White House considers pre-midterm package of business tax breaks to spur hiring

Unless the tax breaks encourage investment over the long-term, anything along the lines of temporary tax holidays are nothing more than window dressing intended to sway voters.

With just two months until the November elections, the White House is seriously weighing a package of business tax breaks - potentially worth hundreds of billions of dollars - to spur hiring and combat Republican charges that Democratic tax policies hurt small businesses, according to people with knowledge of the deliberations.

Source: washingtonpost.com

Labor Market Spin Attempts to Shape Perceptions and Expectations

Companies add 67K workers, but jobless rate rises,

Private employers hired more workers over the past three month than first thought, lifting hopes for the weak economy. But the unemployment rate rose in August for the first time in four months as more people entered the market looking for work.

As headlines attempt to shape perceptions and expectations, a quick review of the data reveals that little has changed in the labor market.

The recovery, in comparison to 2004 of the 2003 to 2008 liquidity injection, remains weak. Birth/death creation as a percentage of total jobs creation remains roughly the same percentage as 2004. Total jobs created, however, are down significantly.

Birth/Death Model (BDM) Contribution to Nonfarm Net Payrolls (NFP) Added/(Lost):


In the battle to alter expectations, the jobs report is being spun as not as bad as expected. As a counter balance to this view, I submit that the weak trend in trucking and transportation, a measure of domestic and international demand, has been unable to turn positive during the recovery. This is hardly an indication of strength.

Truckers and Warehousing Payroll And YOY Change:


Also, the jobs creation/(destruction) histogram suggests that job creation barely exceeds labor force expansion on an annual basis. After the massive job losses of the past two years, it's going to take a lot more than effectively treading water in the labor market to bring down the 15%+ real unemployment rate.

Job Creation Histogram (JCH): Net Nonfarm Payrolls Added/(Lost) less Civilian Labor Force Added/(Lost), 12 Month Average.


Source: finance.yahoo.com

China PBOC Researcher Warns Sharp Gold Price Decline

China uses the media as much as the West as a tool of misdirection. This suggests that China is still buying agressively.

"Investors should be careful about investing in gold. Gold prices could fall sharply because of intensive gold sales by the U.S. and other overseas central banks," Zou said.

Source: imarketnews.com

African Barrick

ABG's trend energy, REV(E), already exceeds the highs set in May and June. This as well as the its general positive divergence with price suggests that trend energy is increasing.

African Barrick (ABG-L):

Offshore Oil Platform in the Gulf of Mexico Explodes

IF IT HAPPEN THREE TIMES THEN WE SHOULD EXAMINE THE PUT OPTION ACTIVITY AND ex-drug trade SUBMERSIBLES.

Jim

News reports said there was smoke rising from the platform, but it was unclear whether the rig was actively burning or in danger of foundering, or whether the explosion had set off any underground oil leaks.

Source: nytimes.com

House Prices Are Still 10% Too High, Says Barry Ritholtz

House prices relative to gold are still way too high. The U.S. dollar is a biased unit of measure, or what statisticians call a nonstationary time series. Think of it as filling your gas tank on a pump with a leaky hose. Even though the price of gas is the same as a previous fill up, the same amount of money won't fill the tank.

The U.S. dollar median home price, while broken from up trend, appears to be consolidating. Home price in a stable, unbiased currency such as gold, paints a completely different picture. A steep downtrend that started in 2005 has broken to new lows in 2010.

All charts are updated through August 2010.

U.S. Median Home Price (MHP):


U.S. Median Home Price (MHP) to Gold


The homebuilders to gold ratio (HBGOLDR) is on the verge of a consolidation breakdown within a steep downtrend.

S&P Homebuilders (HB) to Gold Ratio:

Ritholtz, who runs Fusion IQ and writes The Big Picture blog, says that the NAR's happy spin is making homeowners too optimistic about the prices they'll be able to get--thus encouraging them to price their houses too high.

In this market, says Ritholtz, houses priced realistically sell quickly. But since the majority of sellers are still dreaming of the good old days, most houses are priced too high and aren't selling. If the NAR would stop spinning and start helping sellers get more realistic, Ritholtz says, the housing market would fix itself more quickly.

finance.yahoo.com

Economic Soft Patch Will Be Met With Further Stimulus and Liquidity

The power up trend (PUT) in the prices paid to purchasing manager's index ratio (PPPMIR) was broken in June 2010. This suggests the onset of another economic 'soft patch' that will be met with further stimulus and liquidity. These injections will induce another round of fiat devaluation that will turn the ratio to the upside by 2011.

ISM Prices Paid Index (PP) to National Purchasing Manager's Index (PMI) Ratio:


Source: www.ism.ws