"A fire overnight at the Labor Department's headquarters shut down the building for most employees. Members of the media were allowed in for the release of the report."
I think that fire affected the Labor Dept computers. In any event, the "upside surprise" is still mediocre and nowhere near the number of jobs needed to keep the economy from shrinking further. IF the labor force participation rate were anywhere near where it was in 2008, unemployment would be over 10%. The only reason unemployment is going down is people who have exhausted their benefits are no longer counted. I was out shopping with my granddaughter recently, an annual pilgrimage on her birthday, and this year I spent the LEAST amount of money in the last 4 years, because all prices, even clothes for the coming season, were slashed 40 to 50%. Retail shoppers are nowhere to be found. This recovery is smoke and mirrors, and when the wizard is out of moves, he will resort to propaganda. BTW, the wizard has boxed himself in and does not know how to get out. A rising market in a bad economy is a disaster as it does nothing for treasury revenues while raising expectations for interest rate adjustments the government can ill afford. In reality all the Fed liquidity has flowed to company balance sheets, where it is being used to buy back stock and issue options to senior executives. The market goes up because the share float is shrinking, simple supply and demand (this is the rising P/E we keep hearing about, but in a shrinking economy it is a sign of MALINVESTMENT). Think about it, CEO’s aren’t even interested in M&E, what does that tell you?
UNFORTUNATELY the phony capital is not being used to grow the economy BECAUSE EXECUTIVES KNOW THERE IS NO AGGREGATE DEMAND. How can there be, the demographic train wreck called the BABYBOOMERS are retiring at the rate of 10,000/day. Anyway, the blame doesn’t lie entirely with the FED, it’s mostly the fault of an ineffective Congress going back 30 years. That was the time to grow the economy by 5% a year (real growth) to avert the looming demographic disaster, NOT NOW. NOW IS TOO LATE. The current asset inflation is just an attempt to salve the gaping wound created by the failure of the last 30 years. And baby boomers, you deserve blame as well. Did the best and brightest of the generation with most overall potential study science and engineering, did they create any transformation technology to propel our economy into a new secular growth period, or did they study how to create wealth out of thin air (i.e, WALL ST) and leave the heavy lifting to emerging market economies? When did the US go to the moon, develop the computer, jet aircraft, STS, space station, etc. In the 50’s, 60’s and 70’s, THESE ARE THE ACHEIVEMENTS OF THE PREVIOUS GENERATION, THE BABY BOOMERS DID SQUAT (other than sponge off EME’s to live well above their means!!) - ALL THE “NEW TECHNOLOGIES” OF THE LAST 30 YEARS ARE INCREMENTAL. I worked in technology my whole life; even in this country a lot of high tech jobs were filled by foreign nationals.
Wealth cannot be created out of thin air by printing money, only the illusion of wealth (otherwise why not do it all the time, and we can all be fat and rich!). No, eventually the FED will have to try to reign in this crazy (ill)liquidity, and the only way to do it will be negative FED interest rates, I.E TAXPAYER WEALTH WILL BE TRANSFERRED TO THE BANKS. This is the exact tyranny the likes of John Adams and Thomas Jefferson fretted over; currency debasement is taxation without representation! Anyway, enough ranting. Dont be fooled by today’s stock market gains, it’s mainly short-covering. Even at “new highs”, on an inflation-adjusted basis the market is basically back to where it was 13 years ago. REMEMBER - DONT BE A BAGHOLDER.
the FED is now trapped by its own liquidity. They really have no idea what to do other than maintain the status quo while floating trial balloons and trying to gauge the market response. The last thing they want is rising rates, because the government doesn't have the revenues to pay higher rates. Yet they have to be extremely worried about asset bubbles, seriously how many more bubbles before they lose all credibility?
Can the FED make up their mind? Last week we had we had FED doves calling for an early end to bond purchases (because of the "improving economy, right), and today we have a hawk (Bullard) saying the FED should continue with QE. This overt manipulation of the markets by the FED is unprecedented. Obviously they know more than we do and it must be ugly.
Gold is and always will be the only real money. It has no counter party risk and should never be sold at a loss in dollar terms. Actually you should never assess the short term value of your gold vis a vie the dollar, rather only over the long term in terms of purchasing power. Short term the price is manipulated by the commercial banks for two reasons, the first is to defend the dollar, which is by far their largest "asset", and the second is to force physical gold out of weak hands. Banks are now scrambling to purchase physical gold as their last beat down was not very successful and they look like the proverbial clown holding an exploding cigar. They see the disconnect between the physical and paper prices, and because their gold holdings have been hypothecated and leveraged many times over, they are desperate to reline their coffers. They have no choice but to let the price come up or they wont get any physical gold. Word of caution - stay away from these manipulated garbage PM ETFs as an investment.
The damage is done. QE is the emperor with no clothes. The fact that this market went up over 50% with FLAT EARNINGS and DECREASING REVENUES shows want a scam the stock market is. Unless you are a crooked insider you dont stand a chance to make money because there is no more Buy and Hold investing. its now BUY, HOLD and GET REAMED.
when liquidity is withdrawn and earnings fail to materialize? Thesis: current dividend payments are a function of cheap money and share buybacks, when economic growth fails to materialize, companies will be forced to cut dividends. Thumbs up yes, thumbs down no
Double bottom in now going back to last May, GLD was up 16% from there. But this time we will see new highs, at least $195. And although the GLD is back to last years pps, its more expensive to purchase physical now than it was last year (much more demand)
Buy the close and sell the open until it doesnt work anymore, but I would not be "investing" in this market. The banksters are trapped; no volume = no one to distribute to (no bagholders), so they will drive it as high as they can until they have to cannibalize one another. This is a broken market where fundamentals dont seem to matter, but of course they always to. If you are investing realize you are gambling the economy will grow to support these inflated stock prices, but where will that growth come from? The US is facing an unavoidable long term secular decline due to demographics (baby boomer retirement) analogous to Japan the last 20 years. Bernanke is rolling the dice hoping he can inflate the economy before the inevitable deflationary decline, but he has no idea if it will work. Historically all countries / governments that have tried this tactic have collapsed (the difference being we are now in a nuclear age, where projection of power goes a long way to protecting ones vested interests). Hope for the best but dont be a Pollyanna. God bless the USA!
So afraid of deflation - they want rising asset prices in a zero growth economy (stocks, housing, i.e, the wealth effect) with low inflation, a weak dollar, low interest rates, and no interest in dollar alternatives (i.e., gold). What a nightmare. BTW, low gold prices are signaling much higher bond yields, cant have it both ways.
and current market values were supported by fundamentals, we wouldnt have to "guess what the FED is going to do." Damn house of cards, these academics should get a real job.
He's an idiot. CNBC and FOX business are all idiots and ideologically biased. The least obnoxious IMO is Bloomberg.
Are you kidding. You will see 600 in a few years. The FED cannot print forever without precipitating a fiat currency crisis.
Followed by crash to SPY 66 in 2014. Im so sick of listening to the oral diarrhea coming from the fast money traders and sell side analysts on CNBC, FOX and BLOOMBERG, all talking their book - desperate to transfer bloated equities to dumb money BAG HOLDERS. This is a phony economy, what else to you need to know? Please, no more GOLDILOCKS jobs reports, OK. Wall St gets richer and richer while Main St college grads go to work at Starbucks for $7/hour. It really is sickening. The damage it done, you cant fix in now Ben. The time to address the looming baby boomer fiscal crisis is long gone; what was needed was 5% real GDP growth for the last 30 years, instead we got FED asset inflation. Best to let US take its medicine and hope some transformational technology (NOT FACEBOOK CRAPOLA) arises from the ashes.
Stupid retail bagholders finally rotating out of bond funds. so far they have not reinvested in stocks but i fear thats coming. i guess i cant blame them since the wizard is talking about tapering asset purchases. but dont believe the fed hype about rising interest rates - there is no way they will end zirp in our lifetime as the government cant afford it.