Oh, goodie, goodie! Joyous Glad Tidings all around. Presents for the Boyz, nog for the reindeer.
Santa has just dropped a National Activity Increase in our stockings early. And what it shows is that growth in November speeded up a bit.
The index’s three-month moving average, CFNAI-MA3, rose to +0.48 in November from +0.09
in October, reaching its highest level since May 2010. November’s CFNAI-MA3 suggests that growth in national economic activity was above its historical trend. The economic growth reflected in this level of the CFNAI-MA3 suggests modest inflationary pressure from economic activity over the coming year.
As you, um, head-off to work this morning, we must have missed this in our weekend Peoplenomics report, but here it is, another bank failure, this one a little bank up in the north woods somewhere:
Northern Star Bank, Mankato, Minnesota, was closed by the Minnesota Department of Commerce, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with BankVista, Sartell, Minnesota, to assume all of the deposits of Northern Star Bank.
The two branches of Northern Star Bank will reopen as branches of BankVista during their normal business hours. Depositors of Northern Star Bank will automatically become depositors of BankVista. Deposits will continue to be insured by the FDIC, so there is no need for customers to change their banking relationship in order to retain their deposit insurance coverage up to applicable limits.
Of course, what no one bothers to mention is that there has been a continuing flow of bank failures ever since IndyMac kicked off the Second Depression’s Bank Failure Season. We’re up, by my count, somewhere north of 6,500 branch closures now. In fairness, a lot of those didn’t come from financial failures, so much as electronics replaced the need for physical locations and as a result, well, off with more heads.
Except Santa’s – the Dow futures are up 50 even if oil is still on its ass.
Meantime, the head of the Federal Reserve, Janet Yellin’s remarks last week about being patient with regards rates have trigger emerging markets to become a bit concerned. This article in the Irish Times for example says these markets might want to fasten seat belts for the period ahead.
It could be too late. Last week’s roaring rise of Wall St. filled all the expectations of the Christmas rally we’d been telling you was due. Now it’s been, and made fade shortly, since this will be an abbreviated trading week. That will tend to keep trading thin and that, in turn could allow for some further upward movement, but fundaments aren’t very promising.
The price of oil this morning was back down to a low of $56.39 while the Saudis were saying quite clearly that they would never reduce their output. In fact, they might even raise it.
While that seems rather pointless, except it will make for much cheaper energy costs over time,k and that includes plastics and rubber products that all depend on oil, the reality seems to be that the declining price of oil is hugely deflationary and that’s bad for wages, good for prices, and bad for government.
While it’s good in the very short term, because it means that public debt of ours (which is bigger than our GDP meaning we’re already done, stick a fork in us) can be refi’ed at lower rates. All fine until we get into 2015/2016 when the Free Lunch crowd in DC goes out shopping for the supplies for those free lunches. They’ll have to make up money and that will be inflationary.
The choice point between free lunch and deflationary collapse is where the discontinuity lies and we keep edging closer to it.
Between now and then, how low gold can go in the interim is somewhere around $690 and $1,050, likely, but it all depends on how much good news the market can stand as we come to Ure’s Discontinuity.
As rates have come down on the 10-year, since June of ‘81 or so (chart here) the payoff for business has been falling expense lines.
As this has happened, and as people continue their economic habits (eating, for example) the relative profit of companies has gone through the roof and is now extending in the 1928-1929 period which is a replay of the Roaring Twenties.
Sadly, this can’t last forever, and when it does, like the 1920’s Fed before it, all the ammunition to fight Depression will have been fired in advance. So along will come either a new currency (something digital with a blue logo, maybe?) or we will simply hyper inflate and we’re off to the moon with gold and silver prices, but not before a long and painful wash-out period designed to kill as many of us gold bugs as possible.
Thinking Happy New Years, are you?
Timing, timing, that’s the thing.
This weekend, my friend Howard Hill posted a dandy article “Does Santa Take Side Bets?” and we’re still pretty sure the old dude in red is crooked,
But it’s a matter of degrees.
We have enough laws on the books that it’s safe to say that everyone in America is a criminal. Whether innocent, or not, of intent doesn’t matter. Everyone speeds now and then – even if accidentally. And the idea of a crime being committed because you forward an illegally ripped .MP3, well, crime is crime.
The reality is that the Baltic Dry index has dropped again this morning and is down to the 803 level and that should scare the bejeezus out of any thinking person.
We may be bears today, but we’ll be Lazarus in a month if this indicator continues to freeze up.
Royal Pain in the Tax
Of course, it would never do to have a conviction stick when a brother runs the country, so pull up some popcorn while we wait until a “sacrificial advisor” can be found to play low-key patsy.
More Cop Threats
Following the killing of two on-duty NYC cops by a black perp this weekend, it is predictably reported that more threats against cops are being made. (Scroll down to the new threats part)
Check me if I’m wrong on this, but weren’t race relations better under Bush? (Pains me to write that, but look at the numbers and headlines. Mall of the Americas demonstration and all of it. Seems like the current anarchist’s plan has elements of a two-fer: Let’s wreck race relations AND Christmas.)