The Spooze made a new record high as employment rose more than expected for the second month in a row in July and wages picked up, bolstering expectations of faster economic growth and raising the probability of a Fed interest rate increase this year. Both gold and the US dollar fell sharply while Texas Tea remained at the 41 handle. Short-term very bullish, longer term not so much.
Here is the current market situation from CNN Money
North and South American markets are mixed today. The S&P 500 is up 0.76% while the IPC gains 0.19%. The Bovespa is off 0.24%.
WASHINGTON (Reuters) - U.S. employment rose more than expected for the second month in a row in July and wages picked up, bolstering expectations of faster economic growth and raising the probability of a Federal Reserve interest rate increase this year.
WASHINGTON, Aug 5 (Reuters) - The U.S. trade deficit rose to a 10-month high in June as rising domestic demand and higher oil prices boosted the import bill while the lagging effects of a strong dollar continued to hamper export growth.
LONDON (Reuters) - Bumper July jobs data from the United States have again begun to stoke expectations of a September rate hike from the Federal Reserve, just when other major central banks around the globe are unleashing ever-looser policy.
NEW YORK (Reuters) - A federal appeals court rejected a one-time Florida billionaire's bid to revive his $800 million lawsuit accusing Citigroup Inc of fraudulently hiding its exposure to subprime and other toxic mortgages, inducing him to hold on to shares he otherwise would have sold.
WASHINGTON (Reuters) - Influential U.S. magazine Consumer Reports urged the Justice Department to hike compensation to 475,000 owners of polluting Volkswagen diesel vehicles and allow owners who opt for a fix to reconsider.
LONDON (Reuters) - AstraZeneca shares hit a record high on Friday, breaching for the first time the 55 pounds a share level offered by Pfizer in 2014 during the U.S. group's abortive $100 billion attempt to buy the drugmaker.
NEW YORK (Reuters) - Oil prices fell 1 percent on Friday, ending a two-day rally fueled by short-covering and bargain-hunting, as the dollar surged on robust U.S. jobs data and reasserted its influence over crude futures in an oversupplied market.
As part of our monthly tradition showing the gaping disparity in the quality of the US labor market, we present the breakdown between the lowest paid jobs available, those for workers in "food services and drinking places", also known as waiters and bartenders, and compare them to the number of workers in the traditionally best paid sector, manufacturing.
Here is the bottom line: as the chart below shows, there have been half a million waiter and bartender jobs added since 2014, and no manufacturing jobs.
This explains why contrary to the BLS's seasonally adjusted models optimistically showing a pick up in wage growth, the US economy has so far failed to observe any form of benign demand-pull inflation.
So what accounts for this troubling deteriorationg in the US labor market continue every single month? Here is one explanation.
Back in January, the ECRI's Lakshman Achuthan's made a troubling observation. The sustained decline in the official jobless rate - now near the Fed's estimate of "full employment" - is a misleading indicator of labor market health, he said.
Indeed, the stagnation in nominal wage growth is consistent with the weakness in the employment/population (E/P) ratio. After dropping to three-decade lows in the wake of the Great Recession, the E/P ratio has barely improved since the fall of 2013, reversing only a quarter of its decline from its pre-recession highs. Furthermore - as a breakdown of the E/P ratio by education level shows - even this modest imp ...
One week ago, the BEA admitted that it had "found a problem" when it comes to calculating GDP numbers. Specifically it blamed "residual seasonality" adjustments for giving historical GDP numbers a persistent optimistic bias. This came in the aftermath of last week's shocking Q2 GDP report which printed at 1.2%, less than half of Wall Street's consensus.
Today, seasonality made another appearance, this time however in the much anticipated July jobs number, which unlike the woeful Q2 GDP number, was the opposite, coming in far higher than expected. In fact it was higher than the top Wall Street estimate.
And, just like in the case of GDP, it appears that seasonal adjustments were the culprit for today's blowout headline print which excluding the Arima X 13 contribution to the headline number, would have been notably weaker.
As Mitsubishi UFJ strategist John Herrmann wrote in a note shortly after the report, the "jobs headline overstates" strength of payrolls. He adds that the unadjusted data show a "middling report" that's "nowhere as strong as the headline" and adds that private payrolls unadjusted +85k in July vs seasonally adjusted +217k.
In Herrmann's view, the government applied a "very benign seasonal adjustment factor upon private payrolls to transform a soft private payroll gain into a strong gain."
He did not provide a reason why the government would do that.
Courtesy of Southbay Research, which also blasted today's seasonal adjustment factor, this is how the seasonal adjustments look lik ...
ECRI's WLI Growth Index which forecasts economic growth six months forward was improved and remains in positive territory for the 19th week - after spending the previous 35 consecutive weeks in negative territory. ECRI's inflation index is now at at 97 month high.
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