As Growth Rates Slow, The BSP Toys with OFW Remittance Data Anew!

The BSP has been at it again!  

Or the BSP has been fudging with OFW remittance statistics again! 

(all bold mine) 

The BSP on January remittance data: Personal remittances from overseas Filipinos (OFs) increased by 3.2 percent year-on-year in January 2016 to reach US$2.2 billion, Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. announced today…. Likewise, cash remittances from OFs coursed through banks amounted to US$2 billion in January 2016, rising by 3.4 percent from the level posted a year ago. 

On February data: Personal remittances from overseas Filipinos (OFs) reached US$2.3 billion in February 2016, higher by 9 percent than the level posted in February last year…Similarly, cash remittances from OFs coursed through banks grew by 9.1 percent year-on-year to US$2.1 billion in February 2016.

On March data: In March 2016 alone, personal remittances amounted to US$2.7 billion, 1.4 percent higher than the year-ago level. Meanwhile, cash remittances from OFs coursed through banks in March 2016 amounted to US$2.4 billion, posting a growth of 1.5 percent year-on-year.

In their April disclosure, the BSP revised all three data. And they have all been substantially downgraded!!!

January personal and cash remittance (monthly) growth rates: 1.9% and 2.1% (original 3.2% and 3.4%). February: 8.3% and 8.4% (original 9% and 9.1%). March: NEGATIVE 1.3% and NEGATIVE 1.2% (original 1.4% and 1.5%)! 

The BSP then shifted the blame on banks for such revisions: “Revised per amended reports submitted by banks”

I recently noted the BSP adjusted the entire TWO year (2014 and 2015) data set in order to shield increasing accounts of NEGATIVE growth!

The BSP’s smoke and mirror trick appears to be to post data only that have been in the positive, from which they then shout or declare G-R-O-W-T-H! And when no one seems to be looking, they considerably reduce them. The BSP seem to be hoping that people will just buy the headlines. It seems that for them, these numbers have no real world implications. 

Monetary authorities can’t seem to handle several truisms.

One, the world economy has been slowing down fast.

Two, the law of diminishing returns simply means that considering the size (over 10 million people or 10% of population), OFW growth cannot expand FASTER than the population growth forever. That’s unless authorities have tacitly been working on to significantly drain the resident population!

Three, the quality of overseas job openings may also evolve.

Fourth, currency factors play a role. Weakening currencies where OFWs are employed may see their remittance diminish.

Fifth, global political developments also matter. The rise of nationalism (anti-immigration, right wing politics) may prove to be a significant barrier to overseas employment.

Sixth, the BSP can’t seem to take into context the contributions of domestic economy. For instance, the government has been shouting at the top of their lungs that the economy continues to boom, where jobs have allegedly been growing! Yet if true, then why wouldn’t OFW growth slow? Has the government come to believe that the Philippine residents can multiply its population at the rate of how Gremlins populate?

In a genuine economic boom, where job and income substantially grows, there will be little incentives for residents to work overseas or seek migration. The fact that there remain a good number of people looking for job overseas essentially defies the government’s account of an economic boom!

Or does truth or reality need to be contorted for the simple reason that all economic sensitive statistical numbers has to remain positive?!

You see, the entire credit fueled supply side boom in the shopping malls, hotels (tourism) and housing (vertical and horizontal) have been predicated originally from OFWs. So perhaps the BSP may have been concerned that any candid announcement of theirs might prompt for a slowdown in the race to build supply that may be reflected on the GDP.

And a slowdown in the GDP should be a taboo! That’s because a magnified GDP allows the government to have generous access to credit at the lowest costs! And it’s not just the government but also politically favored firms!

Again, hardly does the BSP seem to realize communications opacity or obscurity will have real world consequences. They may fudge data to boost GDP over the short term, but eventually such costs will emerge overtime in the form of slowing sales (demand), magnified vacancies (excess capacity), financial losses, slowdown or curtailment in investments, job losses, amplified credit risks, increased poverty and more.

Some of these have become apparent today.

This shows the kind of boom mentality entrenched in the consensus.  Such mentality bears no margin of safety and have all been anchored on a riskless-one way trade. The seeming disinformation employed by the BSP only feeds to such confirmation bias.

And that’s why there will be a rude awakening. OFW data have already been showing the way!!!!

Central Bank Panic: Sweden's Central Bank Expands QE! Keeps Negative Interest Rate

Why has the stock markets of developed economies run amuck over the past week?

The US S&P

Europe's Stoxx 600

Japan's Nikkei 225 (not update for today's or April 21st trade where the said index spiked by 2.7%)

My guess? Aside from the supposed agreements by oil producers to cut oil production, which has become a key stimulus, another substantial part of the answer could be from the implicit Shanghai Accord. Global central banks appear to have undertaken an unannounced coordinated project of implementing monetary easing of their respective domestic financial system designed to propel risk asset markets higher or stoke the 'animal spirits'. Such tacit project, which may have emerged during the G-20 meeting in February, have been sold to the public as intended for inflation and growth enhancement.

Stock markets have become an instrument for policy making, thereby its sustained perversion. Thus, as global central banks remain on a panic mode, such translates to panic buying for stock market casino gamblers whom are the main beneficiaries from such policies.

Well, Sweden's central bank just announced an expansion of QE

From Marketwatch.com

The Swedish central bank raised its bond-buying target to 245 billion Swedish krona ($30.35 billion) on Thursday, saying the move, coupled with the bank's negative benchmark interest rate, is aimed at holding down the national currency and safeguarding a rise in inflation.

The revised policy plan will see the Swedish Riksbank, the world's oldest central bank, buy an additional SEK45 billion in government bonds in the second half of this year, on top of the SEK200 billion it is in the process of buying by the end of June.

Its main interest rate will remain at minus 0.5% where it has been since February.

Yesterday the Bank of Japan signaled that it may expand the purchasing of stock market ETFs

From Yahoo.com

Bank of Japan Governor Haruhiko Kuroda said on Wednesday the central bank's presence in the exchange-traded fund (ETF) market is "not too big," signalling that topping up purchases of ETFs could be a real, near-term option.

Later today, the ECB will have its decision day. Global markets seem all focused on central bank actions.

In short, to keep stock markets in suspended animation, away from the reckoning of harsh economic reality, central banks will continue to rain "stimulus" on stimulus addicts.

FOMC Policies: Why the US Federal Reserve Waffles

Sometimes media presents a different context than the indicated headline.

A noteworthy example has been today’s breaking news from Philippine business news provider, the Businessworld

The expert quote in the terse article “bar is low for the Fed to raise rates” patently diverges from “Fed moves closer to raising interest rates.

This isn’t pettifogging. To consider that much of the public’s actions can be traced to what has been fed by mainstream (for instance the weak peso); the contrasting message may confound readers. Or readers may just ignore the quote and stick with the headlines.

Nonetheless this Wall Street Journal Blog also sees a dovish tendency by the FOMC’s statement: Many bond investors are skeptical that the Federal Reserve will clearly signal a September rate increase at the conclusion of the central bank’s policy meeting on Wednesday. 

And so has this Reuters report which attributes the yesterday's buoyancy on US stocks to low interest rate expectations on Fed actions.

However, here is the actual FOMC statement: (bold mine)

To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen some further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term.

As usual, the Fed's assessment has been data-dependent, meaning based on ex-post (past performance) analysis, but whose policy decisions will be predicated on ex-ante (anticipated changes). In short, for the FOMC, the immediate past will be projected into the future as basis of decisions. They have barely provide room for alternative response-reaction paths.

So given the above litany of factors for consideration, the FOMC seem as moving goalposts. They have been looking for various excuses or alibis to justify the postponement of raising rates.

Why so? Sovereign Man's Simon Black describes the Fed's addiction to zero bound:

In the US, market manipulation has taken on a much more sophisticated approach.

It caught my attention last week that the Federal Reserve’s balance sheet is still within 0.3% of its all-time high.

All the fanfare about Quantitative Easing coming to an end, and the Fed cleaning up its balance sheet, turned out to be a load of bull.

When the Fed entered the financial crisis in 2008, its balance sheet was roughly $900 billion.

At its peak, its balance sheet totaled $4.5 trillion. Today, it’s still at $4.5 trillion.

So much for a new era of responsibility.

But to give you a sense of how closely tied the Federal Reserve is to financial markets in the US, this morning I pulled the data and plotted the two together.

This chart shows the relationship between the size of the Federal Reserve’s balance sheet and the Dow Jones Industrial Average since the start of the crisis in late 2008:

You can see that the market stays within a tight range, and as Quantitative Easing played out over the years, that range became even tighter.

Even now that Quantitative Easing has supposedly ended, the ratio between the Fed’s balance sheet and the Dow Jones Industrial Average remains nearly constant at 253x, with a standard deviation of just 1.5%.

That’s a fancy way of saying that, whether intentional or not, the Fed is completely dominating the US stock market.

It’s the same story with mortgages. Treasury bonds. And just about every other major asset class in the US.

Which means that any shrinkage of the Fed’s balance sheet will drag down markets with it.

The Fed may not be as brash as China, but their unsustainable support for financial markets is just as precarious.

This is a time for extreme caution; there’s simply been too much pressure built up in the system, and there’s no way of knowing when or where it’s going to be released.

The Fed's dependence on bubble blowing have become so deeply rooted. With the prospects of painful adjustments, this makes withdrawal hardly an option. This applies not only to the Fed, but almost to the entire spectrum of central banking operations worldwide.

War on Bitcoin: US Government Seizes Assets of Mt Gox

The US government has officially launched a campaign against bitcoin by seizing accounts tied to one of the largest bitcoin exchange.

From the Wall Street Journal:

WASHINGTON—U.S. officials dealt a blow to the fledgling digital currency called bitcoin, freezing an account that is tied to the largest bitcoin exchange just months after regulators warned that such entities should follow traditional rules on money laundering.

The authorities obtained a warrant Tuesday to seize an account of a subsidiary of Mt. Gox held at the online payments firm Dwolla, according to a copy of the warrant provided by the Department of Homeland Security on Wednesday. The department declined to comment further on the matter.

The scrutiny from law enforcement comes after the Treasury Department ruled in March that the same money-laundering rules that apply to traditional money-order providers, such as Western Union Co., WU +0.98% would also be applied to firms that issue or exchange online cash, including currencies not backed by a central bank.

Bitcoins are supposedly decentralized. So technically speaking the US government cannot directly strike at bitcoin without taking on the internet itself. Thus the US government’s campaign against bitcoin has been channeled through the financing facilities of the trading platforms and not bitcoin itself. 

But so far, other exchanges as US-based competitors Seattle-based CoinLab and San Francisco-based Coinbase or bitcoin exchanges registered with the Treasury Department has not been subjected to the same harassment. On the other hand, the Mt. Gox case should benefit them.

The US government wants bitcoin dealers to operate under their umbrella and has assailed or harassed those operating outside their ambit.

In short, the governments will work on controlling cryptocurrencies covering all variants; aside from Bitcoin: Litecoin, PPcoin, Freicoin, Solidcoin, BBQcoin, Fairbrix, Geistgeld among the many more.

Besides, it may come as a coincidence but the Mt. Gox crackdown comes in the light of the second wave of selling pressure on gold prices. Gold fell 2.34% last night to close below the psychological $1,400 threshold level.

Remember that the Wall Street initiated flash crash in gold came alongside the crash in bitcoin prices during mid April. (chart from stockcharts.com and bitcoincharts.com)

The current actions against Mt.Gox’s bitcoin platform has so far unaffected prices of bitcoins.

The crux is--bitcoins and gold appear to be simultaneously under political pressure as expressed through prices or through direct government intervention

Yet look at the irony with the following headline: US Stocks Rise on Stimulus bets as Manufacturing Falls.

This means more bad news is good news; which also implies that stocks have been totally dependent on steroids, thus the parallel universe: stagnant economies yet surging stocks on steroids.

This also impresses on the public that the connection between gold and government steroids have become detached. People are being made to believe that gold have lost its “inflation hedge” function. (Although in the real world this hasn’t been true: Just take a look at the seminal hyperinflation phase in Argentina where the average citizens flee to gold and bitcoins as refuge)

What else am I saying? Well, governments simply hates competition. So currency alternatives as gold and bitcoins are not just being manipulated, they are being attacked.

All financial markets are being manipulated, but at different degrees. Assets that benefits the political objectives of governments such as stocks, bonds and the property sector are being subsidized (directly and indirectly) whereas those opposed such as short sellers, commodities and bitcoins are being marginalized. 

But the real economy, which allegedly has been the target of all these assistance, has been ignoring them.  

And yet the real objective behind all these has been to save or preserve the cartel of the political institutions of the banking system-central bank-welfare/warfare state. Remember rising asset prices buoy the balance sheets of insolvent banks and governments, thereby the cumulative inflationist policies.

Thus the parallel universe or the huge detachment between the real economy and prices of financial assets.

All these are really signs of bubble blowing activities everywhere and of how terribly desperate governments have become. 

Yet all failed government actions would translate to deeper confiscations of people's savings by governments. Hence, governments are working around the clock to close all possible loopholes as seen by the attack on Mt. Gox or from the Indian government's ban on gold imports.

I Told You So: Gold Slump Used as Justification for MORE QE

I earlier mentioned that the deflation bogeyman from the recent gold-commodity panic will be used to justify more inflationism

Expect this selloff in gold-commodity sphere to increase risks towards a transition to a global crisis, and for central banks to engage in more aggressive inflationism.

Well media’s rationalization or the Fed’s implicit public conditioning strategy (signaling channel) through media to generate public support for more QE seems to have been initiated.

From Bloomberg: (bold mine)

The slump in gold may hand activist central bankers more reasons to pursue the easy monetary policy that helped drive up the metal’s price in the first place.

Among many explanations for the biggest drop in more than 30 years: a fourth annual global growth scare as data disappoint from China to the U.S. and investors fold long-held bets that monetary stimulus will ultimately unleash inflation. Other reasons for the drop range from a view that the price reached so-called technical levels to concerns that Cyprus could start a rush by indebted nations to sell their supplies of the metal.

The combination of growth jitters and reduced inflation anxiety boosts the case of Federal Reserve Chairman Ben S. Bernanke and counterparts elsewhere to keep pump-priming their economies in the hope they will finally secure traction. It also may help them beat back critics, including some U.S. Republican lawmakers.

From Wall Street Journal Blog (bold mine)

Tuesday’s inflation data reported by the Labor Department gives the Federal Reserve a new reason to keep its easy money policies in tact – inflation could be slowing.

The consumer price index was up 1.5% in March from a year earlier, the fourth time in five months that it has been below the Fed’s 2% inflation goal. The index for consumer prices excluding volatile food and energy was up 1.9% for the fourth time in five months. Readings like that are likely to get the attention of central bank officials.

The Fed has been debating when to begin winding down an $85 billion-per-month bond-buying program. The Fed has linked the bond buying to developments in the job market, saying it would gradually reduce the amount of the monthly purchases once the job market improves substantially.

No conspiracy?

Parallel Universe in Gold: More US States Push for Gold as Money

Even amidst aggressive inflationism from central bankers and from predatory confiscation of people’s savings, prices of gold has staggered.

Priced in major currencies (USD, EUR, GBP) except Japan’s yen, gold has substantially softened since mid 2011 (Gold.org)

Technically speaking, languid gold prices has been mostly due to a selloff in paper gold and through short sales. (chart from Danske Research)

In an interview with the South China Post, George Soros attributes falling gold prices to deleveraging in the Eurozone:

But when the euro was close to collapsing in the last year, actually gold went down, because if people needed to sell something, they could sell gold. Therefore they sold gold. So gold went down together with everything else

This implies that gold has not been deflationary hedge.

Nonetheless Mr. Soros partly acknowledges of the parallel universe that exists in the pricing of gold:

Gold was destroyed as a safe haven, proved to be unsafe. Because of the disappointment, most people are reducing their holdings of gold. But the central banks will continue to buy them, so I don’t expect gold to go down. If you have the prospect of a crisis, you will have occasional flurries or jumps. So gold is very volatile on a day-to-day basis, no trend on a longer-term basis.

Gold really has not lost its safe haven status, the role of currency safe haven may have partly been assumed by bitcoin.

But the bear raid on paper gold could have been orchestrated to influence “inflation expectations”. Gold plays a vital role in the commodity sphere, signifying a key benchmark on commodity ETFs, from the Mineweb last March:

The exodus from gold pulled down the entire commodities ETP complex, global data from BlackRock showed, as the gold segment accounts for some 70 percent of total commodity ETP investments.

Some $5.1 billion left commodities ETPs as inflows to industrial metals and broad basket commodity ETPs failed to offset the gold meltdown.

In other words, by suppressing gold prices, the general commodity sphere will likewise follow.

 

Also my personal view that gold’s has been undergoing a normal reprieve (profit taking-shake out phase) considering TWELVE consecutive years of advances.Markets hardly ever move in a straight line.

Yet aside from record central bank buying buying of physical gold as noted by Mr. Soros, gold coin sales has just been slightly off the record highs, while silver coins remains on record breaking path,

The more significant part of the growing parallel universe in gold dynamics is that about a dozen US states appear to be in the process of legislating gold as money.

From Bloomberg

Distrust of the Federal Reserve and concern that U.S. dollars may become worthless are fueling a push in more than a dozen states to recognize gold and silver coins as legal tender.

Arizona is poised to follow Utah, which authorized bullion for currency in 2011. Similar bills are advancing in Kansas, South Carolina and other states.

The measures backed by the limited-government Tea Party movement are mostly symbolic -- you still can’t pay for groceries with gold in Utah. They reflect lingering dollar concerns, amplified by the Fed’s unconventional moves in recent years to stabilize the economy, said Loren Gatch, who teaches politics at the University of Central Oklahoma.

If gold’s role as money will continue to get political recognition, then eventually this will reflect on prices, in spite of Central bank-Wall Street’s stealth suppression schemes.

The US Dow Jones Industrials at Record Highs

One of the key benchmark of the US stock market finally sets a new record. 

From the Bloomberg

America, birthplace of the credit crisis that erased $37 trillion from global equity values, is leading the world’s stock markets back.

The Dow Jones Industrial Average (INDU) rallied 126 points to 14,253.77 yesterday, joining Denmark’s OMX Copenhagen 20 Index among major stock gauges in the 45 largest markets to regain all-time highs, according to data compiled by Bloomberg. Four years after bottoming, equity benchmarks in those countries are an average of 27 percent below their peaks, the data show.

About $10 trillion has been restored to U.S. equities, fueled by the fastest profit growth since the 1990s and monetary stimulus from the Federal Reserve. Retailers, banks and manufacturers led the recovery from the worst bear market since the 1930s as the Dow took less than 65 months to rise above its previous high set on Oct. 9, 2007, more than a year faster than the recovery from the Internet bubble.

Here is what I wrote a month back,

If the actions of the broader Russell 2000 (RUT) and Dow Transports (DJT) should serve as clues, then we are bound to see the Dow Industrials and the S&P in new record territory soon. That’s because both the RUT (brown) and DJT (black) are at fresh milestone highs.

And US Federal Reserve chair Ben Bernanke must be very pleased as such has been the declared object of his wealth effect theory channeled through his portfolio balance sheet management (euphemism of manipulation)

Of course, he and his crew doesn't say that all these has been meant to shore up the banking cronies and the political class via the welfare-warfare state.
 
The fact is that the Dow’s record highs have been crafted as the US Federal Reserve’s Balance sheets also reached a milestone.

Chart from the Cleveland Federal Reserve

From St. Louis Federal Reserve

Major easing policies of ZIRP and QEs have driven US money aggregates M2 and MZM to record levels, as high powered money (adjusted monetary base) have also gained significant upside momentum (right window).

Like Philippines and the rest of ASEAN, the manic stage of the bubble cycles, which has been a global pandemic, has been intensifying. 

It would be a major error to see or interpret the current booming markets as "permanent" or "structural", as one day all these artificial props will reach its maximum threshold levels where imbalances will either have to be exposed and undergo a painful adjustment phase (bust) or that such imbalances will reflect on the purchasing power of the currency (currency crisis).

A Coming Scramble for Gold? Bundesbank Initiates Repatriation of NY Fed held Gold

Oh this should be interesting. 

If governments have indeed been manipulating gold prices, then Germany’s Bundesbank’s reported commencing of the process of repatriation of their gold bullions held by the NY Fed may have just opened the gauntlet for a potential scramble for physical gold.

Writes the Zero Hedge, (bold, underline and italics original)

In what could be a watershed moment for the price, provenance, and future of physical gold, not to mention the "stability" of the entire monetary regime based on rock solid, undisputed "faith and credit" in paper money, German Handelsblatt reports in an exclusive that the long suffering German gold, all official 3,396 tons of it, is about to be moved. Specifically, it is about to be partially moved out of the New York Fed, where the majority, or 45% of it is currently stored, as well as the entirety of the 11% of German gold held with the Banque de France, and repatriated back home to Buba in Frankfurt, where just 31% of it is held as of this moment. And while it is one thing for a "crazy, lunatic" dictator such as Hugo Chavez to pull his gold out of the Bank of England, it is something entirely different, and far less dismissible, when the bank with the second most official gold reserves in the world proceeds to formally pull some of its gold from the bank with the most. In brief: this is a momentous development, one which may signify that the regime of mutual assured and very much telegraphed - because if the central banks don't have faith in one another, why should anyone else? - trust in central banks by other central banks is ending.

Much more importantly, it is being telegraphed as such, with Buba fully aware of just what the consequences of this (first partial, and then full; and certainly full vis-a-vis the nouveau socialist regime of Francois Hollande which will soon hold zero German gold) repatriation will be in a global monetary arena, which is already scraping by on the last traces of faith in a monetary system that is slowly but surely dying but first diluting itself to oblivion. And in simple game theory terms, the first party to defect from the prisoner's dilemma of all the bulk of global gold being held by the Fed, defects best. Then the second. Then the third. Until, in this particular case, the last central bank to pull its gold from the NY Fed and the other 2 primary depositories of developed world gold, London and Paris, just happens to discover their gold was never there to begin with, and instead served as collateral to paper gold subsequently rehypothecated several hundred times, and whose ultimate ownership deed is long gone.

Two things:

First, if true then this should be reflected on gold prices soon.

Next if the Bundesbank action will impel for a "domino effect" or where other central banks may likely do the same, then this may translate to some volatility in the asset markets, as bullion banks and the banking system, who may be physically short gold, envisage risks of financial strains to cover their positions.

Has Friday’s Surge by the US Stock Markets Been about the ‘Positive’ Jobs Report?

That’s how media paints it.

This Bloomberg headline serves as an example “Dow Posts Longest Weekly Rally Since October After Jobs Report”

Here is an excerpt: (bold emphasis mine)

U.S. stocks rose for a fourth week, giving the Dow Jones Industrial Average the longest rally since October, as better-than-forecast jobs data erased a four-day drop amid investor disappointment with global stimulus efforts.

Technology companies climbed the most among the 10 industry groups in the Standard & Poor’s 500 Index. Apple Inc. (AAPL) jumped 5.2 percent amid speculation the company may join the Dow, while First Solar Inc. (FSLR) soared 18 percent on surging profit. Better- than-expected earnings at MetLife Inc. (MET) and Frontier Communications Corp. (FTR) sent their stocks up at least 9 percent. Knight (KCG) Capital Group Inc. plunged 61 percent after a trading error spurred a $440 million loss.

The S&P 500 added 0.4 percent for the week to 1,390.99. The benchmark index for American equities extended its 2012 gain to 11 percent. The Dow climbed 20.51 points, or 0.2 percent, to 13,096.17, the highest level since May 3.

“We’ve come to fall into this trap if you will, when it comes to central banks, we want something from them immediately and if we don’t get it, the market gets disappointed,” Mark Freeman, who oversees about $13 billion as chief investment officer at Westwood Holdings Group Inc. in Dallas, said in a phone interview. “At the end of the day, the fundamentals matter, and the fundamentals are doing OK.”

Equities reversed weekly losses on the final day, with the S&P 500 jumping 1.9 percent, after a Labor Department report showed American payrolls climbed more than forecast even as the jobless rate unexpectedly rose. The benchmark index slumped 1.5 percent in the previous four days as European Central Bank President Mario Draghi and Federal Reserve Chairman Ben S. Bernanke failed to reassure investors on immediate efforts to bolster the economy.

The unemployment data ROSE despite the better than expected payroll figures? How’s that?

That’s because many people dropped out of the labor force.

From CNN Money: (bold emphasis mine)

Employers said they added 163,000 jobs in the month, according to a Labor Department report released Friday, much better than the 95,000 jobs economists had forecast.

But at the same time, the unemployment rate unexpectedly rose to 8.3% as households claimed they lost 195,000 jobs.

The government's monthly jobs report comes from two separate surveys: one that looks at employer payrolls, and the other which questions households. Those two reports went in opposite directions in July, confusing the overall reading on the job market.

"There are two sides of this report, and unfortunately both sides are not telling us the same thing," said Ellen Zentner, senior U.S. economist for Nomura. "This is a report showing the economy expanded at a greater pace in July than in June, but households are still telling us they're in pain.

How will “fundamentals matter” if the US economy and the financial markets have been heavily dependent on the Fed's steroids, as if to imply that monetary policies have neutral or only positive effects on the economy and the markets? Such observation is unfounded: the US Fed's balance sheets have ballooned but unemployment and economic growth remains sluggish.

Yes the CNN interprets the report as “confusing” even as the markets allegedly saw them as substantially positive.

Some positive developments eh?

Yet the breakout by the US stock markets seem to lack support as seen from internal market dynamics.

Bespoke Invest has a nice insight: (chart theirs too) [bold mine]

While the S&P 500's price has been in a steady uptrend, cumulative breadth for the index has actually been pretty weak. As shown in the lower chart, with each successive higher high in the index, breadth has actually been making a lower high.

Typically, it is optimal to see breadth trends confirming the moves in price, but the recent narrowing of breadth is indicative of fewer stocks participating in the rally, and likely a sign that more managers are underperforming.

“Fewer stocks participating in the rally” means two things for me, one the insufficiently supported rally could signs of developing weakness rather than strength; although most of the buying seems to have been directed at index heavyweights—Could the Fed or proxies of the Fed be behind this (too big to fail banks or the Plunge Protection team), ala the Bank of Japan via ETFs?

And second such could also be indications of distribution days.

Table from Bloomberg.com

Bottom line: I would put more weight in the interpretation of Friday’s hefty index-based US stock market rally as a “sympathy move” to the monster rebound (see the above table) by the Europe’s equity markets based on the mounting expectations of the imminent unveilment or announcement of the ECB-EU’s big bazooka.