The Case for Unemployment
Unemployment is tricky. You just cannot announce high unemployment. The political damage is too much to take. But unfortunately, the time comes when unemployment just increases...
Every sane person would want the economy to remain calm for as long as possible. This is not sinister or bad.
After all, it is in the duty of Governments and Central Banks to keep our daily lives as calm and peaceful as possible.
Bad unemployment data is inherently bad. It is worse than bad inflation data. So it is always a tricky situation...
After the inflation chaos, calm has return to the financial world. Volatility and inflation is lower, equities are higher! So all is well!
Not only inflation is lower, but also unemployment! With an ultra-low rate of 3.4%. News just couldn't be better!
Initial claims is also breaking down, signaling better days ahead...
After all, low unemployment is good! Right?
Not so fast fella!
Low unemployment is good for, well, employees! But it is bad for corporations! Finding skilled personnel is incredibly hard. So much so, that most companies underperform. They just can't grow!
I believe that unemployment does not necessarily break the economy. And the economy does not necessarily break the unemployment. It is a mixed bag... Sometimes, businesses benefit from high unemployment. If the antagonists fail, others get their workers, and most importantly, the piece of the pie! Some companies grow while others fail...
Believe it or not, low unemployment is risky. Especially when it is in a 54 year low... It just cannot go lower!
Recent unemployment data is perfect. However, Continuous Jobless Claims (USCJC) may give us a new perspective...
It is at times like these when we see conflicting data. Continuous Claims increase while unemployment rate is decreasing.
At that period, the official unemployment rate was making lower lows!
This is deeply concerning. Especially when it is eerily similar to 2020. Perhaps it is a shift of balance right before a crisis.
Perhaps a period when long-term employees lose their jobs since companies attempt to cut down costs. Instead, they hire less skilled workers with lower wages, perhaps for part-time jobs. This may be the last attempt of companies to stay afloat. It is also the last attempt for families to stay afloat. High food prices necessitate work at all costs, no matter how low...
A crisis may be brewing... A Black Swan one, just like 2020.
The Big Tech bubble is literally hollow, full of derivatives aka weapons of mass destruction.
And the scale and the ramifications of such a crisis are still unknown.
(By inflation pressure I mean the amount of work the FED does to fight inflation. While this chart increases, inflation gets out of hand)
Perhaps all of this is meaningless. Only time will tell what will happen... WW3 commence I guess?
Tread lightly, for this is hallowed ground.
-Father Grigori
Every sane person would want the economy to remain calm for as long as possible. This is not sinister or bad.
After all, it is in the duty of Governments and Central Banks to keep our daily lives as calm and peaceful as possible.
Bad unemployment data is inherently bad. It is worse than bad inflation data. So it is always a tricky situation...
After the inflation chaos, calm has return to the financial world. Volatility and inflation is lower, equities are higher! So all is well!
Not only inflation is lower, but also unemployment! With an ultra-low rate of 3.4%. News just couldn't be better!
After all, low unemployment is good! Right?
Not so fast fella!
Low unemployment is good for, well, employees! But it is bad for corporations! Finding skilled personnel is incredibly hard. So much so, that most companies underperform. They just can't grow!
I believe that unemployment does not necessarily break the economy. And the economy does not necessarily break the unemployment. It is a mixed bag... Sometimes, businesses benefit from high unemployment. If the antagonists fail, others get their workers, and most importantly, the piece of the pie! Some companies grow while others fail...
Believe it or not, low unemployment is risky. Especially when it is in a 54 year low... It just cannot go lower!
Recent unemployment data is perfect. However, Continuous Jobless Claims (USCJC) may give us a new perspective...
It is at times like these when we see conflicting data. Continuous Claims increase while unemployment rate is decreasing.
This is deeply concerning. Especially when it is eerily similar to 2020. Perhaps it is a shift of balance right before a crisis.
Perhaps a period when long-term employees lose their jobs since companies attempt to cut down costs. Instead, they hire less skilled workers with lower wages, perhaps for part-time jobs. This may be the last attempt of companies to stay afloat. It is also the last attempt for families to stay afloat. High food prices necessitate work at all costs, no matter how low...
A crisis may be brewing... A Black Swan one, just like 2020.
And the scale and the ramifications of such a crisis are still unknown.
Perhaps all of this is meaningless. Only time will tell what will happen... WW3 commence I guess?
Tread lightly, for this is hallowed ground.
-Father Grigori
Comment:
One note about the Big Tech Bubble:
- As money is created from thin air (borrowing cheap and lending expensive), the difference is invested in stock market, bubbling it up. This process is relatively slow and steady. This is only possible in periods of QE (1980-2020)
- In periods of progressively higher yields, this method of thin-air money creation is impossible. Derivatives are the only option. As money gets scarce, there is high incentive of withdrawing that money from the stock market. To prevent equity downside, the removed money are replaced with cheap derivatives, bubbling up the stock market. This process is fast and unstable. This is occuring in the post 2020 world (QT).
- Curiously, the derivative bubble may have just begun. Who knows how high or how low equities might get. Perhaps this simplistic idea might make sense after all.
The crash happens when nobody expects it to. Perhaps when equities go actually parabolic. Parabolic equities is a byproduct of extreme inflation.
Since equities usually surpass the inflation rate, there is high incentive of keeping the equities growing fast in an inflationary environment. High equity prices doesn't necessarily mean wealth-creating. No matter how severe the NDQ bubble might get, the growth of Bitcoin looks like it will surpass it.
- As money is created from thin air (borrowing cheap and lending expensive), the difference is invested in stock market, bubbling it up. This process is relatively slow and steady. This is only possible in periods of QE (1980-2020)
- In periods of progressively higher yields, this method of thin-air money creation is impossible. Derivatives are the only option. As money gets scarce, there is high incentive of withdrawing that money from the stock market. To prevent equity downside, the removed money are replaced with cheap derivatives, bubbling up the stock market. This process is fast and unstable. This is occuring in the post 2020 world (QT).
- Curiously, the derivative bubble may have just begun. Who knows how high or how low equities might get. Perhaps this simplistic idea might make sense after all.
Since equities usually surpass the inflation rate, there is high incentive of keeping the equities growing fast in an inflationary environment. High equity prices doesn't necessarily mean wealth-creating. No matter how severe the NDQ bubble might get, the growth of Bitcoin looks like it will surpass it.
Comment:
Breakout of tiny triangle, and successful retest.
Scary...
Guess the move!!