Uncategorized
Neptune Reports Fiscal Third Quarter Ended December 31, 2022 Financial Results
Neptune Reports Fiscal Third Quarter Ended December 31, 2022 Financial Results
Canada NewsWire
LAVAL, QC, March 30, 2023
YTD net sales $40.5 million, up 8.6% from prior yearQ3 net sales $12.2 million, down $2.5 million from last year, $3.5 million …
Neptune Reports Fiscal Third Quarter Ended December 31, 2022 Financial Results
Canada NewsWire
LAVAL, QC, March 30, 2023
- YTD net sales $40.5 million, up 8.6% from prior year
- Q3 net sales $12.2 million, down $2.5 million from last year, $3.5 million of decrease attributable to sale of cannabis business
- In Q3 Sprout outperformed Organic Shelf Stable Baby Food category, had highest sales velocity in Toddler Meals segment1and increased NA distribution to approx. 29,350 doors with Loblaws launch
- Diluted Earnings Per Share attributable to equity holders of the company – $0.06
Company will host a conference call at 5:00 p.m. (Eastern Time) Thursday March 30, 2023, to discuss these results
LAVAL, QC, March 30, 2023 /CNW/ - Neptune Wellness Solutions Inc. ("Neptune" or the "Company") (NASDAQ: NEPT), a consumer-packaged goods company focused on plant-based, sustainable and purpose-driven lifestyle brands, today announces financial and operating results for the three-month period ending December 31, 2022.
Raymond P. Silcock, Chief Financial Officer of Neptune commented, "This is the start of our transition to a pure play consumer-packaged-goods company. On November 9, 2022 we completed the sale of our cannabis business, which resulted in a reduction of $3.5 million in cannabis sales in the third quarter. Partially as a result of this sale, and also due to other cost cutting measures, we are starting to see the positive earnings impact of reduced SG&A costs anticipated in last year's strategic business review. SG&A for Q3 was down $9.7 million as compared to the same period last year."
Sprout, our organic baby and toddler food brand, ramped up innovation this year and outperformed its category with the two fastest growing organic toddler meal items nationally, and the highest sales velocity in the Toddler Meals segment.1 Sprout also continued its North American expansion during Q3 by launching into Loblaws, the largest grocer in Canada, reaching a total of approximately 28,000 doors in the United States and 1,350 in Canada.
Biodroga, our nutraceutical co-manufacturing business, had year-to-date net sales of $11.8 million, up 6%, as compared to same period last year. This was driven by increased sales of MaxSimil and MaxSimil based products, which are now the most popular of Biodroga's product lines.
- Consolidated net sales for Q3 totaled $12.2 million, down $2.5 million from prior year Lost cannabis sales versus prior year amounted to $3.5 million.
- Gross profit in Q3 was $1.9 million, a gross margin of 15.4% of net sales, up from 11.3% for the same period last year.
- SG&A expenses for the quarter totaled $8.7 million compared to $18.4 million for the same period last year, a reduction of 52%, primarily driven by reduced headcount in both the cannabis and Sprout businesses.
- Net loss of $497 thousand dollars for third quarter compares to a net loss of $16.8 million in the prior year, an improvement of $16.3 million primarily due to the reduced SG&A ($9.7 million) as well as from the gain on the revaluation of the derivatives net of the one day loss on issuance ($7.4 million).
- Adjusted EBITDA loss for the quarter totaled $5.1 million compared to a $14.2 million loss for the same quarter last year.
Third Quarter Events and Recent Business Highlights:
- Completed the divestiture on November 9, 2022 of the cannabis assets, including the Sherbrooke plant and the Mood Ring and PanHash brands.
- Announced an accounts receivable factoring facility of up to $5 million for its Sprout Organics baby food brand.
- Sprout now has the two fastest growing organic meal items nationally, and the highest sales velocity in the Toddler Meals segment.1
- Sprout achieved strong fill rate of 85% for the third fiscal quarter.
- Biodroga continues to report strong growth year-over-year, driven by MaxSimil.
------------------------------------------ |
1) Sales velocity: Sales dollars per total point of distribution; Nielsen AOD; Total US xAOC Latest 13 W/E 12-31-22 |
The Company will host a conference call at 5:00 p.m. (Eastern Time) on Thursday March 30, 2023 to discuss these results. The conference call will be webcast live and can be accessed by registering on the Events and Presentations portion of Neptune's Investor Relations website at www.investors.neptunewellness.com. The webcast will be archived for approximately 90 days.
- ADJUSTED EBITDA
Although the concept of Adjusted EBITDA is not a financial or accounting measure defined under US GAAP and it may not be comparable to other issuers, it is widely used by companies. Neptune obtains its Adjusted EBITDA measurement by excluding from its net loss the following items: net finance costs (income), depreciation and amortization, and income tax expense (recovery). Other items such as equity classified stock-based compensation, non-employee compensation related to warrants, impairment losses on non-financial assets, revaluations of derivatives, costs related to conversion from IFRS to US GAAP and other changes in fair values are also added back to Neptune's net loss. The exclusion of net finance costs (income) eliminates the impact on earnings derived from non-operational activities. The exclusion of depreciation and amortization, stock-based compensation, non-employee compensation related to warrants, impairment losses, revaluations of derivatives and other changes in fair values eliminates the non-cash impact of such items, and the exclusion of costs related to conversion from IFRS to US GAAP, together with the other exclusions discussed above, present the results of the on-going business. From time to time, the Company may exclude additional items if it believes doing so would result in a more effective analysis of underlying operating performance. Adjusting for these items does not imply they are non-recurring. In Q4 2022, the Company added the costs related to the conversion from IFRS to US GAAP as an adjustment to the definition of Adjusted EBITDA. Adjusting for these items does not imply they are non-recurring.
Headquartered in Laval, Quebec, Neptune is a consumer-packaged goods company with a mission to redefine health and wellness. Neptune is focused on building a portfolio of high quality, affordable consumer products in response to long-term secular trends and market demand for natural, plant-based, sustainable and purpose-driven lifestyle brands. The Company utilizes a highly flexible, cost-efficient manufacturing and supply chain infrastructure that can be scaled to quickly adapt to consumer demand and bring new products to market through its mass retail partners and e-commerce channels. For additional information, please visit: https://neptunewellness.com/.
Disclaimer – Safe Harbor Forward–Looking Statements
This news release contains "forward-looking information" and "forward-looking statements" (collectively, "forward-looking statements") within the meaning of applicable securities laws. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates, and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as "expects", or "does not expect", "is expected", "anticipates" or "does not anticipate", "plans", "budget", "scheduled", "forecasts", "estimates", "believes" or "intends" or variations of such words and phrases or stating that certain actions, events or results "may" or "could", "would", "might" or "will" be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements include, among other things, statements with respect to the Company's strategic review, expected cost savings, projected growth of Sprout and Biodroga, the success of the Company's action plan, future increased revenues, expectations regarding expenses, cash needs, cash flow, liquidity and sources of funding, future expansion plans, initiatives and strategies of the Company, and the Company's performance, growth initiatives, profitability, future product launches and plans and gain in market share.
These forward-looking statements are based on assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance, or achievements of the Company to materially differ from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include: the ability of the Company to successfully implement its strategic initiatives; implications of the COVID-19 pandemic on the Company's operations; fluctuations in general macroeconomic conditions; fluctuations in securities markets; changing consumer habits; the ability of the Company to successfully achieve its business objectives and cost cutting plans; plans for expansion; political and social uncertainties; inability to obtain adequate insurance to cover risks and hazards; the ability of the Company to obtain financing on acceptable terms, the adequacy of our capital resources and liquidity, including but not limited to, availability of sufficient cash flow to execute our business plan (either within the expected timeframe or at all); the ability of the Company to obtain financing on acceptable terms, expectations regarding the resolution of litigation and other legal and regulatory proceedings, reviews and investigations; employee relations; and the presence of laws and regulations that may impose restrictions in the markets where the Company operates. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Readers should not place undue reliance on the forward-looking statements and information contained in this news release. The Company assumes no obligation to update the forward-looking statements of beliefs, opinions, projections, or other factors, should they change, except as required by law.
Additional information regarding these and other risks and uncertainties relating to the Company's business are contained under the heading "Risk Factors" in the Company's Annual Report on Form 10-K dated July 7, 2022, for the year ended March 31, 2022.
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated Interim Balance Sheets
(Unaudited) (in U.S. dollars)
As at | As at | |||
December 31, | March 31, | |||
Assets | ||||
Current assets: | ||||
Cash and cash equivalents | $3,404,023 | $8,726,341 | ||
Short-term investment | 17,540 | 19,255 | ||
Trade and other receivables | 4,919,568 | 7,599,584 | ||
Prepaid expenses | 2,937,662 | 3,983,427 | ||
Inventories | 16,942,808 | 17,059,406 | ||
Total current assets | 28,221,601 | 37,388,013 | ||
Property, plant and equipment | 1,862,667 | 21,448,123 | ||
Operating lease right-of-use assets | 2,144,362 | 2,295,263 | ||
Intangible assets | 17,343,178 | 21,655,035 | ||
Goodwill | 14,396,380 | 22,168,288 | ||
Total assets | $63,968,188 | $104,954,722 | ||
Liabilities and Equity | ||||
Current liabilities: | ||||
Trade and other payables | $21,984,254 | $22,700,849 | ||
Current portion of operating lease liabilities | 489,849 | 641,698 | ||
Deferred revenues | — | 285,004 | ||
Provisions | 5,936,933 | 1,118,613 | ||
Liability related to warrants | 1,444,058 | 5,570,530 | ||
Total current liabilities | 29,855,094 | 30,316,694 | ||
Operating lease liabilities | 2,229,583 | 2,063,421 | ||
Loans and borrowings | 15,936,658 | 11,648,320 | ||
Other liability | 23,000 | 88,688 | ||
Total liabilities | 48,044,335 | 44,117,123 | ||
Shareholders' Equity: | ||||
Share capital - without par value (11,778,392 shares issued and outstanding as of | 321,791,727 | 317,051,125 | ||
Warrants | 6,117,600 | 6,079,890 | ||
Additional paid-in capital | 57,303,078 | 55,980,367 | ||
Accumulated other comprehensive loss | (14,539,294) | (7,814,163) | ||
Deficit | (357,075,395) | (323,181,697) | ||
Total equity attributable to equity holders of the Company | 13,597,716 | 48,115,522 | ||
Non-controlling interest | 2,326,137 | 12,722,077 | ||
Total shareholders' equity | 15,923,853 | 60,837,599 | ||
Commitments and contingencies | ||||
Subsequent events | ||||
Total liabilities and shareholders' equity | $63,968,188 | $104,954,722 |
See accompanying notes to the condensed consolidated interim financial statements. |
On behalf of the Board: | ||
/s/ Julie Philips | /s/ Michael Cammarata | |
Julie Philips | Michael Cammarata | |
Chair of the Board | President and CEO | |
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated Interim Statements of Loss and Comprehensive Loss
(Unaudited) (in U.S. dollars)
For the three and nine-month periods ended December 31, 2022 and 2021
Three-month periods ended | ||||||
December 31, | December 31, | |||||
Revenue from sales net of excise taxes | $11,945,092 | $14,371,095 | ||||
Royalty revenues | 263,816 | 276,670 | ||||
Other revenues | — | 20,164 | ||||
Total revenues | 12,208,908 | 14,667,929 | ||||
Cost of sales other than impairment loss on inventories, | (10,328,349) | (13,026,604) | ||||
Impairment gain (loss) on inventories | — | 12,765 | ||||
Total Cost of sales | (10,328,349) | (13,013,839) | ||||
Gross profit (loss) | 1,880,559 | 1,654,090 | ||||
Research and development expenses | (28,836) | (301,645) | ||||
Selling, general and administrative expenses, net of subsidies | (8,727,323) | (18,429,528) | ||||
Impairment loss related to intangible assets | — | — | ||||
Impairment loss related to property, plant and equipment | — | — | ||||
Impairment loss on assets held for sale | — | — | ||||
Impairment loss on right of use assets | (271,057) | — | ||||
Impairment loss related to goodwill | — | — | ||||
Net gain on sale of property, plant and equipment | 84,998 | 6,490 | ||||
Loss from operating activities | (7,061,659) | (17,070,593) | ||||
Finance income | — | 2,956 | ||||
Finance costs | (1,362,776) | (363,466) | ||||
Loss on issuance of derivatives | (1,029,614) | — | ||||
Foreign exchange gain (loss) | 524,571 | (601,347) | ||||
Change in revaluation of marketable securities | — | (17,640) | ||||
Gain on revaluation of derivatives | 8,367,871 | 1,245,134 | ||||
Gain on settlement of liability | 66,169 | — | ||||
6,566,221 | 265,637 | |||||
Loss before income taxes | (495,438) | (16,804,956) | ||||
Income tax (recovery) expense | (2,013) | 50 | ||||
Net loss | (497,451) | (16,804,906) | ||||
Other comprehensive loss | ||||||
Net change in unrealized foreign currency gains (losses) | (231,490) | 332,074 | ||||
Total other comprehensive loss | (231,490) | 332,074 | ||||
Total comprehensive loss | $(728,941) | $(16,472,832) | ||||
Net income (loss) attributable to: | ||||||
Equity holders of the Company | $1,288,110 | $(15,009,015) | ||||
Non-controlling interest | (1,785,561) | (1,795,891) | ||||
Net loss | $(497,451) | $(16,804,906) | ||||
Total comprehensive income (loss) attributable to: | ||||||
Equity holders of the Company | $1,056,620 | $(14,676,941) | ||||
Non-controlling interest | (1,785,561) | (1,795,891) | ||||
Total comprehensive loss | $(728,941) | $(16,472,832) | ||||
Basic income (loss) per share attributable to: | ||||||
Common Shareholders of the Company | $0.06 | $(3.14) | ||||
Diluted income (loss) per share attributable to: | ||||||
Common Shareholders of the Company | $0.06 | $(3.14) | ||||
Basic weighted average number of common shares | 11,030,838 | 4,781,190 | ||||
Diluted weighted average number of common shares | 11,094,967 | 4,781,190 |
The Company has removed certain captions compared to prior |
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited) (in U.S. dollars)
For the three and nine-month periods ended December 31, 2022 and 2021
Nine-month periods ended | ||||
December 31, | December 31, | |||
Cash flows from operating activities: | ||||
Net loss for the period | $(44,289,638) | $(47,762,688) | ||
Adjustments: | ||||
Depreciation of property, plant and equipment | 652,196 | 2,135,961 | ||
Non-cash lease expense | 385,800 | 563,428 | ||
Amortization of intangible assets | 1,352,787 | 2,436,219 | ||
Impairment loss on goodwill | 7,570,471 | — | ||
Share-based payment | 2,832,438 | 6,251,713 | ||
Impairment loss on inventories | 3,079,997 | 2,996,333 | ||
Expected credit losses | 496,846 | 1,978,705 | ||
Non-employee compensation related to warrants | — | 178,917 | ||
Loss on issuance of derivatives | 3,156,569 | — | ||
Net finance expense | 2,656,865 | 1,170,069 | ||
Unrealized foreign exchange (gain) loss | (6,545,401) | 10,568 | ||
Change in revaluation of marketable securities | — | 107,564 | ||
Interest received | 1,440 | 7,796 | ||
Interest paid | (215,019) | (961,463) | ||
Gain on settlement of liability | (66,169) | — | ||
Revaluation of derivatives | (16,083,681) | (8,706,973) | ||
Impairment loss on property, plant and equipment | — | 2,404,459 | ||
Impairment loss on assets held for sale | 15,346,119 | — | ||
Impairment loss on right-of-use assets | 271,057 | — | ||
Impairment loss on intangibles | 2,593,529 | — | ||
Payment of lease liabilities | (253,795) | (236,802) | ||
Income tax expense | 14,543 | 11,894 | ||
Net gains from sale of property, plant and equipment | (170,000) | — | ||
Changes in operating assets and liabilities | 6,543,514 | (6,394,409) | ||
Income taxes paid | (360) | (11,894) | ||
Net cash used in operating activities | (20,669,892) | (43,820,603) | ||
Cash flows from investing activities: | ||||
Proceeds on sale of assets | 170,000 | — | ||
Proceeds from the sale of Cannabis assets | 3,121,778 | — | ||
Acquisition of property, plant and equipment | (601,743) | (1,034,982) | ||
Acquisition of intangible assets | — | (434,168) | ||
Sales of Acasti shares | — | 44,509 | ||
Net cash provided by (used in) investing activities: | 2,690,035 | (1,424,641) | ||
Cash flows from financing activities: | ||||
Increase in loans and borrowings, net of financing fees | 3,800,000 | — | ||
Withholding taxes paid pursuant to the settlement of non-treasury RSUs | (574,153) | (978,699) | ||
Gross proceeds from the issuance of shares and warrants through a Direct Offering | 5,000,002 | — | ||
Proceeds from the issuance of shares and warrants through a Registered Direct Offering | 6,000,002 | — | ||
Warrants issuance costs | (1,330,211) | — | ||
Proceeds from exercise of options and pre-funded warrants | 65 | — | ||
Net cash provided by (used in) financing activities: | 12,895,705 | (978,699) | ||
Foreign exchange loss on cash and cash equivalents | (238,166) | (454,341) | ||
Net decrease in cash and cash equivalents | (5,322,318) | (46,678,284) | ||
Cash and cash equivalents, beginning of period | 8,726,341 | 59,836,889 | ||
Cash and cash equivalents as at December 31, 2022 and 2021 | $3,404,023 | $13,158,605 | ||
Cash and cash equivalents is comprised of: | ||||
Cash | $3,404,023 | $13,158,605 |
See accompanying notes to the condensed consolidated interim financial statements. |
NEPTUNE WELLNESS SOLUTIONS INC.
Condensed Consolidated Interim Statements of Cash Flows (continued)
(Unaudited) (in U.S. dollars)
For the three and nine-month periods ended December 31, 2022 and 2021
Additional cash flow disclosure:
Changes in operating assets and liabilities:
Nine-month periods ended | ||||
December 31, | December 31, | |||
Trade and other receivables | $2,489,793 | $(2,541,426) | ||
Prepaid expenses | 798,493 | (2,162,076) | ||
Inventories | (2,544,635) | (2,720,569) | ||
Trade and other payables | 1,599,623 | 2,684,869 | ||
Deferred revenues | (285,006) | (303,765) | ||
Provisions | 4,550,934 | (1,112,762) | ||
Other liabilities | (65,688) | (238,680) | ||
Changes in operating assets and liabilities | $6,543,514 | $(6,394,409) |
View original content to download multimedia:https://www.prnewswire.com/news-releases/neptune-reports-fiscal-third-quarter-ended-december-31-2022-financial-results-301786491.html
SOURCE Neptune Wellness Solutions Inc.
Uncategorized
Mortgage rates fall as labor market normalizes
Jobless claims show an expanding economy. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
Everyone was waiting to see if this week’s jobs report would send mortgage rates higher, which is what happened last month. Instead, the 10-year yield had a muted response after the headline number beat estimates, but we have negative job revisions from previous months. The Federal Reserve’s fear of wage growth spiraling out of control hasn’t materialized for over two years now and the unemployment rate ticked up to 3.9%. For now, we can say the labor market isn’t tight anymore, but it’s also not breaking.
The key labor data line in this expansion is the weekly jobless claims report. Jobless claims show an expanding economy that has not lost jobs yet. We will only be in a recession once jobless claims exceed 323,000 on a four-week moving average.
From the Fed: In the week ended March 2, initial claims for unemployment insurance benefits were flat, at 217,000. The four-week moving average declined slightly by 750, to 212,250
Below is an explanation of how we got here with the labor market, which all started during COVID-19.
1. I wrote the COVID-19 recovery model on April 7, 2020, and retired it on Dec. 9, 2020. By that time, the upfront recovery phase was done, and I needed to model out when we would get the jobs lost back.
2. Early in the labor market recovery, when we saw weaker job reports, I doubled and tripled down on my assertion that job openings would get to 10 million in this recovery. Job openings rose as high as to 12 million and are currently over 9 million. Even with the massive miss on a job report in May 2021, I didn’t waver.
Currently, the jobs openings, quit percentage and hires data are below pre-COVID-19 levels, which means the labor market isn’t as tight as it once was, and this is why the employment cost index has been slowing data to move along the quits percentage.
3. I wrote that we should get back all the jobs lost to COVID-19 by September of 2022. At the time this would be a speedy labor market recovery, and it happened on schedule, too
Total employment data
4. This is the key one for right now: If COVID-19 hadn’t happened, we would have between 157 million and 159 million jobs today, which would have been in line with the job growth rate in February 2020. Today, we are at 157,808,000. This is important because job growth should be cooling down now. We are more in line with where the labor market should be when averaging 140K-165K monthly. So for now, the fact that we aren’t trending between 140K-165K means we still have a bit more recovery kick left before we get down to those levels.
From BLS: Total nonfarm payroll employment rose by 275,000 in February, and the unemployment rate increased to 3.9 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in health care, in government, in food services and drinking places, in social assistance, and in transportation and warehousing.
Here are the jobs that were created and lost in the previous month:
In this jobs report, the unemployment rate for education levels looks like this:
- Less than a high school diploma: 6.1%
- High school graduate and no college: 4.2%
- Some college or associate degree: 3.1%
- Bachelor’s degree or higher: 2.2%
Today’s report has continued the trend of the labor data beating my expectations, only because I am looking for the jobs data to slow down to a level of 140K-165K, which hasn’t happened yet. I wouldn’t categorize the labor market as being tight anymore because of the quits ratio and the hires data in the job openings report. This also shows itself in the employment cost index as well. These are key data lines for the Fed and the reason we are going to see three rate cuts this year.
recession unemployment covid-19 fed federal reserve mortgage rates recession recovery unemploymentUncategorized
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Inside The Most Ridiculous Jobs Report In History: Record 1.2 Million Immigrant Jobs Added In One Month
Last month we though that the January…
Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush.
What happened? Let's take a closer look.
On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.
Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.
Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K, a 124K revision, which was the biggest one-month negative revision in two years!
Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.
In the past month the Biden department of goalseeking stuff higher before revising it lower, has revised the following data sharply lower:
— zerohedge (@zerohedge) August 30, 2023
- Jobs
- JOLTS
- New Home sales
- Housing Starts and Permits
- Industrial Production
- PCE and core PCE
To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).
And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...
... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...
... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.
While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.
But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).
This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.
There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).
Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!
But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!
The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!
Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...
... but there has been zero job-creation for native born workers since June 2018!
This is a huge issue - especially at a time of an illegal alien flood at the southwest border...
... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.
Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.
Uncategorized
Economic Earthquake Ahead? The Cracks Are Spreading Fast
Economic Earthquake Ahead? The Cracks Are Spreading Fast
Authored by Brandon Smith via Alt-Market.us,
One of my favorite false narratives…
Authored by Brandon Smith via Alt-Market.us,
One of my favorite false narratives floating around corporate media platforms has been the argument that the American people “just don’t seem to understand how good the economy really is right now.” If only they would look at the stats, they would realize that we are in the middle of a financial renaissance, right? It must be that people have been brainwashed by negative press from conservative sources…
I have to laugh at this notion because it’s a very common one throughout history – it’s an assertion made by almost every single political regime right before a major collapse. These people always say the same things, and when you study economics as long as I have you can’t help but throw up your hands and marvel at their dedication to the propaganda.
One example that comes to mind immediately is the delusional optimism of the “roaring” 1920s and the lead up to the Great Depression. At the time around 60% of the U.S. population was living in poverty conditions (according to the metrics of the decade) earning less than $2000 a year. However, in the years after WWI ravaged Europe, America’s economic power was considered unrivaled.
The 1920s was an era of mass production and rampant consumerism but it was all fueled by easy access to debt, a condition which had not really existed before in America. It was this illusion of prosperity created by the unchecked application of credit that eventually led to the massive stock market bubble and the crash of 1929. This implosion, along with the Federal Reserve’s policy of raising interest rates into economic weakness, created a black hole in the U.S. financial system for over a decade.
There are two primary tools that various failing regimes will often use to distort the true conditions of the economy: Debt and inflation. In the case of America today, we are experiencing BOTH problems simultaneously and this has made certain economic indicators appear healthy when they are, in fact, highly unstable. The average American knows this is the case because they see the effects everyday. They see the damage to their wallets, to their buying power, in the jobs market and in their quality of life. This is why public faith in the economy has been stuck in the dregs since 2021.
The establishment can flash out-of-context stats in people’s faces, but they can’t force the populace to see a recovery that simply does not exist. Let’s go through a short list of the most faulty indicators and the real reasons why the fiscal picture is not a rosy as the media would like us to believe…
The “miracle” labor market recovery
In the case of the U.S. labor market, we have a clear example of distortion through inflation. The $8 trillion+ dropped on the economy in the first 18 months of the pandemic response sent the system over the edge into stagflation land. Helicopter money has a habit of doing two things very well: Blowing up a bubble in stock markets and blowing up a bubble in retail. Hence, the massive rush by Americans to go out and buy, followed by the sudden labor shortage and the race to hire (mostly for low wage part-time jobs).
The problem with this “miracle” is that inflation leads to price explosions, which we have already experienced. The average American is spending around 30% more for goods, services and housing compared to what they were spending in 2020. This is what happens when you have too much money chasing too few goods and limited production.
The jobs market looks great on paper, but the majority of jobs generated in the past few years are jobs that returned after the covid lockdowns ended. The rest are jobs created through monetary stimulus and the artificial retail rush. Part time low wage service sector jobs are not going to keep the country rolling for very long in a stagflation environment. The question is, what happens now that the stimulus punch bowl has been removed?
Just as we witnessed in the 1920s, Americans have turned to debt to make up for higher prices and stagnant wages by maxing out their credit cards. With the central bank keeping interest rates high, the credit safety net will soon falter. This condition also goes for businesses; the same businesses that will jump headlong into mass layoffs when they realize the party is over. It happened during the Great Depression and it will happen again today.
Cracks in the foundation
We saw cracks in the narrative of the financial structure in 2023 with the banking crisis, and without the Federal Reserve backstop policy many more small and medium banks would have dropped dead. The weakness of U.S. banks is offset by the relative strength of the U.S. dollar, which lures in foreign investors hoping to protect their wealth using dollar denominated assets.
But something is amiss. Gold and bitcoin have rocketed higher along with economically sensitive assets and the dollar. This is the opposite of what’s supposed to happen. Gold and BTC are supposed to be hedges against a weak dollar and a weak economy, right? If global faith in the dollar and in the U.S. economy is so high, why are investors diving into protective assets like gold?
Again, as noted above, inflation distorts everything.
Tens of trillions of extra dollars printed by the Fed are floating around and it’s no surprise that much of that cash is flooding into the economy which simply pushes higher right along with prices on the shelf. But, gold and bitcoin are telling us a more honest story about what’s really happening.
Right now, the U.S. government is adding around $600 billion per month to the national debt as the Fed holds rates higher to fight inflation. This debt is going to crush America’s financial standing for global investors who will eventually ask HOW the U.S. is going to handle that growing millstone? As I predicted years ago, the Fed has created a perfect Catch-22 scenario in which the U.S. must either return to rampant inflation, or, face a debt crisis. In either case, U.S. dollar-denominated assets will lose their appeal and their prices will plummet.
“Healthy” GDP is a complete farce
GDP is the most common out-of-context stat used by governments to convince the citizenry that all is well. It is yet another stat that is entirely manipulated by inflation. It is also manipulated by the way in which modern governments define “economic activity.”
GDP is primarily driven by spending. Meaning, the higher inflation goes, the higher prices go, and the higher GDP climbs (to a point). Eventually prices go too high, credit cards tap out and spending ceases. But, for a short time inflation makes GDP (as well as retail sales) look good.
Another factor that creates a bubble is the fact that government spending is actually included in the calculation of GDP. That’s right, every dollar of your tax money that the government wastes helps the establishment by propping up GDP numbers. This is why government spending increases will never stop – It’s too valuable for them to spend as a way to make the economy appear healthier than it is.
The REAL economy is eclipsing the fake economy
The bottom line is that Americans used to be able to ignore the warning signs because their bank accounts were not being directly affected. This is over. Now, every person in the country is dealing with a massive decline in buying power and higher prices across the board on everything – from food and fuel to housing and financial assets alike. Even the wealthy are seeing a compression to their profit and many are struggling to keep their businesses in the black.
The unfortunate truth is that the elections of 2024 will probably be the turning point at which the whole edifice comes tumbling down. Even if the public votes for change, the system is already broken and cannot be repaired without a complete overhaul.
We have consistently avoided taking our medicine and our disease has gotten worse and worse.
People have lost faith in the economy because they have not faced this kind of uncertainty since the 1930s. Even the stagflation crisis of the 1970s will likely pale in comparison to what is about to happen. On the bright side, at least a large number of Americans are aware of the threat, as opposed to the 1920s when the vast majority of people were utterly conned by the government, the banks and the media into thinking all was well. Knowing is the first step to preparing.
The second step is securing your own financial future – that’s where physical precious metals can play a role. Diversifying your savings with inflation-resistant, uninflatable assets whose intrinsic value doesn’t rely on a counterparty’s promise to pay adds resilience to your savings. That’s the main reason physical gold and silver have been the safe haven store-of-value assets of choice for centuries (among both the elite and the everyday citizen).
* * *
As the world moves away from dollars and toward Central Bank Digital Currencies (CBDCs), is your 401(k) or IRA really safe? A smart and conservative move is to diversify into a physical gold IRA. That way your savings will be in something solid and enduring. Get your FREE info kit on Gold IRAs from Birch Gold Group. No strings attached, just peace of mind. Click here to secure your future today.
-
Uncategorized2 weeks ago
All Of The Elements Are In Place For An Economic Crisis Of Staggering Proportions
-
Uncategorized1 month ago
Cathie Wood sells a major tech stock (again)
-
Uncategorized3 weeks ago
California Counties Could Be Forced To Pay $300 Million To Cover COVID-Era Program
-
Uncategorized2 weeks ago
Apparel Retailer Express Moving Toward Bankruptcy
-
Uncategorized3 weeks ago
Industrial Production Decreased 0.1% in January
-
International13 hours ago
Walmart launches clever answer to Target’s new membership program
-
Uncategorized3 weeks ago
RFK Jr: The Wuhan Cover-Up & The Rise Of The Biowarfare-Industrial Complex
-
Uncategorized3 weeks ago
GOP Efforts To Shore Up Election Security In Swing States Face Challenges