Deflation in CPI
It always feels like the Oscars when the jobs report comes out. Moments of tension in the markets...then right at 8:30 Eastern out pops the report:
"The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.2 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the index increased 2.0 percent before seasonal adjustment.
For the second month in a row a decline in the energy index accounted for the seasonally adjusted decrease in the all items index. The index for energy decreased 2.9 percent in May and more than offset a slight increase in the index for all items less food and energy. The food index was unchanged. Within the energy component, the gasoline index accounted for most of the decrease, although all the major energy indexes declined.
The index for all items less food and energy increased 0.1 percent in May, posting a monthly increase for only the second time this year. Contributing to the May rise were increases in a number of indexes including shelter, used cars and trucks, tobacco, apparel, and medical care. The index has increased 0.9 percent over the last 12 months."
Of course, what no one is coming out and saying is that if you look at this morning's report, you have an annualized deflation rate of 2.4%.
But if you take the time to see what the rec3ent Fed money su0pp0ly figures are, you trip over a 7% YoY increase in M1. While it's not a perfect conclusion and there are lots of ways to pick nits, to my simple way of thinking when we see the price of goods going down more than 2.4% annualized and that comes when money stocks M1-wise are up 7%, then the malaise settling over America is a 9.5% annualized deflation.
Think the stock market is going to hold up for long under that kinda pressure? Hahaha...you must be kidding!
Job Numbers aside, there is a pretty good Tyler Durden piece over at ZeroHedge on what Tobin's q and CAPE (cyclically adjusted PE's) are saying about this market. But, you might not want to hear "48% overvalued!" with breakfast so just pretend I didn't mention it.
What else is there in the way of evidence? How about more than 90 banks miss TARP payments? Gee, sorry I'm short the financial sector...NOT!
Big pop in the jobless figures this morning.
"In the week ending June 12, the advance figure for seasonally adjusted initial claims was 472,000, an increase of 12,000 from the previous week's revised figure of 460,000. The 4-week moving average was 463,500, a decrease of 500 from the previous week's revised average of 464,000.
The advance seasonally adjusted insured unemployment rate was 3.6 percent for the week ending June 5, an increase of 0.1 percentage point from the prior week's unrevised rate of 3.5 percent.
The advance number for seasonally adjusted insured unemployment during the week ending June 5 was 4,571,000, an increase of 88,000 from the preceding week's revised level of 4,483,000. The 4-week moving average was 4,601,500, a decrease of 21,250 from the preceding week's revised average of 4,622,750.
The fiscal year-to-date average of seasonally adjusted weekly insured unemployment, which corresponds to the appropriated AWIU trigger, was 5.097 million. "
When in Doubt: Regulate
So what to do is the question. Around here, simple-minded George & his friendly Big Eastern School econ prof know the answer is "Spur Production!" and everything should take care of itself.
But after bailing out nonproductive banksters, the Fed has continued to beat the "More regulation" drum with, most recently, the Squam Lake report which was Blessed by Ben" this way Wednesday:
"The Squam Lake Report provides a substantial set of recommendations. Among these are the adoption of a more systemic approach to the supervision and regulation of financial firms and markets; enhanced capital and liquidity regulation for financial firms, particularly for systemically important institutions; improved information collection by regulators and, where possible, the public release of such information; development of a resolution regime that would allow the authorities to manage the failure of a systemically important financial firm in an orderly manner while imposing losses on shareholders and creditors; and significant strengthening of the financial infrastructure, particularly for derivatives contracts. The Federal Reserve has supported legislative changes in all of these areas, and, where possible under current law, has initiated changes along these lines within its own operations. In the remainder of my remarks I will elaborate briefly on these recommendations, with particular attention to how they are currently helping shape regulatory reform and the Fed's own regulatory and supervisory activities. "
Only a few simple problems with the concept: By the time someone besides us figures out that production is cratering and banks aren't loaning, we will be so deep into Depression 2.0 that it may be unrecoverable.
It's, of course, already global is you know where to look. For instance...
The Return of Bank Runs
Say, here's a nice little story being mostly buried by the MSM: "Bank run in Spain and its destabilizing ramifications for the entire EU" on the Economic Policy Journal site.
If you're patient and know where to look, you can watch D2 developing...kinda like watching cancer...slow but deadly.
Growing Homeless Families
Unemployed 'Locked Out'
That's the bottom line, apparently: Employers are opting to hiring people who already have jobs versus those on unemployment, given a choice according to a new report.