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Mind Blowing Economic Charts – First Time Claims, The Stock Market, and The Fed

Improvement in first time unemployment claims is slowing. Actual, not seasonally manipulated data, including an adjustment for the usual weekly upward revision, shows that the year to year rate of change is on the cusp of a possible upside breakout, which would be good news for stock market bears if it happens.

Here’s why it’s mind blowing. I’ve plotted it below on an inverse scale with the S&P 500 overlaid.

Unemployemt Claims and Stock Prices - Click to enlarge

Unemployemt Claims and Stock Prices - Click to enlarge

That speaks for itself. As the improvement in claims has slowed, so have the gains in stock prices.

What’s the Fed’s role in all this? The chart below illustrates. As I have told my subscribers for years, the Fed triggered both the financial crash and the economic collapse when it pulled cash out of its System Open Market Account to fund the direct bailouts of AIG, Goldman Sacks and Pillages, Citi, DoucheBank et. al. Doing that crushed Lehman and other shaky Primary Dealers. Great for the ones that got the free money, bad for everybody else, especially working people and old retired people with a few bucks in savings. Yes, the depression would have happened anyway. The Fed just made it happen faster, more violently, and worse than it would have been, by transferring wealth from middle class workers and savers to the Lloyd Blankfiends and Jamie Demons of the world.

Unemployment and The Fed Chart- Click to enlarge

Unemployment and The Fed Chart- Click to enlarge

Lately, the Fed has gotten away with not growing its balance sheet because it is continuing to surreptitiously fund, cash out, and prop up the Primary Dealer casinos that own the Strip, …oops… the Street, to the tune of $30 billion a month in MBS buys. As long as it has done that, the layoffs and firings have continued to slow. There is zero chance that Fed will end this program in June because it knows what happens when it lets its balance sheet shrink, which it would if the MBS purchase end. Twist, the Treasury swap program is just a sideshow. The real game is the MBS replacements. That show must go on.

The Fed saw in the second round of QE that the trickle down theory of pimping the stock market to get the economy going just wasn’t paying the desired returns employment wise, and it was giving the old white farts around the table heartburn and gas because of the runaway rise in energy and commodity prices that it was causing. They denied responsibility. But we knew.

So Ben decided that it was time for the FOMClub to sit on their fat cat asses and just quietly keep feeding their Primary Dealer godfathers while continuing to starve all the little old retirees with a few bucks in a savings account. Oh, that’s right. Nothing left! As Paul Krugman says, ZIRP doesn’t matter because seniors live on Social Security, not savings.

That’s because they were forced to spend it all, you smug, clueless, craven, conscienceless intellectual fraud.

So there you have it, a couple of charts of the slings and arrows outrageous fortune, and the out of left field barbs that go with them when I get on a roll.

Until next time… with love.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 


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