January 14, 2016

Santelli: Press, Pushing For Zero Rates Forever, Will Turn Us Into Japan

On Saturday, after one of the worst year-opening weeks for the stock market in many years, Myles Udland at BusinessInsider.com complained that “The stock market is having a nightmare start to 2016 and it’s all the Fed’s fault.” This sentiment is apparently widely held in the media. At NationalInterest.org on Tuesday, Christopher Whalen wrote that “the Fed created the current unstable market situation by keeping dollar interest rates too low for too long,” and now “is out of step with other major central banks … causing markets an extra degree of anxiety.”

This morning, Jay Somaney at Forbes.com complained about “the foolish and self-serving move made by our Federal Reserve last month … (of) raising rates and then continuing to yap off about 4 more rate hikes this year.” In other words, the complainers really want near-zero rates, apparently in perpetuity, and cower in fear at anything resembling market-based capital allocation. This caused CNBC’s Rick Santelli to warn that the U.S. is in danger of going down the ugly road Japan has travelled for two decades.


Initial Unemployment Claims (011416): 284K SA; Raw Claims (504K) 5 Pct. Below Same Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 8:28 am

Predictions, per Yahoo’s Economic Calendar: 275,000 to 282,000 seasonally adjusted claims.

This is the first report of the year covering a full week of business, so the results will be the first bellwether of how things are going in this aspect of the 2016 job market.

For what it’s worth, even considering the New Year’s holiday the previous week, the seasonal adjustment factors for this week and same week last year seem artificially high (177.4 and 174.2, respectively).

The Department of Labor’s home page will post a link at 8:30 a.m.

8:34 a.m.: So, they’re late with the release. That has tended to presage less than perfect info in the past. We’ll see.

8:35 a.m.: Reuters has a report at CNBC telling us that the result was 284K. Still no DOL home page link.

8:40 a.m.: While we’re waiting for the official release, the following can be stated:

  • Last year’s raw claims of 530,000 seasonally converted to 304,000.
  • This year’s raw claims (plus or minus about 700) came in at 504,000 (504K divided by 1.774 is 284K).
  • This year’s raw claims came in about 5 percent lower than the same week last year.

I don’t consider 500K+ in raw claims to be a positive result.

8:45 a.m.: Let’s excerpt Reuters and conclude —

US weekly jobless claims total 284,000 vs 275,000 estimate

… Initial claims for state unemployment benefits increased 7,000 to a seasonally adjusted 284,000 for the week ended Jan. 9, the Labor Department said on Thursday. The prior week’s claims were unrevised.

Still, it was the 45th consecutive week that claims remained below the 300,000 mark, which is associated with strong labor market conditions. That is the longest such stretch since the early 1970s.

Reuters seems to have travelled way back into time with that 300K benchmark. The AP was using 350K six years ago.

8:50 a.m.: Finally, DOL’s release is up. Raw claims were actually 503,919.

Thursday Off-Topic (Moderated) Open Thread (011416)

Filed under: Lucid Links — Tom @ 6:00 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.

Positivity: A Soldier Responds to an Accusation of ‘Privilege’

Filed under: Positivity,Taxes & Government,US & Allied Military — Tom @ 5:55 am