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The Inflation Trader
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The Inflation Trader has been a recognized leader in developing the U.S. inflation derivatives market. He traded the first interbank U.S. CPI swaps in 2003 and, as a dealer, was a primary liquidity-provider in that market for two large banks. He represented about one-third of interbank swaps... More
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  • Summary Of My Post-Employment Tweets 4 comments
    Sep 7, 2012 9:07 AM

    Here is a summary of my post-Employment tweets at @inflation_guy, for those not on Twitter and those who just want to see them all together. I also include a chart and some commentary:

    • Ouch. #Canada added 1/3 as many jobs as the US did last month, and that nation has 1/9 of the population.
    • Awful payroll data - 34k lower than expected with an additional -41k revision.
    • Unemp rate fell from 8.254% to 8.111%, looks like a 0.2% fall but only b/c rounding. And it was all labor force shrinkage.
    • Saw comment that the unemp # matters politically. No it doesn't. These are numbers. What matters is what people feel is happening. And
    • ..and with employment, the man on the street doesn't need the government to tell him if the employment situation sucks.
    • Weekly hours back to where we started the year. And Participation Rate now at the lowest level since 1979.
    • One thing this ought to do is quiet the conspiracy theories about how Obama is cooking the numbers! Couldn't have cooked up worse.
    • Internals even worse: I follow "Not in Labor Force, Want a Job Now". Highest since they strted asking that qn: [Note: I include this chart below]
    • 7 million people aren't even looking for work, but want a job and would take one if offered. 7 million!
    • Don't worry too much about hourly wages meaning deflation is coming. Wages follow #inflation, they don't lead.

    Here's the chart referred to in the second-to-last tweet (Source: BLS):

    (click to enlarge)

    Republicans, don't cheer because we got a weak number. It isn't the number that causes trouble to the Obama campaign; it's the perception of the job market and that's not necessarily correlated to the number itself. Perceptions were already bad, and it's more likely this number is slightly understated.

    Democrats, don't cheer because of the decline in the Unemployment Rate. You might think it makes a nice talking point, but if you crow about the improving labor market people will think you're an idiot. The labor market isn't improving. It's stagnating, at best; at worst, the crisis in Europe and the weakening of growth in Asia is dragging our increasingly export-sensitive economy down.

    In fact, both sides of the aisle should be crying. But watch stocks jump! It's a little disappointing to me, actually, since more pundits will now get the QE3 call right. However, this number didn't "seal the deal" - it was already sealed, and the Fed was going to be easing next week no matter what today's number was.

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Comments (4)
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  • azblackbird
    , contributor
    Comments (358) | Send Message
     
    >>>However, this number didn't "seal the deal" - it was already sealed, and the Fed was going to be easing next week no matter what today's number was.<<<

     

    I sure hope they do. I want to see $5 gasoline (even with the SPR releases) and $10 bushel corn. I want food prices to go so high that an EBT card will only buy 1/2 of what it used to. I want to see a sheeple revolution! I want to see the OWS'ers out there tearing up their cities, burning, looting and rioting. I want to see the bankers make more money than they ever have. I want to see more businesses go under and more people being layed off. I want to see Israel attack Iran just right after we do QE and the SPR release so we are at our most vulnerable. I want to see the draft re-instated with all of our new citizens we recently amnestied. I want to see us go "forward"!

     

    The only man who can make all this happen is Obama, so please cast your vote accordingly!
    7 Sep 2012, 09:52 AM Reply Like
  • mickmars
    , contributor
    Comments (1323) | Send Message
     
    Now worries....Obama and Romney can both make this happen.
    7 Sep 2012, 11:51 AM Reply Like
  • themayor
    , contributor
    Comments (46) | Send Message
     
    I.T. If Ben does not buy 60% of our bonds then who will? It seems to me that there will not be many more takers of our debt.
    7 Sep 2012, 10:49 AM Reply Like
  • The Inflation Trader
    , contributor
    Comments (2024) | Send Message
     
    Author’s reply » Unless we stop buying their products, other countries will keep accumulating dollars. They can buy US bonds with them, or corporate bonds, or corporate equities, or commodities, or real estate, or buy our products in return. They can't choose to buy NOTHING unless they just want to burn the dollars we send them for our goods. (And if they want to burn them, we'll send them a thank-you card for the free goods!)

     

    I'm not worried about China deciding to sell all of its US bonds, because then they'll have to buy something else. As much as they'd like to punish us for our bad attitude, they can't. There is no reason, therefore, for the Administration to bow and scrape.

     

    That being said, more public debt means less private debt, all else being equal, which means a higher cost of capital and slower growth, in the long run. If the Fed doesn't buy bonds, there will have to be adjustment higher in yields, to be sure; if the Fed does buy bonds, the adjustment is in prices. Choose your bad outcome from having too much debt!
    7 Sep 2012, 11:14 AM Reply Like
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