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Mike Mish Shedlock

Mike Mish Shedlock

Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction.

Articles by Mike Mish Shedlock

Is College Worth the Cost?

2 days ago

New schools are popping up. Some offer one year programs but no college degree. Good idea?Ben Carlson at Wealth of Common Sense is irked by the question: Is College Worth the Cost?
Reddit co-founder Alexis Ohanian gave some advice to young people in a recent interview with the New York Times:
“Do you really need to go to college? There is a huge student loan debt problem in this country. I think there’s going to need to be a drastic change in how these universities work. And I also think we’ve lambasted the trades for way too long. You can make six figures as a welder.”
These kinds of statements irk me, especially when they come from rich entrepreneurs. This line of thinking reeks of survivorship bias.
Successful entrepreneurs must

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Mariano Rajoy, You are a Disgrace To Spain

October 3, 2017

Spanish prime minister Mariano Rajoy, the man who said there would not be a vote, now has to face the facts: 90% Voted for Independence.

📊 Resultats del Referèndum de #1OCT
— Govern. Generalitat (@govern) October 1, 2017

90% of the 2.26 million Catalans who voted on Sunday voted in favour of independence, according to preliminary results released by the region’s government. The region has 5.3 million voters. Officials said 770,000 votes were lost due to disruption which resulted in polling stations being raided by Spanish police.
Carles Puigdemont, Catalan’s leader, announced in a televised statement that the region had earned the right to become an independent state and that results would be passed the region’s parliament in the coming days.

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Equifax Is Not Your Friend

September 19, 2017

The Equifax security breach scandal keeps growing and growing. Their handling of the data breach that affected as many as 143 million accounts has been horrendous.
Executives dumped their shares before reporting the stolen data. Following the breach, their website did not function properly, people got signed up for programs they did not want or need, and customer service has been dismal all around.Equifax is Not Your Friend
InTheseTimes reports The Equifax Hacking Scandal Is a Reminder That Credit-Reporting Agencies Are Not Our Friends.
Last week, Equifax—one of the country’s three major credit-reporting agencies alongside Experian and Transunion—revealed that its security apparatus had been breached. “Hackers” obtained private financial

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India Fears Run on Banks

December 31, 2016

Indian banks are fearful of running out of cash as lines queue up to withdraw money.
Bankers say they cannot cope with any sudden increase in demand, and warn against lifting cash withdrawal limits.

A decision by New Delhi on November 8 to scrap all large-denomination banknotes overnight removed 86 per cent of India’s currency from circulation. In an effort to prevent banks running out of cash, the finance ministry then imposed strict limits on the amount of new notes that could be withdrawn. Customers can currently withdraw just Rs2,500 from an ATM per day — equivalent to $37 — or Rs24,000 over the counter per week.
Myths, Misunderstandings and Outright lies about owning Gold. Are you at risk?
“If the government lifts the limits on Friday and there is a sudden rush,

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German Media Aid Merkel

December 23, 2016

German media is solidly behind Angela Merkel as the US media was behind Hillary Clinton. German reporting of the recent terrorist truck incident was in a single word “pathetic”.
Thanks to chancellor Merkel, it’s politically incorrect to presume refugees are a problem. Worse yet, the media cooperates.
Culture of Denial
The following via email from Eurointelligence.
Why are the most advertised Gold and Silver coins NOT the best way to invest?
The discussion about the terror attack in Berlin has turned political very quickly, with some commentators now wondering openly whether this might cost Angela Merkel the elections.
This is at its most fundamental a story about denial. The German establishment, and their friends in the media, are in denial that Merkel’s

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Eurozone Showdown Coming

December 14, 2016

The eurozone cannot survive without Italy. The serious problem at the moment is the Eurozone also cannot survive with Italy.
Two of Italy’s three largest parties are anti-Euro. The only party in Italy that does support the euro is ex-prime minister Matteo Renzi’s Democratic Party. And with Renzi gone, there’s a huge risk the party splinters.
Regardless, there are no likely scenarios that can keep things from flying apart according to Wolfgang Münchau. I believe his analysis is solid.
Münchau makes a detailed case why the eurozone is doomed in Italy Poses a Huge Threat to the Euro and Union.
Myths, Misunderstandings and Outright lies about owning Gold. Are you at risk?
He lists five ways the Eurozone can stay intact. However, none of them stands up to close

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War on Cash Becomes War on Gold

December 9, 2016

Global financial repression picks up steam, led by India. After declaring large denomination notes illegal, India now targets gold.
It’s not just gold bars or bullion. The government has raided houses, no questions asked, confiscating jewelry.
For background to this article, please see my November 27 article Cash Chaos in India, 86% of Money in Circulation Withdrawn; Cash Still King in Japan.
Large denomination means 500-rupee ($7.30) and 1,000-rupee notes ($14.60), which account for more than 85 percent of the money supply. They are no longer legal tender, effective immediately.
As one might imagine, chaos ensued. And it continues.
Myths, Misunderstandings and Outright lies about owning Gold. Are you at risk?
India Confiscates Gold
Picking up where we left off, please

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They Shopped Until They Dropped—–August Consumer Spending Up 0.00%

September 30, 2016

Personal income rose 0.2% in August, as economists expected. However, consumer spending rose 0.0% vs. the Econoday Consensus estimate of 0.2%.
The personal consumption expenditures (PCE) price index came in at +0.1% vs. a consensus of +0.2%. Last month the PCE was flat. This certainly is not what the Fed expected or wanted.
Year-over-year, PCE is up 1.0%, with the core PCE (excluding food and energy) up 1.7%.

August was a soft month for the consumer, both for income and especially for spending. Income rose only 0.2 percent in the month as wages & salaries, which had been on a 4-month surge, could inch only 1 tenth higher in August. Consumer spending, which had also been on a 4-month winning streak, came in unchanged as durable goods declined, largely reflecting monthly weakness in vehicle sales, as did non-durable goods, in part reflecting low fuel prices. Service spending advanced, at plus 0.3 percent, but at a slower rate than prior months. Despite the weakness in income, the consumer put money into savings which are at a 5.7 percent rate for a 1 tenth gain and a special factor that held down spending.
Inflation readings do show more life with the PCE price index up 0.1 percent and the core up 0.2 percent, both 1 tenth better than the prior month. Year-on-year, the overall measure rose 2 tenths to 1.0 percent with the core up 1 tenth to 1.

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Durables Goods Orders Less Transportation Negative Y/Y For 20th Straight Month

September 28, 2016

Factory orders did way better than the Econoday consensus estimate of -1.9% but that was against a revision that took July from +4.4% to +3.6%. The good news pretty much stops there.
The headline, at a monthly zero percent, is flat and so are the indications from the bulk of the August durable goods report. Excluding transportation, orders slipped 0.4 percent. This reading excludes a 22 percent downswing in civilian aircraft orders that is offset in part, however, by a solid 0.7 percent gain for vehicle orders. Readings on core capital goods (nondefense excluding aircraft) are mixed with orders up 0.6 percent, which points to shipment strength ahead, but current shipments are down -0.4 to extend a long string of declines going back to May. The weakness here in shipments is a negative for business investment in the GDP report.
Aside from vehicles and a strong gain for defense capital goods, good news is hard to find in today’s report. Total shipments are down 0.4 percent following no change in July while unfilled orders, which last posted a gain in April, fell 0.1 percent. Inventories did fall, down 0.1 percent, but not enough to keep the inventory-to-shipments ratio from rising to a less lean 1.66 from July’s 1.65.
Another negative in the report is a downward revision to July where the gain in total orders is shaved 8 tenths to 3.6 percent.

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Deutsche Bank’s Monumental Mess—Merkel Says No State Aid, Depositor Bail-In Coming Up?

September 24, 2016

The €72 trillion (notional) derivatives mess known as Deutsche Bank remains under severe pressure. It’s market cap is $17.43 billion. It has no earnings and pays no dividend.
On April 23, Deutsche Bank was Fined $2.5 Billion over LIBOR rate rigging. Twenty-one people face criminal charges following a seven-year investigation.
On September 16, the US Department of Justice Fined Deutsche Bank $14B for mortgage securities fraud leading up to the 2007-2009 global meltdown.
Today, German Chancellor Angela Merkel Rules Out Assistance for Deutsche Bank.
No Comment
Chancellor Angela Merkel has ruled out any state assistance for Deutsche Bank AG in the year heading into the national election in September 2017, Focus magazine reported, citing unidentified government officials.
The German leader also declined to step into the Frankfurt-based bank’s legal imbroglio with the U.S. Justice Department, which may seek as much as $14 billion in sanctions against Deutsche Bank’s mortgage-backed securities business, the magazine said. A German government spokesman declined to comment on the report Saturday. A Deutsche Bank spokeswoman also wouldn’t comment.
Understanding the Fine
The Guardian reports $14bn Deutsche Bank Fine – All You Need to Know.
The prospect of a $14bn penalty from the US Department of Justice has rattled investor confidence in Deutsche.

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Can the Immigrant Crisis Be Solved?

September 20, 2016

UK prime minister Theresa May will address the UN General Assembly on Tuesday. She seeks UN Action to Control Mass Migration Flows.
In contrast, I propose a 10-point “common sense” solution, not UN action.
Let’s start with May’s proposal.
Theresa May will use her first appearance as British prime minister at a United Nations General Assembly meeting starting Monday to urge fellow leaders to do more to control mass migration, which she’ll argue hurts both refugees and the countries they enter.
May will say the migrants should be encouraged to claim asylum in the first safe country they reach.
Meanwhile the EU’s open internal borders have allowed large population flows, with many Eastern Europeans traveling to richer countries in search of a better life. It

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Thinking of a Dem Donation?

September 19, 2016

Things are not going well for the Hillary campaign these days.
She is without a doubt sick, but no one knows what. Anyone trusting the pneumonia diagnosis as the full truth has mush for brains.
Her “deplorables” comment backfired miserably.
And today we learned that the Clinton campaign has been dinging donors multiple times for “one-time” donations.
Recurring “One Time” Donations
Please consider Hillary Clinton Campaign Systematically Overcharging Poorest Donors.
Hillary Clinton’s campaign is stealing from her poorest supporters by purposefully and repeatedly overcharging them after they make what’s supposed to be a one-time small donation through her official campaign website, multiple sources tell the Observer.
The overcharges are occurring so often that

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Hillary Strangelove—-Flashback To 2008 And War You Can Believe In

September 17, 2016

A reader sent me an image of Hillary imposed with images of Peter Sellers from the movie Mysterious Doctor Strangelove.
I bit of digging turned up other interesting images and articles.
Hillary Strangelove

Origin is unknown, but a Boston Globe had an editorial back in 2008 with that same title: Hillary Strangelove
AMERICANS have learned to take with a grain of salt much of the rhetoric in a campaign like the current Democratic donnybrook between Hillary Clinton and Barack Obama. Still, there are some red lines that should never be crossed. Clinton did so Tuesday morning, the day of the Pennsylvania primary, when she told ABC’s “Good Morning America” that, if she were president, she would “totally obliterate” Iran if Iran attacked Israel.
This foolish and dangerous threat was muted in domestic media coverage. But it reverberated in headlines around the world.
Responding with understatement to a question in the British House of Lords, the foreign minister responsible for Asia, Lord Mark Malloch-Brown, said of Clinton’s implication of a mushroom cloud over Iran: “While it is reasonable to warn Iran of the consequences of it continuing to develop nuclear weapons and what those real consequences bring to its security, it is probably not prudent in today’s world to threaten to obliterate any other country and in many cases civilians resident in such a country.

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Late-Stage Lying

September 16, 2016

On Sunday, an “Overheated” Hillary Stumbled or Fainted at a 911 Ceremony.
Hours later, came news flash Hillary’s Doctor Discloses Pneumonia Diagnosis Made Last Friday: Questions Abound.
Since then, a video by Dr Ted Noel has made the rounds. Dr Noel makes a seemingly convincing case Hillary has Late Stage Parkinson’s disease.
Snopes says Noel’s claim is false. I question the analysis of Snopes.
Some Mish readers who are medical doctors have some interesting comments.
Physical Gold & Silver in your IRA. Get the Facts. 
Late Stage Parkinson’s?
[embedded content]
In the above video, Dr Ted Noel makes a seemingly convincing case Hillary has Late Stage Parkinson’s disease.
My first thought on watching the video was “Wow”. My second thought was “Wow, I wish Dr

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Auto Collision Ahead: Motor Vehicle Production +0.5%, Motor Vehicle Sales -4.4% Year-Over-Year

September 15, 2016

In the third poor economic report today, we learned industrial production declined 0.4% vs. an Econoday Consensus of -0.2%.
Diving into the Industrial Production and Capacity Utilization – G.17 Federal Reserve Report we also learned July was revised from +0.7 to +0.6 and manufacturing from +0.5 to +0.4%.
The standout pair of numbers is industrial production at -0.4% vs. motor vehicle production at +0.5%.
There was some life in the factory sector during July but it proved brief, at least for production. Held down by a 0.4 percent decline in the manufacturing component, industrial production also fell 0.4 percent in data for August. But motor vehicles continue to be a plus in the report, rising 0.5 percent and offsetting a 0.5 percent decline in hi-tech production.
And mining is an increasing plus in the report, emerging from deep weakness with a second straight gain and a solid one at plus 1.0 percent. Utility production, which had up in prior months, fell back 1.4 percent in August. Total capacity utilization edged 4 tenths lower to 75.5 percent.
This report isn’t as weak as the headline readings suggest but, given weakness in other data including this morning’s Philly Fed and Empire State reports, won’t build much confidence that the factory sector will contribute much to the nation’s third-quarter growth.

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Book Review of David Stockman’s “Trumped! A Nation on the Brink Ruin”

September 13, 2016

David Stockman released his latest book “Trumped! A Nation on Brink of a Ruin” on Monday.
I read an advance copy last weekend.
I could not put the book down. It’s the book I wish I had written if only I had time.

Chapter 1 starts off with Stockman’s take on the revolt of Flyover America kindled by the Trump campaign. He mildly praises Trump with a bit of damnation thrown in, pretty much my position given the alternatives.
“Trumped!” is not really about Donald Trump, the man. Rather it’s about broken contracts and the conditions that led to the rise of Trump in the US, Brexit in the UK, and deteriorating economic conditions globally.
Politically speaking the book is anything but one-sided. Stockman goes after “feckless John Boehner” and his “equally spineless” replacement, Congressman Paul Ryan.
Stockman takes on the Fed and the ECB. The “Fed doesn’t serve the Main Street economy: It lives to pleasure Wall Street,” says Stockman, quite accurately.
In regards to Europe, Stockman states the “EU-18” owes Germany so much that permitting any country to leave is unthinkable in Berlin. The call for ‘more Europe,’ it is a desperate gambit to keep alive an utterly flawed and contradiction-ridden monetary, fiscal and political union that never should have been concocted in the first place.”
Stockman is a former Congressman and Ronald Reagan’s budget director.

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Groupthink Lunacy—-Negative 2% Rates, Cash Bans And Monetary Voodo

September 11, 2016

Looking for group think, extrapolation of extreme silliness, linear thinking, and belief in absurd models?
Then look no further than Fed presidents, their advisors, and academia loaded charlatan professors.
Today’s spotlight is on Marvin Goodfriend, a former economist and policy advisor at the Federal Reserve’s Bank of Richmond, and Ken Rogoff, a chaired Harvard economics professor, a one-time chief economist at the International Monetary Fund.
Case for Minus 2% Rates
Goodfriend says the Fed Might Need to Cut Rates to Minus 2 Percent.
The U.S. Federal Reserve might need to cut interest rates to as low as negative 2 percent, far lower than levels other global central banks have tested, a former Fed economist said.
That’s what would likely be needed to engineer a recovery if the U.S. economy were to fall into a recession in the next couple of years, Marvin Goodfriend, who was an economist and policy advisor at the Federal Reserve’s Bank of Richmond from 1993-2005, told CNBC’s “Squawk Box” on Thursday.
Goodfriend, who is currently a professor of economics at Carnegie Mellon University, pointed to data on the eight recessions in the U.S. since 1960.
“In eight of those recessions, the Fed had to push the short rate 2.5 percentage points below the long term rate. Today, the 10-year rate in the U.S. is 1.

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Red Hot Junk and Massive Bond-Market Dislocations; Equity Smash Coming Up?

September 9, 2016

The economic data does not support a rate hike. Is the Fed is really worried about something else?
How about an overheating junk bond market? An equity bubble? Room to cut later? Or does the Fed really think the economy is strong?
Regardless, a massive selloff in bonds in Japan and a two-day five-sigma event in German bunds may be the start of a significant rout.
Let’s investigate this through the eyes of various bond market dislocations.
[embedded content]
Sizzling Hot
Bloomberg reports Red-Hot Market Spurs Risky Bonds That Allow Interest Delays.
The bond market is getting so hot that it’s fueling a surge in debt deals allowing companies to defer interest payments.
Just a week in, September is already on track to become the busiest month for so-called payment-in-kind toggle notes that let companies pay coupons with more debt, according to data compiled by Bloomberg. Ardagh Group SA, a Luxembourg-headquartered packaging company, sold $1.72 billion of the securities. German auto components maker Schaeffler AG is poised to sell 3.59 billion euros ($4.05 billion) of the notes on Thursday, more than 1 billion euros than initially planned, which would make it the largest PIK issue ever, Bloomberg data show.
PIK debt is often issued at the holding company level, which makes the notes riskier because they are one step removed from the operating company.

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Why The Eurozone Will Self-Destruct

September 9, 2016

Fireworks are going off in Germany again in yet another battle between Wolfgang Schaeuble, Germany’s finance minister, and the ECB.
Schaueble dismissed a suggestion this week by ECB head Mario Draghi that Germany should use fiscal room for manoeuvre to decrease its export surplus.

Reuters reports Germany’s Schaeuble blames ECB for German Export Surplus.
Germany has no plans to reduce its export surplus, Finance Minister Wolfgang Schaeuble said on Friday, as the European Central Bank (ECB) has not changed its monetary policy which has led to a weaker euro which in turn boosts German exports.
“Even before the European Central Bank decided its policies of unusual monetary policy, which also led to the euro exchange rate falling significantly, I said that we will increase German export surplus,” Schaueble told reporters.
“If the surplus in the euro zone as a whole rises by a total of 3.6 percent, one should not be surprised that the German export surplus has also risen, if not by 3.6 percent but by 2 percent,” he said before meeting other European finance ministers.
When asked whether he had any plans to decrease Germany’s export surplus, Schaeuble said: “I haven’t heard that the ECB is changing its monetary policy.”
The Munich-based Ifo economic institute has said Germany’s current account surplus would probably hit a new record of 278 billion euros ($313.

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Stanley Fischer’s Low Rate Humbuggery

September 3, 2016

Federal Reserve Vice-Chairman Stanley Fischer made a couple of controversial statements this week regarding negative interest rates.
Fisher stated negative rates “seem to work” while admitting they are bad for savers but they “typically they go along with quite decent equity prices.”
There are two problems in play. The first is an explicit admission that the Fed sponsors wealth inequality. The second problem is Fisher does not understand how markets even work.
Failed Transmission
John Hussman takes Fisher to task on how markets work Failed Transmission – Evidence on the Futility of Activist Fed Policy.
Any economist with even a vague understanding of how securities are priced should understand that elevating the price that investors pay for financial securities doesn’t increase aggregate wealth. A financial security is nothing but a claim to some future set of cash flows. The actual “wealth” is embodied in those future cash flows and the value-added production that generates them. Every security that is issued has to be held by someone until that security is retired. So elevating the current price that investors pay for a given set of future cash flows simply brings forward investment returns that would have otherwise been earned later, leaving little but poorly-compensated risk on the table for the future (see QE and the Iron Laws for an illustration of this process).

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Productivity Dives For 3rd Straight Quarter; Unit Labor Costs Soar 4.3%; Robust Hiring About To End

September 2, 2016

Janet Yellen and the Fed are concerned about Labor Productivity. It’s down for the third consecutive quarter, a rarity.

Nonfarm business sector labor productivity decreased at a 0.6-percent annual rate during the second quarter of 2016, the U.S. Bureau of Labor Statistics reported today, as output increased 1.1 percent and hours worked increased 1.7 percent. Labor productivity, or output per hour, is calculated by dividing an index of real output by an index of hours worked of all persons, including employees, proprietors, and unpaid family workers.
In the second quarter of 2016, nonfarm business productivity was revised down slightly to a decline of 0.6 percent. Output was revised down slightly to an increase of 1.1 percent, and hours were revised down slightly to an increase of 1.7 percent. Unit labor costs increased 4.3 percent rather than increasing 2.0 percent as reported August 9, due mainly to a 2.2-percentage point upward revision to hourly compensation, in addition to the slight downward revision to productivity.
In the second quarter of 2016, manufacturing sector productivity was revised down to a decline of 0.4 percent from a previously-reported decline of 0.2 percent. Unit labor costs increased 6.7 percent, higher than the preliminary
estimate of 3.1 percent. Durable and nondurable goods manufacturing unit labor costs were also revised up, to increases of 3.

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Madness In Draghi Land——European Companies Issue Debt Simply Because the ECB will Buy That Debt

August 22, 2016

Things are so absurd in the Eurozone that the ECB is buying private placement debt with little regard for safety. In turn, private equity companies issue debt simply because they know in advance the ECB will buy it.
It’s a startling example of how the market is adapting to extremes of monetary policy, and it’s a safe conclusion the experiment will not end well.
For now, it’s a Seller’s Paradise as Companies Build Bonds for European Central Bank to Buy.
The European Central Bank’s corporate-bond-buying program has stirred so much action in credit markets that some investment banks and companies are creating new debt especially for the central bank to buy.
In two instances, the ECB has bought bonds directly from European companies through so-called private placements, in which debt is sold to a tight circle of buyers without the formality of a wider auction.
Now, they are all but inviting private actors to concoct specific things for them to buy so they can continue pumping money into the financial system.
The furious central-bank buying has been a relief to companies and governments that can now borrow at rock-bottom interest rates. But it has also spurred criticism that the extreme policies are killing the returns available to other investors, such as pension funds, and loading up the economy and financial system with potentially overpriced debt.

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Mind The Shipping News—–Every Major Index Is Down

August 16, 2016

The Port of Long Beach Posts a  7.7% Drop in Container Volumes compared to July 2015. The port attributes the decline to high inventory levels and a slow start to the peak season.
Container volumes at the Port of Long Beach fell 7.7 percent in July compared to the same month in 2015 when harbor terminals handled a record amount of cargo.
Dockworkers moved 637,091 TEUs last month. Inbound containers totaled 325,608 TEUs, a 5.9 percent year-over-year decrease. Outbound containers reached 142,812 TEUs, a slight drop of 0.7 percent from July 2015. Empties decreased to 168,671 TEUs, 15.9 percent lower than July 2015, the port’s strongest July on record.
“Due to continued market uncertainty and high inventory levels, the traditional holiday peak season is off to a slow start and several national forecasts have been revised downward to reflect this softness in cargo movement,” the port said.
Uncertainty Yet Again
There’s that darn uncertainty cropping up again. Mercy.
If it’s any consolation, Economists Expect “Mount Everest” of Uncertainty to Clear Up by December.
However, the peak shipping season will long be over by December.
Concerned parties may also wish to read Comment of the Day Regarding Uncertainty.
Port Blames Inventories
Curiously, the port blamed inventories. The port authorities better get a hold of the Bloomberg Econoday writer pronto.

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Is Voter Discord Over Jobs and Wages? If Not, What?

August 8, 2016

By Mike “Mish” Shedlock
In a recent WSJ/NBC poll, 62% of Americans said the nation on the wrong track. That’s higher than at any point in 2012.
The Wall Street Journal takes the poll and concludes Voter Discord Isn’t Over Wages.

Wage and income gains in the U.S. have improved significantly since the last presidential election, yet voters remain deeply unhappy. The divide underscores the scars and anxieties that remain top of mind even as the severe 2007-09 recession fades into the background.
It isn’t just measures of American households’ net worth and the stock market reaching new highs this year. Nor is it just the latest monthly jobs report showing wage growth picking up last month.
Median wage growth has climbed from less than 2% in 2012, to 3.6% over the past year. That means half of workers received a raise above that level and half below. Thanks largely to falling gas prices in recent years, those pay increases are well above inflation.
Many households recognize they’re doing better, but think everyone else is doing badly. A big disconnect has emerged, for example, in the University of Michigan’s survey on household sentiment, when people are asked about themselves personally versus the overall economy.
In 2008 and 2009, when the recession was at its worst, more than 80% of Americans told Gallup that economic problems were the biggest issue facing the country.

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McKinsey Study Shows 81% of US Worse off Than in 2005, France 63%, Italy 97%

August 8, 2016

The McKinsey study Poorer than Their Parents? offers a new perspective on income inequality over the period 2005-2014.
Based on market income from wages and capital, the study shows 81% of US citizens are worse off now than a decade ago. In France the figure is 63%, Italy 97%, and Sweden 20%.
The numbers for the US and France differ radically once transfer mechanisms like food stamps and Obamacare subsidies are taken into consideration.
Extent of Flat or Falling Incomes

The first set of numbers is easily believable. But the second?
Who believes 98% of the US is better off after transfer payments are taken into consideration?
The study also shows that 90% of French are better off than in 2005 taking into account government giveaways.
I do not believe those numbers. We would not see so mach anger in France, the UK and the US if those numbers were true.
The numbers in Italy, however, are easily believable. The study has some points that I do agree with.
Points of Agreement
The hardest hit are young, less-educated workers, raising the spectre of a generation growing up poorer than their parents.
The economic and social impact is potentially corrosive.
Nearly one-third of those who are not advancing said they think their children will also advance more slowly in the future, and they expressed negative opinions about free trade and immigration.

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Heavens to Murgatroyd! The Fed’s Lockhart Is On The Lookout For “Bubbles”

August 3, 2016

Atlanta Fed president Dennis Lockhart keeps making a fool out of himself by yapping about rate hikes for over a year.
This time, not only does he warn about hikes, he is on the lookout for bubbles.
Why he cannot see them is a mystery.
Dennis Lockhart Has Eye Out For Bubbles

MarketWatch reports Fed’s Lockhart Doesn’t Rule Out Rate Hike as Soon as September
Atlanta Fed President Dennis Lockhart said Tuesday he would not rule out an interest rate hike in September and said he was watching closely for signs of possible asset bubbles.
“At this point I don’t rule out a rate increase at the next meeting or later in the year,” Lockhart said in an interview on CNBC.
Lockhart Did Not Rule Out Anything
In addition to not ruling out rate hikes, he did not rule out Apple Pie or Tuna Casserole. In fact, he did not rule out anything that I am aware of.
Thank goodness he is on the lookout for bubbles. We should all be relieved.
Dudley and Kaplan “Hikes on the Table”

I addition to Lockkart, Dallas Fed president Robert Kaplan and New York Fed president William Dudley warn that rate hikes are on the table.
However, Dudley and Kaplan fail to convince market.
A pair of Federal Reserve officials, on separate visits to Asia, suggested overnight that the financial markets are too complacent about a September rate hike. However, investors back in the U.S. basically ignored the admonishments.

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US Construction Spending——Eight Miles High and Falling Fast

August 1, 2016

Construction spending month-over-month declined 0.6% vs an expected gain of 0.6% in a Bloomberg Consensus Range of 0.2% to 2.2%. Spending is on the verge of negativity year-over-year.
Revisions are all over the place. May was revised up by 0.7 percentage points but April lower by 0.9 percentage points.
Construction spending has to show the strength based on other data including housing starts and permits. Spending fell 0.6 percent in June vs expectations for a 0.6 percent gain. Revisions are mixed with May revised upward from a 0.8 percent drop to a decline of only 0.1 percent but April revised from minus 2.0 percent to a drop of 2.9 percent.
Spending on single-family construction fell 0.4 percent in June to extend a surprisingly negative streak that goes back to March. Year-on-year, construction spending on single-family homes is up only 4.8 percent vs a 16.4 gain for multi-family units where monthly data for June, however, also show contraction, at minus 1.5 percent. A plus for housing data in this report is strength in home improvements as residential spending excluding new homes rose 1.2 percent in the month.
Non-housing is also soft in the report, down 1.3 percent for private non-residential spending which is up only 2.5 percent year-on-year. Manufacturing is showing the most weakness, down 4.5 percent in the month with the on-year rate down 10.

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Is Trump Putin’s Puppet Or Has The Liberal Media Gone Stark Raving Mad?

July 29, 2016

Slate writer Franklin Foer says “Vladimir Putin has a plan for destroying the West—and that plan looks a lot like Donald Trump. If the Russian president could design a candidate to undermine American interests—and advance his own—he’d look a lot like Donald Trump.”
Foer went as far as to directly label Trump as Putin’s Puppet.
Continuing the “puppet” meme, Newsweek writer Maxim Trudolyubov noted “Trump has shattered the Republican orthodoxy on Russia, promising to get along with Moscow and heaping praise on Putin.”
Trudolyubov then asked the question Is Trump Putin’s Puppet?
Puppet Theory
Trudolyubov asked the question and never even bothered to answer it.
I will. The question is a joke, and Foer is a fool. No one is pulling Trump’s string.
Indeed, the Democrat and Republican leadership hate Trump precisely because he is no one’s puppet.
Talking with Russia is the smart thing to do. The sanctions on Russia were a huge mistake, but more so for Europe than the US. The US could have and should have opened relations with Iran after 911 but the neocons would have none of it.
The Real Puppet
The irony of the Sate article is Hillary Clinton is the real puppet! For starters, Hillary is a puppet of the progressives, the SEIU and public unions in general, and the warmongers.

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G-20 Meeting/Time For More Official Lies——Italians Claim Their Banking System Is Hunky-Dory

July 24, 2016

At yet another useless G-20 meeting, Italy’s finance minister, Pier Carlo Padoan,  made an official denial regarding  the plight of Italian banks:
“There is no risk in terms of systemic stability,” said Padoan. Supposedly, everything is “contained“.
Praise for Lies and Useless Talk
The New York Times reports Group of 20 Will Use ‘All Policy Tools’ to Lift Growth.
Actually, the only policy tools central banks are likely to use are tools that have long-term negative consequences such as negative interest rates and competitive currency devaluations.
Also expect a bunch of useless yap about forward guidance that is nearly always wrong.
Philip Hammond, Britain’s new Chancellor, chimed in with a messages about uncertainty.
“What will start to reduce uncertainty is when we are able to set out more clearly the kind of arrangement we envisage going forward with the European Union,” Hammond told reporters.
Just Do It
In the communique, the G20 underscored “the role of open trade policies and a strong and secure global trading system in promoting inclusive global economic growth, and we will make further efforts to revitalise global trade and lift investment”.
Rather than discussing the role of open trade, how about doing it? Let’s see the US and UK throw away their agricultural tariffs. Let’s stop 500% tariffs on Chinese steel.
None of that is going to happen.

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Hungary’s Prime Minister Praises Trump: “Our problem is not in Mecca but in Brussels,”

July 24, 2016

The anti-terrorist message of Donald Trump appeals to Hungary’s prime minister Viktor Orban.
Bloomberg reports Hungary’s Viktor Orban Says Donald Trump Better for Europe.
“I am not Donald Trump’s campaigner,” the Hungarian leader said at a cultural event in Baile Tusnad, Romania, an area with a large Hungarian population. “I never thought that the idea would ever occur to me that he is the better of the open options for Europe and Hungary.
“I listened to (Trump) and I have to tell you that he made three proposals to stop terrorism. And as a European, I myself could not have drawn up better what Europe needs.”
“If I’m asked what is Hungary’s strongest expectation regarding Turkey today, we will put stability first,” Orban said. “If Turkey becomes unstable, many tens of millions of people from that region will hurtle toward Europe without any sort of filtering, screening or control.”
“Europe’s current political leadership has failed,” Orban said, adding that the EU was “fooling itself” if it still viewed itself as a “global actor,” saying that era had ended with the vote by Britain to leave the 28-nation bloc.
“Our problem is not in Mecca but in Brussels,” Orban said. “The bureaucrats in Brussels are an obstacle for us, not Islam.
Orban arguably did as much to stop the flow of refugees into Europe as did Merkel’s ill-advised deal with Turkey.

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