This week I observed something far scarier than aliens which is why their arrival gives me hope lol!
"The dispersion between the QCEW and NFP hit a record to the downside of approximately -1.25% as of June 2024 (~1.25 million jobs.) Said differently the NFP estimates had 1.25 million more jobs than the lag QCEW which is way closer to reality.
The Non Farm Payroll and the Quarterly Census of Employment & Wages are put out by Bureau of Labor Statistics. Over time there are differences but should average close to zero. NFP is the real time monthly estimate and the other is the reality after the data has come in. Eyeballing this it’s a 3 standard deviation minimum likely more.
3 possibilities…gross bureaucratic incompetence, fraud or a combination of the 2."
Translated into English this proves something I have been saying now for a very long time: The numbers are cooked and when reality is finally revealed, something likely to happen right at the beginning of Trumps new term, it will make aliens look like saviors to the capital markets.
With the stock market at all time highs while the actual fundamental numbers are this bad there can only really be one outcome here.
Thankfully, most of my clients are blissfully unaware of what's going on and sometimes I seriously consider joining them for a beer and mindless jabber about the game, any game!
Some things are hard to un-see though:
"Fed cut by 75 basis points since September while 10-year Treasury yield rose by 75 basis points to 4.40%, as Bond Market frets about Inflation & Supply."
So rates are going up even though the Fed is cutting. Gee, I wonder who said that would happen a few months ago? This guy! Reading my blog posts might be boring but I nailed it!
And this:
"PPI, “Core” PPI, “Core Services” PPI Inflation Much Hotter after Whopper Up-Revisions Going Back Months"
I told you so.
It won't matter after next week folks, the aliens are here now so we can all relax!
Wolf Street writes:
“Office CMBS Delinquency Rate Spikes to 9.4%, Highest Since Worst Months after the Financial Crisis.
‘Survive till 2025’ is the motto in CRE now, but that might not work either.”
Wall Street On Parade (WSOP) chimes in:
“The New York Fed has created gasps in the corridors of power in the banking world by releasing a paper that documents how banks have ginned up their capital by ‘extending and pretending’ on their underwater commercial real estate (CRE) loans.
…. ‘In this paper…we document that banks have ‘extended-and-pretended’ their distressed CRE mortgages…to delay the recognition of losses.
Lets all take a deep breath and focus on running our businesses. At the end of the day whatever is going to happen will happen regardless.
Have a great week everyone and God Bless this mess!