Mish's Global Economic Trend Analysis |
- 88% of Americans say "Now is a Bad Time to Find a Quality Job"
- Reading Between The Lies
- Curve Watcher's Anonymous Investigates the Question "Is the Bond Bull Dead?"
| 88% of Americans say "Now is a Bad Time to Find a Quality Job" Posted: 22 Sep 2010 07:44 PM PDT The vast majority of Americans think this is a bad time to find a quality job. It's been that way since early 2008 when the number first touched 70%. Please consider Recession or Not, U.S. Job Market Woes Persist. Even as Wall Street rallies on the National Bureau of Economic Research announcement that the recession ended in June 2009, Gallup finds -- more than a year later -- that 88% of Americans believe now is a bad time to find a quality job.Flawed Binary Choices Unfortunately we do not have a real measure of changes over time in regards to how hard it is to find a quality job because the question only offered a binary choice. A far better question would have allowed a range of options such as ...
The flaw helps explains the virtual flatline starting in late 2008. Nonetheless, the answers are not encouraging and the overall response certainly does not suggest consumers are about to go on a spending spree. Unemployment Ticks Higher One reason Gallup's unemployment numbers vary from the BLS numbers is the latter seasonally adjusts numbers while Gallup does not. This is not a flaw, but it does make comparisons different. Another reason the numbers may differ is the BLS excludes those who want a job but has not looked for one. This is an arguable flaw in the reported BLS number. Furthermore, it would be far more helpful if Gallup posted numbers from a year ago for comparison purposes. Nonetheless, rising numbers are consistent with the vast majority of economic headlines as well as the Fed's panic unemployment statement on jobs as translated in Reading Between The Lies. I expect to see unemployment make news highs later this year or next. That's when panic statements are likely to translate into panic actions. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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| Posted: 22 Sep 2010 12:13 PM PDT On August 27, 2010 in a much Ballyhooed Speech at Jackson Hole, Bernanke said The Committee is prepared to provide additional monetary accommodation through unconventional measures if it proves necessary, especially if the outlook were to deteriorate significantly.Really?! In light of yesterday's FOMC Statement inquiring minds are asking four key questions. 1. Did the economic conditions "deteriorate significantly"? 2. Is deflation a significant risk? 3. Does the Fed "have the tools"? 4. Did the Fed do a "careful comparison of benefit and cost" for further quantitative easing? Answers 1A. Of course they did. You can see it in the Philly Fed index, in Housing, and in numerous other indicators. The only outlier was last month's ISM. The problem is the Fed does not admit conditions have deteriorate significantly. Instead the Fed talks of a slowdown and uses words like "sluggish". The Fed always pretends conditions are better than they are so as not to alarm the markets. In response, people rightfully accuse the Fed of telling lies. 2A. Deflation is not a risk per se. We are in deflation as measured by credit. Deflation is the result of piss poor economic policies by the Greenspan Fed, the Bernanke Fed, numerous banks and lenders, and Congress. The threat is not deflation, a much needed event. The threat is further insane policy actions by the Fed and Congress hoping to stave off the inevitable credit collapse. 3A. Clearly the Fed does not have the tools. If they did, we would not be in this mess in the first place! It's hard to say if Bernanke's statement is an outright lie or if he is delusional enough to believe the nonsense he is spouting. The safe action here is to assume Bernanke is a delusional liar. 4A. Clearly the answer is no. Jackson Hole vs. Tuesday's FOMC Statement Let's compare the key points above with select highlights from yesterday's FOMC statement. Supposedly
That does not look like rapid deterioration. That looks like slow improvement. However, we do see this new statement thrown in out of the blue "Measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the longer run, with its mandate to promote maximum employment and price stability." Skilled Translation of Blatant Lies My friend "HB" is very skilled at reading between the lies. He offers this accurate Translation of the FOMC Announcement, September 21. FOMC: "Information received since the Federal Open Market Committee met in August indicates that the pace of recovery in output and employment has slowed in recent months. Household spending is increasing gradually, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software is rising, though less rapidly than earlier in the year, while investment in nonresidential structures continues to be weak. Employers remain reluctant to add to payrolls. Housing starts are at a depressed level. Bank lending has continued to contract, but at a reduced rate in recent months."Reading between the lies is a fine art. Please see the article for more select quotes and their true meaning. Gold Monthly By the way, there is someone else very adept at leading between the lies. I just happen to have a select quote handy.  It seems to me that gold does not believe the horse hockey spewing from Bernanke's mouth anymore than I do. Just yesterday I was asked My response was "Who does it look like is right?" Note that gold fell from 850 to 250 over a 20 year period with inflation every step of the way. Prechter is simply wrong. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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| Curve Watcher's Anonymous Investigates the Question "Is the Bond Bull Dead?" Posted: 22 Sep 2010 03:30 AM PDT Curve Watcher's Anonymous is looking at various long-term and intraday charts of treasuries and the stock market following Tuesday's FOMC meeting. $TNX: 10-Year Treasury Yield Intraday Chart  Click on any chart to see a sharper image. Note the initial spike higher in yields right on the announcement. This headfake is very typical of FOMC announcements. SPY: S&P 500 Index Shares Intraday Chart  As with treasuries, the S&P 500 had an initial spike that quickly reversed. Both charts show fat tails. Ultimately the rally failed (which would be typical given the flight to safety trade in treasuries). Every FOMC meeting it seems we get the same fake reaction: The first move is typically a false move. Sometimes there is a double fake, but only rarely does the initial move keep on going. I would be interested to see comments on this. Given that I seldom concern myself with intraday or even short-term action however, the more serious question is "Where to from here?" 2-Year Treasuries vs. the S&P 500  The pattern may not continue, but for quite some time rising treasury yields have generally been directionally aligned with rising equities. In three instances (the first three red boxes), a drop in treasury yields preceded (led) a subsequent drop in equities. The fourth box (where we are now) is unresolved. 2-Year Treasuries - Monthly Chart  Two year treasury yields have fallen to a record low, yet stocks have been rising. 5-Year Treasuries - Monthly Chart  The all time low in 5-year treasury yields is but a stone's throw away. 10-Year Treasury Yields - Monthly Chart  New lows in 10-year treasury yields are in sight. To help put things into perspective here is a weekly chart of $TYX 30-year treasuries, $TNX 10-year treasuries, $FVX 5-year treasuries, and $IRX the 3-month treasury discount rate. The other symbols are yields. $TYX, $TNX, $FVX, $IRX Weekly Chart  The chart depicts weekly closing values. Is the Bond Bull Over? Judging from 2-year treasuries or 5-year treasuries, pronouncements of the "death of the bond bull" were certainly premature. Moreover, given how weak the economy is, I think it is odds-on the 10-year treasury note touches if not breaks the previous yield lows. Only the 30-year long bond yield seems reluctant to drop. It may not make it. Regardless, no matter how you look at things, the treasury bull is nearing its end. 30 years is a long run! However, bull markets tend to end in love affairs. That's how tops are made. Currently, nearly everyone despises treasuries except the banks and foreign central banks. As long as sentiment stays negative on treasuries, there is room for long-dated treasuries to rally. There will be a time to short treasuries, but now does not seem like it. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. 
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