Hey Bartender! Fed Looks To Raise Rates In Face of The Great Bartender Recovery

This has been a SLOWWWWW economic recovery. Full-time employment is ALMOST back to 2007/2008 levels of full-time employment. However, average wage growth is almost 50% lower than in 2007 despite The Fed not having raised The Fed Funds Target rate since 2006.


One reason that wage growth is so slow is that many of jobs added post-2007 have been lower wage service jobs (e.g., bartenders).


Here is a chart courtesy of Zero Hedge showing bartender growth versus manufacturing job decline.

Mfg workers vs waiters_0

Someone sent me an email repeating the common meme: “But wage growth will remain slow until unemployment bottoms out!” Not true. The toxic green line shows today’s unemployment rate compared to average YOY wage growth. This “recovery” is the lowest wage rate given the current unemployment rate.


So, let me get this straight. The Fed wants to raise rates in the face of stagnant wage growth and a surge in bartenders.

Even Goldman Sachs CEO and Chairman Lloyd Blankfein sees a jolt when The Fed raises rates.

Here is a photo of Fed Chair Yellen and former Fed Chair Bernanke sharing a beer in front of their favorite bartender.


Hey bartender! This is your recovery!


Limbo Rock Homeownership: Census Reveals That US Homeownership Rate Falls Back To 1965 Levels

To quote Chubby Checker from the song Limbo Rock, How low can you go?”

According to the US Census Bureau, the homeownership rate has slumped back to 1965 levels.


Of course, the sad thing is that despite the trillions of dollars of Treasury and MBS purchases by The Fed, homeownership keeps falling and median rents for housing keep rising (to record levels).


The Fed is having a “limbo party,”  And I don’t think that homeownership has gone low enough.

limbo (1)

Home Prices Decline In May (Case-Shiller) While YoY Price Growth 2x YoY Wage Growth

According to the S&P/Case-Shiller home price indices, the composite 20 city home price index fell -0.18% in May, the biggest decline in 10 months. However, YoY home price growth remained near 5% at 4.94%.


Home price growth remains at more than 2x average wage growth.


Home price growth is outpacing mortgage purchase applications since The Fed’s QE3.


Chicago, Detroit and San Francisco were the biggest losers in seasonally adjusted terms.

case shiller top 20 cities breakdown_0

In honor of finishing last (much like my beloved Chicago Cubs), here is a Chicago Italian Beef Sandwich. MMMMMM!!!!


Shanghai Surprise! China Stock Market Crashes 8.5 Percent Last Night!

It was truly a “Shanghai Surprise” in China.

The Shanghai Composite Stock Market index tanked 8.5% last night.


It was the second worst day for the Shanghai Composite after February 27, 2007.

biggest drop_0

Over a long period of time, we can see the Chinese asset bubble.


Sadly, any city that is featured in a Sean Penn and Madonna film is jinxed.


Unlike the Don Ho song “Tiny Bubbles,” China has a BIG bubble!

Rate Trek II: The Wrath Of Janet (Fed Accidentally Releases Suggestion For 1 Rate Hike in 2015, 4 In 2016)

When you have bad news for consumers, it’s best to float a trial balloon by “accidentally” leaving staff projections in the data dump ahead of the June meeting.

Internal economic forecasts prepared by Federal Reserve staff ahead of the June policy meeting were posted on the U.S. central bank’s website late last month, years ahead of schedule, the central bank said Friday.

The projections, which normally are made public only after a five-year lag, were “inadvertently” posted online June 29 within a package of files related to the Fed’s FRB/US model of the economy. A Fed spokeswoman said the accidental release went unnoticed at the central bank until Tuesday, when a Fed economist discovered it.

The files are being kept online “because the information has already been released,” the Fed said in a statement. The Fed spokeswoman said the matter was referred to the Fed’s inspector general Thursday; the inspector general on Friday declined to comment.

….the projections suggest 1 rate hike before year end; and 4 hikes in 2016, with end 2016 Fed Funds rate of 1.26%.

Or as Captain Kirk said in Star Trek II: The Wrath of Khan, “Here it comes.”

Janet Yellen at the helm of the USS Federal Reserve.



World Trade Volume Drops By Most Since Great Recession (Q2 Is Worsening)

The US economy sagged badly in Q1 2015 which many talking heads blamed on the cold weather (Hello! It’s called WINTER and occurs every year in Q1). But the bad news is that the same talking heads (see CNBC) thought there would be a rebound effect in Q2.

Unfortunately, there was no rebound in world trade volume in Q2.


Here is a closer look at the “rebound” in Q2:


Trade? We don’t need no stinkin’ trade!