Hello Taikun, Today is a beautiful day. We had a terrific thunder, lightening and rain storm yesterday that cleansed and refreshed.
The sun is bright, air is still cool, and the environment is electrifyingly fresh. The ocean is looking calm and inviting. There is a fishing boat anchored in the bay, resting after perhaps a night of squid hunting.
All my windows and balcony doors are open, on all sides, and so inside is out and outside is in. The sounds of birds are audible as in the middle of an aviary.
Insects are kept out by a magical air pressure gradient differential between the street side of our abode and the ocean/valley frontage.
Below me I see a few fruit-laden wild papaya trees amongst a miasma of green, and my thoughts are drawn to my so far top-secret project code named “The Royal Coconut in the Great Valley”.
My Putamayo Music from Tea Lands is filtering through electric circuitry, filling my corner of Hong Kong with the atmospherics of Ceylon.
I plan on working on some Powerpoint slides for my primary construct, and then go to the beach for a quick swim before picnic with extended family at the beach below. A reflexology session is schedule for 3:00pm. After that, more work, so that the work can bear fruits.
Let me respond to your note before the strange and melodic sitar music ends and the Music from Coffee Lands begins.
<<A foreign investor, looking at US job growth and low inflation may come to the conclusion this is an investment opportunity, may they not?>>
… they may, but this time there will be less 'they' than last time, and the next time, lesser still. Thus we will have a slow saw tooth grind into ruination.
<<Because if the assumption is higher rates, along with the return of financing of the carry trade will be new dollars. Where will these find their homes? US Bonds over stocks?>>
… hard to say, because there is so much money floating about, all asset classes may be supported to some extent, allowing the poison of debt to work itself uniformly into all nooks and fissures, leading eventually to wild unreasoned increases in the worth of precious metals (the single and very narrow emergency exit for a flame engulfed theatre of the obvious doomed), and to complete ruination.
<<Could this cause a bond or stock market rally with the dual effects of winding up carry positions strengthening the dollar plus new investments, investing in growth, not interest rates, will be looking for a home?>>
… sure, and each such rally leads to more dangerous danger, all leading to no good, and then absolute ruination.
<<AG's failing attempt to 'paper' over America's financial asset bubble with more paper>>
… is a tried falsehood, in line with a pattern of fraud and blueprint of hubris, and it leads to … oops, again, inevitable ruination.
<<If AG, being able to wind up the carry trade through speeches on rate increases … a few more weeks, could there be a mini-stock or bond rally? Ditto for homes? Then, the frenetic pace rises to a crescendo, and then it all falls in a cacophony.>>
… Yes and yes, and then, into desperate ruination.
Paper can only support so much repeated rally of financial derivatives (stocks, bonds) and housing, even in what is mostly a financial economy, relatively speaking, and then the rallying stuff is worth no more in purchasing value than the paper that supports them. At that point, the point of realization, the paper holders keep an appointment scripted by history, unfortunate ruination.
Valuation will eventually defer to cash flow, and cash flow will eventually give way to purchasing power attrition through increased taxes, decreased debt, higher inflation, and lower income, leading to inevitable ruination of financial economy that is divorced from world norm, arbitraged away like so much twigs in a flood.
Some paper systems are going towards their destiny faster than other paper systems.
One thing to note about HK, the island was able to weather the SARS storm for 4-5 months in 2003, with all restaurants operating at 10% of normal flow and most business in hibernation mode. Most societies would have lasted 8 weeks before folks took to the streets. The difference is savings, of the cash type, which can be used to buy bread, not home equity, the liberation of which requires the cheapening of the money in which the home is in turn valued.
Some folks are hanging quite a bit of hope on what apparently is good April news on the job front, even as we have it on good authority (herr Doktor Richebacher) that the similarly good March news was a desperate scheme constructed to induce the comatose investoriates onward to willing ruination via pathetic lies, through bold fraud, and by way of controlled statistics …
On April 2, the U.S. Department of Labor announced that nonfarm payroll employment in the United States had surged by 308,000 in March, allowing the administration to claim that the job recovery had finally arrived.
After taking a closer look, we concluded that was just another case of absurd statistics.
The monthly employment situation report of the Labor Department is based on two different surveys, the household survey data and the establishment survey. The first is a sample survey of 60,000 households conducted by the U.S. Census Bureau for the Bureau of Labor Statistics (BLS). The second is conducted by the BLS in cooperation with state agencies, and includes 160,000 businesses and government agencies covering about 400,000 individual worksites.
According to the household survey, civilian employment increased from 137,384 million in February to 137,691 million in March, up 307,000. These are the raw, not seasonally adjusted, figures. Usually, employment rises in March due to seasonal effect. Accordingly, indeed, the seasonally adjusted data for March shows a decline by 3,000. In other words, zero job growth.
In the establishment survey, the raw numbers are even much worse. Nonfarm payrolls, not seasonally adjusted, increased by just 7,000 in March, as against 307,000 in the household survey. Now you would expect that seasonal adjustment would produce an even steeper decline than in the household survey. Miraculously, seasonal adjustment went in a diametrically opposite direction, turning the paltry raw number of 7,000 into a seasonally adjusted spectacular jump of 308,000.
Wondering how this is possible, we found out that virtually half of this big employment gain owed to a statistical method called the “net birth/death model.” The BLS explains that due to its “inability to capture, on a timely basis, employment generated by new firms,” it feels the need to use some special adjustments.
“To correct for this systematic underestimation of employment growth, an estimation procedure with two components is used to account for business births. The first component uses business deaths to impute employment for business births.” In essence, this means the more businesses are being liquidated, the more new jobs through business births are “imputed.” The second adjustment component is the X-12-ARIMA software model, being used to account for seasonal effects on the net birth/death ratio.
[EDIT by Jay: this above revelation is simply too funny, if not so sad, seeing perfectly good folks democratically following unelected financial leaders that give them the chemical light treatment with in broad day light]
In March, the two methods of calculation had a dramatic result: 153,000 of the 308,000 new jobs derived from the “net birth/death model.” The other half of the alleged job growth came mainly from two sectors:
construction (71,000) and retail trade (47,000).
Again, according to the household survey (seasonally adjusted), employment in private industries fell by 175,000; the number of self-employed workers fell by 288,000. If there had not been a steep increase in government employment by 439,000, the March job report would have been a disaster.
Last but not least, another oddity from the establishment survey: Average weekly hours fell in March; in fact, they fell so much that total hours worked declined even as the work force surged.
Chugs, Jay
Patiently waiting for the dawn of GUDDEED, after a considerably lengthy episode of DUEED. |
