Dear PGM Capital Blog readers,
In this weekend’s blog edition we want to discuss some of the most important events that happened in the global capital markets, the world economy and the world of money in the week of August 3, 2015:
- DOW-Jones Industrial 7-day losing streak.
- Americans not in labor force rise to record 93.8 million.
DOW-JONES INDUSTRIAL 7-DAY LOSING STREAK:
U.S. stocks closed lower Friday, with the Dow industrials hitting its worst losing streak since 2011’s debt-ceiling crisis, after the jobs report matched economists’ estimates, boosting the chances for a Federal Reserve interest-rate hike in September.
As can be seen from below chart the DOW declined form the close of Wednesday, July 29 to Friday August 7th, with 377.92 points or 2.18 percent.
With seven straight days of losses, it marks the longest losing streak for the index since the height of the debt-ceiling drama in the summer of 2011.
As can be seen from below chart, back in late July/early August 2011, the Dow lost ground for eight sessions in a row, shaving some 857 points, or 6.7%, off the index.
AMERICAN NOT IN LABOR FORCE RISE TO RECORD 93.8 MILLION:
The U.S.A. Labor Department said Friday, August 7, that employers added 215,000 jobs in July.
The number of people not in the labor force reached another record high in July, according to new jobs data released Friday by the Bureau of Labor Statistics.
The BLS reports that 93,770,000 people (16 and older) were neither employed last month nor had made specific efforts to find work in the prior four weeks.
The number of people outside the workforce in July increased 144,000 over June’s record when 93,626,000 were not in the workforce.
July’s labor force participation rate however remained the same as June at 62.6 percent. Before last month the labor force participation rate had not been that low since October 1977, when the participation rate was 62.4 percent as can be seen from below chart.
PGM CAPITAL COMMENTS:
DOW 7-day losing streak:
Lately the USA media cannot find enough words to tell their audiences how good the USA Economy and capital markets are and that the problems of the world lies in Europe and that China’s stock markets are crashing.
Below YTD charts of the DOW-30 versus the German DAX-30 and the Chinese CSI-300 versus the DOW-30 gives a complete different picture.
As can be seen from above charts the DOW-Jones Industrial is down approx. 2.52 percent YTD, while on the other hand the Chinese CSI-300 and the German DAX-30 are up respectively 10.5 and 17.68 percent.
Americans not in labor force decreasing:
In 1975, when the Bureau of Labor Statistics began keeping such records, 58,627,000 Americans were not in the labor force, and the number has grown steadily since then, breaking the 80-million mark at the end of George W. Bush’s presidency; and the 90-million mark in July 2013, during Barack Obama’s second term.
The number of Americans not in the labor force has continued to rise since then.
End result: with the civilian employment to population ratio flat from last month’s 59.3%, one can once again easily discern on the chart below why there will be no broad wage growth any time soon.
The above shows, that by no-way, the USA has a healthy labor force situation as policy makers in that country would like you to believe and that the IMF is right when they urged the FED not to raise its key interest rates until 2016.
Until next week.
Yours sincerely,
Eric Panneflek