Welcome to Illuminati Silver, we tell you
the truth about silver. Today is Thursday 3rd September 2015 and we are going to review
tomorrows US Jobs Report and its potential impact on the FED’s Interest rate decision.
With a Fed rate increase on the horizon, the jobs data becomes that much more important
In early August, Kathleen Bostjancic, an economist at Oxford Economics USA Inc. said “on a
scale of one to 10, if you asked me how important the employment numbers are, I’d put it at
a 10,” “The next two figures are like 10-plus-plus;” meaning that September and October figures
were even more important. However, Bloomberg came out with the headline
today saying : Don’t Trust Friday’s U.S. Jobs Report
Now We quote them: ‘If the U.S. economy added a ton of jobs
in August, the promised increase in borrowing costs will be seen as a done deal for this
month. If employment falters, the soothsayers of finance will scribble that the Fed stays
on hold for a while longer. Except that it turns out that the August report is the least
trustworthy of the monthly jobs figures.’ Harm Bandholz, the chief U.S. economist at
Unicredit in New York, has done the maths on the Bureau of Labor Statistics figures.
He found that August has had the lowest average monthly gain since 2011.‘So it shouldn’t
be a surprise if it turns out that the economy didn’t add the forecast 217,000 jobs last
month after all;’; Bloomberg quotes as August’s average in the past four years is a paltry
102,000. Bloomberg’s world interest-rate probability
calculator says traders and investors now see a 32 percent chance of the Fed raising
rates this month, up from 24 percent a week ago. History would suggest that relying on
Friday’s economic report to gauge whether the Fed should move would be a mistake — both
for traders and for policy makers. However, Andrew Soergel of US News published
the headline yesterday: ‘U.S. Job Growth Speeds Up in August’.
‘U.S. job growth picked up the pace last month as the labor market tacked on 190,000
new positions,’ according to the ADP National Employment Report issued on Wednesday.
August’s employment numbers clocked in slightly below analysts’ expectations but were still
an improvement from a surprisingly weak July. July’s previously reported 185,000 new jobs
were revised down further to 177,000 this month, marking the labor market’s slowest
pace of growth since March. The ADP numbers are released at the beginning
of each month, usually a few days before the Labor Department publishes its own more encompassing
employment report. Though the ADP figures offer a glimpse of what could come out of
the government’s official analysis, which will be published tomorrow, the two estimates
draw from different pools of data and don’t always line up.
“It’s really these last two weeks that have been a real problem in terms of China and
market volatility and all of these other things,” Phil Orlando (chief equity market strategist
at Federated investors) says. He added; “If you and I had had this conversation three
months ago, I would have told you I’m locked in on September. But I’m less locked in on
September today than I was three months ago.” Robert Hennelly of CBS Money Watch states:
“Conventional wisdom holds that if the Bureau of Labor Statistics reports Friday that the
U.S. added at least 200,000 jobs, the economy will still be considered in “recovery” mode
and the Fed will be more likely to move ahead with a rate hike, the first in nearly a decade.”
So, should we be hyper-focused on Friday’s jobs report as the way to most accurately
judge the relative health of the U.S. economy and the future of interest rates? “Definitely
no,” said Jared Bernstein, senior fellow at the Center on Budget and Policy Priorities.
“I am frankly concerned that so much reliance is being put on such a noisy indicator that
reflects just one month.” Bernstein, who has served as a top economic
advisor in the Obama administration, warned that taken alone, the jobless rate can be
deceiving. “When the unemployment rate falls, it’s not necessarily good news,” he said.
“It could mean you had more jobs created, but it could also mean more people dropped
out of the labor market.” For Bernstein, the more relevant data points are indicators like
wage growth. He says; “If a labor market is truly nearing full employment, we should see
more in the way of wage growth, something we have seen in the past.”
It could take a blockbuster payroll report Friday to nudge the Federal Reserve into raising
interest rates this month, but after recent market turmoil, some economists say the Fed
won’t move even if the job gains are eye-popping. “September is most probably off the table,”
says economist Jesse Hurwitz of Barclays Capital. The Fed hasn’t raised its benchmark rate since
2006, and it has hovered near zero since the 2008 financial crisis.
Economists expect the Labor Department to report that employers added a solid 218,000
jobs in August, in line with the 211,000 average monthly additions so far this year. Payroll
processor ADP said on Wednesday (which we mentioned earlier) its own sampling showed
businesses added 190,000 jobs last month. But Hurwitz says even 300,000 gains, a further
drop in the near-normal 5.3% unemployment rate and accelerated wage growth won’t move
the Fed’s needle. His reasoning is simple: It takes at least a couple of months for battered
markets to affect the real economy and the impact likely won’t be evident in economic
reports released before the Fed’s September 16-17 meeting. “Stocks have fallen nearly
7% the past couple of weeks, notwithstanding Wednesday’s rally, oil prices have been volatile
and the dollar has strengthened, developments triggered mostly by China’s economic slowdown.”
So is Peter Schiff right when he said on Kitco News this week, when asked whether he thought
the FED would raise interest rates – he replied “I don’t think they’re really
considering it or ever have” – Time will tell.
Our view is that we are at an impasse. If the job figures are good there will be pressure
to raise rates. If not they are unlikely to be raised. However if they are good, will
the FED risk a stockmarket collapse by raising rates, in view of the losses recently experienced?
Equally, if they don’t raise rates, then there may be a lack of confidence in the FED
and the markets fall anyway? This is the dilemma – an answer to which will be known in a
little over 2 weeks’ time. We hope you have found this video if not useful.
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Silver Illuminati owners come from a background of Banking, International Wealth Management
and Economics. Having now retired from these worlds we are not qualified to give investment
advice. Therefore, this and other productions must not be deemed to be giving such advice
and merely represent the personal views of its owners.