16 July 2015

SP 500 and NDX Futures Daily Charts - No Fear, Little Shame, Lousy Pay 'With Benefits'

"The problem of the last three decades is not the 'vicissitudes of the marketplace,' but rather deliberate actions by the government to redistribute income from the rest of us to the one percent. This pattern of government action shows up in all areas of government policy."

Dean Baker

A quick peek at the VIX chart below really tells the whole story of this market: no fear.   These sorts of extremes in manipulation and perception management to the point of delusion rarely last long.

We are in a financial asset bubble that is diverging from reality. The economic number from this morning's Philly Fed was abysmal. But the Fed just keeps on keeping on, with compounding policy errors and elite friendly bubbles.

This is going to end, and badly.

By mid-next week I think we will have a better idea of where we are in the wash-rinse-repeat cycle of the mispricing of risks.
There should be no doubt that this creation and management of another financial asset bubble is intentional at least in its effects, if not in its consequences.  
It is doing a very good job of channeling the vast majority of new money created by the Fed almost directly into the hands of the 'audacious oligarchy'.

Apparently Chairwoman Yellen likes the Employment Cost Index number which is increasing. Right below here is a comparison of the Employment Cost Index and the growth of wages.
As you can see, the employee cost index rose sharply while actual wages are flat to declining. What's up with that, besides seasonal adjustments and any other bureaucratic tinkering and the usual statistical suspects?
The index measures changes in the cost of compensation not only for wages and salaries, but also for an extensive list of benefits.

The benefits covered by the ECI include the following:
• Paid leave—vacations, holidays, sick leave, and other leave;
• Other supplemental cash payments—premium pay for work in addition to the regular work schedule (for example, overtime pay and pay for working weekends and holidays),
• Insurance benefits—life, health, short-term disability, and long-term disability insurance;
• Retirement and savings benefits—employers’ payments into defined-benefit and defined-contribution plans, including Employee Stock Ownership Plans (ESOP’s);
• Legally required benefits—Social Security, Federal and State unemployment insurance, workers’ compensation insurance, and Medicare;
• Other benefits—severance pay and payment into supplemental unemployment plans.

The grift is certainly working, and there is a recovery for some. 

But not for the 'working classes'.  That much is painfully obvious.  Let us not forget that most of the poor are the 'working poor.'  And there is a long line of unproductive drains on them from the FIRE sector, like a plump tick on their necks.

Have a pleasant evening.