It what has to be one of most miserable jobs numbers in some time, we learned today that the number of Americans who are involved in the Labor Force has now shrunk to levels not seen since 1979! Think about this for a minute - we are talking 34 year lows!
Yesterday we were greeted with the news that the US poverty rate is now back at levels last seen in the 1960's! Remember when Lyndon Johnson declared war on poverty in this nation. Well, it looks like under the Obama administration, the US just lost that war.
We had a market looking for an increase in hirings somewhere in the vicinity of 200,000. Instead we got a paltry 88,000 and one has to wonder how many of those are due to the birth/death model.
Taken together, any idea of a premature end to QE3 and QE4 is certainly off the table based on this recent series of data.
While not trying to make light of the number of our fellow citizens who have completely given up on finding decent employment or have been forced into taking part time work to attempt to make ends meet, I was struck with a story appearing on the Drudge Report this AM detailing an increase in theft of maple syrup up in the state of Maine. It seems like you can get $50/gallon at the retail for this stuff. Maybe some of the unemployed have decided to go into the maple syrup business. They sure as hell cannot find work in this nation.
It looks as if the bullish euphoria, a euphoria which I have been mocking and will continue to do so, is finally wearing off of the equity bulls. WE noted this week on the S&P 500 chart a "just miss" on a Bearish downside reversal pattern. After we got news about the Bank of Japan's "all-in" on the liquidity front, the force of the reversal was lessened as risk was back in vogue. Today, that reversal pattern is seeing some further downside confirmation. The day is yet young but the S&P 500 stands a good chance of putting in a WEEKLY DOWNSIDE REVERSAL PATTERN. We have not seen one of these on the S&P 500 chart for a long time (since May 2011). If the market does not stage one of those late-in-the-session miraculous recoveries, it could very well portend that this overbought, overextended stock market is going to finally see a deeper and more protracted retracement in price.
I want to add here that in the battle between Dr. Copper and the broader US equity markets, it appears as if Dr. Copper is being vindicated. The base metals, the grains, some of the softs as well as the broader Continuous Commodity Index were all sinking while the equity world was in its own little La-La land and soaring ever higher into the clouds. Both of these cannot be right. It looks as if those concerned about slowing global growth and deflationary pressures are being vindicated although cackling before laying an egg is not a good idea. Let's see where the dust settles today before getting too dogmatic.
Something else to note here - normally in the past, on a day like this in which risk is being taken off as indicated by soaring bond prices, the US Dollar and the Yen are the recipients of safe haven flows. The Dollar is moving lower today as the Euro and the Pound are seeing inflows while the Yen is dropping sharply on the heels of the policy change by the Bank of Japan.
Just when you think you have the drill figured out, the rules of the game change. Now we will need to see how to interpret all of this in the days and weeks ahead. Is this a temporary aberration or the start of yet another new trend. It is hard to believe that anyone would consider the Euro a safe haven given the recent events over there. What does that tell you about the mess in the currency markets? This is gold's moment to shine if there ever was one. It had better not disappoint.
At least it is not disappointing in terms of the Yen. Take one look at the following chart and you can see how the Japanese public is seeing their currency debauched. Given this, why anyone would want to own Japanese government bonds outside of the Bank of Japan, I will never understand. When you are getting 0.5% on money for TEN YEARS and the underlying currency is collapsing, you would have to require a frontal lobotomy if you put any money into those things.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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