We will get to this morning’s jobs report in a sec.
But first, a number of readers have asked me whether the world is ending.
The answer, I’m afraid, will not be very satisfying.
The main attention-getter seems to be the Baltic Dry Cargo Index. That index as of this morning stands at 298.
To put this into perspective, we know that when the economy has been percolating along in the past that this index has been previously in the 1,000 and higher, level.
There are likely two things going on here: First is the economy is experiencing another near-death experience. As explained yesterday, you don’t have a percolating economy unless you have growth. To have growth, however, government has (stupidly) put us into a box.
We have trapped millions of young people in the New Vicious Cycle: Can’t get job, so can’t pay college loans. Since the jobs they are finding pay terribly, they have to spend every dime on mandatory health care. Everyone knows healthcare for American could be 20-50% CHEAPER if we we cut the insurance companies out of the middle of it…but no one in Washington, which we call the District of Corruption with reason, is willing or able to do anything because the insurance types are like the unstoppable force in physics. If you want to get re-elected….and so it goes.
So the normal recovery from this mess is not happening yet.
Since people are seeing disposable incomes decline (a fact papered-over in nonsensical government schemes to count paying off your car as “savings” and such) there is not much going on.
In 2008, the labor participation rate was about 66.7% and unemployment was 5.5%. We’ll get to this morning’s report in a minute. But the main thing to focus on is quality of jobs.
Now back to this cargo thing: Yes, the Baltic Dry is screaming “End of the World! Everyone Flee from Street!”
But there are some important differences between now and 2008.
I don’t know how many transportation companies you’ve been in senior management of. My only experience was in the airline industry. But here, the cost of jet fuel was about 50% of costs. And some portion, perhaps 7%, was in the debt service of a couple of tax-advantaged off-shore leases.
Here’s my first point (I know, you’ve been waiting patiently): In summer of 2008 the price of oil was running $145’ish. This morning it is in the $33 range if we split the difference between West Texas and Brent.
A little simple math: The cost of oil is 23% (22.75%, but it’s easy so we don’t mess with decimal points until after noon, or so) of the 2008 level.
And when we look at long-term Bond rates, the 10-year was running right around 4%. Today, the 10-year is 1.86% (*although this is all hopelessly simplified).
Another measure in the HARPEX container index. This one hasn’t taken out the 2009 low of 275. Instead, it is edging up and down to the recent lows of 383. In a really hot economy, talking 2007-2008 here, this index topped 1,400.
Now, a really great indicator that we talk about with subscribers over on our www.peoplenomics.com site is the Association of American Railroads’ Rail Time Indicators report.
WASHINGTON, D.C. – Feb. 3, 2016 – The Association of American Railroads (AAR) today reported weekly U.S. traffic, as well as volumes for January 2016.
Carload traffic in January totaled 968,042 carloads, down 16.6 percent or 192,747 from January 2015. U.S. railroads also originated 1,039,621 containers and trailers in January 2016, up 3.4 percent or 34,523 units from the same month last year. For January 2016, combined U.S. carload and intermodal originations were 2,007,663 down 7.3 percent or 158,224 carloads and intermodal units from January 2015.
In January 2016, four of the 20 carload commodity categories tracked by the AAR each month saw carload gains compared with January 2015. This included: miscellaneous carloads, up 45.2 percent or 7,409 carloads; chemicals, up 2.1 percent or 2,615 carloads; and motor vehicles and parts, up 3.9 percent or 2,435 carloads. Commodities that saw declines in January 2016 from January 2015 included: coal, down 33.3 percent or 150,658 carloads; petroleum and petroleum products, down 19.4 percent or 12,037 carloads; and crushed stone, gravel, and sand, down 10.3 percent or 8,475 carloads.
Excluding coal, carloads were down 5.9 percent or 42,089 carloads from January 2015.
“Intermodal was solid in January, but carload volumes weren’t what railroads were hoping for,” said AAR Senior Vice President of Policy and Economics John T. Gray. “By all accounts, rail service right now is excellent, but volume just isn’t there. At some point, the problems currently plaguing the energy and manufacturing sectors — low oil prices, a strong dollar, uncertainties in emerging ?markets — will sort themselves out. When that happens, railroads will be positioned to provide safe, reliable service.”
I highlighted the number that matters because a good bit of traffic change can be chalked up to the Obama administration’s beat-down on the coal industry (which makes no sense, in terms of coal pollution compared to China, Volcanoes, and Porters Ranch and the fact that democrats used to be big with unions…) which reduced some of the numbers.
The other big factor is that inbound cargoes from Asia aren’t hardly down coming through West Coast ports. Where the ass-kicking is taking place is on the export side. And that is because of the familiar old complaint here about how the U.S. isn’t producing much besides porn, social media, and hot air anymore. I point to the presidential mess, as a major point-source of hot air in global warming.
While it is true that the economy is not growing as much, there are lots of other factors in play here. Since the odds-on favorite in terms of “Economic Solutions” is blowing over into the QE4 column and since negative rates of interest are effectively here, we may be able to set up one last minor blip as money should come pouring into stocks at some point to help the democrats in time for fall.
It’s next year we have to worry about. The elections will be over, the QE4 pop will be gone. The pushed back payoffs (higher rates) to the greedy bastards of the Insurance Industry will be done and come home to roost. And whoever wins in the election should be a republican and go through a major historical rhyme of how Herbert Hoover’s presidency worked out.
In the meantime, the market is poised to put in a double-bottom on the supporting trend lines of our proprietary Aggregate Index work (which no, is not a freebie, sorry; subscriber’s only). But from there the clouds should part and the QE4 commeth.
The only real question is what happens with all the chickens come back to roost (and crap on us) next year. This is all about “holding the bag” and if our read on things is anywhere near it’s usual 20-15 and well in advance perspective on things, it will be a very special bag for the bag holder.
It will be a genuine, Made in America colostomy bag.
But in the meantime, stocks (by the S&P) have been down 15% while real trade is down around 6%.
Now, spray some Lysol around and let’s return to the Big Deal That Isn’t which is the morning jobs report…
Jobs: Like this Matters?
Somewhere north of 94-million Americans are not in the labor force. Which is patently absurd until you figure that by the time you put a student loan on hold, pay for Ocare, and get something to eat, a lot of people have figured the math out: They’re better being on welfare than working.
Which gets us to this morning’s fairytale about how the jobs picture looks;
Total nonfarm payroll employment rose by 151,000 in January, and the unemployment rate was little changed at 4.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in several industries, led by retail trade, food services and drinking places, health care, and manufacturing. Employment declined in private educational services, transportation and warehousing, and mining.
Both the number of unemployed persons, at 7.8 million, and the unemployment rate, at 4.9 percent, changed little in January. Over the past 12 months, the number of unemployed persons and the unemployment rate were down by 1.1 million and 0.8 percentage point, respectively. (
Among the major worker groups, the unemployment rates for adult men (4.5 percent) and Whites (4.3 percent) declined in January. The jobless rates for adult women (4.5 percent), teenagers (16.0 percent), Blacks (8.8 percent), Asians (3.7 percent), and Hispanics (5.9 percent) showed little change over the month.
The number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged in January, at 2.1 million, and has shown little movement since June. These individuals accounted for 26.9 percent of the unemployed.
After accounting for the annual adjustments to the population controls, the civilian labor force and total employment, as measured by the household survey, were little changed in January. The labor force participation rate, at 62.7 percent, was little changed. The employment-population ratio (59.6 percent) changed little over the month but was up by 0.3 percentage point since October.
The cynical restatement:
1. The number of people working and portion of population working actually improved. Again, this gets back to what I was saying a minute ago: The world hasn’t ended. That’ll be along in a year or two.
2. On the other hand, the 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 remained at 9.9% so good luck getting a job that will pay enough to have both healthcare insurance AND pay back a student loan.
You ever ask yourself “What would anyone in their right mind run for office when things are only likely to get worse from here?”
Well, either they are not in their right mind, or they believe in borders, or they want two seats on the Gravy Train. Some want a whole private car on the Gravy Train.
Futures are down a tad, week is likely to see the S&P finish lower than a week ago.
We Have No Borders – or Leaders, Either
With the reports this week thatmeaning anyone (including foreign terrorists) can come to the remains of America unimpeded by the border, a thoroughly intriguing question wanders by:
If the Republicans are a real separate entity from the corporate paymasters and their democratic henchmen, where the hell are the impeachment hearings for disassembly of our borders?
The answer was included in the comments: corporate paymasters. And republicans who are spineless corporate suck-ups.
For what it is worth, however, here is a Google news search that shows the unthinkable has already happened in America:
The search term “catch and release” – once the exclusive term of a group of environmentally aware sportsmen, has not fallen to second place in language use behind the references to catching and releasing illegals.
Can I have we have our country back at some point, please? <WTF?>
FPS Disease Outbreak
Yes! That stands for Further Political Stupidity disease. Latest outbreak was in New Hampshire and it seemed to strike infected democrats most seriously. A report on the outbreak here.
But the finest and purest of clear thinking ended up coming from one of our readers who makes a fine point which I couldn’t have written better myself:
The two posts on Julian and Hil(arious)C and her 6 (66) got me wondering, so I ask the question:
What is the essential difference between Hil and Ed Snowden?
1. They both allegedly mishandled National Security data
A serious FELONY!
2. They both allegedly left top secrets open to the public
3. They allegedly have some relationship with Russia-
whether it is high priced speaking engagements via
state department aegis and hubby’s foundation, for
Russian audience, or just laying low there with no
4. One has the weight of the entire intel/USG against him
t’other has it behind her.
What’s wrong with this picture?”
This is an example of why we encourage readers to post comments.
The thing is, this is such a lump of steaming you-know-what that it is overwhelming when we nibble on the problems individually. But if we all contribute reasonable insights – like this grand one above – then we do have a chance to save at least the remnants.
I keep waiting for Texas to exit the Union as provided for by Law. Lots of northern liberals joke about having to carpet bomb the Lone Star State should that ever happen, but please check your maps on where Pantex is located. Ya’ll might want to rethink a bit.
Besides, all that crude in the Dakotas lacks a little thing we have in Bay Town, Midland, Tyler, Houston…hell, all over the place: Refineries.
Malpractice Lawsuit Considered
Personal note here: Ure’s truly uses asthma medication – have for 60 years. One of the meds is called Q-VAR.
Well, this year, it is not on my drug insurance outfit’s “formulary” so they don’t want to cover it.
They sent a letter to that effect and recommended something called PULMICORT.
Here’s the key thing: Letter was signed by a pharmacy fellow.
So the interesting concept here is this: Can I file suit or a complaint to enjoin the insurance outfit because they are practicing medicine without a license here in Texas?
I pay (and pay and pay) my doctor to make those kinds of decisions (which meds), but when insurance companies start to prescribe seems to me they cross a regulatory line and should be called on the carpet for it.
I was a customer of the same outfit last year and it was covered. This year, they changed their formulary and now want to tell my doc how to do his job.
You see, these pricks (and prickettes?) in the insurance biz aren’t just passing out favors in Washington, they are getting away with practicing medicine without a license, as I figure it.
I’ll remind you of this next year when the Obamacare prices beat NASA into space.