What is possibly MORE important than even this morning’s job numbers – which we will get to in a sec.?
The answer is the Federal Reserve standing on the brakes of easy money and shortly this should result in move of interest rates up and perhaps a decline in stocks.
What I’m about to show you gets virtually no play from the financial press, but perhaps it’s because it’s not in a press release…
So here are the two pictures of what’s going on:
The Fed H.6 Money Stocks Measure out Thursday reveals this:
Look at the dates and the top line of numbers. Because it explains where the massive stock market rally has come for to a great degree. It says that in the three months to March (in other words December, January, and February) Fed was rolling M1 (cash and equivalents) out the door at 13.3% annualized rate.
But then, they also publish the “What’s going on here lately” part of the report covering the sliding 13 week window…
Observe that the MOST RECENT data says not only is M1 creation almost cut in half (which in itself should slow the market) but M2 is down to a moderated 5.3% annual growth rate (AGR).
With less money sloshing into the system, what should happen?
For one, the interest rate on the 10 year note should be firming and gee, gosh, golly look surprised at this chart.
No question in our minds about it, the Fed has had a thumb on the market going up – and will have one (or is that present-tense HAS one) as the market climb slows and maybe reverses?
The answer should be obvious in coming weeks, but as the interest rates are arb’ed up by the Fed, it increases the odds of a rate hike at the next Fed meeting or two.
But that assumes the market doesn’t go into utter panic at the thought of higher rates which means that again, bonds will look like a more reasonable choice than stocks for the “widows and orphans” money which isn’t so much concerned with a return ON the investment but more OF the investment on an inflation-adjusted basis.
My sell it all and go to cash trigger finger (or outright short) is getting itchy for a second reason, too: One that we will share in detail with subscribers to Peoplenomics tomorrow. But let’s just say there’s an odd rhyme to 2015 coming up in one of our aggregated data studies.
Now About That Job Report
Hot off the press release:
“Total nonfarm payroll employment increased by 211,000 in April, and the unemployment
rate was little changed at 4.4 percent, the U.S. Bureau of Labor Statistics reported
today. Job gains occurred in leisure and hospitality, health care and social
assistance, financial activities, and mining.
Household Survey Data
Both the unemployment rate, at 4.4 percent, and the number of unemployed persons,
at 7.1 million, changed little in April. Over the year, the unemployment rate has declined by 0.6 percentage point, and the number of unemployed has fallen by 854,000.
(See table A-1.)
Among the major worker groups, the unemployment rate for adult men declined to 4.0
percent in April. The jobless rates for adult women (4.1 percent), teenagers (14.7
percent), Whites (3.8 percent), Blacks (7.9 percent), Asians (3.2 percent), and
Hispanics (5.2 percent) showed little change.
The usual 2-bits worth of analysis here: Unemployment rate dropped a 10th. (Good)
Labor participation rate dropped 1-10th of a percent (bad).
Total number employed went up 156,000 (OK).
And table “U-6 Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force dropped from 8.6 last month to 8.3% this month (good).
The questionable? CES Birth-Death model accounted for 255,000 new jobs claimed and an amazing 90,000 in business and professional services. (cough, cough, ahem…) So all of the job growth was “estimated?”
Hmmm…apps and software implementations must be smokin’ hot.
The futures at mixed levels: Dow down a few and the NAZ and S/P up tiny bits.
France Vote This Weekend
Bloomberg has it figured this-a-way: Traders Vote Macron as Le Pen Vows to Wipe the Smiles Off Their Faces.
Wasn’t it on Hillary, though, too?
I got no sympathy with the family as Delta Air Lines kicks US family off flight after row over toddler…if the child hadn’t bought a seat….
Having lived the joys of being an airline VP I can tell you (been there, done that) if the little tike didn’t buy a seat, it goes on a lap or the adult or off the plane, simple as that. Been airline policy most places, let me see, forever.
No ticky, no seaty as passenger load factors are high.
But if the toddler had a ticket? Oh-oh…lawyers will have fun with this one…How big is the Delta checkbook?
Paranoia Med Check
Washington Post Backs Soros?
Are we surprised to read the WaPo op-ed “How the United States can stop Hungary’s descent into authoritarianism“?
Wait…regime change? Yep a favorite tactic of the Left. Keeps people focused on dirty wars in foreign lands so 70-years of democrat political failures at home seem smaller.
Besides, with all the dough Soros has passed around to left-leaning groups, its no wonder some could be duped into a foreign promoted coup to keep Soros in power and doling out the cash…
What’s missing in jurisprudence? Well, obviously 18 U.S. Code § 2385 – Advocating overthrow of Government only applies to actions within the US.
And the Logan Act is aimed at negotiations with a foreign power…
But for the US press to advocate overthrow of an elected foreign leader…should that be banned, too?
There Goes Obamacare
Which I’m sure you know: House have voted to kill the Obamacare deal.
Is it the Big Deal the left is whining over? Well, we go by the Government Accountability Office assessment of what’s in play:
“GAO reviewed the Department of Health and Human Services’ (HHS) new rule on the Patient Protection and Affordable Care Act and market stabilization. GAO found that (1) the final rule (a) makes changes that HHS expects will help stabilize the individual and small group markets and affirm a state regulator role; and (b) amends standards relating to special enrollment periods, guaranteed availability, and the timing of the annual open enrollment period in the individual market for the 2018 plan year; standards related to network adequacy and essential community providers for qualified health plans; and the rules around actuarial value requirements; and (2) HHS complied with applicable requirements in promulgating the rule.”
Expect the full court press by the special (insurance industry) interests in the Senate.
World Comes to its Senses?
From Showbiz 4-1-1: “Dept. of Fleeting Fame: “Kardashians” TV Show Ratings Tanking, Caitlyn Jenner’s Book A Bust.”
Aw, gosh…flags at half staff?