There are some simple themes to this morning’s rather short – and to the point for a change – report.
1. As you will see in the Coping Section, if Global Warming was real, would China be building islands in the South China Sea?
We can’t help but notice the Washington/Amazon Post is going to great lengths t5o explain “Here’s how t5he South China Sea ruling affects U.S. Interests.”
As much as anything, the regional tension-building might be seen as an Alibaba vs. Amazon proxy war. Just like the major oil companies and the Middle East…
2. We know that governments need to have threats in order to extort large (30% and up) tax tribute from their citizenry.
So it really doesn’t sit well with the political powers that be to have some (Donald Trump) pointing out that “Obama is the founder of Isis.”
Point is, you can’t just ignore events – they all have roots that go back in time and things in the world are more evolutionary than revolutionary, contrary to what the MSM/lamestream imply by their 3-second sound bites and lack of context.
3. And as if that isn’t enough, we have Russia getting their dander up a bit today since there are reports that Ukraine is sending “terrorists” in to cause havoc in the Crimea.
We are watching these main theaters of conflict because we are anticipating the Obamanation – which includes president to be elected Clinton pulling off a fine October Surprise.
The only matter that’s really open to discussion is a) who will it be centered around (China, ISIS, or Russia?) and will it work. (Statistically, given the room temp IQ of most Americans that’s a dumb thing to even ask…my deflationist pal Jas says we’re mostly a nation of born and bred dopes which is arguably a charitable assessment.)
Which gets us to the market.
Yes, they are going up.
It’s not that market’s don’t climb a wall of worry. It’s just that they do even better climbing a wall of stupidity…which is what we have become.
Dow Futures were up 50, which means we should make back the loss from Wednesday and then some in today’s session.
There is really no new news, so let’s move along.
That Dead Pool of Capital
How big is it? (This is the money that is our of markets and in things like cash…because the elites are not really as smart as they put on…)
Here’s a CNBC story – that we have no reason to doubt that puts the amount in the range of $1.7 trillion dollars.
As we have explained until we are green in the face, this is why the M2 money velocity is at the lowest level in our lifetimes:
Think of Velocity as inventory turns of money. If you have a $20 bill and can spend it 10-times a year, then you get $200 of economic activity.
Gven that the turnover of money is extremely low (1.302 times at the Money Zero Maturity level presently) there ain’t much in the way of growth gong on in real terms.
When we get the dumb of the elites trying to make money and the bond rates finally move up, then stocks should (amazingly) double, or so.
This is not to say you will be able to buy much more – because that will be coming with some inflation, of course, but we sit back looking at the 1921-1929 period and wonder how high and how soon…
Imbalance of Trade Hints
We can get a pretty simple idea of how the trade deals (secret as they are) are really doing for America by looking and import and export prices.
Hot off the press release from the Labor Department this morning we see that:
Imports All Imports: U.S. import prices continued to advance in July, ticking up 0.1 percent. Prices for imports have not recorded a monthly decrease over the past 5 months and increased 3.0 percent since last declining in February. Prior to July, the increases were driven by rising fuel prices. In contrast, in July, nonfuel prices led the advance and fuel prices recorded a decrease. Despite the recent increases, import prices remain down on an over-the-year basis, falling 3.7 percent over the past 12 months. Import prices have not recorded a 12- month advance since 2 years ago when the index rose 0.9 percent between July 2013 and July 2014.
“Und zo…” (with my best Austrian economics accent) “Vee must look at zee osser zide, too…”
Exports All Exports: Prices for U.S. exports increased 0.2 percent in July, after rising 2.4 percent over the 3 previous months. In July, higher nonagricultural prices more than offset a decrease in agricultural prices. The price index for exports last recorded a 1-month decline when the index edged down 0.1 percent in March. Even accounting for the recent advances, export prices declined 3.0 percent over the past 12 months and have not increased on an over-the-year basis since the index advanced 0.4 percent in August 2014. All Exports Excluding Agriculture: Nonagricultural prices increased 0.3 percent in July following a 0.5 percent advance the previous month. In July, rising prices for nonagricultural industrial supplies and materials as well as consumer goods drove the overall rise. Prices for nonagricultural exports fell 3.0 percent over the past 12 months and declines for each of the major end-use categories contributed to the decrease from July 2015 to July 2016.
Class project: Spreadsheets due by noon showing how this related to the Balance of Trade in coming months….
Hint: It’s really a problem of quantities, not just prices, so see our Ports data report on the Peoplenomics side…
Good-bye Local Cops
The Obama administration – not satisfied with flooding America with immigrants who haven’t been vetted properly – is now taking over local police departments.
The mechanism here is simple: The FedGov sends in the Lynch Mob (Department of Just Us and no we won’t go after president Hil) and they enter into an “agreement” with the local constabulary…and now who is in charge?
But the big pattern is clear in places that have had any headlines associated with them: FedGov will take over local police.
Which leaves us with an interesting question of what about local sheriffs in all this?
Point is, if you stand back, you can see the move of Federalized Police taking shape. These “agreements” between the DOJ and police departments are phase 2.
Phase 1, if you slept through it, was the issuance of MRAPS and such…
Gee, we can hardly wait for phase 3 which will not doubt involve state governors going all=in… that may be a year or so out, but remember where you read it first.
Lies Unraveling Dept.
For the longest time, we have reported on the strong correlation between fracking and increases in earthquake in –places like Oklahoma.
The problem = as Oilman2 – explained back when is not so much the fracking as the wastewater deposal that goes with fracking.
The oil and gas industry consistently held there is no relationship, yet the data is solid.
So no comes the “Bit Corporate Lie Unravels” part as a story in USA Today headlines that “Increase Regulation may be easing Oklahoma earthquakes.”
Kind of like government does with corporations that are too big to discipline “We won’t admit to any wrong-doing but we agree in the future not to…”
Which is how this shit works out all the time.
Little people get screwed (or cracked foundations) but the big fish? Well they just keep swimming, don’t they?
Me Me Me Department
If you really give a rip about the attention-seeker who was climbing Trump Tower to meet with the presidential hopeful, the follow up is over here.
With futures holding +55, looks like a great morning for corned beef hash with a couple of eggs, don’t it? My QQQs “vill be back…” Means the price could have been worse, I s’pose…