Labor Market Continues To Deteriorate: Job Openings Tumble, Fewest Hires Since 2014

While many will be quick to ignore the May JOLTS report, due to its one-month delay behind the payrolls data and coinciding with an abysmal month when the US added only 11K seasonally-adjusted jobs, it does reveal several troubling points. First and foremost is that while Wall Street – which was already aware of the June payrolls number  – was expecting the number of job openings to decline modestly from 5.788MM, the drop was far steeper, albeit from an upward revised 5.845MM, sliding to 5.5MM, the lowest number of job openings since February, and the biggest monthly drop since October.

 

It wasn’t just job opening which disappointed in May: so did the far more important, in our opinion, number of hires. In May, the BLS reported that the number of total hires was only 5.036MM, the third month in a row of declines, and the lowest print since November 2014 as suddenly employers clamped down on new (seasonally-adjusted) hiring.

 

The Hires series is important because historically it has been a good concurrent indicator of the trend in cumulative annual total payroll changes, although in this cycle something has broken, as the char below shows. That something is the Beveridge curve, shown below. However, no matter the breach in correlation, the recent slide in hiring is hardly a favorable outcome for the US jobs market.

 

Naturally, the flipside to reduced hiring at a time when overall payrolls are still rising, is a reduction in separations, and indeed in May, the number of total separations dropped from 5.015MM to 4.952MM, which meant that the Net Turnover between additions and separations was +84K in May, well above the total payrolls increase reported in the month of May of only 11K.

And then there is the “quits” series, or as Nick Colas from Convergex puts it, the “take this job and shove it” indicator. This too showed a troubling decline, and at just 2.895MM in people quitting in May, this was the lowest monthly print since January, suggesting that workers had less confidence in their ability to find a job, and thus prompted them to quit in smaller numbers.

 

Finally we conclude with our favorite chart which encapsulates all the trends revealed in the JOLTS report, namely the Beveridge Curve, which sadly continues to be broken. This is the BLS’ explanation:

  • The graph plots the job openings rate against the unemployment rate. This graphical representation is known as the Beveridge Curve, named after the British economist William Henry Beveridge (1879-1963). The economy’s position on the downward sloping Beveridge Curve reflects the state of the business cycle.
  • During an expansion, the unemployment rate is low and the job openings rate is high. Conversely, during a contraction, the unemployment rate is high and the job openings rate is low. The position of the curve is determined by the efficiency of the labor market. For example, a greater mismatch between available jobs and the unemployed in terms of skills or location would cause the curve to shift outward (up and toward the right).
  • From the start of the most recent recession in December 2007 through the end of 2009, the series trended lower and further to the right as the job openings rate declined and the unemployment rate rose. From 2010 to the present, the series has been trending up and to the left as the job openings rate increased and the unemployment rate decreased.
  • I6, the unemployment rate was 4.7 percent and the job openings rate was 3.7 percent. This job openings rate corresponds to a higher unemployment rate than it did before the most recent recession.

Source: BLS

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This Is What Hillary Clinton’s Advisors Really Think Of The American Public

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Back in 2014, we received confirmation of what politicians and their “very smart” advisers think of the American public. Namely, that we’re a bunch of stupid slobs who need to be tricked into agreeing to elitists legislation that always ends up working against us. I’m specifically referring to comments from Obamacare architect Jonathan Gruber exposed in the post, Video of the Day – Obamacare Architect Credits “Lack of Transparency” and “Stupidity of the American People” for Passage of Healthcare Law. Here’s some of what we learned:

An architect of the federal healthcare law said last year that a “lack of transparency” and the “stupidity of the American voter” helped Congress approve ObamaCare.

 

He suggested that many lawmakers and voters didn’t know what was in the law or how its financing worked, and that this helped it win approval. 

In case you’re wondering whether or not Hillary Clinton’s advisers harbor similar contempt for the American public, let the following Facebook post from Robert Reich dispel any confusion:

An acquaintance from my days in the Clinton administration, who has been advising Hillary, phoned this morning.

 

ACQUAINTANCE: “Don’t you think your blog post from last night was a bit harsh?”

 

ME: “Not at all. The Democratic Party is shooting itself in the foot by not officially opposing the Trans Pacific Partnership.”

 

ACQ: “But you know why. The Party can’t take a stand opposite the President’s. He’s the leader of the Party, for chrissake. And he wants the TPP.”

 

ME: “Yeah, because he sees the TPP as a way to limit China’s economic influence. So he made a Faustian bargain with big global corporations who want more protection for their foreign investments. But he’s wrong. The TPP won’t crimp China. Global corporations will give China whatever it wants to gain access to the Chinese market. The TPP ….”

 

ACQ: “Look, it doesn’t matter what you or I think. The President wants the TPP, and the Party isn’t going to oppose him.”

 

ME: “You mean Hillary won’t oppose him.”

 

ACQ: “Hillary won’t, and Debbie [Wasserman Schultz] won’t, and neither will Nancy [Pelosi] or Harry [Reid] or Dick [Durbin] or Chuck [Schumer].

 

ME: “But it’s terrible policy. And it’s awful politics. It gives Trump a battering ram. Obama won’t be president in six months. Why risk it?”

Now here’s how extraordinarily dismissive and contemptuous of the American public Hillary Clinton’s people really are.

ACQ: “They don’t see much of a risk. Most Americans don’t know or care about the TPP.”

 

ME: “But they know big corporations are running economic policy. They think the whole system is corrupt. Believe me, Trump will use this against Hillary.”

 

ACQ: “He can’t. She’s inoculated. She’s come out against the TPP.”

 

ME: “But it’s her delegates who voted not to oppose it in the Democratic platform. Her fingerprints are all over this thing.”

 

ACQ: “I think you’re being too cynical.”

 

ME: “Actually, the real cynic is you.”

Just in case you remain confused, let’s not forget what we learned in the following posts:

Where Does Hillary Stand on the TPP? 45 Public Statements Tell You Everything You Need to Know

Obama Administration Delays Release of Hillary Clinton TPP Emails Until After the Election

Hillary Clinton is and always has been in favor of the TPP, despite what she’s saying to get elected. If you don’t get that, you’re as dumb as her advisors think you are.

So is the rest of the Democratic Party, by the way. As the New York Times reported:

Amid boos from the sidelines, allies of Hillary Clinton and President Obamaon Saturday beat back an effort by the Bernie Sanders campaign to have the Democratic Party officially oppose a congressional vote on the Trans-Pacific Partnership trade deal.

 

At a sometimes-raucous meeting in Orlando, Fla., of the party’s platform committee, which is drawing up policy goals for the Democratic National Convention this month, lieutenants of Mr. Sanders argued that the trade deal would lead to a loss of jobs and competitive wages and that it would ultimately harm American workers and labor unions.

 

But given Mrs. Clinton’s need to unite the party, and Mr. Sanders’s desire to defeat the presumptive Republican nominee, Donald J. Trump, Mr. Sanders may ultimately choose not to mount a distracting and divisive war on the convention floor over trade.

What’s the big deal. Just another agreement to further annihilate the U.S. middle class. “Unity” is more important.

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Wholesale Inventories-To-Sales Holds At Recessionary Highs

Following an upwardly revised April 0.7% rise in inventories, May saw yet another build (+0.1% MoM) but for once sales outpaced it with a 0.5% MoM gain. However, inventories remain 0.5% higher YoY with sales down 2.5% leaving the inventories-to-sales ration hovering at 1.35x – previous recession highs.

Inventories continue to rise and sales drop…

 

leaving inventories-to-sales at recessionary peaks…

 

Of course Bernanke’s helicopter money will fix all this right? Or will corporations front-run the exuberance and overbuild the wrong inventories again?

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Loretta Lynch Defends “The Disturbing Politicization Of The Justice Department” – Live Feed

The U.S. Justice Department's Attorney General, Loretta Lynch, has already released her written statement that she will deliver in person to the House Judiciary Committee at 10:00 a.m. this morning. As WallStreetOnParade's Pan and Russ Martens point out, it says nary a peep about the private, half-hour meeting with Bill Clinton that she held on her plane on the tarmac in Phoenix just eight days before her FBI Director, James Comey, would hold a surprise press conference and opine that no responsible prosecutor would bring criminal charges against Hillary Clinton, while Comey simultaneously fleshed out a boatload of falsehoods that Hillary Clinton had told to the American people about her handling of Top Secret and other classified material.

In announcing today’s hearing, House Judiciary Committee Chair Bob Goodlatte said, in part:

“…the recent announcement by FBI Director Comey that he does not recommend criminal charges be brought against Hillary Clinton for her mishandling of classified information raises serious concerns. It is uniquely troubling in light of Attorney General Lynch’s secret meeting with former President Bill Clinton. No one is above the law and the American people need to know that federal law enforcement is taking this misconduct seriously.”

Yesterday, news broke at the wire services that the Washington Post and ABC News had conducted a poll that found that 56 percent of Americans disapprove of FBI Director Comey’s recommendation against bringing charges against Hillary Clinton. Only 35 percent approve. Equally problematic for Clinton, an even higher percentage of Independents disapproved of Comey’s action (59 percent). With so many Independents on the fence about voting for Trump, losing the confidence of Independents could be a major blow to Democrats if Clinton is the Democratic Party’s nominee.

Read the full text of Attorney General Loretta Lynch’s statement prepared for the House Judiciary Committee hearing.

Chairman Goodlatte's full statement: GOODLATTE: CLINTON `POSSIBLY JEOPARDIZED' OUR NATION

“At the oversight hearing, members of the House Judiciary Committee will examine several issues facing the Justice Department, ranging from recent terrorist attacks in Orlando and San Bernardino to technological advances and their impact on law enforcement activities. We will also seek information about the disturbing politicization of the Justice Department under the Obama Administration, including the Department’s involvement in crafting the New Orleans Police Department’s sanctuary policy and its use of mortgage settlements to funnel money to third-party activist groups.

 

“Additionally, the recent announcement by FBI Director Comey that he does not recommend criminal charges be brought against Hillary Clinton for her mishandling of classified information raises serious concerns. It is uniquely troubling in light of Attorney General Lynch’s secret meeting with former President Bill Clinton. No one is above the law and the American people need to know that federal law enforcement is taking this misconduct seriously.

 

“I look forward to hearing from Attorney General Lynch and learning more about how she and the Justice Department are addressing these important issues.”

Live Feed (due to start at 10amET)…

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But How Would You *Know* if LP Prez Nominee Gary Johnson Used Pot?

Last week, Libertarian Party presidential nominee Gary Johnson and his running mate William Weld held a press event at the National Press Club in Washington, D.C. Here’s part of what they discussed, courtesy of The Wall Street Journal:

[Press Club President] Thomas Burr: …Do you worry about being perceived as a spoiler to the major party candidates such as Ross Perot in ’92 or Ralph Nader in 2000?

Gary Johnson: I will lose no sleep if that is the label given to me, and I will reiterate; this is a party that needs crashing.

William Weld: What’s to spoil?

Mr. Johnson: What’s to spoil? (Applause) . . .

Mr. Burr: Governor Johnson, we’ve had several questions submitted about this, so I’m just going to ask it. When was the last time you smoked or ingested marijuana?

Mr. Johnson: I did this about two months ago, it’s been about two months. And when you tell the truth, really, you don’t have anything to fear. I’ve always maintained that you shouldn’t be on the job impaired. Well, as of two months ago, really this is a 24/7 job running for president of the United States. And as president of the United States, that is also a 24/7 job. So, in my lifetime, I think I have more than demonstrated my ability to be self disciplined. I haven’t had a drink of alcohol in 29 years. I wasn’t an alcoholic, it had everything to do with rock climbing and the immediacy of rock climbing and being the best that you could possibly be. But this is the truth component that I think is really also lacking in politics.

Who would know that I ingested marijuana products two months ago? My best friends and if I’d have said, “Hey, I don’t use it, or I haven’t used them,” my best friends would consider me a hypocrite. And I think hypocrisy is the one unforgivable in life. Doing one thing and saying another. (Applause)

More here.

There are at least two remarkable things in the exchange above.

First is the simple, direct honesty of a politician admitting not that he used pot way, way, way back in his student days when he didn’t really inhale and then he never tried it again but that he was a regular, responsible user of a mild intoxicant whose legalization is supported by 58 percent of adult Americans.

God, when you put it that way, why is any courage necessary? Legalizing pot is wildly popular and getting more so. Yet few pols will cop to using. Indeed, it is nothing less than sad-making that well into the 21st century, so many officials are afraid to acknowledge any sort of illicit drug use (unless they are doing so as part of a mea culpa or to humble-brag that they’ve been clean and sober for X number of years). The prohibition of marijuana isn’t simply a personal choice, it’s an institutional decision that undergirds so much that is wrong with the war on drugs, criminal justice, education, and even foreign policy. It’s progress that, as Jacob Sullum notes, that all four presidential candidates (Hillary Clinton, Donald Trump, Jill Stein, and Johnson) support letting states decide the legal status of pot. But even as it seems likely that California and other states will legalize recreational pot use in November, we’ve got miles to go before we can sleep, safe and secure in knowing that the drug war is actually over.

The second remarkable thing? Johnson, a former two-term Republican governor of New Mexico, is normalizing the image of a pot user like no politician before him. Sure, he may seem, as John Stossel contends, a bit “sleepy” at times but it’s not because he’s high all the time. It’s because he’s a rock climber and a one-time competitive skier and from Colorado and New Mexico, places filled with folks who talk and sound just like him regardless of use. Among the most-important barriers to widening the range of legal intoxicants is the persistent notion that people who use “bad” or “illicit” drugs are different from you and me. At various points in its long and tortured history, marijuana has been associated with various out-groups, such as Mexicans, blacks, musicians (jazz men, rockers, and now rappers), youth, et al. Johnson helps to flip that script by being generally and genuinely presentable. He’s not the second coming of Scooby-Doo‘s Shaggy or a Cheech & Chong character. He speaks eloquently about the control he exercises over his drugs of choice and his own body. We should all look so fit at 63 years old.

Ending the war on pot—or even the larger war on drugs—won’t solve all or perhaps even that many of America’s problems. But it will make this country a better place to live, and a fairer one to boot. That it’s taking us well into the 21st century is to our collective shame. And that it’s a third-party candidate leading the charge is to the shame of the Democrats and Republicans, even as that backward-looking sluggishness helps to explain why people are evacuating those parties as if the cops just showed up at the front door.

Related: “3 Reasons to Legalize Pot Now!” (2010)

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Why Libertarians Should Be Wary of Brexit ‘Victory’: New at Reason

Many American libertarians have lauded British voters’ decision to leave the European Union. After all, any blow to such a federal structure must be good for liberty, right? Not so fast, writes Johan Norberg. Many European libertarians view Brexit as a dangerous blow to openness and free trade that removes one of the strongest voices against E.U. centralization from the negotiating table in Brussels.

View this article.

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Despite Medical Marijuana, Pot Smell Justifies Searches in Arizona

In a pair of cases decided yesterday, the Arizona Supreme Court ruled that the smell of marijuana still generally supplies probable cause for a search in that state, nothwithstanding the legality of medical use. Since the Arizona Medical Marijuana Act (AMMA) allows possession and cultivation only for people who meet specified conditions, the court reasoned, “the odor of marijuana in most circumstances will warrant a reasonable person believing there is a fair probability that contraband or evidence of a crime is present.”

One of the cases involved Ronald Sisco, whose indoor growing operation at a Tucson storage facility was discovered in 2013 after police obtained a warrant based on “a strong odor of fresh marijuana.” The other case involved Ian Cheatham, whose car was pulled over in 2013 based on suspicion of illegal window tinting and searched based on a “pretty strong” odor of burnt marijuana emanating from the vehicle, in which police found a small amount of pot under the driver’s seat. Both defendants argued that in light of AMMA—which allows a patient with a state-recognized “debilitating medical condition” and a doctor’s recommendation to possess up to two-and-a-half ounces of marijuana and to grow up to 12 plants at home if he lives more than 25 miles from the nearest dispensary—what used to be incriminating smells no longer suffice to justify a search. The court disagreed (citations omitted):

AMMA did not decriminalize the possession or use of marijuana generally….Instead, AMMA makes marijuana legal in only limited circumstances. Possession of any amount of marijuana by persons other than a registered qualifying patient, designated caregiver, or medical marijuana dispensary agent is still unlawful, and even those subject to AMMA must strictly comply with its provisions to trigger its protections and immunities. Thus, when an officer detects marijuana by sight or smell, the “degree of suspicion that attaches” remains high, notwithstanding AMMA. A reasonable officer is therefore justified in concluding that such sight or smell is indicative of criminal activity, and thus probable cause exists.

The court added that other considerations, such as the presentation of a patient ID card issued by the Arizona Department of Health Services, might negate what would otherwise be odor-based probable cause. “Because probable cause is determined by the totality of the circumstances, and marijuana possession or use is lawful when pursuant to AMMA,” it said, “a reasonable officer cannot ignore indicia of AMMA-compliant marijuana possession or use that could dispel probable cause.” Neither Sisco nor Cheatham was a state-registered patient.

If Arizona did “decriminalize the possession or use of marijuana generally,” the court noted, “our analysis and conclusion in this context might well be different.” Courts in Alaska and Massachusetts have ruled that decriminalization means the smell of pot by itself is no longer provides probable cause for a search. An initiative that is expected to be on Arizona’s ballot in November would legalize the production, distribution and possession of marijuana for recreational use.

A lawsuit filed yesterday by Maricopa County Attorney Bill Montgomery and other prohibitionists seeks to block that initiative. Among other things, the plaintiffs argue that the initiative summary presented to petition signers is legally indadequate and that the measure violates the state constitution’s Gift Clause by giving licensing preference to current operators of medical marijuana dispensaries.

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Five Arrested After Shooting At D.C. Police Officers

The shootings continue. 

According to AP, Police arrested five people for allegedly shooting at officers in Washington, D.C., early Tuesday before barricading themselves inside a vehicle. No injuries were reported. The good news is that the group allegedly fired at police to avoid arrest, not as part of a targeted attack on cops, a police official told The Washington Post.

As Fox adds, officers in marked police cruisers were responding to reports of gunshots just after midnight in southeast Washington, D.C., near Martin Luther King Elementary School, when the cops were shot at by people inside an SUV, police spokesman Dustin Sternbeck said.

Police came under fire near this elementary school in Washington, D.C.

Police returned fire at the suspects, who barricaded themselves in the vehicle, Sternbeck said. Officers ordered the group to come out, but they refused.

Unlike the Dallas shooting incident, no drone would be needed, however, and after about 30 minutes, three women and two men in the SUV surrendered to authorities. None of the five had been publicly identified as of Tuesday morning.

The investigation will include whether the individuals who were arrested may have been involved in any other crimes before police arrived.

Police were initially alerted to the area by the ShotSpotter system, WTOP reported. ShotSpotter uses sensors to detect gunfire around the city and then notifies authorities if anything is picked up.

Tuesday’s incident follows protests over police shootings of black men in Louisiana and Minnesota and the fatal shooting of five police officers by an anti-cop, anti-white assailant in Dallas last week.

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It’s Official: Bernanke Urges Japan To Unleash Helicopter Money

As previewed last week in “Something Big Is Coming: Bernanke To “Secretly” Meet With Kuroda; “Helicopter Money” On The Agenda“, the week’s key event, albeit behind closed doors, was the surprising meeting between Ben Bernanke and the BOJ’s Kuroda as well as Japan’s prime minister Abe. The outcome of the meeting has been, as we expected, nothing short of a whirlwind reaction in markets where speculation that Japan is set to become the first nation to openly espouse “helicopter money”, or central bank funded fiscal policy stimulus, has seng the Yen plunging (at least check the USDJPY was above 104), the Nikkei soaring and unleashed a global “risk on” wave.

But what was actually said? Since the meetings were held in private, nobody will ever know, although one can infer based on the upcoming actions by the BOJ and the Japanese Ministry of Finance, both of which are expected to boost monetary and fiscal stimulus, respectively, in the coming weeks, with Japan expected to unleash a new fiscal stimulus of around JPY 10 trillion or more. As such, we have to rely on heavily filtered and watered down official interpretations of what the Citadel analyst and Brookings blogger told the BOJ.

According to the WSJ, the former Federal Reserve Chairman Ben Bernanke rejected the notion that the Bank of Japan is short of ammunition when he met with Prime Minister Shinzo Abe Tuesday. Bernanke noted during the face-to-face meeting that Japan’s central bank still has a range of monetary easing measures at its disposal, according to Chief Cabinet Secretary Yoshihide Suga.

This contradicts BOJ executive director, Kazuo Momma, who just yesterday said that the Bank of Japan will need to reduce the pace of its record purchases of government debt as it is approaching the limits of the bond market. “Of course they can’t keep stacking up 80 trillion yen ($784 billion) of bonds forever,” said Kazuo Momma, who worked at the BOJ until the end of May. “They are aware they are nearing the limit, whether that is now or later.”

“With that awareness, it’s not impossible that they will increase the pace from 80 trillion yen to 100 trillion yen or 120 trillion yen, but it’s incredibly difficult,” he said in an interview on Monday in Tokyo. “Based on common sense, you’d think they’d start considering reducing the pace a little bit in the near future.”

Alas, common sense was never Bernanke’s strong suit who according to rumors urged the BOJ to do precisely the opposite, namely monetize even more debt, however since the BOJ is indeed running out of bonds to buy, it would need to government’s assistance and issue even more debt, ostensibly to fund “infrastructure projects”, which would then be promptly monetized by the central bank.

Sure enough, Bernanke recommended the BOJ coordinate its policy with fiscal measures aimed at shoring up Japan’s economic output to end over a decade of deflation, according to Mr. Suga.

Bernanke refused to speak to reporters following the talks at Mr. Abe’s office. The meeting lasted for a half-hour. 

Brushing aside a view among Japanese economists that BOJ policy has reached its limit, Mr. Bernanke’s assessment added to speculation that Tokyo will unleash new rounds of fiscal and monetary stimulus to reboot Abenomics, Mr. Abe’s growth plan. 

 

Mr. Bernanke visited Tokyo at a time of intense speculation that Mr. Abe may resort to so-called “helicopter money,” a radical form of monetary easing advocated by the former Fed chief. The strategy involves a central bank directly financing government spending or tax cuts. Japan once implemented the measure in the 1930s-40s and ended up stoking sky-high inflation.

But despite Bernanke’s insistence to keep his mouth shut about what transpired during his historic meeting, the answer leaked out anyway: Koichi Hamada, a close adviser of the prime minister, said Mr. Bernanke may have discussed helicopter money with Japanese officials he met with during his visit, including BOJ Gov. Haruhiko Kuroda and Ministry of Finance policy makers. Hamada, a Yale University professor, attended Tuesday’s meeting with Bernanke and Abe.

As a reminder, Mr. Bernanke said in a blog in April that monetization by a central bank could be the “best available alternative” under extreme circumstances, for example when demand is very weak but a central bank is out of ammunition and parliament is unwilling to rely on borrowed spending.

And just like that, the final phase of monetary policy – incidentally a very familiar one to the Weimar Republic – is about to begin, with helicopter money first coming to Japan, to be tried out as a trial balloon, and then everywhere else.

 

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