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As stocks soar on yet more US-China trade deal optimism, Bloomberg’s Consumer Comfort index plunged last week to 59.1 from 61.0 a week earlier – the lowest since March – as ratings of the economy, personal finances and the buying climate all slumped, a potential sign of faltering in the strong support consumers are giving the expansion.

The personal finances gauge falling to the lowest since January and posting the steepest decline of the three components.

Source: Bloomberg

The overall index has declined 4.3 points in two weeks, the most since 2011.

WTF!?

Source: Bloomberg

The last two times it decoupled (April-May and September) saw stocks revert down to confidence.

One day after the IMF, whose former boss is now head of the ECB, warned Europe to “prepare for the worst” and put in place emergency plans for an economic slump strongly urging Europe to implement a major fiscal response (translated: Germany should issue much more debt), the European Commission published its own economic forecasts which as Bloomberg’s Richard Breslow said “make for a dour reading.”

Specifically, the European Commission cut its euro-area growth and inflation outlook even as Germany appears to be careening into a recession with its manufacturing engine contracting sharply for over a years..

… amid global trade tensions and policy uncertainty, warning that Europe’s economic resilience won’t last forever.

“Adding to domestic economic shocks and policy uncertainty, the slowdown in global demand and weak trade has hit the European economy hard,” EU chief economist Marco Buti wrote in the report.

The Commission sees economic momentum remaining subdued through 2021, if not entering an outright recession, and forecasting GDP growth of 1.2% for that year. Meanwhile, at 1.3%, inflation is projected to remain far below the European Central Bank goal of just below 2% over the medium term.

The projections, in line with those of Wall Street analysts, reflect the admission of more pronounced weakness in the region, which has been especially impacted by the global trade war as tariffs disputes hit manufacturers and dent broader confidence. The slowdown resulted in the ECB last month cutting rates to even more negative levels and re-launching QE. The Commission also warned that risks, which include the possibility of a disorderly Brexit, remain “decidedly to the downside.”

While the strength of the labor market and the resilience of the services sector have so far prevented a more broad-based deterioration of momentum, Buti warned that “this resilience cannot endure indefinitely.”

“Economic activity now looks set to slow down in a number of member states, which at first appeared immune,” he added.

Hardest hit by the global slowdown has been Europe’s manufacturing sector, and as a result manufacturers across the region have lowered their outlooks in recent weeks. As Bloomberg notes, Rheinmetall cut its full-year forecast citing a downturn in global automotive production, Siemens said weakness in the car and factory-equipment industries will lead to a decline in some business volumes next year, and Volkswagen’s finance chief warned of two tough years ahead for industry.

To be sure there have been some “green shoots” in recent economic data, including French momentum which proved more resilient than expected in the third quarter, and robust growth in the Spanish economy. However, more ominously, Germany probably slipped into a technical recession at the same time, with the Commission predicting only “muted growth” through 2021. As for Italy, the expects “no signs of a meaningful recovery.”

So what is the European Commission’s advice? It’s the same as that of the IMF, and now former ECB head, Mario Draghi: spend more! Because apparently a crisis that was the result of too much debt can only be fixed with even more debt.

“Using available fiscal space actively would allow member states not only to provide a fiscal stimulus amid the sharp slowdown in manufacturing that threatens to spill over to the labor market, but also to refresh and modernize the public capital stock, thereby boosting potential growth,” the Commission’s report said.

That echoes the latest demands by the ECB, which deployed fresh monetary stimulus in September in a package aimed at bolstering the economy, although outgoing chief Mario Draghi warned that euro-area governments should do more to support the central bank’s efforts with fiscal spending, a message his successor Christine Lagarde has also pushed.

So far, the message has fallen on deaf ears. German Finance Minister Olaf Scholz said on Thursday the country is in a “stable economic situation” adding that “we will have more growth in the next years. If the trade tensions worldwide will be reduced, this will have a real impact on better growth.”

In other words, only a major European crisis will get Germany to do what policymakers demand it it should do. We almost know what happens next…

Authored by Bruce Wilds via Advancing Time blog,

Someone recently mentioned they wished they could have back the week of their life they spent glued to the television during the Kavanaugh hearings. While the Senate Judiciary Committee hearings on sexual assault allegations against Supreme Court nominee Brett Kavanaugh riveted Washington and the nation with hours of fiery, emotional testimony, in the end, it may not have been the best use of time for those watching. Speculation has the potential to be a massive time-waster, but both men and women tend to get sucked into this pastime that can while away the hours.

Speculation Was Not Kind To Mark Twain

This is not to say thinking through problems or looking at the various options being presented has no merit, but more often than not humans waste a lot of time pondering things that will never happen or never did. We even ponder why someone took a certain action or why something took an unpredictable turn. The habit of carrying speculation to an extreme is a curse.

Speculation is defined by Oxford University Press as the forming of a theory or conjecture without firm evidence: such as “there has been widespread speculation that he plans to quit” or as the act of investing in stocks, property, or other ventures in the hope of gain. This article is focused on the first definition of speculation. It is true that in terms of investment or other such pursuits speculation can extend into a form of placing a bet by buying or selling a commodity or stock. It can also be the driver for someone to scream a prediction from the rooftop as a way to prove their superior judgment or intellect.  As I have written in a prior post I consider predicting the future as an impossible task, a fool’s errand, full of pitfalls.

Events never seem to unfold as we might expect or predict. When you see how the world has developed, the twist and turns are most unpredictable and full of what the author, Nassim Taleb calls “Black Swans.” This term is used to describe events that seem to  descend out of nowhere catching everyone by surprise. A great example of speculation gone wild can often be found on the Sunday morning talk shows emanating from our nation’s capital. These shows originally designed to inform and report the crucial news of important issues facing our nation tend to quickly leave the facts and stray into the area of speculation. The line between opinion and speculation is fine and can easily be crossed. Blurring this, even more, is the habit many people have of stating an opinion as a fact, this does not make it one.

Speculationville is where the confident and suave television and news commentators, politicians, and the experts that speak with false authority live, I include the pundits and so-called specialists. Whenever I find myself drawn down the path that leads towards Speculationville I try to stop and ask if the journey ahead has any real merit or payoff. Often the subject we speculate over is a big factor into just how frivolous the effort is. This means I find very annoying the efforts of media, news programs, and talk shows to drag us into huge areas of speculation instead of focusing on facts and important issues. When they start talking about who will run for President in 2024 or be elected in 2020 we know where they are taking us.

It is often not the message they crank out, but the spin and way they project it with their heads all a bobbing and their arms moving all around that freeze us in our tracks. These people often rise through the ranks by stating their case with such brilliance and force that we are carried away by their enthusiastic message. As the words spew from their mouths and we read the reams of material they write it is easy to overlook the large number of often misstated facts and forget they are speculating or merely guessing. Sometimes they even go as far as to tell us exactly what someone was thinking, for example, a commentator might say, “when Martin jumped he knew it was to his death.” I ask, how do they know that? It is possible that Martin was an optimist thinking he might survive the fall or he might not have even jumped but simply slipped.

The fact is that when it comes down to what someone is or was thinking unless these authorities have had a deep honest one on one conversation with that person they are only speculating. After they have used every recent “buzz phrase” they say, “that being said” and after “having said that” they often wow me with “just do the math” or “it is not if, it is when”.  A major pet peeve of mine is the mixing up of “millions and billions” of dollars when talking about money or cost. But what sends me over the top is a line of pure speculation often used by politicians and our so-called public servants to justify some unsavory action, “it would have been far worse if we had done nothing”. How do they know that? On more than one occasion when it comes to our government I find myself wishing they had done nothing.

We have all witnessed the crazy unenlightening information generated  from media coverage during “live crisis” coverage of a news event, it is a reminder that often the world is clueless. It seems that people love to defer to the opinions and advice of so-called experts so they don’t have to think. When we look behind the curtain, we often find their background in the subject is weak and short, or clouded and blurred by bias. One thing I do know that is not based on speculation or hearsay is that a certain point speculating about the future tends to get excessive and becomes a great waster of time. Most of us might better spend our time focusing on real problems in the real world rather than whether Michelle Obama will run for President in 2024.

In a show trial where several life sentences (and one suspended death sentence) were handed down, A Chinese court in Xingtai sentenced three citizens to the maximum punishment for smuggling fentanyl to the US.

It’s one of the most high-profile drug prosecutions in China. President Trump has repeatedly insisted that Beijing must do more to curb the flow of fentanyl to the US. Liu Yong, one of the men sentenced, received death with a two-year reprieve, which means his sentence will likely be converted to life without the possibility of parole (assuming he shows good behavior in the ensuing two years).

Six others involved with the smuggling ring were sentenced to jail terms of between six months and two years. According to Bloomberg, the convictions are the first to arise from a joint investigation between the US and China. Earlier this week, Beijing announced its plans for the press conference. The smuggling ring was allegedly founded in 2016.

The big sentences are likely a factor of the politically sensitive nature of the case, since appeasing the US on the issue of fentanyl enforcement could give China some more leverage. Interestingly enough, China has managed to balance its need to appease Trump with its insistence that it’s not the main source of illicit fentanyl flowing into the US via Mexico.

White House trade adviser Peter Navarro believes China’s fentanyl distribution is one of its “seven deadly sins” that must be addressed before any trade deal can be signed.

An American official from the Department of Homeland Security was present and spoke at the event, as did Yu Haibing, deputy Secretary General of the China National Narcotics Control Commission. Yu stressed that the sentences were within the norms of China’s strict anti-drug laws, and that the information provided by the US during the course of the investigation had been “limited”.

The investigation reportedly began with a phone number provided to Chinese authorities by the Guangzhou office of the US Department of Homeland Security’s Immigration and Customs Enforcement.

More than 20 suspects were captured or investigated and the police cracked down on one fentanyl manufacturing base.

Still, deaths in the US from fentanyl have continued to rise.