grand total of 101.77 million working age Americans that do not have a job.  Back in April 2000, only 5.48 million Americans were unemployed and only 69.27 million Americans were "not in the labor force" for a grand total of 74.75 million Americans without a job.  That means that the number of working age Americans without a job has risen by 27 million since the year 2000.  Any way that you want to slice that, it is bad news.

Well, what about as a percentage of the population?

Read more »

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ZeroHedge: Bill Gross Contemplates Sneezing

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Last month it was a tribute to his cat. This month, the manager of the world’s largest bond fund discusses sneezing: “A sneeze is, to be candid, sort of half erotic, a release of pressure that feels oh so good either before or just after the Achoo! The air, along with 100,000 germs, comes shooting out of your nose faster than a race car at the Indy 500. It feels sooooo good that people used to sneeze on purpose.”

He also discusses the aftermath: “The old saying goes that when the U.S. economy sneezes, the world catches cold. That still seems to be true enough, although Chinese influenza is gaining in importance. If both sneezed at the same time then instead of “God bless you” perhaps someone would cry out “God have mercy.” We’re not there yet, although in this period of high leverage it’s important to realize that the price of money and the servicing cost of that leverage are critical for a healthy economy. “

He also talks about some other things, mostly revolving around long-term rates of return assumptions and what those mean for investors. Via BBG:

  • Neutral nominal fed funds policy rate is 2% rather than the 4% implied by Fed’s “dots,” which indicates “asset markets are not bubbly, just low returning”
  • While this means concern over possible asset bubbles are unfounded, it’s “not a win/win for investors” as it implies a financial future where returns are much lower than historical levels
  • “Potentially 2% instead of 4% for cash; maybe 3% instead of 5% yields for 10-year Treasury bonds; 4% returns instead of 5–7% for stocks; financial repression ultimately is not an investor’s friend, because it lowers returns on cash and all other financial assets”
  • Alternatives require “taking different risks” via alternative assets, hedge funds, levered closed-end funds, higher proportion of stocks vs bonds

And more such “predictions” about the future, which as Gross himself has ironically explained repeatedly before, are worthless.

Read more »

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ZeroHedge: The Paul Craig Roberts Dilemma: World War Or The End Of The Dollar

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Submitted by Paul Craig Roberts via The Institute for Political Economy,

Is the US or the World Coming to an End?
It will be one or the other

2014 is shaping up as a year of reckoning for the United States.

Two pressures are building on the US dollar. One pressure comes from the Federal Reserve’s declining ability to rig the price of gold as Western gold supplies shrivel and market knowledge of the Fed’s illegal price rigging spreads. The evidence of massive amounts of naked shorts being dumped into the paper gold futures market at times of day when trading is thin is unequivocal. It has become obvious that the price of gold is being rigged in the futures market in order to protect the dollar’s value from QE.

The other pressure arises from the Obama regime’s foolish threats of sanctions on Russia. Other countries are no longer willing to tolerate Washington’s abuse of the world dollar standard. Washington uses the dollar-based international payments system to inflict damage on the economies of countries that resist Washington’s political hegemony.

Russia and China have had enough. As I have reported and as Peter Koenig reports here http://www.informationclearinghouse.info/article38165.htm Russia and China are disconnecting their international trade from the dollar. Henceforth, Russia will conduct its trade, including the sale of oil and natural gas to Europe, in rubles and in the currencies of its BRICS partners. Read more »

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ZeroHedge: Futures Surprise Nobody With Now Mundane Overnight Levitation

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Being that markets are unrigged and all, at least according to every single proponent of HFT that is, futures have done their overnight levitation as they have every day for the past month driven by the one staple – the Yen carry trade – even if in recent days the broader market slump during the actual daytrading session mostly impacted biotechs yesterday. And since any news is good news, we don’t expect today’s main event, the ECB’s rate announcement and Draghi press conference, both of which are expected to announce nothing new despite Europe’s outright inflationary collapse which most recently dropped to 0.5%, the lowest since 2009.

Incidentally this is the new trend in central bank watching: yesterday JPM pushed back its “imminent” forecast for a BOJ QE boost to July, however adding that Kuroda may just as easily boost QE in May or June. In other words, the new forward guidance paradigm, now that quantiative forward guidance is dead, is don’t do anything rash or stupid, like shorting, because central banks can announce QE any moment. They won’t…. But they could.  And because deflation is a “temporary” phenomenon when it comes to the actual announcement of QE, like with the ECB today, which has jawboned about QE five ways from Sunday meaning it certainly won’t do it, but two to three months down the road, nobody knows, just buy into the manipulated, centrally-planned market like an obedient little Pavlovian dog.

Nikkei 225 (+0.84%) outperformed again, buoyed by another record close in the S&P 500, although reports of a mini-stimulus in China were offset by continued property curbs in Beijing which saw Shanghai Comp settle lower (-0.7%). Also of note, Chinese Non-Manufacturing PMI fell to 54.5 from 55.0 and HSBC Services PMI rose to 51.9 from 51.0. Stocks in Europe gradually edged lower as focus remained firmly on the looming ECB policy announcement, with Bunds also lower following the absorption of supply from Spain and France, both enjoying drop in funding costs.

Read more »

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ZeroHedge: Futures Surprise Nobody With Now Mundane Overnight Levitation

Be prepared for the next great transfer of wealth. Buy physical silver and storable food.

Being that markets are unrigged and all, at least according to every single proponent of HFT that is, futures have done their overnight levitation as they have every day for the past month driven by the one staple – the Yen carry trade – even if in recent days the broader market slump during the actual daytrading session mostly impacted biotechs yesterday. And since any news is good news, we don’t expect today’s main event, the ECB’s rate announcement and Draghi press conference, both of which are expected to announce nothing new despite Europe’s outright inflationary collapse which most recently dropped to 0.5%, the lowest since 2009.

Incidentally this is the new trend in central bank watching: yesterday JPM pushed back its “imminent” forecast for a BOJ QE boost to July, however adding that Kuroda may just as easily boost QE in May or June. In other words, the new forward guidance paradigm, now that quantiative forward guidance is dead, is don’t do anything rash or stupid, like shorting, because central banks can announce QE any moment. They won’t…. But they could.  And because deflation is a “temporary” phenomenon when it comes to the actual announcement of QE, like with the ECB today, which has jawboned about QE five ways from Sunday meaning it certainly won’t do it, but two to three months down the road, nobody knows, just buy into the manipulated, centrally-planned market like an obedient little Pavlovian dog.

Nikkei 225 (+0.84%) outperformed again, buoyed by another record close in the S&P 500, although reports of a mini-stimulus in China were offset by continued property curbs in Beijing which saw Shanghai Comp settle lower (-0.7%). Also of note, Chinese Non-Manufacturing PMI fell to 54.5 from 55.0 and HSBC Services PMI rose to 51.9 from 51.0. Stocks in Europe gradually edged lower as focus remained firmly on the looming ECB policy announcement, with Bunds also lower following the absorption of supply from Spain and France, both enjoying drop in funding costs.

Read more »

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