Since Thursday’s must hear Audioblog, the global economic situation has weakened dramatically – as the equity market’s worst-ever start to a New Year; following its worst-ever year-end; has been matched only by the horrifying collapses of commodities; high yield bonds; and last but not least, currencies – as China’s loss of control of not only its stock market, but “offshore Yuan” trading, has – per the title of Thursday’s article, “set the stage for a global currency catastrophe.” To that end, I have gathered six pages of “horrible headlines” in the past 48 hours alone – which I’ll simply list here, in the interest of brevity. Followed by today’s principal topic, as “teased” by today’s article title.
However, before I get to these issues, I must comment on an ominous article regarding what Donald Trump, the frontrunner for the U.S. Presidency, just proposed. Unless you’re living on an island, you’re well-aware of the dangerous, antagonistic policies Trump has been championing – which sadly, become more viable with each passing day. However, yesterday’s proposal to impose a 45% import tariff on all Chinese goods defines biting your nose off to spite your face. If such a psychotic, suicidal act were undertaken, the global currency wars would erupt into a nuclear conflagration – starting with the dollar, when the price of essentially everything Americans buy rise by 45% – at least. Walmart, by far America’s largest private employer, would be thrust to the brink of bankruptcy; government entitlement payments (and income taxes) would go parabolic; and the national debt would rise hyper-bolically. Yes, my friends, this is a “taste” of what life might be like in the coming years, as the collateral damage of the collapse of history’s largest fiat Ponzi scheme unfolds. Which, I might add, is why the urgency of protecting your life’s savings has never been stronger.
I’ll get to the “atoll in a tsunami” momentarily; but before I do, here’s a sampling of what’s been “going on” in the past 48 hours…
- Oil down 10% after five-day drop; Goldman says $20/bbl likely
- Junk-bond risk gauge jumps as China meltdown adds to energy rout
- Glencore stock plunges to all-time low
- Brazil slides into the brink – Industrial Production down 12% year-over-year
- Commodities rout forces resource firms to slash capex, dividends
- China burned through $120 billion in FX reserves in December – Devaluation crisis straight ahead
- U.S. auto sales are about to choke, as increase in non-revolving credit smallest in four years
- Baltic Dry Index careens to fresh all-time low
- UK poll shows Brexit support rising
- Canadian heavy crude falls to $19/bbl – from $100/bbl in 2011
- OPEC basket crude price crashes below $30/bbl, to lowest level since 2004
- Saudi devaluation odds highest in 20 years – now more likely to default than Portugal
- “Death to Saudi Arabia”: Thousands of Iranians in anti-Saudi protests
- Dear Janet, this was not supposed to happen – yield curve flattest since 2008
- The hedge fund known as the Swiss National Bank posts $23 billion trading loss
- Atlanta Fed cuts 4Q GDP growth estimate to 0.8%
- The last time automakers channel-stuffed this much, Lehman and GM went bankrupt
- Wholesale trade data suggests manufacturing recession spreading to entire economy
- Markets spooked after PBOC announces more “interest rate liberalization”
- Macy’s prepares to sell crown jewels, fire 3,000
- Copper futures crash below $2.00/lb for first time since 2009
- Bill Gross warns of demographic doomsday (in this must read article)
- China suspends circuit-breaker rules, after two limit-down plunges in four days
And my personal favorite – from one of Wall Street’s most clueless, but well-followed “strategists”…
- Blackstone’s Byron Wein giving up on gold
Which brings me to today’s principal topic, of the “atoll in a tsunami” the credibility of U.S. “employment” data has become. Yes, amidst the historic economic and financial market carnage, it happened to be a “jobs report” week – starting with Wednesday’s “much better than expected” ADP report, and concluding with yesterday’s unconscionably ridiculous +292,000 NFP job print. Which clearly didn’t have the data manipulators’ intended effect – as stocks, Treasury yields, junk bonds, commodities, and currencies plunged; whilst gold surged, and silver was unchanged.
Never mind the typically ugly “details” – such as an essentially unchanged labor participation rate (at 38-year lows); falling hourly wages; and a hideous job mix, featuring low-paying, non-productive “education and healthcare” workers; waiters and bartenders; and temporary help. And oh yeah, the biggest surge in “multiple job holders” since…drum roll please…August 2008. In other words, if a $100,000/year engineer loses has job, and takes four five-hour-per-week fast food jobs totaling $20,000/year, the BLS now calculates that the economy has “added three jobs!” And speaking of layoffs, just wait until the dozens of gargantuan acquisitions fueled by cheap Fed money, “liberal” GAAP accounting, and “black magic” Wall Street financial engineering close in the coming months. Let alone, the corporate and governmental reactions to the fourth quarter’s unprecedented commodity and currency collapse; the worst retail holiday spending since the 2008 crisis; and the now undeniable bursting of the historic subprime auto lending bubble.
But I digress, as the key message here is that, as I predicted two years ago, the end of the influence of “island of lies” economic reports like NFP employment is rapidly approaching – to the point that inevitably (and perhaps, after yesterday’s historic fabrication, imminently), investors will no longer pay attention to what was once the “most important economic report in the world.”
Heck, the Federal Reserve did so itself – despite continuing to cite “improving labor markets” as the key driver of economic “recovery” – when nearly two years ago, it abandoned its previously-stated condition of raising rates when the “unemployment rate” fell to 6.5%, calling it an “outdated” economic metric. I mean, Janet Yellen herself has publicly stated that she is more focused on labor participation, real wages, and full-time job creation. And yet, has the gall to “raise rates” based on “improving labor markets” when all three of these metrics have not only worsened in the past two years, but dramatically so. To wit, a 38-year low Labor Participation rate; a four decade low in real median household income; the lowest percentage of full-time versus part-time jobs ever; the lowest percentage of benefits-paying jobs ever; and the weakest job mix – perhaps since the 1800s – due to the serial, irreversible destruction of the nation’s manufacturing base. Which, I might add, may well return in true Atlas Shrugged form if Donald Trump’s 45% Chinese import tariff proposal is enacted. And if you don’t know how Atlas Shrugged ended, I suggest you read it immediately.
In a nutshell, the “island of lies” I referred to the NFP report as in July 2014 has, in just seventeen months, been “eroded” by data-cooking so egregious, even the Chinese government was likely blushing yesterday. In other words, the last bastion of U.S. economic propaganda is crashing to the ground, as vulnerable as an “atoll in a tsunami” – which, in my view, may well have washed over it yesterday. Yes, the “powers that be” will continue to fight reality to the death, by increasing their money printing, market manipulation, and propaganda exponentially. However, you know the “end game” is upon our doorsteps when, amidst the worst financial market carnage of our lifetimes, this is the headline Yahoo! Finance trots out…
- “The stock selloff is happening in a parallel universe” – It has almost nothing to do with the U.S. economy, which is doing pretty well
Well, that’s enough for now. It’s early Saturday morning; and after a tumultuous week, I need some rest. But before I go, I must, yet again, warn you that what is occurring – worldwide – is unprecedented, and more terrifying than anything I have ever witnessed. Which is why, as vehemently as possible, I am warning you that the time is NOW to protect yourself – financially and otherwise. And if, by chance, such protection involves the purchase or storage of Precious Metals, I humbly ask you to give Miles Franklin, now in its 27th year of business, a call at 800-822-8080, and give us a chance to earn your business.