US job openings jump; SME optimism returns; OECD sees good outlook; China still gets strong real estate growth; Indonesia slipping; Aussie AML claims widen; UST 10yr yield at 2.28%; oil and gold unchanged; NZ$1 = 73.3 US¢, TWI-5 = 75.9

I recall talking to an employee of the CBA/ASB anti-laundering unit last year and he told me the laundering situation was rife throughout Australasia, particularly Australia.

"despots seem to be gaining the upper hand against their people"
" It is open season now that the US has withdrawn from international engagement in support of democracy."
Sad

Score - Money Launderers 100 - Austrac 10 - RBNZ 0

Anyone who thinks money-laundering "hasn't been" happening in NZ is deluded
Scandals galore in the Oz banks which seemingly aren't scandals in NZ
If the scams worked so well for the Oz parents you think they didn't do the same here
Where do you think CBA CEO Ian Narev got his training wheels from
Where did ex CBA Chairman Ralph Norris get his stripes

And the OECD is also reporting good conditions among its seven major members. They also survey four major non-members. They are saying that growth momentum is being maintained in most countries, improving in China, and declining in Russia. [my emphasis]

Hmmmm.... Re China;

Total exports were, as of now, 8% less than those in July 2014 three years ago. That is not expansion in any meaningful sense of the word, a distinction that gets lost in the focus on the plus sign at the expense of the degree of it in relation to context.

This is more than just a historical oddity. It tells us what to expect in the near future and how that could further evolve according to a more reasonable analysis of the global economic trend. The lack of momentum as well as the lack of success in inflation are together indications of the same thing. The trade figures tell us of a persistent economic drag that won’t go away even after heavy cyclical forces on the upturn should have been evident long before now.

The inflation piece merely indicates what it is that is causing the drag. This is all textbook monetary tightness, which unfortunately has been corrupted in mainstream, conventional terms. The popular imagination assigns October 1929 to March 1933 as the only possible result of such tightness, therefore if the global economy and every single market is not all at once experiencing a great crash a monetary issue is immediately overlooked and dismissed.

Milton Friedman, the presumed father of monetarism, described how this was a false assumption in the course of destroying (as the kids say) the idea that low rates are somehow stimulus. And this was 1967, meaning he was making a prediction that within just a few more years was empirically settled for all time (or so it should have been):

As an empirical matter, low interest rates are a sign that monetary policy has been tight-in the sense that the quantity of money has grown slowly; high interest rates are a sign that monetary policy has been easy-in the sense that the quantity of money has grown rapidly. The broadest facts of experience run in precisely the opposite direction from that which the financial community and academic economists have all generally taken for granted.

We have today around the world all the same signs; low interest rates, low inflation rates relative to specified targets, and economic growth that has been overall seriously deficient as well as more recently unable to break out of that state despite what otherwise seems to be everything going for it to do so. Until the issue of monetary tightness is resolved not for the US or dollars, but for “dollars” meaning global money, there should be no expectation for a change in economic conditions, even if we don’t know exactly how far from healthy they may be. Read more

In August 2014, to some mild fanfare, the Federal Reserve debuted its Labor Market Conditions Index (LMCI). The justification for such a statistic was its broad reach; as a factor model, it would seek to isolate outliers in favor (meaning greater weight) of those among its nineteen inputs that corroborated each other.

Within a few months, however, the LMCI began to suggest serious weakness that didn’t comport with the dominant everything-is-awesome narrative. Janet Yellen preferred the hope expressed in the unemployment rate, which by the middle of 2015 became that outlier statistics and therefore surely (we don’t know for sure, the guts of the LMCI have to my knowledge never been released) and increasingly isolated from the rest of the overall outputted number.

Having accepted that the LMCI was actually correct in suggesting looming weakness, as GDP following several revisions now corroborates in no uncertain fashion with a near-recession starting in Q4 2015, the statistic’s real transgression has been in the aftermath. Despite a now ridiculously low unemployment rate, having been low for nearly two years, the LMCI has failed to accelerate off the downturn. Its reward for this treachery?

As of August 3, 2017, updates of the labor market conditions index (LMCI) have been discontinued; the July 7, 2017 vintage is the final estimate from this model. We decided to stop updating the LMCI because we believe it no longer provides a good summary of changes in U.S. labor market conditions. Specifically, model estimates turned out to be more sensitive to the detrending procedure than we had expected, the measurement of some indicators in recent years has changed in ways that significantly degraded their signal content, and including average hourly earnings as an indicator did not provide a meaningful link between labor market conditions and wage growth.

Sometimes it is truly hard to defend the stupid from accusations of nefariousness. I have to believe this official reference to “detrending” was as described above; the unemployment rate is increasingly alone in its indication for robust growth, therefore as a factor model it would be given much less weight so long as nothing else agrees with it (such as wages and labor costs). It really does appear as if the Fed wants to believe in the unemployment rate no matter what. Read more