OMG: Stop the presses, put your coffee down and pay attention: The ECB this morning has announced that some of their new rates will actually be negative. From the ECB Website:
The Mario Draghi press conference is going on now, and it’s on streaming from the ECB website. Key: Negative rates!!!
Bit for now, looks like the Dow will pop about 50 up at the open. But we’re just sitting back remembering that “free money” interest rates cause a phenomena I call “Ure’s Discontinuity” which is when interest rates argue for infinitely high stock prices, while the reality of a collapsing economic paradigm argue for zero valuations.
That’s the kind of asymmetry of expectation that isn’t clear to many people in advance, but when a large number of people wake up to the idea that the market is horribly overpriced because there is no growth, then you get an endogenously arising nonlinearity.
Screw government policy…it becomes irrelevant (as negative rates prove).
You’ll know the moment of recognition -when it gets here- by another name: Crash.
Jobs Numbers versus Interest Rates
We have a couple of employment numbers to ponder while we wait for “offishul” numbers to arrive tomorrow morning (same time, same website).
One is the ADP report which claimed creation of 179,000 jobs in the private sector last month which sounds OK on the surface, until you look at it through George-colored glasses. Here, put these on, and I’ll show you how the world looks.
We begin by looking at the number of people working in America in April. This shows up in the April Employment Situation Report Table A figures: The number employed in April was 145.669 million.
If we add 179,000 people in may, that ought to bump the number of people working up a good bit in tomorrow’s report. That means jobs growth is running 1.48% annualized, or at least that’s one way to figure it. So the good news is that with population growing around the 0.7% annualized level in America, there should be some progress being noted in the economy.
And there is. What matters is how much, and will it hold?
This morning’s the Challenger Job Cuts report came out and hints maybe not too much longer:
“Job cuts climbed to the highest level in more than a year, as US-based employers announced plans to reduce payrolls by 52,961 in May, according to the report Thursday from global outplacement consultancy Challenger, Gray & Christmas, Inc.”
However, there’s the matter of the Fed’s Beige Book out Wednesday. It found that “Consumer spending expanded across almost all Districts, to varying degrees. Non-auto retail sales grew at a moderate pace across most of the country: Although improved weather generally gave a boost to business, lingering wintry weather in the Northeast continued to weigh on sales in parts of the Boston and New York Districts. Increasingly strong new vehicle sales were reported by more than half the Districts, with most other regions seeing steady sales; demand was generally reported to be less robust for used vehicles than for new vehicles. Tourism was steady to stronger across most of the country–particularly in most of the eastern seaboard Districts. “
So what will the market’s do?
So far this morning, they have held on to a slight positive bias as the markets wait for the decision of the European Central Bank, that is widely expected to lower interest rates a bit in efforts to stimulate Europe out of deflation.
So it’s here that we see our tug of war: The US jobs picture had been improving (well ahead of the population growth rate) which is a good thing. However, the Challenger numbers argue for a pause.
But offsetting this is the drop in rates. Remember the explanation: A stock with $1 worth of earnings in a 10% interest rate environment is a $10 stock. But that same $1 of earnings in a 1`% environment means a $100 stock.
So wi9th the ECB negative rates, it will likely pump up the global equities markets and that oughta to drag the US higher. Remember parabolics and our “vomit comet economy” model? Going upppp…….
Tomorrow, once “rate fever” has passed (or not) we might see a different reaction if the Labor Department numbers follow Challenger’s job cut data.
In the meantime, just sit back and relax. The odds of the financial world imploding into a heap this morning aren’t much different than they were yesterday.
And besides, it’s only your life, lifestyle, inheritance for the kids, and place in the Universe that’s at stake here. Why, toss in your immortal soul and your online trading account, and sure…what’s there to worry about?
And you do trust government and the Fed, right?
Impeachment Talk Rising
The presidential handling of the recent prison swap (one American for five Taliban) has forced the word Impeachment back into the headlines.
Meantime, the Bowe Bergdahl homecoming has been canceled because of the backlash to recent disclosures.
Apparently, undeterred, the White House is consider freeing another Gitmo detainee. And columnists, like George Will, are writing under headlines like “When a president goes rogue.”
Curiously, even the republicorps admit the WH mentioned the possibility of a trade 2-years ago, but whether that meets the requirements of law? Long, long, big, nasty one, that.
But the political mood of the country is changing – and in a big way.
In one case, we see how the administration botched assessment of the public mood and in another, we see how the GOP may be about to “wax” a long time democratic stalwart.
YGBSM: Our “Other Plane Event” Arrives
If you’ve been following the predictions being posted at the www.nationaldreamcenter.com (which scans the web for dream content using www.nostracodeus.com software in addition to reader-submitted dreams about the future), you’ll know we have been waiting for our “second plane” event to show up.
Well, here we go with the crash yesterday of a Marine jet into a California neighborhood.
Now it gets strange: Another jet, this one a jet off the California coast. crashed on a training flight last night.
Not strange? Well, not till you read the write-up on the National Dream Center site this morning where the future predicting sequence of dream analysis features this key sentence:
Next day, we run the linguistics. Much of it had to do with finding a plane (which came out with the WWII plane), but we also got a “Flying class taking three,” which to us meant we’ll experience 3 major airplane events/crashes.
When working on predicting the future (via linguistic shift and Big Data) we are always surprised by the hints that come through about future.
In this case, does it mean that three training flights will have accidents? They are, after all “flying class…”
If something pops in Nashville next, I’ll be the jaw-dropped guy. Oh, and since one was Navy, one was Marines, I figure Air Force is due…
Too Much Weed
Oh, sure, marijuana may cure cancer. And yes, everyone with half a brain has read about US Patent 6630507 which the US government had (rather audaciously) expropriated for itself and the Department of Health and Human Services.
And yes, it shows medicinal value and shows the DEA claims of “no medicinal value” a flat-out government lie, but we assume you already knew all that.
But here’s where it gets interesting.
USA Today has a story about Maureen Dowd’s latest column in the NY Times about getting a little much of a pot-laced candy bar.
What’s interesting is that there are still people who haven’t studied the effects of ganj. The use of indica weed gives a lot of physical high, while the sativa strain is more of a “head trip.”
And as people in Washington and Colorado are learning, on new high quality weed on the market, it’s a good idea to have a toke, wait 20 minutes and see how it rolls.
Having experimented with a thumb-sized doobie in 1970, smoking the whole thing (followed by a remarkable experience with a Persian rug design) I’m pleased to see such honest in reporting. Makes a better reporter, I think, but then I’m crazy.
Oh, it also means the national press “establishment” may be presaging a national move toward decriminalization.
