Our view of economics data is just settling now. Been up since 1:30 this morning, in fact, working on several items for the in-depth on Peoplenomics tomorrow.
The super-short version (free, lol) is that there is a case for a “soft summer rise” into about the middle of August, after which a slide into the fall and uncertainty begins to increase. Exponentially.
In the immediate (2-3 day) future, I have had another bout of the “earthquake tireds” so if there’s a 6.7 or higher magnitude quake, that’s where it’s from. Remember who called it. Southwest Pacific seems hot, and I hope for Bernard Grover down in our Jakarta Bureau, it’s not in his back yard.
A bit further out on the timeline, the things “shaping” the soft peak are manifold. First we had the Federal Reserve consumer debt report out Monday. Total consumer credit was up 7.6 percent annualized in May (this is a driving in the rearview kind of report) and of that, the revolving (read: credit cards) were up 11.4 percent. School loans and mobile homes and the like (read: non-revolving) were up 6.3%.
The reason to take this with a grain (or three) of salt is that while consumer spending was up in May, a portion of that is likely due to that being the period when people first started hearing the words “trade war” together. It may have pushed people to “pull some purchases forward” using the reasonable logic that “If it’s going to be more expensive later, why not buy it now and enjoy it while we can?”
Under normal conditions, this would be dandy. But the Fed has also been stepping on the brakes over on the Money Supply side, which will be driving interest rates up. We’re down to a 2.2 percent increase run-rate on M1 which will firm up credit.
This credit cycle stuff is a lot like driving on ice for the Fed. On the one hand, they wanted the interest rates to come off zero because there is always a risk across a long-wave economic low that rates will go negative and that’s something the Global Confidence Game can ill-afford.
On the other hand, the way that you slow the economy when it begins to heat up a good (Trump Bump) bit is you put on the brakes and the way this is done is throttling down the money supply – which drives up rates.
The Big Question to be answered later this week boils down to what’s the Consumer Price Index doing? We expect to see general inflation pushing a good bit higher, which means closer to the four percent range. The Fed, not eating food or using energy – the semi-delusional core rate will pooh-pooh the headline number and will stick to their guns. Nevertheless, the headline number could be large enough to set off another month of “credit card bending” and that would lead to even more pressure on the money supply which will push rates up.
The important thing to keep in mind here is that rates are something of a supply and demand deal. Right now, seems to us that the smart money allocation would be to overweight in stocks a bit in here (notwithstanding a possible blip down Friday-Tuesday depending on the inflation report). After the middle of August, though, maybe the September CPI number, bonds may be looking better once again.
Remember: When bonds go up, the market is going down and when the market is going up (likely in the short term but this is not investment advice) then bonds generally head down.
The bonds early were around 2.86 on the 10-year (more current data here).
All of this would be the case for an almost “non-peak” over the summer, but we’re still seeing power from the “Trump Bump.” Take this morning’s report from the National Federation of Independent Business:
“The Small Business Optimism Index posted its sixth highest reading in survey history for the month of June, at 107.2, down 0.6 from May. Since December 2016, the Index has averaged an unprecedented 105.4, well above the 45-year average of 98 and rivaling the all-time high of 108.0 in July 1983.:
There’s a lot more on their website over here and pay particular attention to the business expansion plan data on the right side of that page. There is economic life in America, yet.
Until Mueller issues forth a close to the election report – which would not surprise us in the least.
But, Then There’s Politics
It’s very simple to see where various media have taken positions in our analytical framework called The Webolution. You will recall this is where we have a second American Revolution underway only it is happening on the Internet and not here overtly bespoken.
Take the L.A. Times coverage of the Trump Supreme Court nomination of judge Brett Kavanaugh. It reads to us like their “What Brett Kavanaugh could mean for the future of abortion, marriage equality and much more” plays to the left-coast liberal crowd.
Balance this off? We see Fox running an opinion piece claiming “We can trust Trump’s Supreme Court pick Brett Kavanaugh to defend religious liberty — our most sacred right…” Um…not quite…
As any of us non-partisans in the Webolution can see, everyone’s sliced up the audience, right or left, and is pandering content to maximize eyeballs in their target demographic in order to maximize revenue. In many ways it’s bad although the good news for Donald Trump is that at some level Trump Bashing is an Industry so even the “haters” are contributing to his economy which continues to (don’t look!) grow.
Why Are Some Still Selling Hillary?
Don’t look now, but you might mention to The Drudge Report that today is July 10 and to run the UK Daily Mail piece on Hillary Clinton yet another day seems a bit….oh…you know…odd.
Bash du Jour
Meantime, our Trump Bash du Jour honors go to Politico which MediaBiasFactCheck rates “;left-center” is going after Trump with “Trump’s neglect of Europe goes beyond angry tweets.” Say what?
Just for example, the article touts (as part of Trump’s alleged neglect) this:
“Several key European ambassadorships remain unfilled, including in Ireland, which is at the center of the sensitive negotiations over Britain’s withdrawal from the EU, and Poland, which is in a fierce battle with Brussels over alleged rule-of-law violations.”
Whoa!!! This set off our BS meter. Sure enough, Trump did appoint an Irish Ambassador back in March but care to guess where that’s hung up? RINO and democrats in Congress… So what about Poland? Ibid and ditto: His pick there was announced back in February and to us it seems specious to blame Trump (packaging it as “neglect”) when it fact the problem is not with Trump, it’s with Congress.
Then there’s the whole Globalist Mindset that permeates the Ure-a-pee-in Onion with their megalomaniacal thinking in Brussels. The “sprouts” have been running a 30-year Ponzi Scheme – and after sequentially bankrupting members, they just “toss another country on the fire” – which is why Ukraine is so ripe and desperately needed. Big oil reserves of the Dnieper Basin and oh, boy…we’re gonna be solvent long-term any time now… (uh-huh…whatever, dudes…)
In the larger scheme, Trump doesn’t own the real bastard-child of Europe: It’s imported Immigration Mess. It was an imported bailout but now the social bills are coming in. Big. And Britain wants the hell out. Can you blame ’em?
We – America citizens and tax-slaves – have no obligations to bail out Europe, either. If they don’t have their shit together enough after 100-years and two bloody wars America has stepped in and won for their sorry asses, at some point we’ve got to cut them loose. GTFU (look it up)
Even the UK is sick of economic appeasement of Brussels – which is why Teresa May and her Globalist choreographed “go slow and let’s not really BREXIT” bullshit will get her thrown out of office.
Just this morning, we see Boris Johnson making it clear – May’s in big trouble. See the Daily Mail’s “Try not to smirk too much, Boris: Johnson poses for picture of himself signing his lengthy resignation letter as he accuses May of letting ‘Brexit dream die’… and Jacob Rees-Mogg says he will make a ‘brilliant’ Prime Minister.”
Now let me take you to school on WHY I pay attention to Jacob Rees-Mogg’s remarks. Know who he is?
Why, he’s one of the offspring of Lord William Rees-Mogg – who authored – along with James Dale Davidson, some of the most brilliant socio-economic books ever. If you haven’t read their classic The Sovereign Individual: Mastering the Transition to the Information Age, then you’re not keeping up with the class. The late Lord Rees-Mogg was genius and we figure his Tory son didn’t fall too far from the tree.
Whole point (yes, is there one? lol) is to point out that the “daily news” finds more profit in pandering to Digital Mob Rule than putting a large number of inter-related facts into useable context.
No, Trump is not ignoring Europe at all.
He’s just caught between the shake-down artists on the Hill in Washington and those sprouting from Brussels. And anyone who isn’t painting this larger context (along with the billionaires who are trying to scuttle the BREXIT plans through their socialist allies) maybe should be taken with more than the recommended daily dose of salt.
Peoplenomics tomorrow – and in it? Our analysis of how the Russian Military is working the Digital Webolution online…oh, God, do we know how to have fun, or what?