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Kenneth Thomas in WSJ

Kenneth Thomas (an AB contributor) was quoted April 7  in the Journal a second time on the general question of how to solve the problem of subsidy bidding wars.  Unfortunately it is behind a paywall…but worth pointing to…

 WSJ.COM
Opinion | Pass a Law to Combat Rent-Seeking

Congress could invoke the Commerce Clause to limit destructive competition over corporate subsidies.

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Weekly Indicators for May 27 – 31 at Seeking Alpha

by New Deal democrat

Weekly Indicators for May 27 – 31 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

There was a touch of weakening across several timeframes. The economy is just weak enough that continuing trade and tariff tantrums could take a slowdown and do enough damage to make it a downturn.

As usual, clicking over and reading should be informative for you, and helps me just a little bit for the effort I put into the work.

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Resolving the contradiction between the yield curve and housing

by New Deal democrat

Resolving the contradiction between the yield curve and housing

If you listen to the yield curve, it is screaming “recession!”  If you listen to new home sales, they are saying “no worries!”  One of them is wrong.

For the last couple of weeks, I have been going back over history in an effort to resolve the contradictory signals. One important portion of that work has been to focus on the non-financial leading indicators, and in particular, balancing the consumer stress indirectly measured by housing permits vs. the producer stress measured by corporate profits.

The outcome of  factoring corporate profits into the mix is telling. This work is up at Seeking Alpha. As usual, clicking over and reading helps reward me with a little $$$ for my efforts.

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Initial claims, temporary staffing point to weaker May jobs report

Initial claims, temporary staffing point to weaker May jobs report

 – by New Deal democrat

As I’ve noted a few times recently, I’m paying additional attention to the weekly jobless claims numbers, partly because I suspected that the late Easter this year resulted in some residual seasonality (which I think has been demonstrated), and partly because if my slowdown forecast is correct, it ought to start showing up there.

The initial claims report this morning covered the week during which the BLS surveyed employers for the May jobs report coming out in two weeks. In the four weeks that coincided with the April report, initial claims made new 49 year lows, averaging 201,500. In the past five weeks that will coincide with the May report, the average has been 221,500.
So, while this isn’t precisely on point, here’s a graph of the four week moving average of claims (blue, left scale) vs. the unemployment rate (red, right scale):

I don’t think it was a coincidence that the unemployment rate fell to a 50 year low during the four week period that initial claims made 49 year lows. And I strongly suspect that the June report will take that back, with an unemployment rate of 3.8% +/-0.1%.
If that happens, it will be significant, because a 3.8% unemployment rate would be exactly what the rate was 12 months previously. And a YoY unemployment rate that has not improved has only happened once during this expansion (September 2016, right before the election).
Further, at the moment initial claims are higher YoY:

Even if they continue at the 210-212,000 range for the next few weeks, that’s still only about a 4% improvement from a year ago.
Bottom line: unless jobless claims continue to fall in the weeks ahead, they are consistent with a slowdown.
And while I’m at it, another leading sector – temporary jobs – continues to show weakness as reported in the weekly American Staffing Association’s Index:

The four week average of the index is -2.9% YoY, the worst showing since the 2015-16 slowdown.
I was surprised by the strong +12,000 temporary jobs number in the April jobs report. I am expecting either that to get revised downward, or a poorer comparison when May’s report comes out, or both.
In short, the weekly data so far this month is consistent with an oncoming slowdown in employment gains. We’ll see in two weeks.

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Weekly Indicators for May 20 – 24 at Seeking Alpha

by New Deal democrat

Weekly Indicators for May 20 – 24 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

The big contradiction between what the yield curve is forecasting, and what most of the rest of the long leading indicators are forecasting, continues.  Meanwhile Trump’s tariff  “policies” are creating chaos in other sectors.

As usual, clicking over and reading should not only bring you up to date, but helps reward me with a penny or two for my work.

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Weekly Indicators for May 13 – 17 at Seeking Alpha

by New Deal democrat

Weekly Indicators for May 13 – 17 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

The stock market’s “tariff tantrum” is driving down interest rates in bonds. We are in a time when government policy decisions – sometimes just passing tweets – are driving winners and losers in economic activity. And these can have immediate impact, disrupting the scheme of long leading -> short leading -> coincident indicators of the economy.

As usual, clicking over and reading helps reward me a tiny little bit for my efforts.

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