of Observations on Economy, Markets and Politics
by Victor Sperandeo with the Curmudgeon and Fiendbear
I have several short points of order about the economy, U.S.
dollar, politics, and general “facts of truth” for the survival of
nations. They are expressed in this two-part
blog post along with my opinions.
Readers are invited to read either or both parts, depending on their
Thanks to Fiendbear and the Curmudgeon for their edits,
reformatting, and added information/references/hyperlinks, etc.
Part I. U.S. Economy and
Weak Payroll Gains Even Weaker When Examined Closely:
- The BLS Employment
report showed an increase of 160,000 non-farm payroll jobs
(“establishment” or “payroll survey”).
The consensus estimates were for an increase of 200,000 jobs. The “household survey” revealed a 5%
unemployment rate. For more on
these two surveys see this BLS summary.
from the BLS report: “The change in total non-farm payroll
employment for February 2016 was revised from +245,000 to +233,000, and
the change for March 2016 was revised from +215,000 to +208,000. With
these revisions, employment gains in February and March combined were
19,000 less than previously reported.” That 19,000 job downgrade for the last
two months was not considered significant by many analysts.
Zandi, chief economist at Moody's Analytics, believes that the
April jobs increase was satisfactory.
That's “because it is more than the US. population growth” (which
is currently 0.7%). Note that a
0.7% population increase would equate to 201,250 jobs a month, which is
reasonably close to the last three months’ average job gains of 200,000
Zandi does not consider the “Birth Death Model” (BDM) adjustment,
which postulates that 70,000 jobs a month were made up. The true increase
in real “counted jobs” was 90,000…far below the headline 160,000. Bottom
line is that it is A DECEPTION used by the government to make things look
better than the really are. Mark Zandi likely plays into this deception
because he is a supporter of the current administration.
- In his latest report to
subscribers, ShadowStats John Williams corroborates my point about
“BLS use of
the BDM artificially inflates headline month-to-month payroll gains with
add factors that currently are well in excess of 200,000 jobs per month.Due to extraordinary
seasonal-factor shifts with today's (May 6th) headline Payroll Survey
reporting, the market-disappointing April payroll gain was 160,000 jobs,
instead of what should have been an even-weaker 100,000 to 120,000 jobs. On the
Household-Survey side and with related unemployment measurement, data-quality
was horrendous, as usual.”
Dollar Plunge Saved by Old-fashioned Jawboning:
- The US
dollar index (DXM) dropped six days in a row from a trading high of 95.18.
On May 3rd, it traded below 93.47 (its low since August 2015) with the
next major support all the way down at 80.
- As the
decline began to accelerate on the broken support, two FOMC members saved
the day by talking (or jawboning) up the dollar. Fed members John Williams
(San Francisco Fed) and Dennis Lockhart (Atlanta Fed) said “the markets
are underestimating rate hike odds” and “investors dwell on downside
risks.” Those remarks evidently prevented a further dollar decline as the
greenback reversed and rallied back to 93.83 by Friday (May 6th) after
trading as low as 91.82 during the week.
should be noted that the two “jaw-boners” are NOT VOTING FOMC MEMBERS in
2016. Therefore, it appears that two irrelevant individuals were able to
turn the dollar market around on a worthless unofficial opinion. THIS IS
Error in US. Government Debt Calculation:
Grant, a man I very much respect, is an expert on bonds, interest rates,
and gold among other things. In a Time magazine
cover story titled, The United
States of Insolvency, Grant asks if the nation could afford a
US. government debt of $13,903,107,629.266?
from that Time magazine cover article:
“It is better not
to incur debt. Once it is incurred, it is better to pay it off. America, we have a problem.”
“The public debt
will fall due someday. (Some of it falls due just about every day.) It will
have to be repaid or refinanced. If repaid, where would the money come from? It
would come from you, naturally. The debt is ultimately a deferred tax. You can
calculate your pro rata obligation on your smartphone. Just visit the Treasury
website, which posts the debt to the penny, then the Census Bureau’s website,
which reports the up-to-the-minute size of the population. Divide the latter by
the former and you have the scary truth: $42,998.12 for every man, woman and
child, as I write this.”
you consider the debts the US government owes itself, the government debt
total tops out at about $19.3
trillion instead of the near $14 trillion indicated by Grant!
does this bookkeeping actually work? The Social Security Administration
takes in (temporarily) more than it pays out. With the surplus it BUYS US
Treasury bonds. The bond purchases enlarge the debt, but it’s not
important that the government pay itself back on time. What is important
is that the government pay its public creditors on time, which is where
the $14 trillion figure comes from. However, the government does not actually
BUY any bonds. Instead it spends all the cash from the so-called purchase
and places it in an untradeable IOU.
what the Social Security ad man calls the IOU's:
“By law, income
to the Social Security trust funds must be invested, on a daily basis, in
securities guaranteed as to both principal and interest by the Federal
government. All securities held by the trust funds are -"special
issues" -of the United States Treasury.
Such securities are available only to the trust funds."
Security Trust Fund Cash Flows and Reserves”
The US debt is 38% higher than what Grant says is
critical aspect of this topic is that if Jim Grant can make such a big
mistake on the total debt, just think what government bureaucrats who run
our economic policy can do?
Part II. Politics,
Survival of Nations, and the New World Order
Trump is the Presumptive Republican Party Nominee for
Trump effectively won the GOP nomination for President. He still has to
complete the voting process as he needs a total of 1237 delegates. After
an incredible winning streak of New York and five other eastern states,
his victory in Indiana caused both Ted Cruz and John Kasich (the only
other Republican candidates still running) to suspend their election
is truly an incredible feat for this very controversial man. What is
really important is what caused him to win, which was the great anger of
the voters who felt betrayed by the GOP establishment. Its leaders essentially sold themselves
and their votes to Corporate America.
GOP establishment is the reason for the rise of Donald Trump who was in
the right place at the right time. Yet the GOP still doesn't get it?
Speaker Paul Ryan said on Friday he wasn't ready to support Trump. His
opponent Paul Nehlen, running for the Speaker's seat, confirms
what seems obvious: that Paul Ryan
“sold his vote” to support so called TRADE DEALS, which Nehlen said are
damaging to America.
added that 83% of Paul Ryan’s political fund raising comes from outside
his Wisconsin district. “The vast
majority comes in the form of large campaign donations from inside the
D.C. Beltway... He sold his vote.
The same people that are donating to his campaign want these open
border initiatives. This isn’t a Free Trade deal.”
problem here is CORRUPTION! It
plagues our political system, and makes organized crime look like “The Little Sisters of the
President Obama Attempts to Rewrite History:
is trying to convince "we the people" that good is bad based on
DECEPTION. In a lengthy
interview with Andrew Sorken of the NY Times,
“If we can’t
puncture some of the mythology around austerity, politics or TAX CUTS or the
mythology that’s been built up around the Reagan revolution, where somehow
people genuinely think that he slashed government and slashed the deficit and
that the recovery was because of all these massive tax cuts, as opposed to a
shift in interest-rate policy - if we can’t describe that effectively, then
we’re doomed to keep on making more and more mistakes.”
- So the
Reagan growth years were not due to policies of large tax cuts, but lower
look at Obama's propaganda: From taking office in January 1981-1988 gross
GDP grew at a nominal compounded rate of 7.88%, and the real GDP (in 2009
dollars) grew at 3.47%. [These are official US government numbers.] In his 7.25 years in office, President
Obama's nominal GDP growth rate is 3.11%, while real GDP was 1.70%!! Real growth was 51% and nominal growth
60% less under Obama, while interest rates were 825 bps higher under
on the above, do readers think Obama's comments about “the myth of the
Reagan revolution” are on the mark?
Especially considering the US economy's terrible performance under
his tenure as President?
Obama: Forget The Difference Between Capitalism and Communism,
"Just Decide What Works"
a visit to Argentina this March, President Obama said: "So often in the past there has
been a division between left and right, between capitalists and communists
or socialists, and especially in the Americas, that’s been a big debate...
Oh, you know, you're a capitalist Yankee dog, and oh, you know, you're
some crazy communist that's going to take away everybody's
are interesting intellectual arguments, but I think for your generation,
you should be practical and just choose from what works. You don’t have to
worry about whether it really fits into socialist theory or capitalist
theory. You should just decide what
works." He added: "And I said this to President Castro in
drinking two martinis: So
Capitalism, Socialism, and Communism are the same? How incredible is that statement?
Characteristics of Successful Nations Vs the New World Order:
No country in history ever prospered by creating debt,
borrowing, spending and committing tyranny over its people (e.g. Cuba). On the contrary, all nations that are
successful are free, have small debts, and whose people save, and invest
(e.g. Switzerland). Such countries have
small limited government, with low taxes, and few regulations. They are not controlled such that they are
the only successful nations over the long run.
This should not be a "big debate"!!! It is empirically a straight forward fact. So
why does Obama (and others) attempt to say “BAD IS GOOD?”
It must be due to "The New
World Order." As
H.G. Wells wrote in his 1940 book with the same title:
"It is the
system of Nationalist individualism that has to go... In the great struggle to
evoke a Westernized World Socialism, contemporary governments may vanish...
Countless people will hate the new world order...and will die protesting
against it." (Put me in that group).
As Ludwig Von Mises wrote in Planning for
"Tyranny is the political corollary of socialism, as
representative government is the political corollary of the market
Good luck and till next time...
Curmudgeon on Twitter @ajwdct247
Curmudgeon is a retired investment professional. He has
been involved in financial markets since 1968 (yes, he cut his teeth on the
1968-1974 bear market), became an SEC Registered Investment Advisor in 1995, and
received the Chartered Financial Analyst designation from AIMR (now CFA
Institute) in 1996. He managed hedged equity and alternative
(non-correlated) investment accounts for clients from 1992-2005.
Victor Sperandeo is a
historian, economist and financial innovator who has re-invented himself and
the companies he's owned (since 1971) to profit in the ever changing and arcane
world of markets, economies and government policies. Victor started his Wall Street career in 1966
and began trading for a living in 1968. As President and CEO of Alpha Financial
Technologies LLC, Sperandeo oversees the firm's research and development
platform, which is used to create innovative solutions for different futures
markets, risk parameters and other factors.
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