Non-Farm Payrolls Report - Small Business Creation Boomed In October

Did new small business jobs creation boom in October during the government shutdown/default crisis?

Well, you might think so by looking at the Bureau of Labor Statistics 'Birth-Death' model report contained in today's October Non-Farm Payrolls Report.

According to the Birth Death Adjustment there were 126,000 jobs added in October. And what an October it was apparently. These are the most new jobs added for any October going back to 2003, which is as far back as my own spreadsheet goes.

A more usual number might be around 103,000 or less. So, someone thinks it was a strong October jobs market.

You can look at the historical Birth-Death Model numbers from 2000-2012 here. And there is a list of Frequently Asked Questions here.

As I have cautioned in the past, the Birth Death number is added to the Non-Seasonally adjusted number, and then seasonally adjusted. So it is not a 'pure addition.'

The Non-Farm Payrolls report contains very large numbers, on the order of 137+ million jobs which are estimated and deseasonalized, and then further revised for the next two months. So reacting strongly to a particular monthly jobs report is a bit of a Wall Street and political game.

What is more important is the trend in the number of jobs, and the quality of the jobs, both in hours worked and hourly compensation.

Another statistics worth noting is the Labor Force Participation Rate.  There is a fairly good commentary on that data from this Payrolls report here.  There was a similar issue with the Households Report since it dealt with the layoffs from the government shutdown differently than the headline NFP report. 

As an aside, when I hear some financier talking about 'the new normal,' as they were on financial television today, it makes me want to gag.  They are attempting to justify the results of their fraud and financial repression as a necessity, just business as usual. There is nothing 'normal' about this current economic environment.  We are in a financialized society where big money dominates public policy for its own ends.

Getting back to the Non-Farm Payrolls number, the big hoohah question is always, 'Is the government lying?' I think it is fair to say that they are certainly putting their best foot forward, in this and quite a number of things.

I am a little more concerned about the lies that take the US into wars of aggression to be frank. But economic deception can have very bad long term effects when coupled with bad economic policy decisions such as those we are seeing today, that are propagating and even increasing an inherently unstable economy.

All things considered, and not just the numbers in this report,  the recovery is weak, and real median wages do not support any sustainable recovery.  Inequity is increasing, and policy supports and subsidizes this growing inequality in both political and economic power.

Keep an eye on the real median wage, and you will have some indication on how the American public is faring. Although the calculation of inflation is fraught with the fog of politics. John Williams of Shadowstats has done some excellent work in this area.

The Banks must be restrained, and the financial system reformed, with balance restored to the economy, before there can be any sustainable recovery.

And that is the bottom line.

In this case the smaller the seasonality factor the bigger the jobs increase because the raw number is being divided by and reduced in September and October to arrive at the seasonal adjustment.  But there are so many estimates involved that the answer really lies in the trends and even more importantly the quality of the jobs.

Gold Daily and Silver Weekly Charts - ECB Surprise Cut, Non-Farm Payrolls Tomorrow

The metals caught the patented Comex open price hit and pretty much drifted around there all day.

Molto Mario Draghi cut the ECB rate.   There was fleeting joy in Mudville.

Did we mention that tomorrow is a Non-Farm Payrolls number? 100K is the consensus.

There was a withdrawal of 1,700 gold bullion ounces out of the Brink's Registered category.  That is a remarkably round number., and a deposit of 19,688 ounces of gold in to storage at JPMorgan Chase.

Let's see how the metals finish the week.  The next big Comex event will be the December options expiration on Monday, 25 November.

Have a pleasant evening.

SP 500 and NDX Futures Daily Charts - A Post Twitter Market Commences

Twitter came out this morning, to cheers and jubilation at around 45, ticked as high as 50 intraday, and then closed slightly below the open at about 44 and change.

The rest of the market dumped off, in a somewhat cynically amusing manner, despite a 'better than expected' GDP number.

It was like the Twitter IPO sucked all that fast 'liquidity' out of the market, and tech stocks in particular dropped in the vacuum it created. Momentum is fleeting.

Tomorrow we get the Non-Farm Payrolls number. Consensus if for an add of 100K. I would not even care to hazard a guess.
It comes down to how they handle the 'government shutdown.'

Have a pleasant evening.

Adjusted Monetary Base Is On a Tear Again - Efficient Markets Policy Error

I thought we would drop in at policy central and see what the Fed has been doing with the US money supply using its policy and regulatory powers.

The first chart shows that the Adjusted Monetary Base is growing by leaps and bounds. This is Billions of Dollars in Fed Balance Sheet expansion.

This chart shows the leaps and bounds of monetary base growth a little more clearly, since it is the growth of the base, in Billions of Dollars, but in year over year terms. Those are essentially trillion dollar growth swings.

 

This next chart indexes a number of measures to the economic trough in 2009, for sake of comparison.

It shows the growth in the Fed's monetary base, as well as the excess reserves being held by the Banks.

Below those it shows Wages, Consumer Credit, M2 Money Supply and the Velocity of M2, that is, the rate at which money is being used by the real economy.

We should bear in mind that despite all the hoopla, sturm und drang, and whining by the Wall Street banking elite, the US financial system is still largely unreformed.

This situation brings to mind a quote about economic policy from John Kenneth Galbraith:

“Trickle-down theory represents the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.”

― John Kenneth Galbraith

There wasn't a Fed database entry for the income of the one percent, but if there had been it would be doing very well indeed.

I did not include this in the already busy chart above, but here is Total Assets of All Commercial Banks, using the same indexing method that was used above.  Looking past the rhetoric, the priorities seem fairly clear if you look at the growth trend in assets starting in 2011, and then look at the same time period in the chart above.

This is when the Fed implemented QE2, from Nov 2010 through June 2011, and then began 'Operation Twist' in September 2011.

QE3 started in September 2012 and continues today.

I think that history may view the co-opting of the urge to reform the banking system, and the outrage at the Wall Street bailouts, into the Tea Party's strong popular backing for financial repression of the victims, and the centering of the political debate on throttling government spending for the public good while propagating a financial system that heavily favors and subsidizes the wealthy financiers, to be one of the great propaganda coups of the 21st century.

Almost as good is running a populist presidential candidate, packaged as a progressive reformer and widely denounced by the opposition as a socialist, who in policy practice is the virtual reincarnation of Herbert Hoover, but without his many prior logistical accomplishments.

Comex Registered Gold Falls To a New Low at 640,552 Ounces - Claims Per Ounce At High of 59

There was a withdrawal of 17,988 registered ounces of gold from the Scotia Mocatta warehouse on Tuesday.

The three kilogram bars representing 96.46 ounces came back to the registered category at Brinks. 

This brings the total ounces of deliverable (registered) gold down to a new low of 640,552 ounces for this leg of the gold bull market.

The 'owners per ounce' of registered gold is still bumping around the all time high of 59 potential claims per ounce.  For the interest of those who have asked, I include the comparable charts for silver this evening as well.

As claims are presented at these prices, gold will have to be delivered.  If the gold becomes scarce at these prices, higher prices may be called for to make additional supply available. The bullion banks can continue to resort to leasing gold from the central banks and using it to settle claims, but that particular game seems to be coming to a sad and sorry end.  When Germany asked for the return of its gold and was flatly refused, we heard the faint sounds of a fat lady preparing to sing.

Weighed and found wanting.

Stand and deliver.

Gold Daily and Silver Weekly Charts - A Banquet of Consequences

"Everybody, sooner or later, sits down to a banquet of consequences."

Gold was held below the $1320 level and silver the $22 level once again.

I tend to think they are coiling for a move, but we will probably have to wait while Twitter comes out to play, and the Bureau of Labor Statistics squeezes out another Non-Farm Payroll Report on Friday.

We finally had a little action in the Comex warehouses. I will be posting on that separately later tonight.

You may have heard that a group of traders have come forward claiming that they have proof of price manipulation in the Brent Crude market.

Let's see, at last count that makes about EVERY major market that has been rocked by a profound scandal of price rigging and market manipulation, enabled or perpetrated by a major player in the Anglo American banking cartel. There is all kinds of weird shit going on, but nothing to see here in precious metals markets, so move along. 

Have a pleasant evening.