Saturday’s post on Donald Trump’s battle with the Republican Party over free trade hit a nerve judging from the hits and mentions elsewhere.
So getting back to the topic at hand — economics. Despite Friday’s stock rise of 200+ points, there are little all clear signs for markets.
While the initial rush to cover short positions, based on ECB’s Mario Draghi pledge of 20 billion euro additional QE raising the stakes to 80 billion a month, created a nice pop it should be short lived as institututional investors looked to cover some positions.
As the Federal Reserve is meeting this week, surely it will stand still on rate rise for risk of undoing the ECB’s cuts. You can bet that Janet Yellen will jawbone about taking a slight pause as the Fed awaits more data to come in.
The awaiting more information on the data is so last century, I just need to comment on it.
Unemployment numbers have almost no correlation to the health of the economy now. The voodoo behind the numbers have been changed so much that there is little comparision to say the jobless rate in 1990. Part-time workers are now counted as working, people who have lost benefits due to time are no longer counted. Discouraged workers are pushed off to another reporting number, which is much higher.
So for Yellen or any other Fed governor to say we are nearing full employment — which in 1990 was 5% unemployment rate — is nonsense because the present number is fixed.
Secondly, average wages are still below 1990 levels, meaning that while people may be working two jobs, they are bring home less than when they first started their work life.
This leads me to the axiom: If the data is bogus, then the policy being driven by the data is flawed and that’s how we wind up with anemic growth for the last eight years.