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The Fed’s Disastrous Gift

The Fed’s Disastrous Gift

Did Yellen just get the green light for an interest-rate hike in December?

The Bureau of Labor Statistics reported on Friday that October saw the addition of 161,000 jobs, while the unemployment rate dipped to 4.9%. At the same time, September’s jobs were revised higher by 35,000 — to 191,000 and August’s jobs were lifted by 9,000 — to 176,000.

Now, I think most of us are willing to say that these headline numbers are largely hogwash. There’s a lot more going on below the surface that we need to consider.

However, there were a few things from the report that caught my attention:

Sadly, I think Yellen is going to look at that headline jobs number and push forward with a quarter-point rate hike at the December Federal Open Market Committee meeting — but that’s assuming that the market doesn’t implode after the results of the presidential election.

I’ll give you that we need higher rates. These near-zero rates for years on end have been pure poison to our economy, but it’s still too soon.

Growing up in Kentucky, I spent bits of my childhood out on the farm with my grandfather. I’ve walked the fields and seen the tender green shoots poking up through the thick, claylike soil we were blessed with. That’s what this labor report possesses — young, green shoots of progress that could grow into something much bigger and better.

And right now, Yellen and the rest of the Fed governors are standing at the edge of the field. If they lift rates in December, it’s going to be as if they ran over those green shoots of progress in football cleats. The progress we’ve made doesn’t stand a chance … and it’s very likely that it’s going to get significantly worse from there.

Make sure you’re prepared for the Fed’s blunder.

Just a quick aside … Thank you to all the readers who wrote me in regard to the rising use of robots and its impact our economy. I am still going through all the responses, and I’m enjoying the discussion of both sides of this ongoing story. I promise to share some of the replies next week. If you would like to write in about this issue as well, you can email me at TotalWealthInsider@sovereignsociety.com.

Regards,

Jocelynn Smith
Sr. Managing Editor, Sovereign Investor Daily