Initial jobless claims are near record lows. The last time they were this low was in early 2000, just before the market meltdown/recession. They were almost this low in 2007, just prior to the last market meltdown/recession. They were almost this low in 1989 before a market sell-off/recession. A critical thinking person might ask how we could have so few jobless claims when GDP is negative.
A critical thinking person might ask how reported layoffs by major corporations could be at a four year high, but jobless claims are at record lows. Someone must be lying or the dramatically higher layoffs in the first four months of 2015 versus the first four months of 2014 haven’t filtered through to the made up government reports. Here are the facts from Challenger & Gray:
Falling oil prices contributed to a 68 percent surge in job cuts last month, as US-based employers announced workforce reductions totaling 61,582 in April, up from 36,594 in March, according to the latest report on monthly layoffs released Thursday by global outplacement consultancy Challenger, Gray & Christmas, Inc. The April total was 53 percent higher than the same month a year ago, when 40,298 planned job cuts were recorded. It represents the highest monthly total since May 2012 (61,887) and the highest April total since 2009 (132,590). Year to date, employers have announced 201,796 planned job cuts, which marks a 25 percent increase from the 161,639 layoffs tracked in the first four months of 2014. This is the largest four-month total since 2010.
Maybe the claims are at an all-time low because the percentage of working age Americans with jobs is the lowest in 37 years. If people don’t have jobs, they can’t lose them. There are 250 million working age Americans in this country today. Only 148 million of them work. Over 20 million of them only work part-time. Millions more are classified as self employed as they try to sell shit on Ebay as their job. There are over 100 million non-employed or drastically underemployed Americans being supported by the 148 million working Americans.
The gutting of our industrial base, outsourcing of blue collar and now white collar jobs to foreign lands, welfare policies designed to reward those who don’t work, and monetary policies that reward debtors and spenders while punishing savers and capital investors have destroyed the vitality of our economic system. The jobs are not coming back. Low unemployment claims is not a reason to celebrate. It’s a warning that things can only get worse from here on out. It’s a long way down. Politician lies, Wall Street propaganda, manipulated economic data, rigged markets, and an apathetic ignorant populace are a bad combo. Something wicked this way comes.
Americans are eating out and staying over more, but remain reluctant to buy clothes, and to spend the windfall from lower gas prices, according to a Visa Inc. V, +0.61% survey of consumers. Restaurant spending in April rose 9.5% from a year ago, up from 7.6% growth in March, while hotel spending growth increased to 9.4% from 9.2%. Household good spending increased 5.1% in April, and home improvement spending grew 4.8%, while spending at clothing stores inched up just 0.1%. With oil prices falling 30% over the last year, Visa said the average household savings was between $50 to $75. Visa said 52% of those surveyed said they planned to save the unexpected savings on gas, while 24% said they planned to use the extra money to pay down debt. Only 30% said they planned to spend the savings on gas at other places, Visa said.
From a critically thinking Druid.
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”John Kenneth Galbraith’s equation of the current US political and economic elite with the French aristocracy on the eve of revolution rings even more true than it did when he wrote it back in 1992, in the pages of The Culture of Contentment.
The unthinking extravagances, the casual dismissal of the last shreds of noblesse oblige, the obsessive pursuit of personal advantages and private feuds without the least thought of the potential consequences, the bland inability to recognize that the power, privilege, wealth, and sheer survival of the aristocracy depended on the system the aristocrats themselves were destabilizing by their actions—it’s all there, complete with sprawling overpriced mansions that could just about double for Versailles.
The urban mobs that played so large a role back in 1789 are warming up for their performances as I write these words; the only thing left to complete the picture is a few tumbrils and a guillotine, and those will doubtless arrive on cue.”
http://thearchdruidreport.blogspot.com/2015/05/the-whisper-of-shutoff-valve.html
Look out below.
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It’s a long way down.
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Is this time different?
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This time is way different, it’ll be far worse – but we’re about to find out what happens when you use a penny for a fuse.
Maybe it’s like this all over – but here in Minneapolis (land of 10,000 taxes) we have some ‘mega’ car dealers. The one Chevy dealer must have 3,000? 4,000? new cars and trucks. They have the equivalent of 3 to 4 ‘big box’ store parking lots filled with inventory. There’s not one empty space.
I wonder what’s going to happen with that when the SHTF.
I have heard from a friend who works in aircraft maintenance management at a very large military facility that there are some real cutbacks coming in the form of realignment of taskings and mission goals. I think that if a large tornado were to hit that facility soon, it might help resolve that mission reaslignment issue. Not fear mongering; just sayin…
On the flip side the .1% seem to be doing just fine. I am bidding on a 20,000 Square Foot home in an exclusive L.A County neighborhood for a tech geek who sold out at just the right time. He now spends his time saving animals (a vegan & animal rights activist) and helping reduce the carbon footprint by cutting down a whole lot of trees to build his house. Maybe its a good trade, kill some trees and trade carbon credits for all the electricity he will be using. Oh and on top of the 20k SF home there is a 7-car garage & a “staff” quarters.
Why are stock prices so high? Follow the borrowed money
By Brett Arends
Published: May 7, 2015 12:14 p.m. ET
Connect the dots between cheap corporate debt and CEO pay
Maybe the bears and cynics and general party-poopers are all wrong. Maybe the stock market these days isn’t a giant Ponzi scheme.
Maybe it’s a shell game.
The cheerleaders on the Street of Shame won’t tell you this, but lurking behind the phenomenon of today’s skyrocketing stock prices is a surge in corporate borrowing.
Companies have been borrowing money with both fists, and spend the money to buy back shares and in the process drive up their share prices.
But what the stock market giveth, the bond market taketh away.
Despite all the claims that U.S. companies are awash with cash and have “never had it so good,” an analysis by investment bank SG Securities calculates that in reality Corporate America has “overspent” in recent years to the tune of hundreds of billions of dollars.
Over the past five years, equity prices have almost doubled — but so has the net debt of nonfinancial companies. Both have outstripped a 60% rise in profits.
Or, to put it another way, since March 2009, the cash pile of non-financial U.S. corporations has risen by $570 billion, but debt has risen by $1.6 trillion.
Indeed over the past year net debt has risen about 20%,SG estimates — while gross cash flows have risen a more modest 4%.
Indeed, “it is also those companies with the weakest sales growth that are buying back the most,” warns SG quantitative strategist Andrew Lapthorne in a new report for clients.
And that’s not all.
The “net debt” figures for most of the stock market are even worse than many will tell you, for the simple reason that the overall figure is skewed by a handful of companies with big cash piles — such as Apple AAPL, +0.84% . When you remove those from the equation, the picture for the rest of the pack looks a lot worse.
Many of those cash piles are sitting offshore, untaxed or lightly taxed. Net of tax, the levels are lower.
And anyone who tries to give you comfort by pointing out that net debt levels aren’t too bad when compared to asset prices needs to offer a big caveat. Such ratios always look good during a boom, because asset prices get inflated.
If or when the tide turns, the asset prices can tumble — but the value of the debt, alas, sticks around at its previous level.
According to Federal Reserve data, non-financial corporate businesses owe 37% of the value of their net worth. That’s down from a peak of 45% in 2009. But that’s still higher than the 34% registered in 2007, at the peak of the last boom.
It’s no mystery why so many companies have been ramping up debt, either.
The money is virtually free. The Federal Reserve’s policy of zero percent interest rates has made savers so desperate for income that they’ve been willing to buy corporate bonds at pitifully low yields. The average yield on BAA-rated corporate bonds touched an all-time low of 4.29% in January, according to ratings agency Moody’s. (BAA is the lowest level of investment grade bond). In May, 2000, the yield approached 9%.
Corporate CEOs get paid these days for driving up stock prices. Their performance targets are often compared to the total returns on their company stock. Their biggest rewards come in the form of restricted stock units and options. So borrowing other people’s money for free and using it to drive up the stock price is a great deal for them.
Where does this leave the ordinary investor?
They say “the trend is your friend,” and maybe this game will just keep going for a long time. Anyone trying to call the next correction in the stock market is probably on a fool’s errand.
Yet it is a financial certainty that rising debt levels imply rising risks. The most interesting question is whether the bulk of that risk is being carried by stock investors or bond investors. Time will reveal all.
Just like in ’07, by this time you could smell the bad times coming even as most were convinced the worst was already behind us.
The destruction this time smells a lot worse. But what do I know, in the words of hub and his family, I’ve been 100% wrong.
So far.