Markets Mull BREXIT, Q1 Inflows

Trading in Asia was down a bit overnight.  A Bit week in Europe in the early-going, too.  And when I peeked earlier, the Dow was looking to drop another 25, or so at the open.

This may be – in part – due to the Brits triggering the BREXIT move which will change the trade picture in Europe a bit.

There’s good news – and bad – on trade:

On  the one hand, if you get the raw materials for a product from inside your own country, and consumer it there, no real economic point to shipping it out of country to be assembled and then reimporting it when built.

That would just add a layer of expense. 

But if the goods you want aren’t available on a ready-made basis at home, then trade is one way to get it.

Corporations carefully weigh where to build products.  If they can assemble resource and labor (and including the transportation costs) somewhere else, like China, then your phone will be built where?

Over time, as internal labor costs come down, or if tariffs go up, then it may in the future become economical to start building the [whatever items] in your home country.

It’s how the Trade Game is played.

It’s also how speculators are considering the whole world right now:  Will the British exit from the European common markets make a hill of beans worth of difference to the levels of trade overall?

We continue to watch how the international consensus evolves because while the U.S. has a large and semi-autonomous stock market lash-up, it still operates with global connections (and arbitrage) so the answers to the BRECIT impact question could be elusive for a while.

 GDP Data

This wheels us around to the first real economic data of the morning:  The report from the Bureau of Economic Analysis on the U.S. Gross Domestic Product….

“Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth quarter of 2016 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter of 2016, real GDP increased 3.5 percent.

The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 1.9 percent. With this third estimate for the fourth quarter, the general picture of economic growth remains largely the same; personal consumption expenditures (PCE) increased more than previously estimated

For the visually-oriented:

There are a couple of things you can track if you’re of a mind to, by inspecting the details of the press release from BEA over here.

Do pay attention to the trade-related references, though:

“The deceleration in real GDP in the fourth quarter reflected downturns in exports and in federal government spending, an acceleration in imports, and a deceleration in nonresidential fixed investment that were partly offset by accelerations in private inventory investment and in PCE, and upturns in residential fixed investment and in state and local government spending.

Current-dollar GDP increased 4.2 percent, or $194.1 billion, in the fourth quarter to a level of $18,869.4 billion. In the third quarter, current-dollar GDP increased 5.0 percent, or $225.2 billion (table 1 and table

The first is you can update the ratio of GDP to Federal Debt.

Among some of us crackpots on the fringe of economics is the notion that the ratio of whether a country owes less than it make (and by how much) can be a meaningful predictor of future events.

When a country owes the rest of world (Row) more than it makes in a year, then currency devaluations are likely.  Indeed, in the broader span of history, the U.S. has been watering down its “dollars” by about 3.2% per year ever since 1913 when the bankers usurped the Constitutionally mandated role of congress to coin “money.”

Not saying this is bad, though.  In many ways its like deciding whether you want the Mafia or the Yakuza calling the shots.

Does it matter? 

The second things to do – after the ratio – is see how its running relative to the price of precious metals.

I’ve mentioned time and again how we bought our “lone” golden round in 2003 for $273.  And our long silver twin in 2005 at $6.97.

As long as the money is being “made up” (thus watering down the paper’s value) the intrinsic of gold and silver should continue to climb.

All it will take is a breakthrough in something like room temperature super-conducting for silver to zoom up to gold’s level. 

But if gold was found to provide immortality, well, it would dr4ag silver up.

In the meantime, these ultra long trends in the economy are very much worth following and using to advantage.

The lone fly in the “oinkment” is that the governments of the world don’t like winners, so like the back street carney, they’re trying to figure a way to turn the obvious into a “Heads I win, tails you lose” affair.

The way they pulled this offer in the last Depression was to call Gold and Silver from private ownership.

In the next Depression, the move to cashless is already well-established, so they will REQUIRE all financial assets, hard, soft, paper, digital – ALL will be required to translate into the digidollars and then we are screwed. 

A kind of Mark of the Beast with an RFID chip in the hand in the end as we get towards the “flashy end of history.” 

But not this morning.  Dow futures moved up 22 points.

Whose Side is Trump Really On?

We may have a chance to find out as the “corporate greased Congress” rubber stamped FCC plans to allow more intrusive use of your internet habits.

Good article in the Wall Street Journal over here.

Bottom line for us?

There are many things the Obama nightmare got wrong, but net freedom and privacy was NOT one of them.  With the move by the FCC, your browsing habits will become a matter of bidding by marketers and don’t start me on the evils of that.

Say you went to look up something like STD’s on the web.  You’ll get even more targeted ads than present. 

Worse, your loved ones will see the kind of ads you’ve getting and (if they’re bright enough) they will be able to infer you’re up to no good.

So then comes divorce, a solid six figure payout and all because your web data has been sold, resold, and your pechewzelwhacker will have led you astray.

But it’s not like that is a new event in human history, now, is it?

Whose Side, II

Then there is the little matter of the revised Trumperian travel ban.

Back on again thanks to a court in Hawaii.

As we opined months back – will the third ban “be a charm?”

Democrats?  Touchy!

We pass on without comment the report in the Washington Examiner “John Podesta slaps the Daily Caller with a cease-and-desist letter.”

At issue seems to be reporting of Podesta’s ALLEGED  stock position in what was described as an ALEGGEDLY  Kremlin-financed company.

Unrelated to this, we observe that Democrats are trying to avoid a goose and gander, since Trump’s relations are under the national microscope…Still no discussion of what Foundation?

Well, as we are so fond of saying, let bygones be mayors…

Sell Our Plumbing Companies?

Due to oversleeping this morning, I need to spend some time with the story about how “North Carolina lawmakers say they’ve agreed on a deal to repeal the bathroom bill.”

As I explained previously, Elaine and I have been buying up plumbing companies in anticipation of a huge explosion in the demand for new – additional –  bathrooms for all the different genders that have come out of the woodwork lately.

Why, if there’s a reasonable compromise and no surge in bathrooms comes, we will have to unload them at a loss.

We were thinking five or six genders (or the new genderless which is in the works, too) would leave us set for life.

You know me.  Always trying to flush out a money-making angle…

I should sleep in more often.  Speaking of which, I have to go now…