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Author Topic: US Economics, the stock market , and other investment/savings strategies  (Read 202969 times)
Crafty_Dog
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« Reply #1150 on: July 08, 2016, 11:39:49 AM »

Nonfarm Payrolls Increased 287,000 in June To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 7/8/2016

Nonfarm payrolls increased 287,000 in June, crushing the consensus expected 180,000. Including revisions to April/May, payrolls rose 281,000.

Private sector payrolls increased 265,000 in June, although revisions to prior months subtracted 14,000. The largest gains in June were for leisure & hospitality (+59,000), health care & social assistance (+58,000), information (+44,000), professional & business services (+38,000, including temps), and retail (+30,000). Manufacturing payrolls rose 14,000 while government rose 22,000.

The unemployment rate rose to 4.9% in June from 4.7% in May.

Average hourly earnings – cash earnings, excluding irregular bonuses/commissions and fringe benefits – rose 0.1% in June and are up 2.6% versus a year ago.

Implications: The Fed should feel foolish. After last month's report that payrolls rose only 38,000 in May the Fed panicked, deciding to postpone rate hikes. But in June payrolls rose 287,000, well above trend, higher than any economist was forecasting, and the fastest growth in eight months. Both of these numbers should be taken with a grain of salt. The economy was not as weak as suggested by anemic May payroll growth and is not as strong as today's number. Instead, it's still a Plow Horse. Part of the reason for the recent volatility in payrolls was the Verizon strike, but only some of it. Information sector jobs fell 39,000 in May and rebounded 44,000 in June. That's why it's important for everyone (including the Fed!) to look at the trend, which shows average monthly job growth of 204,000 in the past year and 172,000 in the past six months. Although some pessimistic analysts will dwell on the jobless rate, which rose back to 4.9% in June, that follows last month's unusually large drop to 4.7%. Again, look at the trend. The jobless rate was 5.3% a year ago and the drop in the past twelve months is not due to a shrinking labor force; the labor force is up 1.9 million in the past year. In addition, the U-6 unemployment rate, which includes discouraged workers and part-timers who want full-time jobs, dropped to 9.6%, the lowest since April 2008. The details of today's report give the Fed reasons to put rate hikes back on the table. Average hourly earnings (which exclude fringe benefits and irregular bonuses/commissions) grew 0.1% in June and are up 2.6% from a year ago, while total hours worked are up 1.6%. Combined, total cash earnings are up 4.3% from last year, giving workers plenty of purchasing power. That's impressive considering that many highly-skilled and highly-paid Baby Boomers are retiring. Another positive detail was that the median duration of unemployment dropped to 10.3 weeks, the lowest so far in the recovery. In other recent news on the labor market, new claims for jobless benefits fell 16,000 last week to 254,000. Continuing claims for unemployment benefits declined 44,000 to 2.12 million. These data suggest jobs continue to grow in July, somewhere in the 170,000 – 200,000 range. We doubt the Fed will move in July, but the market is putting the odds of a rate hike by September at only 12%. That's way too low. Don't be surprised if the Fed still ends up raising rates twice later this year.
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Crafty_Dog
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« Reply #1151 on: July 11, 2016, 11:47:28 AM »

Ignore the Central Banks To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 7/11/2016

How many times does Chicken Little have to wrongly squawk before investors get it? Yes, payrolls increased just 38,000 in May, and yes, British voters opted for political independence from the European Union. And, yes, Stock markets swooned. But, they will likely hit new highs this week. Just another head fake, brought to you by the bad news bears.

The financial press doesn't help. They jump on any, and every, story-line that can be spun negatively, even if they can't really explain it. And, the Fed seems just as jumpy as the press. Before the May jobs report (released June 3rd), most thought the Fed would hike rates by July. But after the May jobs data, and even though Janet Yellen went out of her way to emphasize that the Fed doesn't put too much weight on any one economic report, the market knew a July rate hike was off.

Some are spinning the July 287,000 jobs report as a "relief" to the Fed, but this only makes sense if somehow the Fed were thinking of cutting rates, but chose to ignore the weaker than expected May jobs data thinking things would get better. In other words, the Fed's indecision and wobbly-knees are creating uncertainty and an environment of fear.

We think it's time to start ignoring central banks. The pretense of global central banks the past several years is that without their decisive action, the crisis of 2008-09 would have turned into a global depression. All it took was a combination of massive quantitative easing, zero percent rates, and now negative interest rates to prop up growth.

This, we think, is nonsense. Quantitative easing just piled banks a mile high with reserves that they didn't lend. And, if QE really did create economic growth, it would have also generated higher inflation and a weaker dollar, but inflation remains low by historical standards and the dollar isn't weak.

The same goes for negative rates. Central banks have always thought lower short-term rates create more stimulus. So, what's to stop them from going the next step and believing that negative rates must be even better! What this theory misses is that negative rates are, in effect, a tax on the financial system, which is supposed to be the conveyor belt for monetary policy. That's why countries adopting negative rates haven't yet generated the economic improvement those rates are supposed to yield. Quit waiting, it's not going to happen. In fact, negative interest rates lead to slower money growth.

But, it's not central banks that create wealth, it's entrepreneurial vigor – new ideas that make consumers' lives better, and engineering improvements that are freeing the US from unstable foreign energy supplies. Government spending and regulation stifle growth, and for the most part that's been getting worse in recent years. But, guess what? In some ways, things are getting better. For example, American oil producers are exporting crude oil for the first time since the 1970s.

The Fed has never written an App. It may use the Cloud, but it didn't build it. Remember this the next time the financial press obsesses about the next move, or lack thereof, by the Fed, the European Central Bank, Bank of England, or Bank of Japan. It hardly matters at all. And, besides, it's time wasted that's better spent analyzing companies. That's what "investors" do.
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ccp
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« Reply #1152 on: July 15, 2016, 04:56:51 PM »

https://www.yahoo.com/finance/news/economy-suddenly-looks-great-000000269.html

Buy buy buy buy buy buy buy buy buy buy buy buy buy buy buy buy ........................

yeeeeeeeeeeeeeehaaah!

 wink
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Crafty_Dog
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« Reply #1153 on: July 18, 2016, 05:11:59 PM »

Real GDP Accelerating To view this article, Click Here
Brian S. Wesbury, Chief Economist
Robert Stein, Deputy Chief Economist
Date: 7/18/2016

Forecasting economic growth from quarter to quarter is a humbling experience. Even when you get the trend right – and it's hard to beat our forecast of Plow Horse growth – there's always a quarter here and there that will throw you for a loop.

Trying to estimate growth in the second quarter is even tougher than others because that's the time of year when the government goes back and revises the GDP reports for the past few years. Moreover, the government has had persistent problems seasonally adjusting GDP, tending to underestimate growth in the first quarter each year while overestimating growth in the middle two quarters. Government statisticians say they're trying to fix that problem, but who knows how much they'll do this time.

With all this in mind, we're forecasting that the economy grew at a 2.2% annual rate in Q2, maintaining a Plow Horse pace. However, there are important signs of improvement. For example, it looks like "real" (inflation-adjusted) personal spending rose at the fastest pace in a decade. And the key reason holding down overall growth in Q2 is an inventory correction that may end up overshooting, helping boost growth in the quarters ahead.

Meanwhile, the M2 measure of the money supply has grown at an 8.2% annual rate in the first six months of 2016, the fastest pace since 2012. This is consistent with our forecast that both real GDP growth and inflation should be accelerating more than most investors expect in the next year or so, which, in turn, should be good for equities and bad for most bonds.

Below is our "add-em-up" forecast for Q2 real GDP.

Consumption: Auto sales declined slightly in Q2, but retail sales outside the auto sector rose at a 7.1% annual pace in Q2, and services, grew at about a 2.5% rate. Overall, it looks like real personal consumption of goods and services, combined, grew at a 4.4% annual rate in Q2, contributing 3.0 points to the real GDP growth rate (4.4 times the consumption share of GDP, which is 69%, equals 3.0).

Business Investment: Business equipment investment looks like it declined at a 1% annual rate in Q2 while commercial construction fell at a 10% rate. R&D probably grew around its trend of 5%. Combined, we estimate business investment slipped at a 1% rate, which should subtract 0.2 points from the real GDP growth rate (-1.0 times the 13% business investment share of GDP equals -0.1).

Home Building: Residential construction looks like it took a breather in Q2, dropping at an 8% annual rate. Don't get worried, though. This a temporary breather; builders still need to ramp up production to fill a shortage of homes. In the meantime, the temporary drop in Q2 will trim 0.3 points off of the real GDP growth rate. (-8.0 times the home building share of GDP, which is 4%, equals -0.3).

Government: Military spending rose in Q2 while public construction projects declined. On net, we're estimating that real government purchases rose at a 1% rate in Q2, which would add 0.2 percentage points to real GDP growth (1.0 times the government purchase share of GDP, which is 18%, equals 0.2).

Trade: At this point, the government only has trade data through May, but the data so far suggest the "real" trade deficit in goods has gotten a little smaller. As a result, we're forecasting that net exports add 0.3 points on the real GDP growth rate.

Inventories: At present, we have even less information on inventories than we do on trade, but what we have suggests companies were surprised by the acceleration in consumer spending, resulting in a sharp slowdown in the pace of inventory accumulation during Q2. We're forecasting inventories subtracted 0.9 points from real GDP growth in Q2.

Put it all together, and we get a forecast of 2.2% for Q2, another Plow Horse quarter. However, the sharp inventory slowdown suggests production and, therefore, real GDP is likely to pick up in the third and fourth quarters. Corporate profits and stock prices are likely to keep rising as well. We expect this to affect the Fed and Fed speakers to become more hawkish, letting investors know a rate hike is a serious possibility by September.
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Crafty_Dog
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« Reply #1154 on: August 09, 2016, 04:26:12 PM »

http://scottgrannis.blogspot.com/2016/08/productivity-sucks.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FtMBeq+%28Calafia+Beach+Pundit%29
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objectivist1
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« Reply #1155 on: August 28, 2016, 01:17:42 PM »

Fed Officials Suggest Rate Hike On The Way In September

Friday, 26 August 2016 - Brandon Smith

As predicted here at Alt-Market, despite all other indications of a receding economy the Fed is pushing for yet another rate hike in 2016.  This is a CLASSIC move for the Federal Reserve.  They almost ALWAYS hike rates into a recession/depression, and this usually accelerates the downturn.  Keep in mind the timing of these announcements; only two months before the U.S. presidential elections.  I believe the goal here by the elites is to initiate a soft downturn going into the elections which will boost Donald Trump's campaign.  I believe that they plan to place Trump into office and then allow the system to crash completely.  The point?  To place conservatives at the helm and then blame them for an economic collapse that was already engineered to happen by international financiers...

 

Federal Reserve Chair Janet Yellen said Friday that the case for an interest rate hike “has strengthened in recent months” in light of recent strong job growth, but she gave no signal that Fed policymakers will make a move at a meeting next month.

At the Fed’s annual symposium in Jackson Hole, Wyo., Yellen said the Fed’s policymaking committee “continues to anticipate that gradual increases in the federal funds rate will be appropriate over time” to meet the Fed’s goals for inflation and employment.

The Dow Jones industrial average rose after Yellen’s remarks, but logged a small decline at midday as the market digested the news that met its expectations. Meanwhile, Fed Vice Chairman Stanley Fischer said on CNBC that next Friday's report on August job gains could factor into the Fed's decision at its September 20-21 meeting, a remark that appeared to keep a rate increase on the table. The 10-year Treasury yield was up .03 percentage points in early afternoon trading at 1.6%.

The Fed raised its benchmark interest rate in December for the first time in nine years but has stood pat since then, leaving it at a historically low 0.4%.
« Last Edit: August 28, 2016, 01:19:44 PM by objectivist1 » Logged

"You have enemies?  Good.  That means that you have stood up for something, sometime in your life." - Winston Churchill.
G M
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« Reply #1156 on: August 28, 2016, 07:41:16 PM »

Trump won't win the election, short of some epic game changer.



Fed Officials Suggest Rate Hike On The Way In September

Friday, 26 August 2016 - Brandon Smith

As predicted here at Alt-Market, despite all other indications of a receding economy the Fed is pushing for yet another rate hike in 2016.  This is a CLASSIC move for the Federal Reserve.  They almost ALWAYS hike rates into a recession/depression, and this usually accelerates the downturn.  Keep in mind the timing of these announcements; only two months before the U.S. presidential elections.  I believe the goal here by the elites is to initiate a soft downturn going into the elections which will boost Donald Trump's campaign.  I believe that they plan to place Trump into office and then allow the system to crash completely.  The point?  To place conservatives at the helm and then blame them for an economic collapse that was already engineered to happen by international financiers...

 

Federal Reserve Chair Janet Yellen said Friday that the case for an interest rate hike “has strengthened in recent months” in light of recent strong job growth, but she gave no signal that Fed policymakers will make a move at a meeting next month.

At the Fed’s annual symposium in Jackson Hole, Wyo., Yellen said the Fed’s policymaking committee “continues to anticipate that gradual increases in the federal funds rate will be appropriate over time” to meet the Fed’s goals for inflation and employment.

The Dow Jones industrial average rose after Yellen’s remarks, but logged a small decline at midday as the market digested the news that met its expectations. Meanwhile, Fed Vice Chairman Stanley Fischer said on CNBC that next Friday's report on August job gains could factor into the Fed's decision at its September 20-21 meeting, a remark that appeared to keep a rate increase on the table. The 10-year Treasury yield was up .03 percentage points in early afternoon trading at 1.6%.

The Fed raised its benchmark interest rate in December for the first time in nine years but has stood pat since then, leaving it at a historically low 0.4%.
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