Wednesday, November 11, 2015

"Irreversibly Broken & Dysfunctional" - There's Something Wrong In The Markets

"Submitted by Doug Noland via Credit Bubble Bulletin,
Bloomberg: “The October Jobs Report Gives Fed Officials a Green Light to Raise Rates.”
With global “risk on” back in full swing, the focus of U.S. monetary policy belatedly shifts back to fundamentals. October’s 271,000 was the largest jobs gain since last December. The unemployment rate is down to 5.0%, the low since April 2008. Average hourly earnings were up 2.5% y-o-y in October, the strongest performance since July 2009. The private sector added an eye-opening 268,000 jobs during the month, with Services employment up 241,000. Indicative of an extraordinarily unbalanced economy, no manufacturing jobs were created during October.
Existing home sales are on track for the strongest year since 2007. Automobile sales are booming as well. Monthly auto sales last month posted the strongest October since 2001 (from Dow Jones), with annual sales poised to test the all-time record. Kelley Blue Book is expecting 2015 sales 12% above 2014.
My point is not that the U.S. economy is robust - or even sound. From my perspective, booming home and auto sales reflect the upshot from years of ultra-loose financial conditions and a resulting “Bubble Economy”. Importantly, the Federal Reserve’s extreme monetary accommodation is grossly inappropriate considering U.S. financial and economic backdrops. Keep rates at zero, print a few Trillion, backstop booming financial markets long enough and spur unprecedented inflation in (perceived) Household Net Worth – and Bubble Economy Dynamics will eventually prevail. They have..."


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