Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Category Archives: Economics

Jobs Report Shows Nearly Five Million Jobs Added in June

This article appeared online at TheNewAmerican.com on Thursday, July 2, 2020:

The U.S. economy, recovering from the government-mandated lockdowns to limit the spread of the COVID-19 virus, rebounded sharply in June, exceeding forecasters’ expectations and confirming yesterday’s report from ADP.

According to the Labor Department, the economy generated nearly five million jobs in June, as those mandates lifted and restaurants and bars reopened. The unemployment rate dropped to 11 percent, down two percent from May and nearly half what it was in April.

Economists polled by Reuters had forecast payrolls increasing by three million jobs.

The government reported that

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Dow and Employment Jump in May and June, Confirming Economy’s Rebound

This article appeared online at TheNewAmerican.com on Wednesday, July 1, 2020: 

Wall Street celebrated its best quarter since 1987, with the Dow gaining 17 percent from April through June, the S&P 500 Index rising 20 percent and the small-cap NASDAQ leaping 30 percent.

The news came on top of the latest report from the country’s largest payroll processor ADP, which reported that private-sector employment increased by more than 2.3 million from May to June. This came on top of employment gains in April of three million.

Job gains were across the board, with a million new jobs being reported by small companies employing fewer than 50 people, more than 550,000 by midsized companies, and nearly 900,000 reported by companies with 500 or more employees.

The goods-producing sector gained 457,000 jobs, with most of them in construction and manufacturing, while the service-sector employment jumped by nearly two million. The bulk of those, as expected, were in the “leisure and hospitality” sector as restaurants opened and customers flocked to take advantage.

To top it off,

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Latest Poll Shows Trump Erasing Biden Advantage

This article appeared online at TheNewAmerican.com on Tuesday, June 30, 2020:

When Optimus pollsters asked 1,000 likely voters last week whom they would vote for if the election were held that day, 44 percent said Biden while 40 percent said Trump.

Not only is this within the survey’s margin of error (MOE) of 4.5 percent, it all but erased Biden’s eight-point advantage from just two weeks earlier.

A shift has become perceptible over the last couple of weeks and was confirmed by CNBC’s All-America Survey taken June 19 through June 22.

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Surprises in Just-released WalletHub’s Best- and Worst-run Cities in America

This article appeared online at TheNewAmerican.com on Monday, June 29, 2020: 

The consumer financial website WalletHub released its “Best- & Worst-run Cities in America” on Monday, and there were a number of surprises.

No surprise was that the worst 10 included Chicago, Detroit, New York City, San Francisco, and, dead last, Washington, D.C.

The top 10 best were all relatively small towns,

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Chesapeake Energy Declares Bankruptcy; Should Emerge Leaner and Stronger

This article appeared online at TheNewAmerican.com on Monday, June 29, 2020: 

Chesapeake Energy Corporation, once the country’s second-largest natural-gas producer, declared bankruptcy on Sunday in Houston. Most on Wall Street weren’t surprised, as the company had warned repeatedly that it likely wouldn’t survive in its present form thanks to excessive debt and the COVID-19 lockdowns.

Wall Street used words such as “succumbs” and “failures” and the like to describe the company’s descent into bankruptcy.

The New American has chronicled the company’s history of enormous success — in 2011 Forbes named the company’s co-founder Aubrey McClendon to its “20-20 Club,” which is comprised of CEOs who had delivered to investors returns in excess of 20 percent a year for 20 years — as well as McClendon’s enormous tolerance for risk as he was building the company.

When McClendon died in a car crash in 2018, Doug Lawler took over as chief executive. Lawler faced an enormous task: reduce the company’s towering debt while pivoting from production of natural gas to the much more lucrative business of producing crude oil.

He almost made it.

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Consumer Spending Rebounds a Record Eight Percent in May

This article appeared online at TheNewAmerican.com on Friday, June 26, 2020:

The U.S. Department of Commerce’s Bureau of Economic Analysis (BEA) reported on Friday that consumer spending jumped to a new record in May: 8.1 percent over April, more than double the all-time high ever recorded since the bureau started keeping track of such things in 1959.

Consumers, locked away owing to government mandates in response to the COVID virus, headed for auto showrooms and big box stores to celebrate their new freedom in May.

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Many Signals Showing Strong U.S. Economic Rebound

This article appeared online at TheNewAmerican.com on Monday, June 22, 2020:  

No matter where one looks, the U.S. economy is not only on the mend, it is rebounding sharply, giving increasing support to a V-shaped recovery from the COVID-inspired government economic shutdown.

Retail sales jumped in May by nearly 18 percent from April’s stomach-turning drop of 16 percent. Apple Maps is showing that travelers are doing more driving, while restaurant bookings have jumped. Hotels are beginning to fill again, and passenger air travel is steadily increasing.

A particularly bright spot is the housing industry. Mortgage applications for single-family homes are now up 21 percent compared to last year at this time, increasing to the highest level seen in over 11 years. As Joel Kan, a forecaster at the Mortgage Bankers Association, exuded,

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Who’s Running the Show: the Fed or the U.S. Treasury?

This article appeared online at TheNewAmerican.com on Thursday, June 18, 2020: 

Scott Minerd, global chief investment officer at Guggenheim Partners, told CNN on Tuesday that the next effort by the Fed to keep the U.S. economy going will be to start buying U.S. stocks. As The New American has reported, the Fed has already expanded its powers so that it can purchase exchange-traded bond funds, junk bonds, and now corporate bonds.

All of this so far exceeds the Fed’s original powers that it has been forced to do a “workaround” by creating a number of intermediaries to accomplish its purposes. Each of these intermediaries needs a “special purpose vehicle” — an SPV — and the help of the U.S. Treasury.

Jim Bianco, president of Bianco Research & Trading, has been producing commentaries on the bond market for 30 years that are faithfully read by hundreds of portfolio managers. His commentary on these SPVs has raised the question, i.e., if the Fed needs the help of the Treasury to accomplish its purposes, who is in charge: the Fed, or the U.S. Treasury? If it’s the latter, and because U.S. Treasury is part of the Executive Branch of the U.S. government, does that mean that the Fed now has a new chairman, namely, President Trump?

Bianco explains:

The Treasury … will make an equity investment in each SPV and be in a “first loss” position.

 

What does this mean? In essence, the Treasury, not the Fed, is buying all these securities and backstopping of loans; the Fed is [merely] acting as banker and providing financing….

 

This scheme essentially merges the Fed and Treasury into one organization. So, meet your new Fed chairman, Donald J. Trump.

Bianco expanded on this thesis:

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Retail Sales in May Set All-time Record High

This article appeared online at TheNewAmerican.com on Tuesday, June 16, 2020: 

Recently freed from government restrictions, edicts, and mandates requiring them to stay at home to limit the spread of the COVID-19 virus, consumers flocked to malls and auto and electronics stores to make up for lost time.

And make up they did! The Commerce Department reported on Tuesday morning that retail sales in May jumped 17.7 percent, the largest monthly increase on record. It followed an equally dismal and record-setting drop in April of 16.4 percent. The rebound far exceeded forecasters’ expectations, who were predicting an 8.4-percent gain.

The president was delighted. He tweeted:

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Fed Plans to Buy Individual Corporate Bonds to “Support” Market

This article appeared online at TheNewAmerican.com on Tuesday, June 16, 2020:  

The announcement by the Federal Reserve on Monday afternoon that it would expand its efforts to “support” the economy by buying individual corporate bonds cheered Wall Street, which rebounded nearly 1,000 points on the news.

The fact that Fed officials voted unanimously for the extraordinary expansion of Fed powers suggests a degree of panic that the government shutdown of the economy using the COVID-19 virus as an excuse was also likely to shut down the $9.6 trillion corporate debt market as well.

For more than 100 years (the Fed began operations in 1914),

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Banks Cutting Credit to Shale-oil Drillers

This article appeared online at TheNewAmerican.com on Monday, June 15, 2020: 

In the private capitalist system, capital-intensive industries such as oil and gas production need all the capital they can get in order to survive. Banks that are doing their usual spring cleaning — called reserve review and assessment followed by “redeterminations” — are discovering that many of their loans to shale-oil drilling enterprises don’t have enough reserves backing them up in case they default.

Moody’s and JP Morgan Chase are forecasting that

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Fed’s Gloomy Outlook Sinks Stocks

This article appeared online at TheNewAmercan.com on Thursday, June 11, 2020: 

Federal Reserve Chairman Jerome Powell’s assessment that the surprisingly favorable jobs report last week was likely a one-off blip is pushing stock prices lower on Wall Street on Thursday.

Following the meeting of the Federal Open Market Committee (FOMC) on Wednesday, Powell said that last week’s report “was a welcome surprise. We hope we get many more like it, but I think we have to be honest, that it’s a long road.”

This sent futures down more than two percent before the opening.

In its official statement issued by the FOMC, the Fed admitted that

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Inflation in Venezuela at 400 Percent for the Year

This article appeared online at TheNewAmerican.com on Wednesday, June 10, 2020:  

Venezuela’s National Assembly reported on Tuesday that prices have risen more than 400 percent so far this year. The country’s central bank, under the control of Marxist dictator Nicolás Maduro, disagrees. It reports that prices have only risen by 296 percent through the end of May.

Either way, the destruction of the VEF — the Bolivar Fuerte or “Strong Bolivar” — continues, along with the continuing impoverishment of Maduro’s subjects.

At the end of April, the Marxist government increased the minimum monthly wage by 78 percent, the second increase this year, and still the VEF buys next to nothing. The latest black-market exchange rates, tracked by several off-shore websites, estimates that the minimum monthly wage translates into just

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The Bear Market in Stocks Is Over, Says Wall Street Guru

This article appeared online at TheNewAmerican.com on Tuesday, June 9, 2020: 

Ed Yardeni, president of Yardeni Research, reviewed last week’s market action on Wall Street and concluded that the bear market in stocks is over: “Not too long ago we were in the midst of a terrible meltdown in the stock market. But it turned out to be a 33-day bear market lasting from February 19 to March 23. Ever since then, we’ve had a melt-up.”

Yardeni has been here before.

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NFIB: Small Business Optimism Jumped in May

This article appeared online at TheNewAmerican.com on Tuesday, June 9, 2020: 

The report from the National Federation of Independent Business, representing the views of its 325,000 members, confirmed Friday’s jobs report: The economy is on the rebound:

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U.S. Economy Peaked in February; Republican Consumers to Drive the Recovery

This article appeared online at TheNewAmerican.com on Monday, June 8, 2020: 

Those in charge of determining when the U.S. economy peaked at the National Bureau of Economic Research (NBER) said it happened in February.

Using a very loose definition of when a recession starts — it involves “a decline in economic activity that lasts more than a few months,” they say — the seers at NBER declared affirmatively that February marked “the end of the expansion that began in June 2009 … and lasted 128 months, the longest in the history of U.S. business cycles, dating back to 1854.”

The data junkies refused to comment on how long the recession might last, or how strong it might be when it recovers. Signs are emerging that May marked the bottom, with a jobs report that astonished and embarrassed nearly every forecaster in its robust surprise.

Predictions as to how long the recovery will last and when the economy will get back to full steam are a dime a dozen,

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May’s Jobs Report Shows Strong Economic Recovery Underway

This article appeared online at TheNewAmerican.com on Friday, June 5, 2020:  

The jobs report released by the Bureau of Labor Statistics (BLS) on Friday morning greatly exceeded forecasters’ expectations. Most were expecting a loss of 8 million jobs in May. Instead the economy, now clearly rebounding, generated 2.5 million new jobs.

And the unemployment rate, widely expected to approach 20 percent, dropped to 13.3 percent.

The BLS’s commentary was much more muted:

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Stock Market Rallies Despite Negative News

This article appeared online at TheNewAmerican.com on Thursday, June 4, 2020:

The small-cap Nasdaq 100 Index has rallied more than 43 percent since its low set on March 23. The S&P 500 Index has posted its largest 50-day rally in history. The Dow Jones Industrial Average has gained 7,600 points.

With all that is going on in the country and the world, how is that possible? The national riots, the confrontation with China building over Hong Kong, and the deaths continuing to mount as a result of the coronavirus, would all seem to be negatives on the market, driving investors away.

But, no. Investors aren’t looking out the back window, but instead are looking out the front. And they are increasingly seeing what they want to see and hope to see: a recovery that justifies their decision to invest in companies that appear likely to benefit and profit from it.

The president is perhaps the most well-informed individual on the planet. On May 29 he said, “We’re going to have a great third quarter, a great fourth quarter. I think next year is going to be one of our better years.”

There are trillions of dollars just itching to hear such confidence coming from the president. During the lockdown, consumers hunkered down and hoarded many things — toilet paper, canned goods, cleaning supplies, and cash. The savings rate, which is normally around five percent of personal incomes, soared to 12.7 per cent March and then to 33 percent in April. As a result, economists are expecting a virtual tsunami of consumer spending to occur once the economy is fully open.

And the economy is already opening.

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Institute of Supply Management Says Purchasing Managers Are Guardedly Optimistic

This article appeared online at TheNewAmerican.com on Monday, June 1, 2020:

The Purchasing Managers Index (PMI) from the Institute of Supply Management released on Monday moved from abysmal to hopeful. Specifically the index for May came in at 43.1 percent, up 1.6 percent from April’s 41.5 percent. Anything below 50 reflects contraction.

The index is a composite of a number of smaller targeted indexes, and many of them are turning around, some decisively. Take altogether, “the overall economy returned to expansion after one month of contraction,” said Timothy Fiore, ISM’s chairman.

From the report:

The New Orders Index jumped 4.7 percent in May;

 

The Production Index leapt 5.7 percent in May;

 

The Employment Index rose 4.6 percent; and

 

The New Export Orders Index increased by 4.2 percent compared to April.

Six of the 18 manufacturing industries tracked by the ISM reported growth in May: mineral producers, furniture makes, apparel, leather products, food/beverage and tobacco, paper goods, and wood products.

Notable also is the fact that the PMI was at 50.9 in January, right before the COVID shutdown hit. That’s just eight points away as the index continues its rebound as the shutdown restrictions are being lifted.

Also revealing is the attitude of some of the respondents to the survey conducted by the ISM for May:

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Economic Green Shoots Appearing; Trump Moves to Water Them Via Regulatory Relief

This article appeared online at TheNewAmerican.com on Monday, May 25, 2020: 

Green shoots are appearing as the economy is starting to rebound from the COVID-19 shutdown.

On Saturday President Trump’s economic advisor Kevin Hassett told CNN, “It looks like the economy is picking up at a very rapid rate. In which case we could potentially move on to other things that the president has mentioned, like the payroll tax cut and potentially even a capital-gains holiday.”

That would provide additional fertilizer to an economy that hasn’t seen much light or water for the last two months. But businesses are reopening and credit-card usage is rebounding. Airline travel as measured by TSA screenings has more than tripled since their nadir on April 14.

Truckstop.com, which monitors trucking activity, says its weekly index has improved for four straight weeks and available loads were up 27 percent last week.

Property showings in the real estate market are also up 27 percent as of Saturday, and the Mortgage Bankers Association is reporting a rebound in the number of new mortgage applications. Last week Delta Airlines announced that it is restoring some flights between key cities such as New York and Atlanta. The airline is also restoring daily flights to Canada, the Caribbean, Central and South America, Mexico, and Europe.

Last week President Trump signed an executive order instructing regulatory agencies in the Executive branch “to use any and all authority to waive, suspend and eliminate unnecessary regulations that impede economic recovery.”

Added Trump:

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2020 Bob Adelmann