Month: July 2019

Authored by Danielle Lacalle,

If there is something that is evident is that the United States does not need a rate cut.

With the economy growing at 2.1%, unemployment at 3.6%, creating 170,000 jobs per month, and estimated underlying core inflation of 2%, no objective data justifies cutting rates that are already artificially low. Wages are rising by 3% and credit growth for companies and families is solid.

There is also no public sector financing problem. The 10-year US bond trades at a 2.05% yield, consistent with the country’s growth and inflation. In real terms, the United States borrows at almost no cost and without Federal Reserve support, as all bond demand comes from the secondary market.

If the Federal Reserve cuts rates it can be for two reasons:

• One, because it expects a drastic and abrupt worsening of the economy, but that is apparently not the case, as the Fed itself talks of a “solid” economy.

• The second reason would be more concerning. The Federal Reserve would cut rates as a reactive measure against the monetary assault of the ECB (eurozone), the PBOC (China) and the BOJ (Japan).  That is because it is recognizing in a veiled way that we are in a dangerous bubble inflated by central banks, and that we are heading for a currency war. It is no surprise that the dollar index (the DXY) has risen despite expectations of lower rates and even repurchase of bonds via reinvestment of interests in the United States. When all major economies “copy” the Fed without having the financial balance, economic dynamism and global reserve currency of the United States, they are basically implicitly saying “buy dollars”.

Constant easing has created major imbalances, from asset bubbles to rising zombie companies (“Asset Bubbles to Zombie Companies: The Dark Side of Rate Cuts”).

In the eurozone, there is a similar case. There is no need to cut rates and launch another stimulus, which by the way has never been abandoned, by the way, since all expirations are repurchased). The excess liquidity in the ECB exceeds 1.79 billion euros, rates are already negative and the eurozone governments issue debt at negative and artificially low yields. The credit market shows the risk of dangerous bubbles when the spread between junk and high-quality bonds has fallen to historic lows.

The problem of stagnation of the eurozone and other economies has nothing to do with rates. Businesses and consumers are not going to take more credit or invest more due to a 0.5% change in already artificially depressed rates. The problem of stagnation in many economies is not due to lack of monetary stimulus but its excess. Zombie debt is perpetuated, overcapacity is maintained and malinvestment in high risk and low productivity sectors is encouraged.

The risk to markets is that investors fall again into the trap of betting on “the worse, the better”, that is, taking more risk despite the fact that the earnings’ season and macro data are disappointing, with traders betting it all on new liquidity injections.

The Fed and the ECB face the devil’s alternative. If they normalize monetary policy, they risk an abrupt and widespread correction in risky asset prices, and if they do not normalize, they lose tools to face a true cycle change. The Federal Reserve still has some tools, but the ECB is already in diminishing return territory in monetary policy.

The United States does not need a rate cut, but it probably will. Reducing exposure to the most cyclical part of portfolios may be a good idea because the race towards negative rates of the global economy has only one result: secular stagnation. Central banks will keep risky asset prices high, but we cannot forget collateral damages. When high productivity is fiscally penalized and monetary policy is rewarding the most inefficient and indebted parts of the economy, growth suffers and bubbles reach systemic size.

via ZeroHedge News https://ift.tt/2ZgHiYp Tyler Durden

Millennials will tell anyone – the “greatest economy ever” is a hoax. That is because many young adults aren’t just priced out of the housing market; they have never recovered from the 2008 financial crisis.

The Wall Street Journal (WSJ) investigated several trends that have transformed millennials into a generation of renters. The Journal’s latest report is an eye-opener into the shaky finances of the next generation that will take over the entire U.S. workforce by 2024.

Alex Ruiz, 29, and his wife, Stephanie Johnson, spoke to WSJ about insurmountable student debt, little savings, rising rents, the affordable housing crisis, and the bleak outlook on life.

The couple is located in Asheville, N.C., where residential real estate markets have jumped 70% post the financial crisis, making it unaffordable for the pair to buy a home. Rising rents and student loans have drained every last penny out of the two, who are unable to save for a downpayment.

“Day to day we’re OK generally,” said Mr. Ruiz, a case manager at a government-funded agency.

“But the depressing part is when we take a hard look at the possibility of our future.”

For many generations, homeownership was a pillar of the American dream. Since the dream died shortly after the 2008 crisis, many are rethinking what that new dream could be.

Millennial homeownership rates have crashed over the last decade. The median age of a home buyer is 46, the oldest since the National Association of Realtors began keeping records in 1981. The trend is expected to accelerate into 2020.

Millennials who became young adults in the stock market and real estate crash a decade ago, came out in the aftermath with “no bargaining power when they entered the job market, crimping their earnings ever since,” said The Journal. They watched their families get obliterated with financial hardships, determined that owning a house wasn’t in their interest.

Now that millennials are generally at an age where it’s accustomed to settling down: buy a home, get married, and have children — many are rethinking the American dream because they cannot afford it.

From 2012 to 2018, the average price of lower-priced homes jumped 64%, according to mortgage-data tracker CoreLogic, while the price of higher-end homes increased just 40%. During the same period, wage growth for average workers remained depressed.

A study earlier this year showed that six out of ten millennials don’t have $500 to cover their rent or food expenses; in the event, they lose their jobs in the next downturn.

The effects of poor financial health have forced many millennials to live in their parents’ basements, according to census data. This means many can’t even afford rising rents in many of the Case-Shiller 20-Cities.

“Lower homeownership for young adults means lower economic growth,” said Sam Khater, chief economist of mortgage-finance giant Freddie Mac. “That’s it in a nutshell.”

The millennial homeownership rate is at the lowest levels in three decades. About 40% of young adults, ages 25 to 34, were homeowners in 2018, according to Freddie Mac. That is down from 48% in 2001 when Gen X-ers were young adults.

Stagnate wage growth is the crux of the problem. Home prices have dangerously outpaced wage gains over the last decade. From about the end of 2000 to the end of 2017, median home prices increased 21% after adjusting for inflation, while median household income grew 2%.

The median net worth for millennial households crashed by a third from 2001 to 2016 after adjusting for inflation, according to the Federal Reserve.

Even if millennials start purchasing homes this year through earlier 2020 – they’re likely buying the top of the market.

The effects of not buying, or buying late, should become more evident through the early 2020s as millennials settle down. The median family net worth of homeowners is $230,000 compared with just $5,000 for renters.

Without home equity, millennials are screwed in the next economic downturn.

And several decades from now, around 2040, millennials will keep working through their retirement years.

Which leaves us to today, as the 2020 U.S. presidential election is around the corner, many Democratic presidential candidates are offering student loan debt forgiveness and universal income to struggling millennials.

A snapshot of the student loan crisis: Only 26 people were granted debt forgiveness out of 34K applicants in the U.S. this year, says @CNBC.

A recent economic study suggested that canceling student loan debt could actually be a huge boost to the economy: pic.twitter.com/FMAjfsXhvK

— AJ+ (@ajplus) November 29, 2018

Could millennials, who are over 75 million strong, have a much more significant impact on the election than previously thought?

via ZeroHedge News https://ift.tt/2YyyHTJ Tyler Durden

Authored by Jake Johnson via CommonDreams.org,

Sen. Ron Wyden issued a scathing statement late Monday warning that President Donald Trump’s pick to serve as director of national intelligence is so unqualified that he could put lives at risk.

Rep. John Ratcliffe (R-Texas), an ardent Trump loyalist, “is the most partisan and least qualified individual ever nominated to serve as director of national intelligence,” said Wyden, a Democrat from Oregon and a senior member of the Senate Intelligence Committee.

“The sum total of his qualifications appears to be his record of promoting Donald Trump’s conspiracy theories about the investigation into Russian interference and calling for prosecution of Trump’s political enemies,” Wyden said.

“Furthermore, he has endorsed widespread government surveillance and shown little concern for Americans’ rights, except for those of Donald Trump and his close associates,” Wyden continued.

“Confirming this individual would amount to an endorsement of this administration’s drive to politicize our intelligence agencies,” the Oregon senator concluded. “This is a dangerous time, and America needs the most qualified and objective individuals possible to lead our intelligence agencies. Anything less risks American lives.”

.@RepRatcliffe is the most partisan & least qualified individual ever nominated to serve as DNI. His only qualifications seem to be promoting Trump’s conspiracy theories about the investigation into Russian interference & calling for prosecution of Trump’s political enemies.

— Ron Wyden (@RonWyden) July 29, 2019

Wyden’s statement comes days after Trump nominated Ratcliffe — who has no background in intelligence — to replace current Director of National Intelligence Dan Coats, who is stepping down next month.

The president reportedly liked the way Ratcliffe questioned former Special Counsel Robert Mueller during his testimony before Congress last week.

In an interview with Politico on Monday, Sen. Chris Murphy (D-Conn.) described Ratcliffe as “a television character that the president has watched on TV.”

Trump, said Murphy, “wants to put somebody in this position who’s going to agree with his political take on intelligence.”

“I’ll certainly do my own evaluation,” Murphy added, “but it strikes me as a very inappropriate choice for the job in a moment when we are trying to lift intelligence out of the political soup.”

via ZeroHedge News https://ift.tt/2GDQkY4 Tyler Durden

The secret is out for a Chinese blogger who called herself “Your Highness Qiao Biluo”, according to the BBC.

The blogger, who had presented herself as a “young” and “glamorous” girl in videos online, is actually just an average middle aged woman. A technical glitch during one of her livestreams revealed the truth. 

It stunned her fans, who were apparently unaware that everyone on the internet may not actually be who they present themselves to be.

Biluo had a follow count of over 100,000 on Douyu and is now believed to have used a filter to alter her face. She had been renowned for her “sweet and healing voice”. China’s Global Times noted that Biluo had been “worshipped” as a “cute goddess” by some members of her audience. Some followers even sent her as much as $14,000.

But during a joint live stream with another user, the filter she was using stopped working and her real face became visible to her viewers. She only noticed the glitch when “people who had signed up to her VIP access room started exiting en masse,” according to the article. 

Many of her followers (who, surprise, were primarily men) stopped following her immediately and withdrew some of their transactions after her identity was revealed. Most commentators didn’t sympathize with the men and said they deserved to be tricked for not verifying her identity in the first place. 

Since the incident, Biluo has suspended her platform. Some users claimed she was conning people out of their money, while others asked people not to judge her because of her looks. The other live-streamer, Qingzi, showed no reaction to Biluo’s face being revealed.

The story has gone viral in China, with more than 600 million people reading posts about it. China has 425 million live streamers and the use of face filters is “common” across many social media platforms. 

Users on YouTube captured the footage: 

via ZeroHedge News https://ift.tt/2Yh9IFh Tyler Durden

Authored by Charlotte Cuthbertson via The Epoch Times,

Children are being rented, bought, recycled, and kidnapped so that single adults, mostly men from Central America, can gain quick release into the United States after crossing the border illegally.

The cost of renting a child varies.

“We’ve had indications … that it could cost anywhere from a few hundred—or even in some cases, less than $100—up to $1,000 or more,” said Kevin McAleenan, acting Secretary of the Department of Homeland Security (DHS), during a congressional hearing on July 18.

McAleenan said in one case, a 51-year-old illegal alien had purchased a 6-month-old baby for $80 in Guatemala so that he could easily get into the United States. The man, a Honduran national, confessed to border agents when he was faced with a DNA test.

“We’ve seen all manner of smuggling organizations communicating to potential customers and to those crossing the border how to bring a child with them to be allowed to stay in the United States,” McAleenan said. “They’ve been active in advertising, literally on Facebook and on the radio in Central America.”

Homeland Security Investigations, a division of ICE, sent 400 agents to El Paso and Rio Grande Valley, Texas, in mid-April to interview families that Border Patrol suspected were fake. In the last eight weeks, HSI special agents have identified 5,500 fraudulent families—about 15 percent of all cases referred.

McAleenan said agents have uncovered 921 fake documents and 615 individuals have been prosecuted for trafficking or smuggling a child.

“That tells me that we might be scratching the surface of this problem and the number of children being put at risk might be even higher,” he said.

“Everybody knows that if they bring a child, they’ll be allowed to stay in the United States—they call it a ‘passport for migration.’ I heard that directly from a gentleman from Huehuetenango, the western-most province of Guatemala.”

He said almost every summary of the cases he has seen mentions the same thing:

“The subject stated that he made the attempt because he heard in his hometown that anyone traveling to the United States with a child will be released.”

The southern border has become so overwhelmed that most illegal aliens don’t even claim credible fear for asylum anymore, knowing they’ll still be released expeditiously into the United States—especially if they have a child.

In Yuma, Arizona, less than 10 percent of illegal aliens make an asylum claim, sector Chief Anthony Porvaznik said on April 17.

300,000 Children

Since Oct. 1, 2018, more than 300,000 children have crossed the southern border, according to McAleenan. Most of them entered as part of a family unit, but 67,000 also entered as unaccompanied minors. Family units increased by 469 percent from the first nine months of the 2018 fiscal year to the same period in the 2019 fiscal year.

The legal loophole that is fueling the sharp increase in family units was opened in 2015 by a California judge, who amended the Flores Settlement Agreement to prohibit the detention of families for more than 20 days. Previously, the 20-day rule was applied to unaccompanied minors only.

An immigration case cannot be adjudicated within 20 days, so families who cross the border illegally are now released by Border Patrol within days, with a future court date that most fail to honor.

One of the most telling statistics is that of men crossing the border with a child. In 2014, fewer than 1 percent of all men apprehended by Border Patrol in the Rio Grande Valley Sector had a child with them. That number now sits at 50 percent, according to Rodolfo Karisch, chief Border Patrol agent for that sector.

McAleenan said smugglers pair up adults and children. “If they have an individual who wants to go to the United States and someone else has a child that they might want to make some additional money renting [out], or they want the child delivered to a relative in the United States,” they’ll buy fake documents and then get smuggled to the border.

“There’s a whole fake document operation in all three countries,” McAleenan said, referring to Guatemala, Honduras, and El Salvador.

“The vulnerabilities in our legal framework [are] incentivizing smugglers and families to put children at risk. The recycling problem is maybe the worst manifestation of that,” he said. Recycling refers to when a child is used by an adult to get across the border easily as a “family unit,” then the child is sent back to be used again.

“ICE now has three significant cases, multiple cities around the country, where they’ve identified a small group of children—say five to eight children—who are being used by dozens of adults to cross our border seeking release into the United States.”

The adults involved in fraudulent family claims are prosecuted by the Department of Justice for federal crimes including: immigration crime, identity and benefit fraud, alien smuggling, human trafficking, and child exploitation.

Changing Flores

McAleenan said Congress could make the biggest impact—“not only on the flow, but on protecting children”—by making a change to the Flores agreement.

He said that prior to the 2015 change to Flores, the Obama administration started detaining families together for the duration of their immigration case, which takes around 45 days. The flow of illegal immigrants reduced in response, as those with meritless asylum claims were deported.

“If people are not successful in coming with a child being released, they’re actually getting a decision from an immigration judge resulting in repatriation for the vast majority, that would mean others would not try to come,” McAleenan said.

Although almost 90 percent of those who claim credible fear when presenting themselves at the border pass the initial screening, less than 20 percent are granted asylum relief by an immigration judge. For Central Americans, that number is less than 10 percent.

Rep. Katie Hill (D-Calif.) told McAleenan at the hearing that a Democrat-controlled House will not amend the Flores agreement, nor will it provide funding for more detention beds.

McAleenan pushed back, saying he’s not ready to accept that a system that worked under the Obama administration five years ago would not be accepted by Congress today. He said back then families were kept together for 40 to 50 days in a campus-like setting with education, recreation, medical care, and courtrooms on site.

“We’re not seeing successful results in immigration cases when anyone is released from being detained in custody, but especially for families—they’re more likely to cut off their [tracking] bracelets; they’re less likely to show up for hearings; they’re less likely to respond to a final order of removal,” McAleenan said. “So being able to address that at the border in an expedited and fair way with due process is a much better solution than what we’re doing now.”

He said he’s already discussing bipartisan options with the Senate Judiciary Committee, but he’d like to start a discussion in the House.

67,000 Unaccompanied Minors

McAleenan is also concerned about the increased number of unaccompanied minors coming across the border and the legal loopholes that prevent them from being sent back home.

The Trafficking Victims Protection Reauthorization Act (TVPRA) has been established for years to help victims of trafficking; however, a loophole prevents the United States from returning children back to their home countries unless they are from Canada or Mexico (contiguous countries).

McAleenan said even if Central American countries want their children back, U.S. law prohibits it.

“We’ve had all three ambassadors from the Northern Triangle countries assert that those governments should have some say in what happens to that unaccompanied child,” he said.

Instead, an unaccompanied child gets moved from Border Patrol to Health and Human Services (HHS), which then finds a sponsor in the United States to place the child with.

Currently, around 11,000 unaccompanied minors are in the care of HHS, creating a proxy foster care system. The vast majority (88 percent) hail from the Central American countries of Guatemala, Honduras, and El Salvador. Most are aged between 15 and 17.

“The number of unaccompanied minors entering the United States during this fiscal year has risen to levels we have never before seen,” said Jonathan Hayes, before the House Judiciary Committee on July 25. Hayes is responsible for the unaccompanied minor program within the HHS’s Office and Refugee Resettlement department.

Hayes said that as of June, the average length of time that a child stays in HHS custody is approximately 42 days—a “dramatic decrease” from late November 2018, where the average length of care was 90 days.

McAleenan said it’s often a parent, who is already in the United States illegally, who pays a smuggler to deliver their child up to the border.

“I don’t think most people realize that most of these unaccompanied children are being released to parents or relatives in the United States who are also here unlawfully, who may not have permission to work in the United States,” McAleenan said.

New restrictions, placed by Congress in the latest round of appropriations, include a provision that illegal aliens in a household with an unaccompanied minor are now exempt from deportation.

via ZeroHedge News https://ift.tt/2GC6uS2 Tyler Durden

Despite record credit injections and endless easing, China’s economic survey data goes from bad to worse.

• While China Manufacturing PMI managed a de minimus gain from 49.4 to 49.7, it remains in contractionary territory for the 7th month in the last 9.

• China Services PMI continued to slide, back to its lowest since 2018.

Confirming global weakness seen in Japanese and European PMIs.

In a seemingly desperate reach, Bloomberg notes that the stronger result (49.4 to 49.7) signaled some optimism is emerging in the Chinese economy in spite of lingering uncertainty over trade talks and domestic demand.

PMI data improves as “the government’s tax cuts have helped improve growth slightly,” Yao Shaohua, economist at ABCI Securities Co. in Hong Kong

Under the hood things are less rosy with Manufacturing New Orders and Employment both contracting…

And Non-Manufacturing Employment is contracting…

We are less enthusiastic as July has more working days than June, which could also have helped lift production.

via ZeroHedge News https://ift.tt/2ZjAE3L Tyler Durden

A new survey reveals that some 28% of food delivery drivers admit to taking food from a customer’s order, while 54% admit they’ve been ‘tempted’ by the smell of their edible cargo. 

The study, conducted by foodservice distributor US Foods, also reveals that 17% of customers complain that their food wasn’t hot enough, 16% say food is consistently late, and 10% report that their food was mangled during delivery. 

17% of customers say they’ve had drivers plop their food outside the door and just leave, while 29% have had a driver refuse to bring their food all the way to the door. 

As far as driver complaints, 60% say they received a weak or no tip, while around 39% say that the customer’s instructions were unclear, or that nobody picked up the phone. 

Our survey establishes the most common complaints in the world of food delivery apps. Not surprisingly, people want food served warm, fresh and on-time – especially when they’re paying a premium for it. 

Of course, frustration extends beyond the customers. Of the nearly 500 deliverers we surveyed, topping the list is weak tips, food not being ready at the restaurant, and lack of communication with customers. To remedy this, many operators are scaling back delivery services and menus so as not to overwhelm the kitchen and create a negative experience for both the dine in and delivery customers. -US Foods

The top apps from the survey are Uber Eats, Grubhub, DoorDash and Postmates in that order, while most food takes around 30-40 minutes to arrive. 

As far as tipping goes, most people tip through the app, while 66% say the delivery and service fees affect how much respondents tip. Around 25% of tips are $3, while the most common amount (31%) is $5.00. 

US Foods surveyed 1,518 American adults between May 9 and 13, 2019, who have used food delivery apps, as well as 497 American adults who say they have worked as a deliverer for at least one food delivery app. Respondents’ ages ranged from 21-63 with a median age of 30.

via ZeroHedge News https://ift.tt/2LPzABp Tyler Durden

Authored by Michael Krieger via Liberty Blitzkrieg blog,

Today’s post revolves around a subject I’ve been thinking about since early 2017, when I noticed much of the population separating into pro-Trump or anti-Trump factions that were becoming increasingly tribal, vitriolic and hostile. I wrote about it in the piece, Lost in the Political Wilderness, and things haven’t improved much since. Fortunately, around the same time I came across the theory of Spiral Dynamicswhich provided me with a useful framework through which to understand consciousness and the importance of guarding your mind and emotional state in a world that encourages fear, tribalism and anger.

Though we live in a time where more diverse information is available at our fingertips than at any other period in human history, we’re still presented with news and narratives via specific channels; whether that be an alternative media figure, a mass media outlet or a tech giant algorithm. The news and commentary that somehow gets in front of us on a daily basis shapes our view of the world just as it always has, and this in turn triggers certain emotions – joy, sadness, anger, fear, inspiration, etc. There’s space for all that in a human life, but the ones I’m most interested in for the purposes of this piece are fear and anger.

For the vast majority of us, fear and anger should not dominate everyday life, and when they do manifest, it’s important we recognize and think about it consciously. For starters, the moment you read a headline or an article that triggers anger or outrage, I suggest taking a deep breath. Then ask yourself if this is something that genuinely deserves your attention, or is it perhaps an intentional distraction of some kind. Politicians and media outlets alike tend to make a living off manipulating your emotional state so be careful what you allow these sources to do to you.

Nobody reading this has the time to be outraged about every possible thing there is to be outraged about, so I suggest being as selective as possible when providing space in your day for this sort of emotion. Many of the issues people become enraged about on a daily basis have been intentionally manufactured or put in front of them for the purpose of pitting people against one another — in other words, for dividing and conquering — or for the purpose of distraction.

Which brings me to the next point. How can you tell if you’re being manipulated in a way that isn’t good for you or society at large? For one thing, if a piece of news or information results in you being disgusted or hostile at a vast collection of other people you consider to be on the “other team” politically speaking, you’re probably being played.

Irrespective of where you stand on the ideological spectrum, most people aren’t saints or sinners, we’re just flawed but decent people trying to do the best we can. Any news or commentary that encourages you to despise a large group of other humans simply because they vote differently, or come from a distinct culture to your own is generally not doing you or anyone else any good. Any time you find yourself triggered in such a way it’s important to be as conscious as possible of what is happening and why.

Bad people crave power more than good people, and are also willing to do anything to get it. So bad people are in power.
Why is this so complicated for some people?

— Michael Krieger (@LibertyBlitz) July 26, 2019

Although there are certainly major issues worthy of disgust that require serious attention, we only have so much spare time each day and a limited amount of emotional energy to spend. My suggestion is to spend your days consciously and wisely, and avoid being played and manipulated. Moreover, the best thing any of us can do on a daily basis is work on ourselves. Most of our energy is best spent trying to be better, more loving, and more understanding in our everyday conversations and relationships in real life. Just as anger and outrage can be viral and result in self-fulling negative societal outcomes, kindness is likewise contagious.

We’re all here for such a brief time and most of us (myself included) don’t always guard our emotional space as carefully as we should. Fear and anger are natural human emotions, but should be dealt with consciously and with care. Next time you find yourself being triggered, take a deep breath and ask yourself if it’s worth your time and energy. If not, move on. Life’s too short.

*  *  *

Liberty Blitzkrieg is now 100% ad free. As such, there’s no monetization for this site other than reader support. To make this a successful, sustainable thing I ask you to consider the following options. You can become a Patron. You can visit the Support Page to donate via PayPal, Bitcoin or send cash/check in the mail.

via ZeroHedge News https://ift.tt/2MqNp8P Tyler Durden