So personal debt is still rising, consumption grows at a steady pace and the personal saving rate is negative. More and more money have to be used to pay interests. Better pray for good economic growth.. What happens if household wealth also starts to decline? Scary scary scary. People will start to save, do they buy stocks? World GDP have to grow faster than the GDP in USA, how else can americans get out of the debt situation? If americans starts to save, the rest of the world better be ready to step in and start to consume, or else a severe recession? If the latest move towards more protectionism continuesâ¦. UGLY
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Rate Hike On The Way
- Thread starter myminitrading
- Start date
Quote from Hydroblunt:
Wow
When I read stuff like this, I am only further convinced that there is no need for conspiracies nowdays, cause even those with intelligence are easily brainwashed.
The information on how government statistics are calculated is freely disclosed on the BLS website. Anyone with slightly above average intelligence can browse through and understand it. When they start assuming job growth from job cuts, that should signal to anyone who is not retarded that these statistics do not represent reality.
Please note, the government DOES NOT LIE about any data. All assumptions, methodologies and footnotes are disclosed. It's up to you to make your own conclusions about how this data is gathered, calculated and derived. Most of the Street takes them at surface and allow themselves to be led around like sheep.
Unemployment rate data requires making assumptions about "discouraged" workers, who are not part of the labor pool. If you are out of work for 6 months and can't find a job, you are no longer part of the labor pool. Shorten that period from 6 months to 4 months and the umployment rate goes even lower. I'm sure there is a study on which this assumption can be based, the government is free to do this and report it this way. As long as you accept it, there is no reason for them to stop.
You can either use your own brain or allow Wall Street media & analysts think for you. All those wonderful revisions you speak of, well, from what I remember, in the revisions they were lowering the number of good high paying jobs and adding more "temp" jobs and low paying government jobs. See, in their methodology, if you work 20 hours a month through some temp agency, that is counted as job creation.
i am a bit confused by this post - what is your point?
Everybody can access BLS data in detail. Also everybody knows that to try to describe the whole labor market through few numbers may be misleading. The data collection may be of questionable quality which may and leads to huge standard errors (easily making today's good number possibly terrible). The report should be improved but everybody knows this for AGES.
The point I am trying to make here is that all above is a PUBLIC information. Knowing all this information and a bit more Wall St makes an estimate (and puts money behind it in auctions) about where the economy is. And here you go - today the number came much better than expected (after good JCs and reasonable Challenger)- therefore the number is good and only idiot does not act on that.
Of course you can say "rich are getting richer and poor are getting poorer, the quality of report is bad (oups) etc" therefore I sell equities and buy treasuries. Go ahead - you are my guest.
Try to fight long term structural problems of economy with short term money and you are a toast.
<b>To stay with the original topic of the thread; Fed is not here to fight structural problems of economy but MAINLY to maintain financial stability (despite its dual mandate). Decreasing unemployment leads ultimately only to one thing - inflation (again however screwed up various measures are).
Therefore my longstanding belief is that after housing bites the bullet and (worldwide) economy still performs well the Fed can do only one thing - hike rates. Probably nothing drastic and not before October but up.
</b>
I really hate this conspiracy/retail thinking that somehow everything is manipulated only to excuse oneself incompetence to make money.
P.S. By the way I did not say that government lies about the data - in fact I argued the opposite.
STILL no explanation for those extra 27,000 construction jobs last month, dhpar?
You realize that if that adjustment were instead negative, they'd be subtracting more than 27,000 out of that number.
I wonder if they did any adjustment to subtract out all the real estate folks that have given up or are making no sales, or the mortgage brokers in a similar boat? Funny how the number show them still being hired, too, HUH?
You realize that if that adjustment were instead negative, they'd be subtracting more than 27,000 out of that number.
I wonder if they did any adjustment to subtract out all the real estate folks that have given up or are making no sales, or the mortgage brokers in a similar boat? Funny how the number show them still being hired, too, HUH?
Quote from scriabinop23:
the fed will STAY paused with this data.
Why? housing sucks and the consumer is slowing down. Why take the risk?
there are no hikes coming to a theatre near you.
I think this housing an slowing consumer chatter is just cover for the Fed.
These dammm economists never get it right. Slowing consumer my ass, they have been saying that for years.
Quote from dandxg:
I think the real wild card is this coming Hurricane season. With so much potential volatility in crude and unleaded gas futures, as we have seen lately, the Fed may not have a choice.
Let's not forget the rumor that the US may attack Iran this summer. These 2 factors could send inflation sky high and would force the Fed's hand IMO.
Your not kidding, energy is the wild card for sure. A major hurricane season and we see $100 oil buy October. It seems as everyone has be fixated on crude, unleaded gas has been surging. Gas at my local Exxon has gone from 2.03 in late Feb to $2.65 today. CPI and PPI should be sky high.
Quote from thriftybob:
To be honest, I don't believe the revised numbers anymore than the preliminary ones. As a matter of fact, I think that was a desperate attempt by the administration to improve the numbers that had been so lousy all year.
I believe they should track employment, unemployment, number retired, and in school, etc statistics by individual person, instead of playing games with statistics. Each person with a social security number is either employed, unemployed, in school, retired, deceased, or not looking for work, and it would be pretty easy to distinguish.
Go ahead, tell me why is neither retail spending nor savings increasing much if more and more people are becoming employed and wages are rising as we are told?
Better yet, if they are increasing the money supply at a 10%+ clip, why aren't the numbers rising?
Why do they get 25,000 applicants when they open a WalMart that only is going to hire 350 people, mostly part time, and with notorious low wages and benefits?
Its not the figures that lie, its the liars that figure. Until they use honest methods, the numbers are suspect, IMO.
I think all government data is massaged.
Quote from dhpar:
i am a bit confused by this post - what is your point?
Yeah you did miss it.
You are looking at revisions to a number that is already so statistically manipulated, it does not represent reality. Contrary to your and Pabst's belief, Wall Street does not really do its own polling. If they did, BLS reports & data would not be used. Talk to some analysts, investment bankers & traders, see how many can actually break down the government statistics and give you the real picture. You would be surprised how many truly believe we have super low inflation & unemployment. Some institutions & hedge funds do use consulting services that can provide alternate reports which give a more straightforward & realitic picture. But this is not the norm.
This country's economic, political & financial decisions are still being based on widely released & publicized government data. This also includes Fed Funds rate, which is a relatively insignificant factor on money supply in comparison to the real forces. The day Wall Street starts overlooking the government reports and then publicizing their own revised ones, well, I suggest you have a "Get out of Dodge" plan for that day.
And low unemployment does not cause inflation. Inflation & Deflation are caused by only one dynamic and it's certainly not employment. Cause in the last few years, more and more US operations are being offshored, hence people being laid off into the "jobless recovery". Most of them end up being thrown into the "discouraged workers" category. Yet inflation is very well present. It's certainly not people getting good paying jobs left and right that is causing the inflation.
Rate hike or not, Fed Funds rate is still at its lowest levels in history. The long term trend is down. They make hike it up to 7%, just in time to have Gov data to justify lowering them again. Or some hedgie blow up or housing problems. Occasional 25-50bps raises really do not have that much of an effect. It's all perception.
Quote from Hydroblunt:
Yeah you did miss it.
You are looking at revisions to a number that is already so statistically manipulated, it does not represent reality. Contrary to your and Pabst's belief, Wall Street does not really do its own polling. If they did, BLS reports & data would not be used. Talk to some analysts, investment bankers & traders, see how many can actually break down the government statistics and give you the real picture. You would be surprised how many truly believe we have super low inflation & unemployment. Some institutions & hedge funds do use consulting services that can provide alternate reports which give a more straightforward & realitic picture. But this is not the norm.
This country's economic, political & financial decisions are still being based on widely released & publicized government data. This also includes Fed Funds rate, which is a relatively insignificant factor on money supply in comparison to the real forces. The day Wall Street starts overlooking the government reports and then publicizing their own revised ones, well, I suggest you have a "Get out of Dodge" plan for that day.
And low unemployment does not cause inflation. Inflation & Deflation are caused by only one dynamic and it's certainly not employment. Cause in the last few years, more and more US operations are being offshored, hence people being laid off into the "jobless recovery". Most of them end up being thrown into the "discouraged workers" category. Yet inflation is very well present. It's certainly not people getting good paying jobs left and right that is causing the inflation.
Rate hike or not, Fed Funds rate is still at its lowest levels in history. The long term trend is down. They make hike it up to 7%, just in time to have Gov data to justify lowering them again. Or some hedgie blow up or housing problems. Occasional 25-50bps raises really do not have that much of an effect. It's all perception.
Obviously in the micro markets will refer to the most commonly accepted data. Over the long haul market participants form their own consensus.
To wit: Stocks rallied sharply in the face of high unemployment in 1991-1992.(ftp://ftp.bls.gov/pub/special.requests/lf/aat1.txt)
Many annalists didn't believe the accuracy of the data. (the Fed lowered rates from 7% in 12/90 to 3% in 9/92) After Bush lost the election there was a series of record bullish payroll reports and upward new job revisions. The market knew it before Labor did.
Toward that end, I think there's little variance among professionals as to what this environment holds. Bernanke sums it up. Inflation is persistent and troublesome. Price pressures are dependant upon continued strength of emerging economies. Higher household costs have been a break on consumers and employers. All knowns. However there's been obvious wage inflation across strata the past year. A decade ago $10 an hour was a SOLID poor mans wage. Now it's obtainable to most any low skilled worker. Management jobs that paid 60k in the 90's pay a hundo today. Even still, wages are lagging prices.
Increasingly the Fed will become aware that "saving" the lower class is a losing game. Protecting lending institutions (vis a vis a steeper curve) and protecting the dollar will be the paramount policy.
I see America's future. It's Brazil.
From my understanding; government's data alway lags from reality, because market is the reflection of reality and it is the most efficient way to interpretive from government's data; otherwise; the government will be more efficient than the market and we wouldn't need the market economy.
Please expand on this. I do not know what you are implying, and I live in Brazil (retired there 14 years ago from USA).Pa(b)st Prime: "...I see America's future. It's Brazil."
As I foresee the future, the dollar will continue to drop and the Brazilian Real will continue to get stronger relative to it. Brazil will continue to increase its balance of trade surpluses, it GDP, its living standards, it international reserves, (too bad they are mostly in dollars, but Brazil will soon learn better than to do that.) Etc.
Brazil will, like everyone, be hurt if the fall of the dollar turns into a run to get out. I.e. hurt in the global depression that follows, but less so than most.
This is because the factories in China and India will still be working at full capacity to satisfy their growing domestic demand. For example, only 3 of every 1000 Indians own a car and Tata Motors will soon be selling one for $2500 (US dollar equivalent) that many can afford. China's Chery Motors model QQ is already being sold for $5000. The domestic markets, not the "cheap labor" is why every auto maker in the world is building new plants in Asia while closing them in the US. Already, only China makes the world's computers.
Embraer (Brazil's Airplane company, third largest in the world) and China are now making in China 100 seat or less planes in a new factory and China is building new factory for larger ones so it will not need to buy any from Boeing or Airbus. Etc. for any high value product you wish to name in a decade or less.
China's rapidly growing and prospering middle class will have more purchasing power than all Americans in less than a decade. Etc.
India, and especially China, will still (and increasingly) need to import raw material and food stocks from Brazil, and others, so part of their high value product production will be required for exports to pay for their supplies of raw materials and food.
I.e. China and India will not have any surplus production* to sell to the US, which is consistent with the fact that after the dollar's fall, the US will not be able to continue borrowing to pay for imports etc.
Thus, I expect that in a decade, the US will have a trade surplus with China as although the US does not have much in the way of raw materials to sell to China, the US does have fertile land in the mid-west. US may be able to become an "agricultural colony" of China, if Canada and Argentina do not under cut the price of wheat too much. (Brazil can not produce wheat as cheaply as the US can, but in other agricultural products, the abundant fertile land, good rains, cheap labor, 12 months frost-free season, make food and alcohol production in Brazil much cheaper than in US.)
SUMMARY: If speaking on a decade or two time scale, and meaning the US will prosper like Brazil, you are too optimistic.
If speaking on a decade or two time scale, and meaning the US will be a "basket case" as Brazil once was, then, perhaps you are correct.
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*Normally their productive capacity would be further expanded to sell all they could to everyone as the fixed cost are spread over a greater volume; however, in a world with limited energy and mineral supplies, the incremental cost of the raw material and energy required to expand production is probably rising faster than this normal cost benefit of expanded production.