Month: August 2024

The 2024 presidential election race is about to take its next unexpected turn.

In minutes, Robert Kennedy Jr. is expected to suspend his presidential race, and if the rumors are true, he will endorse Donald Trump in a stunning rebuke to the party that is inexorably linked to the legacy of his father and his uncle, brothers Jack and Bobby Kennedy.

Watch Live (due to start at 2pmET)

While Richard Truesdell and Keith Lehmann point out that RFK Jr. was never a serious candidate, he had a famous name (to those of us old enough to remember), a tinge of legitimacy, and a wealthy billionaire running mate to keep the train going.

It wasn’t enough to reach office but it got his foot in the door after RFK Jr. was shunned by Democrat Party insiders in their initial effort to prop up husk of a president, Joe Biden.

Now they are stuck with Biden’s insurance policy, Kamala Harris.

It terrified the Dems to have RFK Jr. in the running, so they rigged the rules, banned him from state ballots, and vilified him as extreme. And to dampen his impact on the Harris-Walz ticket, after trying to deny him ballot access and remove RFK Jr. from the state ballots he made his way to, Democrats will now attempt to keep him on ballots to hurt Trump.

Such hypocrites.

He’s an environmental attorney, about as Lefty Democrat as you can get! He was expected to capitulate, kiss the crown, and get in line with everyone else. Instead, he went rogue. He showed them by unexpectedly running as an Independent. 

In exchange for his potential endorsement, what can Trump promise?

A cabinet post? Being named director of the FBI to clean up that mess? Or ironically, heading up the CIA? Maybe after six decades, we’ll find out exactly what was the role of the agency in assassinating his uncle and if it had any role in his own father’s assassination.

He’s now rumored to be ready to endorse Trump and is expected to announce his campaign suspension in Phoenix, where Trump is scheduled to hold a rally nearby. Coincidence? Unlikely.

If this happens, it will take much of the post-DNC momentum away from Harris-Walz and focus attention on the PR value of RFK Jr.’s endorsement.

Imagine the son of RFK and the nephew of JFK, endorsing a Republican candidate for the presidency, Donald Trump no less.

It will be a net positive gain for Trump, although not much and only for so long. But it could make all the difference in a race that’s expected to be tight in the all-important swing states—especially Pennsylvania.

After spending millions to keep him off the ballot, the Democratic National Committee released a memo Friday dismissing the potential impact Robert F. Kennedy Jr.’s endorsement of Donald Trump will have on the presidential race.

The DNC claimed, without evidence, that the only reason Kennedy was in the race was to be a spoiler candidate to help former President Trump, but derided him as “a near-negligible factor” with “no meaningful base of support.”

The DNC memo purported, again without evidence, that Trump was “at a low point and acting out of desperation.”

“Embracing RFK Jr. now —when he has nothing to offer but months of disqualifying revelations—is not a decision a campaign makes when they’re acting from a position of strength.”

The memo went on to accuse RFK Jr. as having an “unsavory and reckless past, ties to MAGA donors, and MAGA-lite positions on abortion bans and January 6th pardons,” and assert that “his support has dwindled to make him a near-negligible factor.”

“The little support that remains is soft, split across ideologies, and disproportionately among lower propensity voters. With no meaningful base of support and sky-high negatives among Democrats, RFK Jr.’s threat to VP Harris was neutralized,” the DNC memo stated.

The DNC memo argued Kennedy could actually hurt Trump because of his allegedly “controversial” positions on the Jan. 6 Capitol riot, the Sept. 11 attacks and vaccines.

Right now, in their post-DNC euphoria, Democrats believe that they have positioned Harris to win.

Don’t be fooled by their misplaced optimism. It’s an illusion even when presented by seasoned political analysts like Mark Halperin.

Where Things Stand in the Swing States

Authored by Richard Truesdell and Keith Lehmann via American Greatness,

From west to east, let’s look at the latest polling, factoring in the impact of the potential Kennedy endorsement factored in, considering how the polls misread the 2016 and 2020 results. Remember that if Trump wins the states he did in 2020 and adds Georgia and Pennsylvania, he’s at the 270 Electoral College votes needed to become the 47th president of the United States. We are also factoring in Harris’s surge in polling in the wake of her anointment after Joe Biden ended his reelection bid. The latest polling and anecdotal analysis indicate that the surge is fading and that the Harris-Walz ticket, especially in the wake of Walz misstating (the way the mainstream media is couching his lies) his personal story. On Thursday afternoon on her podcast, Megyn Kelly ripped Walz apologist Rep. Adam Smith (D-WA) a new one in a very contentious interview. That damage on the stolen valor issue has yet to be fully baked into the electoral cake.

(Response bias and Democrat oversampling in many of the polls—most specifically the New York Times/Sienna poll—over the last month radically shifted the polls after Biden ended his campaign.)

We should note that Harris is lagging behind Biden’s polling at this point in 2020 with Black, Latino, and blue-collar voters in all of the crucial swing states.

Nevada: In recent election cycles, Nevada is trending right. With its large hospitality industry voter base in Las Vegas, Trump got out in front of Democrats with his no taxes on tips policy position. It was such a positive move, that it was quickly copied by Harris. But hospitality segment workers are smart enough to realize that Trump is the better choice to look out for their interests. Taking into consideration Trump’s increasing appeal to the state’s Hispanic community along with rural Nevada’s traditional right leanings, Trump could potentially win the state by as much as five percent, especially when the way past polls have consistently underestimated Trump in both 2016 and 2020 even though he lost Nevada in both previous races.

Arizona: Arizona was one state that massively benefited from the move from Biden to Harris. Before the swap, Trump was comfortably leading Biden but that gap closed with Harris actually leading in some polls. But things have swung back in the opposite direction. Factor in RFK Jr.’s withdrawal in a tight race and it appears to shift the advantage back to Trump. What can be important in Arizona is that with the shift back to Trump, can he carry Kari Lake across the finish line? She is currently losing to Democrat Rubin Gallego by up to five percent in most polls. Immigration is indirectly on the ballot in Arizona and, as Election Day approaches, should benefit both Trump and Lake. As with other tight races, just 20 or 30 thousand net votes moving from RFK Jr. to Trump could easily deliver Arizona back to the GOP.

Wisconsin: Harris is currently up by 1 percent in Wisconsin according to the latest Rasmussen polling, which over the last two election cycles has been the most accurate. But several other polls show Trump outperforming his 2020 results. And this is another state where polls in both 2016 and 2020 underestimated Trump’s support. The polling is likely underestimating his support this year as well and if that turns out to be the case, Trump is probably leading by 3 to 4 percent. Democrats will continue trying to keep Harris’s unpopular far-left positions cloaked, much as they did in 2020 with Biden. But it is unlikely that the strategy will work this time. Expect Harris’s numbers to plummet after Labor Day, especially following the first—and currently only confirmed—debate on September 10 in Philadelphia, hosted by the Harris-friendly ABC network. Notably, Democratic shill George Stephanopoulos will not be moderating. Harris’s policies on the border and the economy are likely to face intense scrutiny.

Michigan: Of the six swing states, Michigan is the least favorable for Trump but with its large Muslim population in the Detroit area, Michigan is trending away from the Democrats and Harris knows it. She will try her best to tack away from Biden’s unpopular support for Israel but it’s going to be very difficult to do. This only got worse with Democrat leadership’s decision to not offer Palestinian Americans any speaking slot at the DNC. We don’t think this important voting block will vote for Trump but they can show their displeasure by staying away from the polls in November. In a tight race, that could swing the state to Trump. Also, with its very heavy blue-collar auto workers constituency, Trump’s stance on electric vehicles could prove to be a deciding factor even without RFK Jr.’s endorsement. (More than any other state, in Michigan Harris-Walz is caught between a rock and a hard place on the Israel-Palestinian Gaza conflict. Democrats have alienated both sides.)

Georgia: In a state where Trump lost by 0.2 percent in 2020, even factoring in the state’s large Black population, it appears that Harris is not moving the needle. Trump is very strong in the rural areas and is improving in the Atlanta suburbs he lost in 2020 after winning them in 2016. We expect that Georgia will flip back in 2024, especially if Trump continues to improve his numbers with Black men. Previously, Trump shot himself in the foot with his previous ill-advised attacks on popular Governor Brian Kemp (who is supporting Trump). But yesterday Trump and Kemp settled their differences dating back to the 2020 election with Kemp issuing a full-throated endorsement of Trump. Trump currently enjoys a two percent lead in the polling aggregates and with Kemp’s endorsement its 16 EC votes should go to Trump. We think that with Kemp’s endorsement—who defeated Stacey Abrams for Governor twice and has a powerful statewide machine—Georgia’s is now off the table for Harris-Walz. Look for Trump to win Georgia by four points or more.

Pennsylvania: It’s been our observation since Biden stepped down with Harris taking his place, by selecting Tim Walz instead of Josh Shapiro as her running mate, she’s made a huge mistake with national implications. Those implications? Jewish voters in other crucial swing states will view the snub of Shapiro in a very negative way. It seems that Democrats think they can win the Keystone State without him being her running mate. Pennsylvania has been trending to the right with Republicans enjoying a big edge in new voter registrations. This is one state where RFK’s exit from the race should benefit Trump. In the multi-candidate polls, RFK was taking more votes from Trump than Harris. Depending on which poll you follow, the state is anywhere from +1 for Harris to +4 for Trump. With RFK Jr. just dropping out (and not endorsing Trump), it looks like Pennsylvania’s 19 EC votes will go to Trump giving him the election.

(With an RFK Jr. endorsement combined with Glenn Youngkin’s popularity, is Virginia now a swing state that Trump can flip? This bears watching between now and the first debate in September.)

The RFK Jr. campaign probably peeled off more Dems than Republicans, so this endorsement is going to piss off the Dems in a higher proportion to the votes they will lose. They realize the mistake they made by trying to sabotage Kennedy’s presidential bid, and now an RFK Jr. endorsement puts new swing-state wind into Trump’s sails. To understand the full extent of disillusionment of the Kennedy campaign over Democrat Party sabotage, here is VP candidate Nicole Shanahan—a California Democrat lawyer—eviscerating her party over its naked election interference.

If anything, it will be entertaining to see left-on-left infighting. Dems will not take this endorsement lying down; they will trot out Kennedy’s “weirdness” (seems to be more projection than usual coming from them) and maybe tout his betrayal of the Kennedy legacy as if anyone under 60 even remembers. The left hates defectors from the plantation, no matter what legacy a defector’s surname might suggest.

The 2024 race has been the wildest in modern American history and it’s not even Labor Day yet. And what will be this cycle’s October Surprise? In this crazy year, we predict it’s going to be Biden’s resignation after the one scheduled debate so Harris can run as the official incumbent. Could that swing the final result back to Harris? We shall see. Buckle up, it’s only going to get crazier over the next 70 days.

Two weeks ago, White House National Security Communications Adviser John Kirby told a press briefing that a deal on Gaza is as “close as it’s ever been”. This came after months of overused football references of being ‘at the goal line’.

Now, on Friday, Kirby wants the world to know that the early signs from ongoing Cairo truce talks are “constructive” and that “progress” has been made.

“There has been progress made. We need now for both sides to come together and work toward implementation,” Kirby said, while admitting that talks thus far are preliminary in nature ahead of more in-depth discussions.

On Friday the White House also confirmed that CIA chief William Burns has once again been dispatched, and is taking part in Cairo talks, alongside Israeli intelligence director David Barnea.

But despite the typical optimism and the many prior instances of such rosy statements, and in the end statements which tend to prove meaningless (often resulting in brief oil sell-offs notwithstanding), the reality on the ground is that the warring sides do not appear closer to any peace agreement.

As we detailed Thursday, Hamas and the Palestinian Islamic Jihad (PIJ)  have confirmed they will reject any agreement that does not include an Israeli withdrawal from the Gaza Strip.

“The position of the resistance and the Palestinian people on achieving any agreement is a comprehensive cessation of aggression, a complete withdrawal from the Strip, the start of reconstruction, and the end of the siege with a serious exchange deal,” the joint statement said. 

Burns’ presence at the talks doesn’t appear to have changed anything, following Blinken’s latest trip to Tel Aviv days ago.

Even Israeli media has blasted Blinken’s latest efforts, which some analysts say did more harm than good, and was really all about projecting PR back home as the Democratic National Convention is underway.

Officials speaking to Ynet described that “Blinken made a very serious foul here that indicates innocence, amateurism, naivety, and lack of understanding.”

They underscored that White House officials more simply want to issue optimistic statements in order to prevent the Gaza crisis from overshadowing the Democratic National Convention.

White House spokesman John Kirby said that CIA director Bill Burns arrived in Cairo on Friday and joined the talks on the Gaza hostage deal and the ceasefire. “The process is moving forward. It is important that all sides participate and that the parties continue to work towards…

— Barak Ravid (@BarakRavid) August 23, 2024

Diplomatic sources privy to the negotiations said further of Secretary Blinken’s recent visit (machine translation), “He broadcast optimism from intra-American political considerations, so that the Democratic convention in Chicago would go smoothly, but senior officials of the Israeli negotiating team who listened to his press conference wanted to dispel the speculations.” 

At the same time, from the perspective of the Hamas and Arab side of negotiations, Washington has remained unwilling to bring real pressure to bear on Netanyahu, creating less incentive for the Israeli side to compromise or ‘give up’ anything substantive in order to receive back the hostages.

Uranium stocks in New York are moving higher in premarket trading after Kazatomprom, the world’s largest uranium producer, announced a cut in the 2025 production forecast due to project delays and sulphuric acid shortages. This raised concerns among Wall Street analysts about a potential uranium supply squeeze that could send prices higher. 

Kazatomprom produces about a fifth of the global uranium supply. The Kazakh company revealed in a financial report this AM that its production target for next year will be 17% lower to the range of 25,000 to 26,500 tons of uranium.

Kazatomprom has previously warned that if limited access to sulphuric acid continues throughout this year, and should the Company not succeed in catching up with the construction works schedule at the newly developed deposits in 2024, Kazatomprom’s 2025 production plan may also be affected. The Company is now adjusting its initial intentions for 2025 production volumes of 30,500 – 31,500 tU (100% basis). Kazatomprom’s 2025 production is now expected to be between 25,000 and 26,500 tU (100% basis), an approximately 12% growth compared to its 2024 guidance.

A significant portion of the adjusted 2025 production is attributed to JV Budenovskoye LLP’s production delays as specified above. JV Budenovskoye LLP’s 2025 production is expected at 1,300 tU instead of the previously approved 4,000 tU (more than a 65% decrease).

Meirzhan Yussupov, chief executive of Kazatomprom, wrote in a statement that “the uncertainty around the sulphuric acid supplies for 2025 needs and delays in the construction works at the newly developed deposits resulted in a need to re-evaluate our 2025 plans”.

Here’s a quick take from Goldman’s James McGeoch on the world’s largest uranium producer cutting next year’s production forecast:

FY24 22,500 – 23,500 guidance (this is +1kt v prev guide). Revision lower to 2025 guidance by 18% at 25k-26.5kt (prev 30.5kt to 31.5kt): “the uncertainty around the sulphuric acid supplies for 2025 needs and delays in the construction works at the newly developed deposits resulted in a need to re-evaluate our 2025 plans”…so i take a look at this holistically, we know this trade is on, its just that everyone got burnt. When do you come into it? now may be good if you can handle the liquidity issues and you feel like you want to lean into a pretty narrow vein of opportunity. Prices are back at c.$80 having traded last year to c.$105lb. The perspective is 2025 Production guidance cut from 82mm lbs to 65-68.9mm lbs – a 14-17mm lb cut on a 150mm global industry supply number, its a big chunk of change. Inventories -30% even with lower 2024 prodn than initially planned and lower 2025 guidance. If they presold some of 2025/26 prodn – they will have to go into spot mkt to replace. If you follow it your as bullish as you have ever been, our job is to get the man on the street back in and that means you have to compete with Copper which is far more investible. Happy to discuss anytime.

“This is a structural problem — they cannot ramp up,” Nick Lawson, chief executive of Ocean Wall, an investment firm, said, as quoted by Financial Times. He added,  “It won’t just be the West saying this is an issue for us; it will also be Russia and China saying it’s a problem for our new nuclear power plants.”

Analysts at Canaccord Genuity forecast Kazatomprom’s production will be around 23,000 tons in 2025, adding that next year’s theme in the uranium market will be “tight.” 

Uranium prices have surged in recent years. Wall Street finally figured out (read here) that nuclear power would be the cleanest and most reliable energy source for AI data centers (read: here) and other electrification trends, such as EVs and reshoring efforts. 

A tight uranium supply theme rolling into 2025 could pressure prices higher.

Kazatomprom’s downgrade “should be a cause for concern for Western utilities. The geopolitical developments and writing on the wall has been the Russians getting closer to the Kazakhs,” said Per Jander, director at WMC Energy, a commodity trading merchant.

Authored by Lance Roberts via RealInvestmentAdvice.com,

The latest retail sales report seems to have given Wall Street something to cheer about.

Headlines touting resilience in consumer spending increased hopes of a “soft landing” boosting the stock market. However, as is often the case, the devil is in the details.

We uncover a more troubling picture when we peel back the layers of this seemingly positive data. Seasonal adjustments, downward revisions, and rising delinquency rates on credit cards and auto loans suggest a more cautious view. The consumer—the backbone of the U.S. economy—may be in more trouble than the headline numbers indicate.

The Mirage of Seasonal Adjustments

The July retail sales report showed a sharp increase of 1.0% month-over-month, surpassing expectations. However, while that number supports the idea of a resilient consumer, these spikes have been more anomalous than not. Since 2021, real retail sales have virtually flatlined. Such is unsurprising as consumers run out of savings to sustain their standard of living.

The following chart of real retail sales clearly shows the consumer dilemma. Over the past two years, retail sales have not grown to support more robust economic growth rates. Notably, flat real retail sales growth was pre-recessionary and a “red flag” of weakening economic growth. However, given the massive surge in spending driven by repeated rounds of Government stimulus, the reversion of retail sales to the long-term trend has taken longer than previous periods, leading economists to believe “this time is different.”

But before we break out the champagne, let’s examine how these numbers are calculated. Retail sales data is notoriously volatile. Factors like weather, holidays, and even the day of the week play a significant role. To smooth out these fluctuations, the data is seasonally adjusted. The chart shows the magnitude of these seasonal adjustments since 1992. Interestingly, the magnitude of these adjustments is increasing over time.

But what happens when those adjustments paint an overly rosy picture?

Downward Revisions: A Growing Trend

Seasonal adjustments are a double-edged sword. While they aim to provide a clearer view of underlying trends, they can also distort reality, especially in an economy as dynamic and unpredictable as ours. Unfortunately, these adjustments are often revised in hindsight as more data becomes available. For example, a “red flag” is that eight of the past twelve-monthly retail sales reports were revised significantly lower, making the recent monthly “beat” much less impressive.

Why are retail sales being revised downward so frequently? One possible explanation is that initial estimates are overly optimistic, perhaps due to seasonal adjustments. As more accurate data becomes available, the true picture emerges, and it’s not as pretty as many believe. So, is there potentially a better method?

As noted, monthly retail sales are volatile due to various events. Christmas, Thanksgiving, Easter, summer travel, back-to-school, and weather all impact consumer spending. Therefore, “seasonally adjusting” the raw data may seem necessary to smooth out these periods of higher volatility. However, such a process introduces substantial human error. Using a simplistic 12-month average of the non-seasonally adjusted data (raw data) provides a smoother and more reliable analysis of consumer strength. Historically, when the 12-month average of the raw data approaches or declines below 2% annualized, it is a “red flag” for the economy. Again, the massive spike in COVID-related stimulus is reversing towards levels that should concern investors.

In other words, if we strip out the seasonal adjustments and apply a smoothing process to volatile data, the issue of consumer strength becomes more questionable.

Another “red flag” is realizing that retail sales should grow as the population grows. If we look at retail sales per capita, we see that before 2010, retail sales grew at a 5% annualized trend. However, that changed after the “financial crisis,” retail sales fell well below the previous trend despite an increasing population. While that gap improved following the Covid-stimulus supports, the gap is once again widening.

As you can see, the data shows a much more subdued picture of consumer spending, which raises a critical question: Are we being lulled into a false sense of security by the headline numbers? The reality is likely far more sobering.

The Debt Bomb: Rising Delinquency Rates

Perhaps the most alarming signal comes from the rising credit card and auto loan delinquency rates. Consumers have been relying heavily on credit to maintain their spending habits in the face of high inflation and stagnant wage growth. The spread between retail sales and consumer credit to disposable personal income rises as COVID-related stimulus runs dry and inflation is outstripping wages, forcing consumers to turn to credit.

But there’s a limit to how much debt consumers can take on before the house of cards tumbles.

According to the latest data, delinquency rates (more than 90 days) on both auto loans and credit cards have reached their highest level since 2012. Notably, delinquency rates are rising the fastest for younger generations that tend to have lower incomes and less savings. (Charts courtesy of Mish Shedlock)

These rising delinquency rates are a warning sign that consumers struggle to keep up with their debt obligations. As more consumers fall behind on their payments, the risk of a broader economic slowdown increases. After all, consumer spending accounts for nearly 70% of U.S. GDP. If the consumer falters, the entire economy is at risk.

 

The Implications for Future Consumption

Given these “red flags,” it is difficult to see how the current level of consumer spending can be sustained. Rising delinquency rates, downward revisions to retail sales, and questionable seasonal adjustments all suggest the consumer is running out of spending power.

In the near term, we may continue to see headline retail sales numbers that appear healthy, especially if seasonal adjustments continue to provide a tailwind. However, the underlying data tells a different story. As more consumers reach their debt limits and delinquency rates continue to rise, we could see a significant spending slowdown later this year.

That slowdown would have far-reaching implications for the broader economy. Retailers could see further revenue declines, leading to potential layoffs and further weakening of consumer spending. Banks and financial institutions could also face higher loan losses, particularly in the credit card and auto loan sectors.

In summary, while the latest retail sales report may have given the market a short-term boost, suggesting a “soft landing” economically, the underlying data suggests we should be cautious. Seasonal adjustments and downward revisions are masking the actual state of consumer spending, while rising delinquency rates are a clear sign of trouble ahead.

Investors and policymakers would do well to look beyond the headlines and focus on the economy’s real risks. The consumer may be hanging on for now, but the cracks are starting to show. Ignoring these red flags could lead to a rude awakening in the months ahead.

Well, it’s official: Powell came, saw, and unlike two years ago when, with with CPI rising almost double digits the uber-hawkish Fed chair warned of “pain” to come, this time he couldn’t be more dovish.

Having put inflation fully in the rearview mirror, the “Powell payrolls pivot” is now complete because as the Fed chair said, “the cooling in labor market conditions is unmistakable” even if it was quite mistakable to the Biden admin’s presstitutes as recently as one month ago.

It appears the “cooling in labor market conditions”, enough to prompt an easing cycle with inflation still at 3%, was mistakable https://t.co/TwujErKbGI pic.twitter.com/KnPBSkDNQ7

— zerohedge (@zerohedge) August 23, 2024

Which is also why it was imperative for the Biden labor department to admit the truth about the deteriorating labor market: without that -818K revision earlier this week, the Fed would have some pushback to turning fully dovish. But now that we know that a third of the job gains in the last year of Bidenomics were bogus…well, please come save us Chairman Fed.

Or, as TradeStation head of strategy David Russell said, “here comes the punchbowl. Jerome Powell came out swinging today with a litany of dovish signals. He said inflation is on a sustainable path lower and talked about how the job market has cooled to pre-pandemic levels. He drove the point home with a clear call for adjusting policy.”

The market agreed, and quickly cemented at least one rate cut while also pricing in as much as 33% odds of a 50bps rate cut.

Which is all great: after all as we have long said, with the November elections looming, the Fed will do everything to make sure the establishment candidate isn’t distracted by such trivial things as a market crash.

There are just four small problems with this.

First: the Fed will end its tightening cycle and starts the next easing cycle with stocks at all time highs, something that has never before happened in the history of capital markets!

It means that, unless the current expansion ends in a gruesome recession which crushes the economy, the S&P is about to enter a full-blown bubble, which in turn will burst in even more spectacular fashion and force the Fed to not only cut back to ZIRP, but activate NIRP (just like Japan did years ago) and also go right back to QE and buying bonds ETFs. For now, however, as in the next three months ahead of the elections, all shall be well and should serve the all time high in the market to Kamala Harris on a silver platter…. which is precisely why the Fed is doing what it is doing.

Second, this is also the first time in history when the Fed has aborted a tightening cycle having achieved zero home price easing. Indeed, one look at the case-shiller index shows that home prices are the highest they have ever been…

… as are actual asking rents according to Zillow (not that delayed aberration known as Owner-Equivalent Rent).

And then you have Kamala’s promise to provides $25,000 in new home purchase subsidies, which will go straight to the asking price, sending prices even higher.

In short, both home prices and rents, already at record high, are about to go record-er…

Third, while one can technically live without housing or rent, one still needs to eat. And here we find another problem, because not only did the Fed’s rate hikes not contain stock, home or rent prices, but food prices – both at home and away from home – are also at all time high! And guess what cutting rates and stimulating the economy will do to food prices from this point on…

Fourth, and final, the seeds of the next inflationary bubble are already set, because even as the Fed kept conditions tight (or even exceptionally tight), M2 – the broadest money aggregate tracked by the Fed – is once again rising after declining for the past three years.

Of course, there are countless other examples, because besides the above case studies, prices are at all time highs pretty much everywhere else too. But you get the message. The only question is what can possibly go wrong with the Fed launching an easing (i.e., monetary stimulus) cycle with prices for pretty much everything, stocks and homes included, at all time highs and rising.

For the answer, ask this guy…

Authored by James Howard Kunstler via Kunstler.com,

“Kamala, you are supposed to drink AFTER the speech.”

– Charlie Kirk, Turning Point USA

“The entire Democrat campaign will now be focused on gaslighting the country into believing Trump has been president for the last 4 years and Kamala has been an innocent bystander the whole time. They can’t run on her record, so they’re going to invent one and lie about it.”

– Sean Davis, The Federalist

Get this: there is one thing, one lurking terror, behind every fake and desperate move the Democratic Party has made this dire election cycle: the fear that hundreds of high officials might have to pay for their crimes of recent years if they lose on November 5.

That’s why they lie about everything, and work so hard to construct false narratives, and struggle to obliterate the memory of Joe Biden’s ruinous term in power.

Of course, they can’t talk about it.

It’s like the darkest secret in a wrecked human soul that has lost itself in mental illness, some abscess of shame and guilt sealed off in the mind’s attempt to protect itself — like the memory of an incest or an unsolved family murder — which explains the rich show of various derangements actually highlighted at this year’s Democratic Convention, their Cluster-B personality disorder freak show.

It is an anguished, guilt-ridden collective mind leaking clues to its own disordered debasement.

So, the deed is done now.

The odious “Joe Biden,” fake president, is dumped in the ditch of history, and a mighty operation is mounted to put over Veep Kamala Harris, who ignored “JB’s” incapacity to head the US government for four years, carrying out no duties meanwhile, hiding from the public, answering nothing, going nowhere, abetted by a treasonous news media bent on hiding her as she drank away the months in the old Naval Observatory.

The conventions are over and the contest is on.

Have you heard enough of their fake war-cry: “defending our democracy?” From a party that has tortured the law to jail and silence its critics and scrape its challengers off every ballot.

The pretense is perfect. Their “democracy” is actually a colossal “spoils” system — to the victor goes the spoils! — a grotesque political machine funneling trillions of federal dollars to their client voter groups, and especially to the non-profit orgs and NGOs that form a sinister secondary bureaucracy accountable to nobody.

And all done with direct connivance of the federal intel blob at war with everyone outside this matrix of turpitude. And, by the way, the money is gone. Trillions. And nothing to show for it.

This is what Mr. Trump opposes, and has been fighting against since 2016. No wonder it wants to stuff him in prison or kill him. It is a mighty enemy because it holds the levers of official power, especially the federal prosecutors and the state and county prosecutors put in place by the Democrats’ chief “influencer,” the George and Alex Soros NGO empire. And the big picture includes the monumental crime against our country — against all the countries of Western Civ, really — which was the Covid-19 operation that left millions disabled or dead from a phony, poisonous “vaccine.”

And now we hear — as I write early this Friday morning, hours before any official announcement — that Robert F. Kennedy, Jr. is about to suspend his campaign, kneecapped by the Democratic Party so busy “defending our democracy,” and perhaps throw his support to Donald Trump in order to defeat this mafia of the mentally ill.

I hope he does that. And I hope he denounces the party of his ancestors in the most vividly opprobrious terms so that no one can misunderstand the gravity of what has been going on.

I’d also look forward to Mr. Kennedy playing an important role in the second Trump government.

Mr. Kennedy knows probably better than anyone in America exactly how the gigantic racketeering operation was constructed that grafted pharma onto the US public health agencies, the FDA, CDC, NIAID, and others. This monster that has left so many Americans dead and injured, and wrecked the health of the nation’s young people especially, must be slayed. It must be disassembled and its pieces reconstructed into institutions that actually serve the public. This includes the hospital holding companies, the private equity pirates out to asset-strip medicine, the insurance-driven, overgrown doctors’ practices, and the mendacious medical boards, professional orgs, and journals that unjustly punished dissident doctors and nurses who tried to oppose the extralegal Covid-19 vaxx mandates.

If it happens that Mr. Kennedy joins forces with Mr. Trump, it could be a momentous turn in an election so far marred by Democratic Party hoaxes, coups, and lawfare ops.

Naturally, The New York Times played the story this morning in a tiny headline below-the-fold, saying nothing about the rumored stunning alliance between the Kennedy and Trump campaigns.

We await the Sept 18 sentencing hearing of Judge Juan Merchan in the Alvin Bragg book-keeping error (“34 felonies”) fake case that threatens to jam Mr. Trump into a Riker’s Island jail cell. I’d like to see them try that. I’d like to see Mr. Kennedy explain to readers of The New York Times and viewers of CNN  how all that worked. Those news agencies, in turn, will not be able to get around the fact that “X” (Twitter) has become the dominant source of news for Americans, a platform the old news orgs have no control over, and may not be able to ignore.

Mr. Kennedy has the chance to elevate the argument against the now-debased party of his father and his uncle that has weirdly become a national wrecking crew. He has the ability to remind the voting public exactly what has gone wrong, in language that won’t be misunderstood or twisted, and to point a way back, with Mr. Trump, to being a country worth caring about.

*  *  *

Support his blog by visiting Jim’s Patreon Page or Substack

Senator Elizabeth Warren and Joe Kernen had a heated spat on “Squawk Box” Friday morning, as the CNBC anchor took her to school over the Democrats’ plan to impose a federal ban on so-called “price gouging.”

“If you lose The Washington Post as a Democrat, you got some serious problems. This is what they said about the price gouging, or the price control legislation,” said Kernen – adding “It was really pilloried from both sides of the aisle … I can paint you a picture how that would work and how it’s worked in the past, where we’ve tried to artificially hold prices down. Competition doesn’t come in. Like if beef is too high, people don’t move the chicken. Competitors don’t come in to undercut where the beef prices are. Nothing works when you try to artificially control prices. It’s just the supply and demand issue. It’s a flawed idea.”

CNBC Host torches Elizabeth Warren on price control policies.

CNBC Host: “Nothing works when you try to artificially control prices… It’s a flawed idea”

Sen. Warren: “Is there a question?”

CNBC Host: “Yes. Why would you propose a flawed idea?”pic.twitter.com/YXhzIo6EtQ

— Resist the Mainstream (@ResisttheMS) August 23, 2024

Warren jumped in, asking Kernen if he was just there to lecture her, noting that states like Texas and Florida already have price gouging laws – adding “Price gouging laws are not price control.”

Kernen then called Warren out for a misleading claim that Kraft-Heinz “increased profits by 448% in 2022,” when in fact it was an accounting charge from the previous year.

Elizabeth Warren tries to defend Kamala’s Soviet-style price control scheme — but can’t handle any criticism.

“This is the way you never lose an argument because nobody can ever say anything back to you, Senator.” @JoeSquawk pic.twitter.com/imOVzIxZo4

— RNC Research (@RNCResearch) August 23, 2024

He also pointed out the absurdity of suggesting that companies didn’t know how to price gouge until Biden was elected.

CNBC: For 40 years, companies didn’t know how to price gouge until 3.5 years ago when Kamala was elected? They just learned how to do this?

POCAHONTAS: “Prices went up because of the war in Ukraine.” pic.twitter.com/mw8DIc5MHR

— RNC Research (@RNCResearch) August 23, 2024

Watch the entire interview (did we sense tears from Warren near the end?):

CNBC Host Becomes Distraught After Elizabeth Warren Talks Past His Argument Against Her Price Gouging Position pic.twitter.com/Z8IHsLtVlD

— Daily Caller (@DailyCaller) August 23, 2024

By Bas Van Geffen, senior macro strategist of Rabobank

The accounts of the July ECB meeting noted that September “was widely seen as a good time to re-evaluate” the level of monetary policy restriction. But caution remains the key word. In fact, it appeared six times throughout the accounts of the deliberations. The Governing Council agreed that the triangular relationship between wages, productivity, and profits is key for the inflation outlook – but is it a happy throuple? Yesterday’s data releases brought policymakers some good news, but also some things to worry about.

The latest wage data should encourage the ECB to cut rates again in September. Euro area negotiated wages rose by 3.55% y/y in Q2. That’s a sharp decline from the 4.7% recorded in the first quarter of the year. The deceleration from Q1 is at least partly reflecting the one-off payments that were awarded in Germany at the start of the year. It remains to be seen whether wage pressures ease further: If we look at the underlying trend, i.e., excluding one-off cash payments, collectively agreed wages in Germany have been much more stable around the 4% y/y level.  

The August PMI survey broadly confirmed that wage pressures are gradually fading, but they remain at an elevated level. Input costs “continued to increase markedly,” but eased to the slowest pace this year. It’s particularly notable that the services sector reported the softest pace of input cost increases since April 2021, considering that wages are the largest share of their cost base.

But, absent a sharp increase in labour productivity, the annual growth rate of negotiated wages is still inconsistent with price stability. The ECB expects labour productivity to increase by about 1% in 2025 and 2026. That’s twice the average annual growth rate since 2000! Admittedly, higher demand may give productivity a boost, because it may force idle, hoarded labour to get into gear. Even so, if productivity increases by 1% –as the ECB predicts– and wages are rising by 3.5%, that’s roughly 2.5% inflation. Besides, policymakers acknowledged that this “expected pick-up in productivity […] had yet to appear in the actual data.”

And are profits equally encouraging? Even though purchasing managers reported a slower increase in their input costs, companies undertook bigger price hikes in August. Selling prices rose at the fastest pace in four months, and at an above-average pace. So while the ECB’s rate setters rejoiced that “domestic cost pressures from high wage growth, including in the services sector, had been increasingly buffered by unit profits,” the latest PMI survey suggests that companies may be expanding their margins somewhat again.

Ongoing expansion of profit margins actually has the ECB concerned about the efficacy of its monetary policy. The Governing Council discussed whether its restrictive stance is sufficiently affecting all parts of the economy, and especially the sector that is currently responsible for the strongest inflationary pressures: “the continued growth of profits in the services sector, albeit at lower rates, and the strength of services demand suggested a weaker transmission of monetary policy.”

Such concerns do not scream rapid rate cuts. Yes, another rate cut or two would still leave policy in restrictive territory, but whether it is also restrictive when rates drop to 3% or lower is less clear. Yet, the market continues to price a decent chance of back-to-back rate reductions. That may reflect concerns about the strength of the Eurozone economy: the PMIs did not exactly paint a rosy outlook for activity. However, in an outlook that looks increasingly stagflationary –as some ECB policymakers also concluded– can the ECB really afford to focus on the “stag-” half when the “-flationary” part has exceeded the target for so long? It would certainly require a leap of faith that the slower growth also leads to less demand-pull inflation in the period ahead, and that inflation expectations remain anchored until this happens.

Hungary has broken with its NATO and EU allies in condemning Ukraine’s Kursk incursion, calling it out as not purely ‘defensive’ but as part of needlessly provocative offensive operations against Russian territory.

Gergely Gulyas, top advisor and spokesman for Hungarian Prime Minister Viktor Orbán said in a Thursday press briefing that Budapest is staunchly “pro-peace” – and when asked about the ongoing Kursk invasion, he said: “Ukraine is not only defending, but also attacking. We want a ceasefire and peace.”

Gulyas went on to explain that Hungary is against anything which thwarts potential diplomatic settlement to the war. He said this is “wrong” given the offensive includes a “spillover of the hostilities into Russian territory.”

“The Hungarian government representative also called on Ukraine and Russia not to forget that they are also responsible for Europe’s energy security,” Ukrainian media noted of the briefing. “He was referring to the transportation of Russian oil and gas through Ukrainian territory.”

The question of the EU’s gas supply which is piped through Ukraine has come into sharp focus with the Kursk operation, given that early on Ukraine forces captured the Gazprom-administered Sudzha station.

While the potential for infrastructure damage remains largely unknown, it seems clear at this point that neither Kiev nor Moscow wants to end the transport of gas via Sudzha. Deutsche Welle writes:

Benjamin Hilgenstock from the Kyiv School of Economics says if Ukraine wanted to end the flow of Russian gas, it could do so from within its own territory at any time, so there is no reason for them to seize the station at Sudzha for this particular purpose.

“I’m not entirely sure if this is relevant,” he told DW. “If Ukraine wanted to stop the transit of Russian gas, it could.”

Operators in Austria and Hungary said that despite fighting in Sudzha, gas supply had not yet been disrupted. Hungary especially has been getting more and more nervous over the possibility, however.

Orban has certainly not shared the same enthusiasm for developments in Kursk as other European leaders. For example, recently the EU’s top diplomat Josep Borrell “reiterated the EU’s full support to the [Ukrainian] people’s fight.”

Hungary’s government wants Ukraine to cease fire in Kursk Oblasthttps://t.co/TOGuLQ23dV

— Ukrainska Pravda in English (@pravda_eng) August 23, 2024

Interestingly, there’s been similar pushback coming from Italy of late related to the Kursk offensive, akin to Hungary’s criticisms:

Italy’s Defence Minister Guido Crosetto has ignited a political firestorm with comments that appear to question Ukraine’s military operations inside Russian territory, POLITICO reported. In an interview, Crosetto warned that ‘no country should invade another country’ and expressed concerns over the conflict escalating into Russian territory, which could complicate efforts toward peace. His remarks have raised doubts about Italy’s commitment to Ukraine, despite Prime Minister Giorgia Meloni’s staunch support for Kyiv since the start of Russia’s invasion.

Crosetto emphasized that the weapons provided to Ukraine by Italy are intended strictly for defensive purposes, clarifying that these arms ‘do not have the possibility of being used for an attack on Russian territory’.

On a strategic level, while Ukraine forces have certainly dealt a serious morale blow to Kremlin leadership, Russia is still on the advance in the Donbass, where the front line to the conflict is located. If and when Ukraine’s Kursk operation utterly fails, it will have translated into no actual strategic gains in eastern Ukraine.

Authored by Mike Maharrey via MoneyMetals.com,

According to Federal Reserve Chairman Jerome Powell, “The Federal Reserve’s monetary policy independence is an important and broadly supported institutional arrangement that has served the American public well.”

According to Professor Thomas J. Weber at Pace University Lubin School of Business, this is nothing but a myth.

In a recently published paper, Webster argues that the relationship between the Fed and the U.S. government is more like a captive’s relationship with his captor.

“Something like the Stockholm syndrome seems to describe the institutional relationship that exists between the U.S. Congress and the White House (the captors), and the Federal Reserve (the captives).”

He goes on to insist, “The Fed is just another branch of the U.S. government with a political agenda.”

Webster argues that “a more economic description of the Fed’s relationship with the executive and legislative branches is regulatory capture (also called agency capture).”

“This occurs when a government agency is politically co-opted into serving the special interests of the institution it is meant to be regulated.” 

While the Federal Reserve isn’t supposed to regulate Congress, it is tasked with independently maintaining “price stability.” Webster asserts that the central bank abandons this mandate and instead prioritizes enabling government borrowing and spending. In effect, the central bank is the engine that drives the massive U.S. welfare-warfare state.   

“To soften the increased debt service burden, the Fed purchases newly issued U.S. Treasury securities not sold to the public with ‘printing press’ money charging below-market interest rates. By inflating the money supply, a part of the increased financial burden is passed along to the household sector in the form of higher prices. The underwriting of congressional spending is at the heart of the symbiotic relationship that exists between the Fed, the president who nominates monetary policymakers, and the Senate that ratifies their appointment.”

Webster described a policy known as quantitative easing (QE). Without the Fed’s intervention by keeping its thumb on the bond market, the federal government wouldn’t be able to borrow and spend to the extent that it does.

Ben Bernanke ran the first QE operation in the U.S. in the wake of the 2008 financial crisis. When the Fed began buying U.S. Treasuries, Bernanke insisted the Fed was not monetizing debt. He said the difference between debt monetization and the Fed’s policy was that the central bank was not providing a permanent source of financing. He said the Treasurys would only remain on the Fed’s balance sheet temporarily. He assured Congress that once the crisis was over, the Federal Reserve would sell the bonds it bought during the emergency.

Of course, that never happened.

The Fed doubled down on quantitative easing during the pandemic. During the government shutdowns, the Fed immediately pushed interest rates to zero and pumped nearly $5 trillion into the U.S. economy through quantitative easing. In so doing, the central bank monetized a big chunk of the debt accumulated during the pandemic era. The Fed didn’t end QE until the end of 2021. 

According to Webster, “The Fed was less concerned with the effect that expanding budget deficits were having on the general price level and more concerned with abetting the budget agenda of the White House and Congress.” He cites a FOMC insider who said it was politically difficult for the Fed to end QE “because the Congress and private-sector business interests had become addicted to cheap money.”

Webster isn’t just making wild assertions. The paper summarizes the results of an empirical investigation “into the relationship between fiscal and monetary policy” during the pandemic era in particular.

While he concedes that the results are “subject to  interpretation,” Webster concludes, “These results, however, are consistent with the supposition that the Federal Reserve was complicit in funding federal government deficits with printing press money.”

“The Fed is not the bastion of sound monetary policy. Rather, it is just another politically coopted agency of the federal government. From the onset of the GFC until the first quarter of 2022, the Fed unapologetically pursued a low-interest rate policy with little regard to the threat that it posed to price stability.”

Webster notes that the Fed essentially serves three clients: government, businesses, and households.

“Regrettably, the best interests of the government and business sectors take precedence over the concerns of the household sector.”