Having been told yesterday by Janet Yellen that The Fed’s Labor Market Indicator is merely “experimental” – contradicting her Aug 2014 exuberance over the index – we thought it worth highlighting just how decoupled the nation’s labor market data really is. Initial claims rose to 277 from 264k, slightly higher (worse) than the expected 270k but remain near the best in 40 year, as LMCI crashes to 6 year lows…
Finally here is BofAML’s Michael Cantopoulos to explain the disgusting hypocrisy of The Fed’s chair…
Chair Yellen mentioned the Fed’s Labor Market Conditions Index today and it is a measure we have kept a close eye on over the last couple of months. Although she discounted its importance today by noting that the index is still “experimental”, in August 2014 she said;
“One convenient way to summarize the information contained in a large number of indicators is through the use of so-called factor models. Following this methodology, Federal Reserve Board staff developed a labor market conditions index from 19 labor market indicators, including four I just discussed. This broadly based metric supports the conclusion that the labor market has improved significantly over the past year.”
Recall our view that labor markets are likely less healthy than many expect and with anemic corporate earnings, high P/E ratios and a need to grow into existing capital structures, a slowdown in the pace of hiring and ultimately layoffs are inevitable later this year and into next.
In fact, today’s index value of -4.8 is very similar to where it was in 2000, and only on 3 occasions in history has today’s level been breached without a recession within the several months…
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