Notes From Underground: Unemployment Data? Frankly, I Don’t Give a Damn

Usually, when the first Friday of the month comes around my concern turns to nonfarm payrolls and average hourly earnings. But after the Powell press conference on Wednesday and Trump’s tariff tweets Thursday, my analysis is Gone With the Wind. As I discussed in the last few blog posts, Trump’s tweets on tariffs have cornered the Powell Fed as concerns arise over just how much global growth is going to be negatively impacted.

After President Trump tweeted his unhappiness with the FED Wednesday afternoon and Thursday the president was on the offensive about $300 billion of new 10% tariffs on Chinese imports. The impact from the president’s exercise sent equities lower, the dollar lower, interest rate yields lower, and pushed precious metals, especially GOLD into a frothy rally. Again, the Donald knows that any hint of a significant stock market correction will put ever greater pressure on the FOMC to provide aid and comfort to asset holders.

The FEEDBACK LOOP affecting Chair Powell will lead to Frankfurt where Mario Draghi will present a goodbye present to European possessors of wealth with more QE to stem any negative fallout from the TRUMP tariff threats. There was discussion Thursday in the media about the ECB actually cutting rates but employing a tiering system in an effort to protect the wholesale funding and deposits that support the European domestic banks. The main tool left for President Draghi is the despicable suggestion of Blackrock’s Larry Fink and Rick Rieder: Purchasing of equities.

Mario Draghi will DO WHATEVER IT TAKES TO PRESERVE THE TIER ONE CAPITAL LEVELS OF EU BANKS so purchasing bank stocks in the open market is certainly plausible. If the lack of liquidity in the August markets results in a significant rise in VOLATILITY we may well see the central banks intervene in non-scheduled, off-calendar meetings. August will not be a quiet month so therefore the unemployment data is null and void.

***I’m including a link to a Financial Repression Authority (FRA) podcast I recorded with Richard Bonugli and Bank Credit Analyst’s Caroline Miller on Tuesday. Enjoy the podcast. I look forward to reading your comments as we embarked on a significant conversation about Europe. And to think that Chair Powell still has the issue of a Hard Brexit to invoke as FED concern.

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25 Responses to “Notes From Underground: Unemployment Data? Frankly, I Don’t Give a Damn”

  1. asherz Says:

    Draghi will drag Powell, Kuroda and friends over the cliff with coming complete distortions of all markets.
    Paraphrasing a famous Prime Minister of England, the Nixon 1971 decoupling of the dollar from gold marked the end of the beginning. With debt levels and budget deficits leaving the atmosphere and Central Banks entering markets never mean for them, we are now on the path of the beginning of the end. If there is a way to avoid what looms ahead, I can’t see it. I sincerely hope I have blind spots.

    • yraharris Says:

      Asherz—the things I see are so dramatic in nature that the markets led by the promise of ever cheaper and more liquidity are going to be extremely surprised when more cash fails to levitate the static investment ideas that have become the norm.As I discussed with Caroline Miller,I just can’t see how Europe gets out of the Draghi balance sheet unless there is a complete capitulation by the Germans to the acceptance of a loss of their national sovereignty [fiscal policy through a eurobond]—Macron thinks this will happen and believes a severe recession in Germany will be the catalyst—let’s HOPE he is correct–and we haven’t even gotten until how the fissures in the global financial system can be exploited by the likes of Putin—complacency seems to be the order of the day even as all the beach residents watch the animals moving to higher ground–no danger of a tsunami

      • ShockedToFindGambling Says:

        This bubble is worldwide, several magnitudes the size of the 2007 bubble.

        I never hear anyone say this……definitely not on CNBC.

        The 2007 bubble was mainly concentrated in CDOs and CDS on CDOs.

        CDOs outstanding peaked at about $2 Trillion……chump change, compared to the amount of grossly overpriced assets today,

        Once the rocket goes up, who knows where it comes down, that’s not my dept. says Wernher Von Braun.

      • yraharris Says:

        Shocked –always love Tom Lehrer to finalize the discussion

  2. Gregg Slutsky Says:

    Was SNB despicable? Japan? Why now? Curious choice of words. Trumps insane economic theory is what that word choice brings to mind

    • yraharris Says:

      Good Morning Mr.Gregg—yes but they actually held positions as policymakers and yes as you know I have called out all the central banks for the actions they have taken—but as far as WE KNOW that were personally they were not making money as the Blackstone people will do—-despicable and remember that Phillipe Hildebrand had his wife trading currencies when he headed the SNB—

  3. Chicken Says:

    Growth is on hold for FLR, it seems.

  4. Richard Papp Says:

    To end the week on a positive note: the near term long bond in Chicago ended the week with a 158 handle. That is a new recovery high from the lows of 10/2018. This action confirms the cash charts and should help kick the can down the road with a reduced cost of financing the huge UST deficit.

  5. Mike Temple Says:

    Yra
    Just watch as the wheels fall off the stock market cannonball express.

    As previously discussed, EDs will rise, but gold will skyrocket as Fed is again behind the markets with UST 2 yr at 1.63%ish and German Bund at an incomprehensible -50 bp

    Gold is heading towards $1600 by October and on its way to $2000 in 2020.

    Simple as that

    Mike

    Am here in Chicago if you would like to meet

    • TraderB Says:

      Mike/Yra-
      Is Smoot-Hawley a relevant historical precedent given the current escalation between the US-China?
      If so, could we see global equities retest the 2008-2009 lows?
      What Fiscal and Monetary tools would be used today to avoid a 1930s type scenario?
      Seems any extreme such measures would be incredibly bullish for Gold. Is a Stock Market Crash and Depression inevitable at this point?

      Perhaps the trade tension subsides, global Economic growth resumes, Monetary policy tightens, and gold heads back to 1,000. Seems possible, but highly unlikely.

    • yraharris Says:

      mike for coffee on Monday???

    • yraharris Says:

      Mike–let me know as i will be downtown this morning—at board of trade

  6. asherz Says:

    China responded again today to the 10% tariff announcement. Yuan at 7.03.
    “Oh yeah? Take that!”
    Speed chess game going on with competitive devaluations in full bloom. Guess what benefits? Another breakout in gold. The huge short position by the commercials in the COT report may be in danger of a steam roller approaching.
    Buckle up PM holders.

    • yraharris Says:

      Asherz—PM yes ,but let us watch the global sovereigns here as it is rather awkward to be wanting to buy sovereign instruments—teh summer Doldrums mean nothing for it is full speed ahead until the land of social media as the platform of choice.The CNBC story about Trump acting against advisers advice really got this rolling and it was interedting that the PMs and Dollar opened in Asia oblivious to this.

  7. yraharris Says:

    TO ALL MY READERS—think about this.Now China named Currency manipulator TRUMP removes tariffs relieving pressure on farmers and others while getting a new set of policy tools to play with–placating Lighthizer et al.—-something to think about

  8. Michael Temple Says:

    Yra
    The wheels are falling off and this new news is TECTONIC.

    Trump will NOT fail to hammer China and who ever else dares to manipulate their currency. After all, he can be the judge and jury in such matters.

    My greatest fear about Trump has been how he would handle a true crisis. I fear we are about to find out.

    Somebody pointed out that when Trump tweets about something,he follows through with his threats.

    So, I fear USD manipulation lower is soon to commence.

    I have said it before and will say it again.
    I still like EDs. But, gold is about to go ballistic, touching $1600 in October.

    $2000 in 2020 is a “lock”

    Stocks are going DOWN DOWN DOWN.

    Buckle up

  9. Arthur Says:

    Gold: + 16% change on year
    Oil: -17% change on year

    • yraharris Says:

      Arthur—the impact of central banks.This is the opposite of the 1970s when central banks,especially the FED wen into monetary stimulus mode in an effort to print dollars to pay for more expensive oil that was only going up in response to a depreciating dollar—-may the circle be unbroken

  10. Arthur Says:

    Gold: +16 % change on year
    Oil: -17 % change on year

  11. ShockedToFindGambling Says:

    Please look at DBA, DBB, DBC, XOP, COPX charts.

    La Deflacion

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