As we prepare our state of mental health for the monthly economic idiocy known as “non-farm payroll report Friday,” I wanted to point out just how silly the markets – and the “economic” reports the that influence the short term direction of the markets – have become.
Perhaps the most, for lack of a better word, retarded indicator of economic vitality is the weekly jobless claims report. Nothwithstanding the fact that this “metric” is tortured by the vagaries and fraudulent handling of Government data collectors and statisticians, the interpretation of the data is now abused to an extreme degree.
The trend for the last 18-24 months has been to promote a jobless claims number below 300k as an indication of a strong labor market. I even saw a Marketwatch article in the past two weeks which asserted that the jobless claim report indicated “tightness” in the labor market. Explain that one to the large portion of the 38% of working age people who are not in the labor force because they gave up looking for a job that pays more than the amount of money available to them from the various Government welfare programs.
Since January 2007, the labor force participation rate has plummeted from 66% to 62%. Tens of millions have been permanently terminated from corporate America payrolls. From February 2006 to March 2009, the weekly jobless claims spiraled higher from 289k to nearly 700k. That reflected the mass layoffs and job eliminations caused by the financial collapse of 2008/2009.
The reason jobless claims have trended lower since then is not because more people found jobs again, and are keeping those jobs, its because overall there are less people working full-time in jobs that qualify for unemployment benfits when they do lose their jobs.
This graph I constructed from the St Louis Fed data supports my assertion – I’d love to hear Steve Liesman or one of the turd-brains on Bloomberg or Fox Biz explain this graph:
Furthermore, its a function of the simple law of averages. There’s less people employed in jobs with jobless claims benefits now than there were in 2009, so it follows that there will be a lot less jobless claims filings now than when the big purge in employment hit the economic system.
In fact, the jobless claims metric is largely meaningless in any regard as an in indicator of economic anything, other than to vaguely represent the amount of money the Government is paying out to those who are left in the workforce that qualify to file for this taxpayer-financed benefit. Beyond that, the “economic” metric completely useless.
Of course, never waste the release of an economic report, regardless of whether the data is positive or negative, or even completely meaningless. The graph below shows Comex Paper Gold trading in 10-minute intervals since 8:00 a.m. EST (x-axis is MST):
As you can see gold was slammed the moment the report was released despite the fact that the report disappointed expectations and showed a 14% year over year decline in factory order for July. If anything, gold should have shot up on the expectation that a weakening economy will lead to more QE.
In fact, the ECB’s Mario Draghi today announced that the ECU was going to, in a roundabout way, expand the ECB’s money printing program by enabling the Central Bank to buy a bigger portion of the sovereign-issued bonds it purchases. He also suggested that the ECB would consider increasing QE.
The S&P 500 futures shot straight on this announcement. Gold should have as well. But you can see from the graph above that gold was sold down in the London paper market as soon as London opened. Obviously the entities doing the selling wanted to manipulate the price of gold lower ahead of a gold-friendly announcement from Draghi.
Gold was hit again when the completely useless jobless claims report was released. Gold is hit automatically every time this report is released.
The blatant market interventions in both the stock, oil and precious metals markets reflects the increasing desperation of the western Central Banks and Governments to use the markets as a mechanism to hide the truth about the underlying deteriorating economic and financial condition of the western economic and political system.
I have a bad feeling that when they lose control of their ability to hide the truth, we’re going to find out the true purpose of the Jade Helm exercises that have been going on since July 15.