Markets closed higher, DOW up 217, SP500 closed above 200 DMA and well into resistance developed in January, 2015. Short-term indicators are mildly bullish as is oil melting back up to the high 46's. Longer term indicators are not so rosy and we could see another down turn in the near future.
NEW YORK (Reuters) - Wall Street is forever on the lookout for ever more exotic indicators of impending doom for the stock market, and the latest measure to catch eyeballs is the CBOE Skew index which recently flashed panic signals like never before.
WASHINGTON (Reuters) - The U.S. budget deficit narrowed to $439 billion in fiscal 2015, the lowest level since 2008, as the economy continued to recover from the financial crisis and revenue growth outpaced a rise in spending, the Treasury Department said on Thursday.
(Reuters) - Valeant Pharmaceuticals International Inc, already under fire over steep price hikes for two heart drugs, said it had been subpoenaed by U.S. prosecutors seeking details on its patient assistance programs, drug pricing and distribution practices.
(Reuters) - Citigroup Inc reported a 51 percent jump in quarterly profit as lower costs more than made up for a fall in revenue amid increased market volatility and uncertainty about the timing of a U.S. interest rate hike.
MILAN (Reuters) - Starbucks Corp , the world's biggest coffee chain, is in talks with an Italian partner to open branches in Italy, one of the few major markets where it has yet to make an entrance, a source familiar with the matter said on Thursday.
WASHINGTON (Reuters) - The Federal Reserve is still expected to raise U.S. interest rates in December but signs the labor market may be in a soft patch have dented confidence the central bank will pull the trigger, according to a Reuters poll.
One of the main reasons why the BLS has been massively overestimating job creation ever since great financial crisis, is due to the well-known birth-death adjustment, aka the CES Net Birth/Death Model, which quantitatively is shown on the chart below, has resulted in the "addition" of some 5.3 million jobs, that don't actually exist, but are merely modeled by the BLS which continues to assume the same new business creation/destruction dynamics that existed before the crisis.
The is a big problem with this core assumption, which has follow through effects not only for domestic fiscal policy, but also monetary policy (and explains why despite a 5.1% unemployment, there is zero wage growth, thus keeping the Fed pushing the ZIRP accelerator pedal years later), for the simple reason that as of this moment it is dead wrong.
Here is what Gallup CEO, Jim Clifton, wrote several months ago looking at the trends in new business creation and destruction in the US.
We are behind in starting new firms per capita, and this is our single most serious economic problem. Yet it seems like a secret. You never see it mentioned in the media, nor hear from a politician that, for the first time in 35 years, American business deaths now outnumber business births.
The U.S. Census Bureau reports that the total number of new business startups and business closures per year -- the b ...
Submitted by Lance Roberts via STA Wealth Management,
The LMCI Index Says The Fed Is Late Again
In May of 2014, the Federal Reserve began discussing a newly designed labor market index to help support their claim that employment conditions in the U.S were improving. This was an important facility for the Fed which needed support to raise interest rates. My good friend Doug Short has a complete discussion on the LMCI, which is worth reading for context. As he defines:
"The Labor Market Conditions Index (LMCI) is a relatively recent indicator developed by Federal Reserve economists to assess changes in the labor market conditions. It is a dynamic factor model of labor market indicators, essentially a diffusion index subject to extensive revisions based on nineteen underlying indicators in nine broad categories.
The indicator, designed to illustrate expansion and contraction of labor market conditions, was initially announced in May 2014, but the data series was constructed back to August 1976."
Unfortunately for the Federal Reserve, the index has not supported the Fed's claims that employment is growing at a rate strong enough to withstand a tightening of monetary policy. In fact, as shown in the chart below, the LMCI index (smoothed with a 12-month average) has been a leading indicator of future weakness in employment. The recent downturn in the LMCI sugge ...
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