We run into this problem in economics (and other sciences) all the time.

It’s called the Hidden Variable.

Historically, in physics, hidden variable theories were espoused by some physicists who argued that the state of a physical system, as formulated by quantum mechanics, does not give a complete description for the system; i.e., that quantum mechanics is ultimately incomplete, and that a complete theory would provide descriptive categories to account for all observable behavior and thus avoid any indeterminism. The existence of indeterminacy for some measurements is a characteristic of prevalent interpretations of quantum mechanics; moreover, bounds for indeterminacy can be expressed in a quantitative form by the Heisenberg uncertainty principle.

There are parallels in economics.  You’ll often hear phrases like “animal spirits” ruling the market – or that grab bag of excuses labeled “consumer sentiment.

Regrettably, after you run head-on into a few “hidden variables” you will quickly become suspicious of every news story you read.

The story circulating over the weekend that brings this to the fore is “It’s plausible Trump incited violence, federal judge rules in OK’ing lawsuit.”

I’m sure you saw videos during the campaign where Trump said “Go on…get ‘em out of here...” about the hecklers and protesters.

The hidden variable which none of the news reports I read bothered to mention was that US District Judge David Hale was appointed by Barack Obama.

If this were a science report it might be titled “Obama-appointed Judge Stretches to Bash Trump.”

But that’s just my odd way of seeing things.  Still, every one of the Trump defeats that I’ve seen have been issued by Obama-appointed judges and somehow that remains a mainly hidden variable.

You see this all the time – when you go looking.

The EU’s press to subjugate Ukraine was really about the huge Dnieper-Donets petroleum reserves of eastern Ukraine.

The fighting over Syria, is another.  Here, the Russians are bulking up their port operations at Tartus and they have good reason:  The Leviathan gas field lies partly in Lebanon’s territory

The Israelis, now beginning development in the area have waved-off other countries – including Lebanon.  The Israeli’s seem to get along with Sunnis OK, but Shi’ites?  Not so much – while Russia has it just the other way around.

Were it not for the U.S. advances in fracking technology, we would likely have been toe-to-toe with the Russians already.  But this benefits of fracking (if you don’t mind the ground water pollution and earthquakes) is another “hidden variable” that really drives the world.

Want more?

Well, how about those demonstrations by “students” in Hungary trying to keep George Soros’ university open?

Not hardly hidden at all is the Soros organizational ability to fund demonstration for La Raza, transgender rights, or whatever other ultra-liberal cause.  So the question Hungarians might ask as they read reports is “Who’s on the dime?” (getting paid…)

Made-Up Variables

Closely related are news stories from big outfits like CNN which toss in words like “nuclear” in headlines like “Senate faces nuclear showdown over Neil Gorsuch nomination.”

No, there is nothing “nuclear” about it.  A better term might have been “circus” but I’m sure somewhere there’s a headline writer’s Guide to Working People Up which says “…outlandish words gain readers or viewers…”

Which they do…

Hell’s bells:  Trump could appoint King Solomon to the high court and the left would filibuster.  It’s just never enough.

If you want REAL nuclear news, the NY Times piece “North Korea’s Nuclear Strength, Encapsulated in an Online Ad for Lithium” offers more headline/content agreement.

Trump’s Nepotism Problem

While we very much support the Trump presidency, the Jared Kushner AND Ivanka Trump being paid for with my tax dollars (and yours) undermines my confidence.

As the NY Times writes “Trump Couple, Now White House Employees, Can’t Escape Conflict Laws.”

10 weeks into a presidency is early to be making snap judgments but I’m pretty sure there are qualified people available for those positions.

Yes, it’s his call – his administration and all – but is this really the “best practices” kind of government we were expecting?

Time to End Political Parties

Peoplenomics topic Wednesday.

There are other ways to slice and dice America than with the crooked two-party system we have now.  We’ll table a couple of ideas.

The Week Ahead

Futures this morning are nearly flat.  But that Global Index event we pointed out to subscribers this weekend will bear watching this week.

The Nikkei and Hang Seng were both up overnight and this morning the European markets are mixed.

The Dollar was up a bit.  The way gearing works, this means it will take less paper to “buy the indices” so that may keep a lid on things.  And the stronger dollars (for now) will mean lower metals prices.

As the RoW (rest of world) begins to climb a bit, we may see some outflows from U.S. markets, but all things in time.

Tomorrow there’s a trade report, Wednesday and Thursday feature ADP and then Challenger job reports.  The Biggy will be Friday’s Employment Situation  report – the EmpSit.

A note from our bond guru:

“Remember when I told you if Russia/China would announce they are back their currencies with a basket of precious metals and reset the price in Shanghai to say something ridiculous like $100,000 to $150,000 an ounce and reset the silver ratio they could destroy us without firing a shot by just saying “show us your reserves?”

You can read the mechanics of how this is playing in the South China Morning Post article over here.

When you see U.S. gold prices pop $100 in a day or silver popping a buck in a day, then it may be imminent.

A Bush Gets Something Half-Right

Former Florida Governor Jeb Bush said Sunday that “people should be marching in the streets” to change an antiquated education system that isn’t preparing people for the robotics-based world to come.

Bush also referred to a Price-Waterhouse-Cooper report out last month that claims “Up to 30% of existing UK jobs could be impacted by automation by early 2030s, but this should be offset by job gains elsewhere in economy.”

As far as it went,, it was OK.

But Bush didn’t get into the real blood and guts of robotics:  The U.S. tax code that essentially (via excessive depreciation allowances) literally gives corporations free human replacements.  We’ve been covering that on the Peoplenomics side.

The good news is someone is talking about a core “going-forward” issue for a change.

A damn shame Jeb didn’t articulate more of this forward-thinking – rather than the reactive crap – that dominated the last election cycle.

America really need to stop voting by looking in the rearview mirror.

As a country, we’re an accident in the process of happening.