No matter how you cut it, there is a long way to go if we are going to see employment figures at levels prior to the pandemic. Distortionary economic policies from both fiscal and monetary authorities have created sizeable imbalances that will take months, if not longer, to work themselves out. These policies have led to the zombification of the economy, whereby in a well-functioning marketplace, many of these companies would have went out of business, downsized, and/or restructured. This propping up of weak and poorly run businesses will only serve to stunt future growth, thereby weakening economic development, thus perhaps putting a lid on job gains as well.
In today’s podcast we cover a number of data points pertaining to the employment situation. Labor force participation figures across various age cohorts, the employment-population ratio, private sector reports, and the overall official numbers from governments agencies are discussed. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation
The official unemployment rate is now 5.8 percent, this is according to the Bureau of Labor Statistics, BLS, as they released the jobs report this morning. For the month of May, 559,000 jobs were added to the roles. This figure was below market expectations, which was looking for a gain of 650,000. Recall that last month, analysts were looking for jobs gains near one million and fell way short of that number. The April figure was revised upward by 12,000 and now stands at 278,000. It would stand to reason that markets would be looking once again for a one million figure or close to it, considering more parts around the country have been re-opening. If one million was good enough for April, then it should have been good enough for May. This was not the case, however, and this was most likely due to the fact that analysts were so far off target in April. And not wanting to make the same mistake twice, they collectively lowered their estimates. It is a joke of an economy and it is a joke of markets. We are in a first world banana republic where the numbers seemingly do not even matter anymore. All that matters is how much central bank liquidity is being thrown into the system. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Jobs #Inflation #Gold #Silver #Protests #FoodPrices #Revolution #Liberty #USA #Leadership #EndTheFed #bananarepublic #FireCongress #Bailouts #Debt #Spending
From one economic figure to the next, it is never really good enough. At least not for the Federal Reserve and other major central banks to truly begin normalizing their respective balance sheets, let alone even discuss the topic. They are concerned how tapering and/or any subsequent increase to interest rates will impact global equity, bond, and currency markets. And rightly so. The Fed attempted to taper and increase interest rates only a few short years ago and it ended with equity markets dropping nearly 20 percent in the fourth quarter of 2018. The economy and equity markets could not digest a Fed’s balance sheet below $4 trillion or the Federal Funds Rate just north of 2 percent. Fast-forward to a balance sheet near $8 trillion and the FFR at the zero bound, and you can surely see their predicament. Equity and bond prices have been able to increase over this pandemic period for one reason and one reason only and that is due to the major liquidity injections by central banks and federal government programs. Remove these items and prices are nowhere near these levels. Policymakers are trapped, they know it, and they are getting more and more nervous by the day.
Initial jobless claims came in at 385,000 for the week ending 29 May. This is the lowest figure since 14 March of 2020 when the number was 256,000. The number from last week was revised slightly lower by 1,000 to now stand at 405,000. In aggregate, some 15.4 million Americans continue to claim some form of unemployment insurance. This gives a de facto unemployment rate of 11.1 percent. The official unemployment rate is currently 6.1 percent. The May jobs report will be released tomorrow morning by the Bureau of Labor Statistics, BLS, and it will be watched closely by global markets. Analysts are looking for nearly 1 million jobs having been added to the roles for the month of May. A recent report released by ADP has stated that 978,000 private sector jobs were added in the month of May. Recall that last month, expectations were for nearly 1 million job gains for April, however, the official statistic came in at 266,000. Will May be a repeat of April or more in alignment with market forecasts?
The Federal Reserve’s balance sheet has hit another all-time and now currently stands at $7.935 trillion. This is a week-over-week increase of some $32 billion. It is somewhat laughable how the Fed stated only yesterday that they will begin to taper their holdings of corporate bonds, which amount to $14 billion. And even this is supposed to be a process that could take until the end of the year. Meanwhile, they added $32 billion to their balance sheet in one week alone! The Fed also remains committed to their QE policy of purchasing at least $120 billion per month in US Treasuries and mortgage-backed securities. M1 and M2 money stock has also been updated and both currently stand at all-time highs, as of April. Coming in at $18.935 trillion and $20.109 trillion, respectively, really puts things into perspective, especially when considering that M1 was at $4 trillion prior to the pandemic and M2 was at $15.5 trillion. So what exactly did we get for all of this funny money? Because we can assure you that this is no free lunch. Jay Powell, Chair of the Fed is expected to speak tomorrow. Most likely this will be some form of damage control for the jobs report whether the number is good looking or ugly. These markets need continued hand-holding in order to grind higher. Talk about a command and control economy. Land of the free, eh? Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #FoodPrices #Gold #Silver #Protests #Riots #Liberty #USA #Leadership #Revolutions #EndTheFed #bananarepublic #FireCongress #Jobs #Bailouts #Debt
The personal consumption expenditure (PCE), the Federal Reserve’s favored inflation metric, was published today and saw a 3.1 percent year-over-year increase. Markets were expecting a rise of 2.9 percent. The Fed remains committed to their narrative that inflation, if it should exist at all, will be transitory. The 3.1 percent figure is a level not seen since the 1990s. Also contained within the report was personal savings, which declined to 14.9 percent in April from 27.7 percent in the month of March. This is attributable to the absence of another stimulus check from the federal government. Now while the 14.9 percent savings rate is still high by historical standards, the reason it is so high to begin with is because of the massive spending and stimulus checks that have been sent out over the last year. This is highly unsustainable and these measures are the direct result of the inflationary policies that have been implemented by the Fed and the federal government. Higher prices and lowers savings is likely going to be a trend that continues unless the government sends more checks. But even then, prices will still move higher. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Gold #Silver #FoodPrices #Housing #Protests #Riots #Revolutions #USA #Liberty #Debt #Leadership
With politicians and central bankers attempting to solve or alleviate the impact from the pandemic, they are in actuality making the problem worse. This is because one cannot expect to solve a global debt crisis by adding record amounts of debt onto the system. Furthermore, the massive printing press operation that is being conducted globally does not translate into productivity. Rather, it translates into inflation, which is an increase in the money supply. Sure, printing presses can print currency, but they cannot print productivity, jobs, or innovation. Yet, what will result from all of this, and it is already being felt across the world, are higher prices. Whether it is in energy, commodities, food, housing, transportation, medical expenses, or more, prices are moving up and will likely stay there for some time. The Kapital News believes that we will be entering a period of structural inflation – meaning that the effects of inflation, higher prices, will be sustained due to central bank and federal government policies, supply-chain disruptions, and geopolitical events.
In fact, much of this is already well underway and many smaller nations are suffering from high rates of inflation. This will lead, if it has not already, to political fallout, protests, riots, conflicts, and revolutions. These events will likely first take root in weaker economies, but will make their way to more developed and diversified economies as well. Inflationary policies can greatly distort reality whereby people think that rising asset prices means that there is a strong underlying economy causing such price movements. However, nothing could be further from the truth. It is not a growing economy that is leading to such price increases, but rather a growing money supply. Another way of looking at it, is to say that it is a weakening currency or a devaluing of the US dollar that is causing prices to rise. Meaning it takes more dollars to purchase the same amount of goods because those dollars have been devalued. This does not occur in a strong economy, but rather a weak one.
If one wants to look at some of the distortionary effects of these policies, then look no further than US retail sales. The trend line has been completely decimated. It can be understood when looking at this data series that there would be a downward deviation to retail sales during the GFC and during the pandemic. However, there is a notable difference when comparing these two time periods. In the former, during the GFC, retail sales peaked in late 2007 and did not recover to that peek until early 2011. This makes intuitive sense that it would take awhile to regain the previous trend. Yet, when we review the pandemic, we see a massive drop-off in retail sales, which makes sense given the lockdowns and restrictions. However, we see a huge V-shaped recovery back to where retail sales were prior to the pandemic in only a few short months, and beyond this, we now see retail sales well above the previous trend. In fact, even if we were to remove the GFC and pandemic deviations, we would likely still not be at the high levels we are currently witnessing. Peak sales prior to the pandemic were around $525 billion in early 2020. In March, the most recent data point, now stands at $620 billion. What this data series suggests is that a couple to a few years’ worth of spending has been pulled forward to today! This is all thanks to Uncle Sam spending money that we do not have and the Federal Reserve printing up the money out of thin air like some 3rd world banana republic. In essence, future growth and prosperity has been stolen from the future in order to make today look better than what it actually is. This is the moral of the story on how debt distorts reality. This is completely unsustainable and when the bottom falls out, it will cause tremendous amounts of damage across the spectrum and around the globe.
Initial jobless claims for the week ending 22 May came in at 406,000. This is the lowest figure since the pandemic began and is a continuation of trend with falling claims figures. The prior week saw no change, thus remaining at 466,000. The Pandemic Unemployment Assistance program saw 93,000 filing, thus taking the total to just shy of 500,000. In aggregate, some 15.8 million Americans continue to claim some form of unemployment insurance. This gives us a de facto unemployment rate of 11.4 percent. The official unemployment rate stands at 6.1 percent. The May jobs report will be released on the first Friday in June. The Federal Reserve’s balance sheet came down by $19 billion and now stands at $7.903 trillion. The Fed remains committed to their QE policy whereby they are purchasing at least $120 billion per month in US Treasuries and mortgage-backed securities. Their balance sheet is likely to make new all-time highs on a near weekly basis. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Jobs #Gold #Silver #FoodPrices #Housing #Debt #Bailouts #Protests #Liberty #USA #Revolution #EndTheFed #bananarepublic #FireCongress #Spending #Commodities
Global markets have been distorted for a long time, but never before have we witnessed such obvious market manipulation alongside the implementation of distortionary policies. What this ultimately translates into is a system that is over-indebted, over-leveraged, and extremely fragile. It can take the slightest of pin-pricks to burst one bubble after the next. The causes of the bursting of the bubbles are near limitless. They can arise from within the financial and economic systems or they can take the form of an exogenous shock to the system. In any event, one bursting bubble will trigger the bursting of others. The economic, financial, political, and societal fallout will be enormous. In such an event, the blame game and finger pointing will ensue almost immediately.
The reason for today’s discussion is due to the ever-changing and shifting narrative that we hear from the mainstream media and policymakers alike. The Kapital News believes this to be a somewhat coordinated effort to distract the people from the bigger picture. Best to keep the people occupied with circuses than the actual truth of what is actually happening around the globe. In this vein, it is quite evident that the narrative around COVID-19, the Chinese, and their Wuhan laboratory are making headlines. Last year, such connections and questions were not allowed to be asked, otherwise you were labeled a conspiracy theorist. Today, it is front page news. So what shifted? What has changed? While The Kapital News does not specifically know the reasoning or the cause behind the sudden change in narrative, we do question why now and may this be used as part of an excuse as to why markets may breakdown? This is a serious question and it needs to be pondered. Because it may provide the perfect cover for policymakers to put the blame on China, thus deflecting any scrutiny of themselves and the asinine and criminal policies that they have been implementing. There will be more to come on this situation. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Gold #FoodPrices #Housing #Silver #Debt #Spending #Protests #Liberty #Riots #Leadership #Revolution #EndTheFed #bananarepublic #FireCongress #Bubbles
The S&P/Case-Shiller US national and 20-city home price indexes, saw year-over-year increases of 13.2 percent each. These types of increases have not been since either 2013 or prior to the GFC in 2005. Now while mortgage rates have also ticked up with housing prices, they are still near all-time lows. However, due to such rapidity in housing price increases, buyers are stepping away from the market. They simply cannot afford to purchase these homes. Furthermore, builders are reluctant to sign offers from buyers because they are concerned with the rapid rise of construction material costs. Should they sign a deal and then costs continue higher, their margins will take a hit and it could be significant. This in turn reduces sales.
Yet despite all of this, we are constantly told that there is no inflation and that the Federal Reserve continues to purchase $40 billion per month in mortgage-backed securities. These monthly purchases are a part of the Fed’s QE program which came about during the GFC. So let us understand this, the purchasing of MBS during and after the GFC was done because it was an “emergency” due to housing prices falling. Now we have prices at all-time highs and they continue with QE and the purchasing of MBS. How does this make sense? They buy when prices are falling and they buy when prices keep going up. Something does not make sense and it is likely that a massive correction in housing and/or construction materials is on the horizon. However, the Fed will do everything in their power to prevent this from happening or at least cushion the blow. And not only is this an economic story, but also a political and social story because home-ownership is a very emotional topic. So if prices should continue higher and more and more people are priced out of the market, while at the same time also having to contend with rising rents, and other cost increases, then something is likely to break and give way. Expect political movements, protests, and the like because of this reality. Stay diversified, stay vigilant, and stay with The Kapital News. #Housing #Inflation #Gold #Economy #Silver #EndTheFed #bananarepublic #Debt #Liberty #USA #Leadership #Commodities #Protests #FoodPrices #Revolution #FireCongress
In September of 2019, there were some shockwaves that were being felt within and throughout the plumbing of the financial system. This was most apparent in the overnight lending market or repo facility. These overnight loans are supposed to have an accompanying interest rate that mimics the Federal Funds Rate, which is set by the Federal Reserve. In essence, these rates have a ceiling because they are controlled by the Fed, or at least they are supposed to be. However, what occurred that shook the markets was that typical market participants were hesitant to make overnight loans while charging such small interest. In order to make a loan, institutions were demanding much higher rates, which in turn nearly brought down the overnight lending market. Higher rates were likely charged because the lending party must have believed that the borrowing party was a default risk. This caused the Fed to get involved. At first, they told us it was all temporary and just a little volatile because it was the end of the quarter and had to do with tax obligations. Then they said it would be a few more weeks, then it was a month, and then it was into the first quarter of 2020. You get the picture.
Now, the opposite is occurring. Before, there was not enough liquidity in the system, and now the markets may finally be coming to terms that there is too much liquidity in the system. The reverse repo market is now nearing all-time high volumes. These transactions seemingly came out of nowhere as only a couple of months ago, there was virtually no action in this market. And now, we are near all-time highs. Something is definitely afoot and the last thing we will hear about this matter is the truth. Yet, this could turn out to be one of the biggest stories that is not getting enough attention. Is this a point or the point of system exhaustion? And if so, what, is anything, can be done about it? This serves as further evidence that the Fed is trapped and running out of options. If they attempt to draw liquidity out of the system, then it is lights out for the equity markets and quite possibly the bond market as well. This whole house of cards is being kept afloat by these artificial liquidity injections. Remove them and it is look out below. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Fraud #Gold #Silver #EndTheFed
Politicians and central bankers the world over have been boxed-in for some time. The road to responsibility, accountability, and leadership is not one they want to take. Therefore, they continue to implement the same asinine policies that led us to this point. And despite all of these artificial attempts to prop up the system and despite how powerful these institutions may be separately or combined, they are not larger than or more powerful than the markets. This means the day of reckoning awaits us. The question is when does this happen? Policymakers know this, but will never admit to it. However, by reading between the lines and listening carefully to their remarks, it is quite clear that they are getting nervous. They know the global economy is extremely fragile right now, as are whole countries from a political and societal perspective. They know this will not end well and they know they will be the ones who will be blamed.
Initial jobless claims for the week ending 15 May came in at 444,000. The lowest reading since the pandemic. The prior week was revised higher by 5,000 to now stand at 478,000. In aggregate, there remains nearly 16 million Americans that continue to claim some form of unemployment insurance. This gives us a de facto unemployment rate of 11.5 percent. The official rate is 6.1 percent.
The Federal Reserve’s balance sheet has hit a new all-time high at $7.922 trillion! This is a week-over-week increase of $90 billion. This is a sign that the Fed is worried about the recent price action in the equity markets that has been trending lower, and this is a clear attempt at cushioning the blow in the least and sparking a rally at best. The Fed remains committed to their QE program of purchasing at least $120 billion per month in US Treasuries and mortgage-backed securities. The Fed is also starting to admit that they are paying closer attention to crypto and digital currencies, and announced that they will be publishing a report on this matter in the summer months.
In other news, the 11 day conflict between the Israelis and Palestinians has come to halt, at least for now as both sides have agreed to a cease-fire that went into effect early Friday morning. The deal was brokered by Egypt. At least 232 Palestinians, including 65 children have been killed. On the Israeli side, twelve people were killed, including two children. Let us pray that the ceasefire holds and turns into a more peaceful situation between the two sides. Stay diversified, stay vigilant, and stay with The Kapital News. #Economy #Inflation #Jobs #Gold #Silver #FoodPrices #Protests #USA #Israel #Palestine #Commodities #Riots #Peace #Liberty #EndTheFed #bananarepublic #FireCongress #Leadership #Debt #Revolution
The price of Bitcoin is known to be volatile with large swings to the upside and the downside. Currently, it is swinging to the downside where it is trading at $39,300 per coin. Not long ago it was trading around $65,000 per coin, which translates into a loss of over 40 percent in a very short timespan. This type of volatility does not lend itself well for those who advocate that Bitcoin is a store of value. In fact, with such volatility it is quite the opposite. It is a speculative play whereby people are hoping to catch their lottery ticket that is going to give them eternal financial freedom. Markets just simply do not work this way. Some of the recent downside volatility has been a direct result of comments made by Tesla CEO, Elon Musk, and statements from several Chinese regulatory agencies.
Mr. Musk, through Tesla, purchased around $1.5 billion worth of Bitcoin earlier this year. As one would imagine, it caught the attention of the media and the markets and Bitcoin would eventually go on to make new all-time highs. Yet after only a few shorts months of being on the balance sheet of Tesla, Musk tweets out the flaws that pertain to Bitcoin, namely the energy consumption that is used to mine Bitcoin and to use it for transactions. This was a rather shocking statement, only because these facts have been well-known for years and Musk is supposed to be all about the “green” economy. Yet here he was supporting Bitcoin, at least temporarily, despite the inefficient nature of Bitcoin and the energy usage associated with it. Was this a pump and dump scheme? Because it is virtually impossible that Musk did not know those facts prior to adding it to Tesla’s financials.
Another issue to contend with are the Chinese regulators that are prohibiting institutions and their citizens of engaging with cryptocurrencies. Now it is interesting to note that China, along with many other countries and their respective central banks are planning, building, or testing their own versions of central bank digital currencies (CBDCs). So it should come as no surprise that governments want to be the only game in town. After all, they can tax, fine, and imprison you if you do not comply with their orders. Bitcoin and other cryptos, or any private institution or individual lacks that power. It is therefore likely that more governments will start to come out and limit, restrict, or outright ban the use of cryptos other than their own. This speculative mania will without question be remembered in the history books, especially after it all comes tumbling down. Stay diversified, stay vigilant, and stay with The Kapital News. #Bitcoin #Inflation #Gold #Silver #Protests #Liberty #USA #Leadership #Economy #bananarepublic #EndTheFed #Revolution #FireCongress #Debt
