3Q 7.1% GDP? Just Where Have All The Jobs Been?????????

You see, GDP has been growing so much for it to engender a monumental paradox—the rejection of the G-R-O-W-T-H story of the previous administration by 16 million people. 

So, they elected a supposed anti-establishment president who has been popularly expected to deliver superhero results via short-term actions predicated on violence and repression.

But because the establishment benefits from the G-R-O-W-T-H story (via mainly access to credit), this remains the embedded theme.

Worst, we have been made to believe in statistically constructed data, even if it departs from on-the-ground events.

Here is a simple question: With all the fantastic growth numbers, just where have the jobs been??????

 

It is said that when numbers are tortured enough, they will confess to anything.

In order to project higher growth numbers, Monster.com even revised its employment index last June.

So instead of negative, growth numbers during the given (2Q) period became positive. Additionally, because they revised the current numbers, the older set had been truncated. Here is Monster.com’s September revised data.

Nevertheless, even when Monster’s numbers had been tortured enough, the confession just didn’t happen.

First, Monster’s online job numbers grew by 4.08% (that’s nominal). Understand that 3Q NGDP was 9.3% (real GDP 7.1%). So from Monster’s data perspective real jobs growth at 1.98% (adjusted for government’s 2.1% deflator), jobs severely underperformed GDP by less than half the latter’s growth rate—yes that’s 7.1 % versus 2%! That’s an ocean of a difference!

Second, despite the massaging of data, 2016 improvements were hardly substantial when compared to 2015. Yes, 2016’s slightly better than online job performance hardly even reached the diminished highs of 1H 2015.  Even with adjusted numbers, the base can be used to infer the relationship between old data and the new data.

And from here it is evident that the 2Q improvement was, unfortunately not sustained, as 3Q growth rates diminished or momentum declined (10% July, 4.26% August and NEGATIVE 2.04% September)

In short, with all so much statistical growth just where have the JOBS been??????????????????

Monster’s performance can’t be said as isolated.

That’s because another major (biggest) online job provider has resonated with Monster’s performance.

 

My own weekly Thursday 12 pm tabulation of Jobstreet’s online posting has shown an even worse performance

Online posting growth has hardly recovered, year on year they have been NEGATIVE.

Again just where have the jobs been?

Has job recruitment shifted back to the old ways (traditional media)? Or have hirings been direct? How effective has the latter two been?

The simple economic logic is that lackluster job postings have signified a symptom of inadequate investments or investments that had been made that were less labor intensive.

Either way, this is just one of the major indicators that flagrantly contradict the G-R-O-W-T-H story.

Next. Government Revenues/Fiscal Balance.

GDP Week’s Pump-Dump-Pump; Bubbles, Rather Than Mr. Trump Is The Key Threat to Philippines; Ochlocratic Governance

GDP Week’s Awesome Volatility: Pump-Dump-Pump Fest

It’s GDP week. 

ACTIVITIES during the GDP week are usually characterized by HUGE volatilities. This happens usually two to three days prior to the GDP announcement.

 

During the past pre-7 GDP announcements, there were 6 massive pumps, 1 dump, and curiously a nonevent(2Q GDP 2016). In the past, I have shown some of them.

One may say that the market may be speculating on GDP outcome. Perhaps, but I would be a skeptic on this. Reason? Even if there had been little improvement on the GDP, it’s always been a massive pump (with two exceptions). And if this were true, then why the snub on 2Q 2016’s 7% GDP?

Of course, the character of activities differentiates every GDP week.

It’s been a truly rollercoaster week.

 

The week’s first session started with a dump, an afternoon delight pump and an awesome mark-the-close dump. Perhaps in expectations of a closing pump, sellers wanted out at higher prices. But the pump didn’t come, so the .23% dump

Even more incredible is Tuesday’s massive early push which hit a high of about 1.1%. But then, the high was not able to hold. So the rest of the session went into a slomo dump which culminated with a fantastic dump. A lot of the day’s weakness came when JFC’s 3Q eps was announced which incited a nearly 10% crash.

 

Tuesday’s session became THE template for the succeeding GDP pump. Yesterday, Wednesday, to ensure gains, bulls and index manipulators pumped the index early on (to about 2.1+%) and spent the day defending the 1.5%-1.7% (margin) channel. They succeeded. The PSEi miraculously closed with NO pumps or dumps—a rarity.

Today, prior to the GDP announcement, another colossal charge sent the PSEi up by over 2.1%. But then again, post GDP disclosure, buying momentum waned. Sell on news emerged.

The PSEi’s gains retraced to a low of .78%. But here the bulls and index managers set the limit of decline. And from here they repeatedly attempted to cross the 1.0% gains post lunch to no avail.

So what can’t be achieved in the markets had to be accomplished through marking the close.

Of course, given the streak of huge selloffs which reached oversold levels, it would be understandable to expect a sharp knee bounce too.

But the nature of rebound is what has been interesting. All FOUR sessions had volatility of 2% for the day. It’s a sign of instability. And more than instability, it reeks of desperate attempts to shore up the index—via individual pumps which had been camouflaged by index. It's a sign of insider tips too.

Also given that a vast majority of listed PSE issues have reported their 3Q eps early this week (including 28 of the 30 PSEi issues), GDP should have been MOOT.

But then again, for the purpose of BOOM BOOM BOOM asset GDP, statistical report has served as Pavlovian conditioning for asset pumps. Or, each time the establishment comes out with G-R-O-W-T-H statistics, the public has been programmed to panic buy. 

Bubbles, Rather than Mr. Trump, Is the Prime Threat to the Philippines

This brings us to the headlines which say that US president-elect Donald Trump supposedly signifies a threat to the Philippine economy. Aside BPO, apprehensions over the deportations of Philippine citizen illegal migrants have become a cited reason for such risks from Mr. Trump’s policies.

First of all, Mr. Trump has yet to be inaugurated. So whatever he does will remain speculative or guesses.

Second, I don’t think Mr. Trump has been plagued by a political ideology. Or he doesn’t seem to espouse any strong political philosophy. This is unlike Philippine counterpart who is an avowed leftist/socialist.

This means that Mr. Trump could most likely make his political decisions based on his position and experience as a businessman and a dealmaker than pursue his campaign rhetoric

He will most likely treat the US economy similar to USA Inc.  But the difference is that his experience based on privately owned firms has been about profit and losses, while the political economy via the latter isn’t.

So he should be expected to make many alterations in decisions, especially since he has ZERO experience in politics.

Yes, four of Mr. Trump’s firms experienced bankruptcies. So whether he will use this experience to avoid a bankruptcy (through less debt) or be attracted to (and gorge on) debt is something we will find out. The latter seems to be the propensity.

And as I wrote last weekend, Mr. Trump anti-establishment image may just be a mirage. If so, his actions will be rooted on pleasing several special interest groups—which entails more compromises (or logrolling).

Finally, let me put a short economic perspective on the deportation issue. There is said to be some 11.1 million illegal immigrants, according to Pew Research. Illegal immigrants earn something like $36,000 a year (median household income) which is below US born residents at $ 50,000 according to another Pew Research (2009).

To simplify matters, let us say illegal immigrants earn about $399.6 billion a year (36K x 11.1 million). While most are consumed in the US, some are sent back to their home countries. The US accounted for 23% or US 133.5 billion of US $582 billion of external remittance flows in 2015, according to another Pew Research data

Let me construct a hypothetical scenario. Should Mr. Trump successfully deport all 11.1 million in a month, then this means US domestic consumption anchored on the $400 billion will evaporate. This also means that the final consumption financed by remittances sent by illegal immigrants would also cause dislocations at remitter’s home economy.

So US domestic economy will be affected. Additionally, dislocations from the cessation of remittances will also impact recipient economies even more.  And since deportees will have no jobs or jobs with less income when they return to their homelands, they will add to the economic and social burdens from such disruptions. Or the former illegal immigrant and recipient of their remittances will experience income shortages. So aside from the US, the global economy will likely suffer.

And this excludes other effects like disruptions on the division of labor, credit issues and other social concerns (e.g. business sentiment).

And what if a terror event occurs; will the ‘far right/nationalist’ Mr. Trump expand his coverage to include even those with legal documents?

Some will say that reduced labor pool will cause US wages to rise. That may be true only if demand for US products remain unaffected. But this won’t be true. Dislocations will not only affect demand but also spilloverto supply (whether for exports or for domestic consumption). Whatever higher wages (for some) that accrue from a reduced labor pool would only diminish profits for enterprises and disposable income for the employers (including informal employers say household employing babysitters).

Moreover, Mr. Trump’s proposed infrastructure spending’s impact will be localized and have long term effects compared to deportation whose impact will be immediate.

And there’s the political impact, Mr. Trump will need bigger bureaucracy and support from states. Yet several cities has been reported to resist such immigration policy

So whom will Mr. Trump be a threat to if he rigorously applies this? Well the answer is he will first be a menace to the Americans—his constituents. Then he would be a threat to the world. The last would be the 271,000 Philippine illegal immigrants.

Will Mr. Trump’s USA Inc. benefit from such undertaking? The answer is NO. So while Mr. Trump may build his walls, the implementation may be for symbolism purposes. He is most likely to ease with his hardline stance on immigrants and focus only on select groups.

Again I expect Mr. Trump’s business perspectives to prevail.

The reality is that the crashing BOOM BOOM BOOM assets have only incited such absurd pseudo-economic uproar.

This means that the kernel of the threat will hardly emerge from Mr. Trump, but from economic sophistry founded on bubble or BOOM BOOM BOOM psychology.

 

7.1% GDP? Bond markets don’t seem to agree or have not been persuaded.  Philippine credit default swaps (CDS) via Deutsche Bank, or the cost to insure Philippine debt has risen to near January highs. As I havewritten earlier, a sustained rise by CDS past the January highs will likely spur downgrades.

So Philippine government needs to churn out more and more POSITIVE news… or else!

Oh by the way, the USD peso closed today at 49.56—that’s almost at 2008 highs (49.99 November 20, 2008, actually my yearend target).

Example of Ochlocratic (rule of mob) Governance

If there is anything that can be expected from the present leadership, it is the penchant to use trial by publicity or appeal to masses to resolve even intergovernment or administrative gridlocks.

From Manila Times:

President Rodrigo Duterte on Monday lashed out at officials of the Bangko Sentral ng Pilipinas (BSP) and the Anti-Money Laundering Council (AMLC) for being “hard to deal with” and for protecting money launderers.

In his speech during the 80th founding anniversary of the National Bureau of Investigation, Duterte told the BSP and AMLC officials to cooperate with his administration or he will look into their shortcomings. 

“The Secretary of Justice now says that you are hard to deal with. You better go to the Secretary of Justice or I will go to you. I will call for you and you have to answer so many questions to me,” the President said. 

“You choose, either we cooperate in this government as a Republic to protect and preserve our people or do not make it hard for us, otherwise I will make it hard for you,” he added.

Phone call/s or meeting/s could have been an option for resolution or agreement for both the executive branch and the supposed independent political agencies. Apparently, this hasn’t been the case.

I have a different interpretation of this than what has been projected from the above. By appealing to the masses through the stepping on the toes of the BSP and AMLA, the leadership appears to exert dominance on such institutions for them to submit to his total control. Or, the leadership wants to portray himself as morally upright. And popularity will thus be used as the instrument to exercise control over these institutions. Crowd popularity over institutional matrix management.

Eventually, it means the BSP’s (and AMLA’s) pandering to the leadership’s whims. This also postulates that supposed “independence” by the BSP will be exposed for what it is.

For example, the president in the future might say “More money is needed for my political projects”. Cowed by the leadership’s intimidation, the BSP’s responds “Ok sir, well just print money for you”!

This should be a wonderful example of ochlocratic (rule of the mob) governance.