Around the Globe 07.18.2013

Leading Economic Indicators Index in U.S. Was Unchanged – Bloomberg.

Conference Board Leading Economic Indicators 07.2013

This chart illustrates all you need to know about the recovery.  Over four years after the trough, the leading economic indicator index is still way below its pre-GFC highs.  Moreover, the index  has only advanced to 2003 levels.  Real economic growth is barely keeping apace of the population increase.  As long as the economy remains this weak, a shock, like a Chinese recession or more Middle East drama,  can easily plunge the country back into recession.

Easy money is the opiate of the American economy: Morici.

Fed QE versus SP500 Fed QE versus SP500 Through July 2013

Cheap money makes the world economy go round.  While the Fed is the most watched central bank, the coordination of the group’s money printing is what matters.  If any of the major central banks tighten its money supply, all markets will suffer.  This is exactly what happened during the Chinese Cash Crunch:

SPY 07.18.2013 China 7 Day Repo Rate 07.18.2013

Schaeuble Opens Door to Greek Debt Relief Tied to Targets – Bloomberg.

German finance minister chides Greeks for seeking debt cut | Reuters.

German Minister Visits, Praises Greece – WSJ.com.

Wolfgang Schaeuble“Nobody who knows anything about the issue at hand is talking seriously about a further cut for private investors,” he said earlier on German Inforadio. “Rather, it’s about the fact that it’s possible that Greece after the end of the current program next year will need another program.” (My emphasis)

The quote is from the Bloomberg article, and it shows the German strategy for Greece.  Private bondholders will probably not take another haircut, but there will be a fourth bailout, as readers of Dareconomics have understood since the 3rd bailout was pieced together at the end of 2012.

The fourth bailout will include debt forgiveness by the EU and probably a deposit tax on the Greek financial system, and it will not be negotiated until after German elections.

US mortgage applications slip anew; soaring rates bite.

Mortgage Applications 07.17.2013

From ZeroHedge

Mortgage applications continue their descent and are bringing housing activity down with them.  The mainstream media is still using quotes from real estate industry shills to support its housing recovery narrative.  How much worse does the data have to be to kill the narrative once and for all?

Crude Reaches 15-Month High as Jobless Claims Decline – Bloomberg.

Gasoline at the pump still rising, but the peak is in sight.

Crude reality: Oil could crimp rally.

Watch out for the gasoline ‘wild card’: Trader.

Gasoline Prices Through 07.15.2013

Whenever gasoline prices rise too high, they choke economic growth and stock market gains.  The magic number seems to be about $3.80/gallon.  That’s just about where we are today with further price increases between now and the end of the summer on increased demand and refinery shutdowns.

U.S. Jobless Claims Decline on Auto Factory Shutdowns – Bloomberg.

Jobless claims fall sharply in positive sign for hiring | Reuters.

US jobless claims drop sharply, raise hopes for labor market.

U.S. Jobless Claims Fall Sharply – WSJ.com.

Jobless Claims 07.13.2013

The mainstream media is in the business of attracting eyes.  The owners of those eyes click prefer watching and reading good news, so there is a bias towards presenting economic data with a positive spin:

“Jobless Claims Fall Sharply in Positive Sign for Hiring”

“US Jobless Claims Drop Sharply, Raise Hopes for Labor Market”

Unfortunately, spinning a story renders it inaccurate.  Jobless claims did not drop sharply, but the seasonal adjustment makes them seem like they did.  Rather, the effects of accounting for summer factory shutdowns make July’s data more volatile.

A reduction in jobless claims means that less people were fired.  Note the long-term trend.  Jobless claims are still running above pre-2008 levels despite the “recovery,” and if our chart accounted for today’s smaller workforce the numbers would be markedly worse.

Right on time, here is today’s Chart of Truth illustrating the true health of the labor market:

June Full vs Part Time Jobs

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