Economic Outlook

Jobs Report Doesn’t Say Much Amid COVID Uncertainty

U.S. employers added 7.5 million jobs in May and June, following a devastating April in which millions filed for unemployment benefits. But July is the tricky month because the trend has failed to continue at the same pace making it look like the pandemic surge is now threatening the recovery momentum.   Even though the Department of Labor will release official data by the end of the week, Dow Jones estimates that 1.26 million jobs were added in July.

That might sound fantastic, but the resurgence of the virus added new volatility to the outlook and economists now fear new layoffs.

Last month, medical experts called for a restart of the COVID lockdown as the United States adds tens of thousands of new cases daily. Twenty-two states, including Washington, Michigan and California, have imposed new restrictions, resulting in fresh layoffs.

As for the previous two months, the healthcare, logistics and construction industries presented with the highest demand for new workers.

In June alone, employers added nearly 5 million jobs. Of those, the leisure and hospitality sector dominated with 2.1 million jobs, while retailers added 740,000 jobs, and education and health services opened up 568,000 jobs.

Compared to the five-decade-low 4.4% unemployment rate we saw in early March, the current rate of 11% looks great, with the number of unemployed persons falling by 3.2 million to 17.8 million, according to the US Department of Labor…CLICK for complete article

Bitcoin Market ‘Much Different Now’ as New BTC Wallets Approach 2017 Highs

New on-chain data suggests that demand for Bitcoin (BTC) from new investors is growing. Specifically, the number of new BTC addresses is nearing 2017 levels when the price hit $20,000.

Brock Connelly, the CEO of RoundBlock Capital, said:

“Has anyone noticed, daily active addresses (Bitcoin) is back above June 2019 levels, and approaching high of 1.29mm in December 2017. BTC market feels much different now.”

Various on-chain metrics hint at a continuation of the Bitcoin uptrend, despite the digital asset’s 28% increase in the past three weeks.

Buyers show renewed interest as new BTC addresses rise

After the Aug. 2 Bitcoin flash crash, both BTC and Ether (ETH) have steadily increased in price. At the time, more than $1 billion worth of futures liquidations in one hour sent the market plunging for a brief period of time.

Since then, major cryptocurrencies have stabilized, seeing less volatile price movements. The stability of BTC and ETH could also indicate the start of an accumulation phase.

While this week’s BTC price action has been strong, the digital asset has many technical reasons to see a rejection from the $11,700 to $12,000 range. Historically, $12,000 has served as a strong resistance level and every attempt to close a weekly candle above it in the last two years led to prolonged corrections.

With that said, the price of Bitcoin is steadily increasing as metrics like new BTC addresses continue to rise. The data suggests that many investors appear to be gradually accumulating BTC…CLICK for complete article

If the “Market” Never Goes Down, The System Is Doomed

The reliance on “good news” narratives dooms our financial system and economy to a death spiral once reality breaks through the induced euphoria.
“Markets” that never go down aren’t markets, they’re signaling mechanisms of the Powers That Be. Markets are fundamentally clearing houses of information on price, demand, sentiment, expectations and so on–factual data on supply and demand, shipping costs, cost of credit, etc.–and reflections of trader and consumer emotions and psychology.
If markets are never allowed to go down, the information clearing house has been effectively shut down. Whatever information leaks out has been edited to fit the prevailing narrative, which in this moment is “central banks will never let markets go down ever again, so jump in and ride the guaranteed Bull to easy gains.”
The past 12 years offer ample evidence for this narrative: every dip draws a near-instantaneous monetary-policy response that reverse the dip and gooses markets higher.
That permanent monetary intervention distorts markets doesn’t matter to participants. Who cares if markets have become “markets,” simulacra of real markets that are now nothing but signaling mechanisms that all is well so buy, buy, buy? If gains are essentially guaranteed, who cares that markets are not longer information clearing houses?
Indeed. There’s no reason to care until the fatal spiral downward surprises us all. Here’s an analogy of what happens when real information gets edited to fit a convenient narrative.
Unfortunately, the patient has cancer which is starting to metastasize, i.e. spread to other organs in the body. But unbeknownst to the patient, this accurate information is considered “bad news,” so the test results and other information is carefully edited to show the cancer is actually shrinking–the exact opposite of what the actual facts reflect. The patient is naturally delighted with this false data because it appears he’s on the mend and doesn’t need any surgery or other drastic treatments.
If participants don’t have information that reflects actual conditions, they cannot help but make disastrous decisions. Falsified or heavily edited information is misleading, and so all decisions made on the assumption this information is accurate will be fatally skewed.
Symptoms of the fatal spread of the disease are masked by stimulants that not only mask the spread but give the patient a sense of euphoric power and supreme confidence.
Imagine the patient’s terrible dismay when symptoms break through the euphoria and he learns his cancer is now terminal. Increasing the tragedy is his awareness that had the authorities in charge of his care given him the real-world data instead of the carefully edited “happy story” version, treatments could have been undertaken that might have extended his life. Now those options have been lost forever.
That’s the situation in our economy and financial system. The information cleared in markets has been suppressed, distorted and edited for 12 long years of permanent and ever-increasing monetary interventions, as the “doses” of intervention required to maintain the cocaine-like euphoria and supreme confidence in central bank manipulation of “markets” so they always signal the “good news” of guaranteed gains ratchets higher on every intrusion of reality.
The reliance on “good news” narratives dooms our financial system and economy to a death spiral once reality breaks through the induced euphoria. Our last chances to clear the financial cancers eating away at our economy are slipping away forever, masked by the “market’s” cocaine-like euphoria and supreme confidence in central-bank guaranteed gains.
If the stock market is never allowed to go down, this is the equivalent of telling the cancer-riddled patient that their cancer has disappeared, even as the disease is leading inexorably to the patient’s needless demise.

Falling Into the Abyss Between Wall Street and Main Street

I know this runs counter to every dominant narrative, but a vaccine doesn’t really matter, opening up doesn’t really matter, and the size of the “free money” stimulus checks doesn’t matter.

What matters is that the nation is falling into the abyss that’s opened between Wall Street and Main Street.

And nothing will stave off the collapse of the social order other than a fundamental re-ordering of the way we create and distribute money and political power, as money buys political influence.

The last economic tide with widespread benefits to Main Street was 30 years ago. Since then, the Federal Reserve and other central banks have incentivized globalization and financialization, two dynamics that favor mobile capital and financier skims and scams…CLICK for complete article

Toronto Real Estate Joins The Flight To The Suburbs, As Inventory Rises In The City

Greater Toronto real estate is seeing a big jump in sales, and it’s mostly people fleeing to the burbs. Toronto Regional Real Estate Board (TRREB) data shows it was the most sales for July in at least a decade. The increase in sales was primarily driven by a surge in the 905, where inventory is falling behind demand. The City on the other hand, is seeing new listings grow at three times the pace of sales.

Greater Toronto’ Real Estate Prices Make Abrupt Jump

The price of a typical home, all types included, made an usually large increase during the pandemic. The TRREB benchmark price reached $880,400 in July, up 10.01% from the same month last year. The City of Toronto reached $967,900, up 9.06% over the same period. This isn’t just unusual during a pandemic, it’s an unusual trend for the history of Toronto real estate prices….CLICK for complete article

Seth Klarman: ‘Little Evidence Of Thought’ Behind Stock Market Rebound

Billionaire hedge fund value investor Seth Klarman is extremely skeptical of the stock market rebound off the March lows.

In his recent second-quarter letter to investors Klarman, who manages the $30 billion hedge fund Baupost, said a combination of faulty investor psychology and an enabling Federal Reserve are driving stock prices higher while the real economy sputters.

The SPDR S&P 500 ETF Trust is now up 48.6% since March 23, yet the economy has lost more than 1 million jobs per week for 20 straight weeks. S&P 500 earnings are down 35.7% so far in the second quarter, while revenue is down 9.6%.

Psychology And Economics: In his letter, Klarman said investing is a combination of psychology and economics, and the two factors have diverged significantly in the past few months. He said investors seem to be relying on some vague idea that the US economy is “opening up” as a green light to buy stocks without even considering valuations.

“There is little evidence of thought as to whether the price of a security already reflects current and projected future news flow, or whether the opening up of the economy might be premature, a sign not of strength, but of impatience, lack of resolve, and poor judgment,” Klarman said.

Since 1982, Klarman has been one of the most consistent investors in the market, delivering gains in 31 of his fund’s first 34 years.

Fed To Blame: Klarman is known for his long-term, value-oriented investment style. Because he rarely comments publicly or grants interviews, followers must piece together his philosophy based on tidbits of insight he has provided throughout the years…CLICK for complete article