Lately, anywhere we look, there seems to be a pattern emerging: those economic thinkers who actually construct and run their own macro models (not the glorified powerpoint presenter variety) and actually do independent analysis and tracing of the money flow, instead of relying on Wall Street forecasts that have as much credibility as a Moody’s home price hockey stick from 2006, almost inevitably end up having a very dire outlook on the economy. One such person is and has pretty much always been Shadowstats‘ John Williams, whose "shadow" economic recreation puts the BLS data fudging dilettantes to shame. That said any reader of Zero Hedge who has been with us for more than a few weeks, knows all too well our eagerness to ridicule the increasingly more incoherent lies coming out of the US department of truth, so no surprise there. Yet another aspect over which there is much agreement is that no matter how one slices the data, the outcome for the US currency is a very grim one. Which is why Williams over the past several years has become a major fan of the shiny metal. Below we recreate portions of his latest observations on the upcoming currency collapse, courtesy of King World News.
John Williams today was dispatching information regarding gold, silver, M3, nearby massive selling of dollars and inflation. Here is a portion from his commentary, “Despite November 9th’s historic high gold price of $1,421.00 per troy ounce (London afternoon fix) and the multi-decade high silver price of $30.50 per troy ounce (London fix) on December 7th, gold and silver prices have yet to approach their historic high levels, adjusted for inflation.”
Real Money Supply M3: The signal of the still unfolding double-dip recession, based on annual contraction in the real (inflation-adjusted) broad money supply (M3), continues and is graphed (above). Based on today’s CPI-U report and the latest estimate on the November SGS-Ongoing M3 Estimate, that annual contraction in November 2010 was 4.0%, narrower than October’s 4.5% contraction, and May’s post-World War II record annual decline of 7.9%.
Incidentally, if there is one thing we disagree with John on is that the broadest aggregate (M3 for Williams, Shadow Banking for Zero Hedge) is declining. That said, an expansion in the most critical broad money signal is merely the missing piece of the puzzle that we…
The August 2010 Consumer Price Index for Urban Consumers (CPI-U) is 218.312. The annualized inflation rate computed from this number is 1.15%, which marks the tenth month of mild inflation after a streak of eight consecutive months of deflation. The annualized inflation rate is well below the 3.99% average since the end of World War II.
The Bureau of Labor Statistics (BLS) has compiled CPI data since 1913 (BLS historic data). Our chart now shows inflation back to 1872 by adding Warren and Pearson’s price index for the earlier years. The spliced series is available at Yale Professor Robert Shiller’s website. This look further back into the past dramatically illustrates the extreme oscillation between inflation and deflation during the first 70 years of our timeline. Click here for additional perspectives on inflation and the shrinking value of the dollar.
As I’ve expressed elsewhere, my opinion is that the optimum method for calculating consumer prices is probably somewhere between the revised BLS method and the historic method preserved by Williams. However, government policy, the Federal Funds Rate, interest rates in general and decades of major business decisions have been fundamentally driven by the official BLS inflation data, not the alternate CPI. For this reason I think it best to take the alternate inflation data as a interesting, but not authoritative.
Just what is the true rate of unemployment in our country? Our headline U-3 rate is currently 9.5%. Our U-6 rate, more broadly defined, is 16.5%.
Many people are aware of the differences between U-3 and U-6; however, renowned economist John Williams takes our analysis to an entirely new level. Williams is far ahead of the curve in his work.
William is likely not a regular on the Washington cocktail circuit. Why’s that? He goes far deeper in his work and exposes inconsistencies, if not worse, in government statistics. Let’s learn more about Williams and his work at Shadow Government Statistics:
Walter J. “John” Williams was born in 1949. He received an A.B. in Economics, cum laude, from Dartmouth College in 1971, and was awarded a M.B.A. from Dartmouth’s Amos Tuck School of Business Administration in 1972, where he was named an Edward Tuck Scholar. During his career as a consulting economist, John has worked with individuals as well as Fortune 500 companies.
Formally known as Walter J. Williams, my friends call me John. For nearly 30 years, I have been a private consulting economist and, out of necessity, had to become a specialist in government economic reporting.
One of my early clients was a large manufacturer of commercial airplanes, who had developed an econometric model for predicting revenue passenger miles. The level of revenue passenger miles was their primary sales forecasting tool, and the model was heavily dependent on the GNP (now GDP) as reported by the Department of Commerce.
Suddenly, their model stopped working, and they asked me if I could fix it. I realized the GNP numbers were faulty, corrected them for my client (official reporting was similarly revised a couple of years later) and the model worked again, at least for a while, until GNP methodological changes eventually made the underlying data worthless.
That began a lengthy process of exploring the history and nature of economic reporting and in interviewing key people involved in the process from the early days of government reporting through the present.
For a number of years I conducted surveys among business economists as to the quality of government statistics (the vast majority thought it was pretty bad), and my results led to front page stories in the New York
If large businesses are not hiring and small businesses do not increase hiring (or worse yet stop hiring), it’s quite hard to be optimistic about jobs.
Hiring Not Improving
One of the things in the ADP report that caught my eyes was this short paragraph:
"July’s rise in private employment was the sixth consecutive monthly gain. However, over those six months increases have averaged a modest 37,000, with no evidence of acceleration."
The key words in that paragraph are "no evidence of acceleration". It is consistent with the small business surveys mentioned above.
ADP vs. BLS Reports
Inquiring minds may be interested in seeing a comparison between ADP and the BLS (government) reports.
A direct number to number comparison using the standard BLS report is inaccurate because ADP reports private nonfarm jobs while the BLS reports all nonfarm jobs. The latter is tremendously skewed this year by census hiring and firing. It is also skewed by normal government hiring and firing.
Fortunately, the BLS does provide the private numbers in Excel format, so with minimal work an accurate comparison is possible.
Let’s go back to January and see what the data looks like year to date.
A shrinking number of jobs and a growing supply of apartments will continue to push the Puget Sound region’s rents down next year as vacancy rates climb, industry experts predict.
Job losses killed our market, and development buried it," Mike Scott, of Dupre + Scott Apartment Advisors, told landlords at an industry conference Tuesday.
The average monthly rent across all apartment types in King, Pierce and Snohomish counties fell from $988 to $959 during the 12 months ending in September, and a continuing decline through 2011 will further cut that figure to $889, Dupre + Scott projects.
While demand for apartments is falling, the supply is rising.
So far, 4,100 new units have opened this year, and more than 2,000 others are expected to become available by year-end, according to Dupre + Scott.
The firm estimates that about 20 percent of the 6,000 condos completed in the past three years are also on the rental market now.
The combination of job losses and new units has upped the region’s vacancy rates from 6.6 percent last spring to 7.2 percent now, and heading toward 9 percent next year, the firm said.
The world has changed immensely and there were once things that were sacrilegiously respected. But, that’s no longer the case. The Chinese were always the baddies ready to overrun us and the dangers came from the East behind the Iron Curtain that had been drawn, leaving the Russians in the dark, while the West went on living the high-life as if it were the roaring twenties still. Now we know that was all a lie. It’s the USA that spies on people while the Chinese criticize the lack of democracy in our shamelessly hopeless quest for an image and a place in the expanding world that is leaving little room for us as we elbow and vie for a place amongst the crowd. The Russians were once notorious drunks, boozing on the...
Some of the stocks that may grab investor focus today are:
Wall Street expects American Eagle Outfitters (NYSE: AEO) to report its Q3 earnings at $0.19 per share on revenue of $844.76 million. American Eagle shares gained 1.67% to close at $16.40 yesterday.
Ulta Salon, Cosmetics & Fragrance (NASDAQ: ULTA) reported downbeat third-quarter results and issued a weak fourth-quarter outlook. Ulta Salon shares tumbled 18.34% to $96.36 in the after-hours trading session.
What's New: I've updated the charts below through Today's close. The yield on the 10-year note rose to 2.88%, which is 136 bps above its 1.45% all-time closing low on July 25th of last year and only 10 bps below its interim closing high on September 5th.
The latest Freddie Mac Weekly Primary Mortgage Market Survey, released today, puts the 30-year fixed at 4.46%, 115 bps above its all-time low of 3.31% in late November of last year and only 12 bps below its interim high reported on August 22nd.
The 30-year Treasury closed today at 3.92% and the 20-year at 3.65%. Both are new interim highs since their 2012 troughs.
Here is a snapshot of the 10-year yield and the 30-year fixed mortgage since 2008.
A log-scale snapshot of the 10-year yield offers a more accurate view of the relative change over time. Here is ...
CELG – Celgene Corp – Shares in Celgene rallied 3.6% on Thursday to an all-time high of $165.88 after the fourth-largest biotechnology company was raised to ‘Buy’ from ‘Neutral’ with an increased target share price of $200.00 at UBS. Options changing hands on the stock this morning suggests some traders are positioning for the price of the underlying to continue higher next week.
The most traded contracts on CELG by volume are the 13 Dec ’13 $165 strike calls, with around 2,500 calls in play against open interest of 675 contrac...
As the charts last week indicated might happen, the S&P 500 has fallen four straight days and failed to hold its breakout above 1800 while the Dow Jones Industrials lost 16,000. Only the NASDAQ is still holding on to its breakout above 4000. Although the Basic Materials sector was the leader on Wednesday, the Technology sector was strong, as well, and in fact Tech stocks have been the strongest over the past week and the past month.
As markets finally show a willingness to pullback somewhat from their torrid pace, the bears are trotting out every naysayer they can lay their hands on to scare investors away, including smart folks like Carl Icahn, who is “very cautious,” and Nobel Prize winner Robert Shiller and his stock market “bubble” assertions. Sure, valuations are high on a historic...
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These rallies are becoming familiar. In early July we saw a streak of 12 of 13 sessions in a row up, early September 11 of 12, and mid October 11 of 13 (current streak). It is a bit uncanny the similarities and how the escalator goes straight up in vertical ascent as we see indexes come out of mini corrections during QE. So we are about at the same stage where the last two began to tire, so it will be interesting if this is similar or if the current consensus of the market that there is nothing to worry about until next year as the Fed and D.C. are both off the table and this 3% annual growth rate in earnings we are now seeing in the S...
Welcome to the fouth update of the IRA Virtual Portfolio. First I am going to summarize the current state of the Portfolio then I will get into all the activity we had during September expiration.
Profit and Loss – Net of closed positions the portfolio is up a total of $769
Market Commentary – Last expiration I said, "I would like to put a total of $20,000 to work by the end of SEP expiration. If the VIX pops up to around 20 I plan to put about $50,000 total to work." The market didn't quite reach the goal but I did manage to deploy $15,000 of buying power. I still feel the market is too high and expect a correction during October. If the vix pops up to around 20 I still plan to put about $50,000 to work. If a correction doesn't happen I still plan to have a total of $25,000 in buying power put to work by October expiration. Now on to the act...
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Come and get it! Read all about it! Biotechs, biotechs and more biotechs to buy buy buy for your portfolio! To date, almost 30 biotech companies have hit the market. Most of the time, there are fewer than 10-12!
For the last five years, biotechs have had issues obtaining offer prices above expectations. In 2013, that trend looks to be broken. According to BiotechNow, the offer prices are 4% above expectations! In addition, biotechs are going public with little more than a wing and a prayer (pre-clinical or Phase 1 data only). Really? What this means is that the drug or technology looks good in mice, rats, or dogs, etc, but there is no smidgen of evidence that it will work in humans. That's what is called an appitite for RISK!
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