Author: admin

With Congressional Democrats backed into a corner over their $3.5 trillion economic stimulus due to infighting within their own ranks, senior party leaders said on Sunday that they will likely need to scale it back in order to reach party consensus.

On Sunday, House Budget Committee Chairman John Yarmuth (D-KY) told “Fox News Sunday” that the bill’s top line number “will be somewhat less than $3.5 trillion,” adding that Biden’s economic agenda will likely drag into October.

On Fox, Budget Cmte chair Yarmuth says social spending bill “will be somewhat less than $3.5 trillion remember that’s over 10 years..we’re probably going to slip past the September 27 date sometime into into early October would be my best guess.

— Chad Pergram (@ChadPergram) September 19, 2021

Yarmuth’s warnings were echoed by Rep. James Clyburn, the third-ranking House Democrat, who told CNN‘s “State of the Union”:

“So it may be $3.5 (trillion), it may be really close to that or maybe closer to something else. So I think that we ought to really focus on the American people to think about what takes to get us in a good place and then let the numbers take care of themselves.”

We are working hard to finish the Build Back Better act and have a successful vote on the Bipartisan Infrastructure bill by September 27. pic.twitter.com/wWTAl6taGp

— James E. Clyburn (@WhipClyburn) September 19, 2021

Clyburn also suggested that a House vote on the $550B infrastructure bill could also be delayed.

Clyburn says the obvious to ⁦@jaketapper⁩: infrastructure vote could be delayed. pic.twitter.com/jTgP2VjVOU

— Jake Sherman (@JakeSherman) September 19, 2021

As Reuters notes, Democrats are also scrambling to raise the $28 trillion federal debt ceiling – which Clyburn suggested Democrats may be forced to ‘go it alone’ in order to accomplish (via reconciliation), as Senate GOP leader Mitch McConnell (KY) has said his party won’t support the increase – even though the US Treasury has warned that it will exhaust its cash and borrowing capacity in October.

“I’m not fine with that but if that’s what it takes, that’s what it will take.”

Democrats aim to pass the massive spending plan without Republican support under budget reconciliation rules and cannot afford to lose any Democratic votes in the Senate and only three votes in the House.

Moderate Senate Democrats including Joe Manchin and Kyrsten Sinema say $3.5 trillion is too much; Manchin suggests spending less than half that. Meanwhile, some progressives Democrats in the House say they cannot support a bill with lower spending levels aimed at bolstering the middle class.

Clyburn said that “it’s going to take some work” to bring Democrats together to support a bill, but added “I believe in our party and our leadership.” –Reuters

House Speaker Nancy Pelosi (D-CA) has sought to build leverage within her own party by delaying the House’s passage of the $550B infrastructure bill until the $3.5 trillion package is advanced, however it looks like they’re going to blow past their the Sept. 27 deadline. While Yarmuth says the infrastructure bill could still pass, and Pelosi could maintain her leverage by sitting on it before sending to Biden for his signature.

“She can hold on to that bill for a while. So there’s some flexibility in terms of how we mesh the two mandates,” said Yarmouth, who advocates folding the debt ceiling hike into a normal appropriations measure, but “I don’t think that decision has been made yet. We have several options for raising the debt ceiling, which is absolutely mandatory.”

Meanwhile, are we feeling a little anxious? T-bills are getting kinky, while US Credit Default Swaps have received sudden interest after months of decline.

By Eric Kulisch of American Shipper

Facing an unprecedented shipping crisis, which includes a record 61 container ships in the queue in San Pedro bay, the ports of Los Angeles and Long Beach on Friday announced their intent to extend operating hours at truck gates in an effort to reduce a massive backlog of containers gumming up retail, manufacturing and agricultural supply chains.

The Port of Long Beach is drawing up a pilot program for drayage trucks to retrieve and return containers at night, while the Port of Los Angeles is coordinating a weekend gate program, dubbed Accelerate Cargo LA, that will operate on a trial basis, officials said.

The news, however, came with few details on how the extra access would be carried out or who would bear the cost — and the measures may have limited immediate effect on the gridlock gripping the ports at the height of the peak season rush. But logistics industry officials said it was a positive first step.

Marine terminals in Southern California already participate in PierPass, a voluntary program of night and weekend gates funded by a fee on loaded containers entering or exiting the port by truck. Motor carriers are encouraged to spread their services among shifts to prevent bottlenecks. Long Beach Deputy Director Noel Hacegaba told American Shipper that the new initiative is designed to cover the hours between 2 a.m. and 7 a.m. PDT, helping to usher in an era of 24/7 operations that officials hope will take root among shippers and truckers as well.

The port authority is in talks with one marine terminal operator about operating around-the-clock and hopes to scale up beyond that over time, he said.  The twin ports plan to provide details early next week about how the new programs will work and be paid for.

“Given the magnitude of the cargo volumes we’re seeing, every segment of the supply chain needs to maximize their hours of operation,” Hacegaba explained. “The Port of Long Beach is  taking the first step toward a 24/7 supply chain. … The objective of this pilot is to open the gates all night and serve as a catalyst for warehouses and trucking companies to move containers all night.”

Many Asian ports operate without interruption and are extremely efficient, but the concept has not caught on in the U.S. despite much discussion. 

Many U.S. port terminals temporarily tack on extra night and weekend shifts during cargo surges to clean out container yards or service a ship during an irregular period, but few stakeholders have been willing to bear the extra expense of permanent off-peak hours. 

Craig Grossgart, senior vice president of ocean at SEKO Logistics, said about 35% of appointments are going unfilled “because truckers don’t want to pull at night because the distribution centers aren’t open.”

The alternative is to pre-pull containers to a secure storage yard, where the containers are kept on a chassis. But that type of operation is more expensive because it requires two truck moves and extra days of chassis leasing.

Freight transportation representatives noted that the gate initiatives won’t help unless warehouses are open at the same time to accept freight delivered by truckers, but applauded the effort to jumpstart reforms.

“At least somebody is trying something. There are just too many other supply chain service providers saying they can’t do anything because not everything is ready to be changed,” said Peter Friedmann, executive director of the Agriculture Transportation Coalition. “The terminal operators say they can’t do anything because the warehouses don’t work 24 hours. And the warehouses say they can’t work 24 hours because the truckers won’t do it. But if everybody continues to say they can’t do anything unless others do things then nothing gets done. 

“So at least somebody is starting here and that’s got to be applauded. It’s a lot easier to say you’re not going to try anything until everyone takes care of their situation than it is to actually try to implement something.”

Friedmann said throwing up night gates with little notice, as terminals often do, makes it impossible for truckers to plan their days within hours-of-service limits. With predictable, regular extended hours carriers and warehouses can plan their operations. And he said PierPass doesn’t work as intended, with terminals open sporadically at night despite collecting the fees to pay for them.

“That would be like saying, ‘Go to the airport, there may be a flight tonight. And come back tomorrow we might have flights going out in the middle of the day. We’ll let you know,” said Friedmann, a long-time critic of the traffic mitigation program. The AgTc has been vocal in urging federal action to stop ocean containers from denying equipment availability at inland locations and to stop terminals from charging late fees for container returns when the yards are jammed.

Container shipping volumes from Asia to the U.S. spiked 33% year-over-year through July and 26% compared to 2019, according to BIMCO and Container Traffic Statistics. The San Pedro Bay ports collectively handle more than 30% of all U.S. ocean imports and are the two largest domestic container ports. 

The volume of containers, combined with COVID-related limits on dockworkers and insufficient truck, rail and storage capacity, have left facilities with huge logjams. Dwell time for containers at terminals is six days, the wait time for on-dock rail is nearly 12 days and it takes 8.5 days on average for containers on the street to find dock space at warehouses. The situation is so bad that 65 container vessels were stacked up along the coast Thursday waiting to berth and unload.

Import congestion at ports has caught the attention of the Biden administration, which has established a White House task force on supply chain disruptions to engage stakeholders on ways to solve bottlenecks that extend from the ports throughout the inland distribution system. Both ports are working with John Porcari, the administration’s ports envoy, and the task force to correct systemic inefficiencies in ocean freight transport.

Porcari supported the ports’ move and said he looks forward “to continuing to work with all stakeholders to strengthen the resiliency of our transportation supply chain.”

Recent efforts at improving efficiency in Long Beach include last week’s introduction of a Truck Alert program to notify truckers by text about traffic conditions and the development of a nearby container overflow yard that has expanded from 17 to 65 acres in eight months.

The port authorities hinted further measures are possible.

“We appreciate the leadership of the Biden-Harris administration in marshaling a response to the unprecedented global supply chain disruption so acutely felt here at the San Pedro Bay port complex,” said Port of Los Angeles Executive Director Gene Seroka in a statement. “These steps, in addition to what has previously been recommended, demonstrate that the Port of Los Angeles will continue to innovate in order to manage this historic cargo surge.”

The port authorities said they will heavily promote the off-peak gates to shippers and work closely with the trucking community to ensure drivers understand how to take advantage of non-peak times. They called on marine terminal operators to incentivize their use to reduce congestion and maximize cargo throughput.

Boeing is facing fresh scandal after empty alcohol bottles were found aboard one of its planes in development at its facility in San Antonio. As worrisome as the prospect of technicians and engineers drinking on the job while constructing an aircraft that will transport people might be, in this case it was one of Boeing’s new Air Force One planes.

The Wall Street Journal cited sources who said, “The discovery of miniature bottles of tequila on one of the future US presidential jets is under investigation by the company.” They added, “It couldn’t be determined where on the plane the bottles were discovered.”

So far a Boeing spokesman has only indicated the company is treating it as a personnel matter, albeit a serious given it’s a highly classified jet and the commander-in-chief will be on board. “This is a personnel matter and for contractual reasons we are unable to comment further,” an official statement said.

Boeing considers its Air Force One jets of the “highest national priority.” The company currently has a $3.9 billion contract with the federal government to deliver two new Air Force One jets.

According to company policy there’s a strict ban on bringing alcohol into Boeing facilities where planes are being manufactured, and especially aboard an aircraft itself. 

All employees who work on Air Force One are required to have a security clearance, given they have access to the highly classified specifications for the the plane that will carry the future president and cabinet members (it’s expected the next Air Force One will be ready by 2024 or 2025). WSJ describes that:

In court papers in a supplier dispute earlier this year, Boeing attorneys described the aircraft as “effectively an airborne seat of government” ranking alongside defense programs such as ballistic missiles that carry the “highest national priority.”

Because of this the company says it’s taking the incident “extremely seriously” during its ongoing investigation.

Boeing is also especially sensitive to this new PR scandal given the 737 Max groundings starting in 2019 into 2020 after 346 people died in two crashes. The subsequent FAA-imposed 20-month grounding of the planes was the longest ever of a US airliner type in history.

When the Air Force One jets are housed and on standby, they are guarded at military facilities at Andrews Air Force Base and Quantico with the same level of protection required of a US nuclear missile facility.

Authored by James Rickards via DailyReckoning.com,

The economy is now at a perilous point of departure. There was no V-shaped recovery, and one should not be expected. There was a severe contraction in March–April 2020, followed by a recovery in July–September 2020. However, the recovery only made up part of the lost ground, not all of it.

We had a partial V or a truncated V. The economy recovered somewhat, but growth is not back to the prior trend, bearing in mind that the prior trend (from 2009–2019) was itself below the long-term trend.

Now we are experiencing slowing growth and metrics in employment and wages that are moving sideways or down without having recovered previous highs.

For the past 18 months, the economic damage of the pandemic has been papered over with federal handouts of various kinds. We had a $2 trillion bailout under Trump in June 2020, followed by another $900 billion bailout during Trump’s final days as president in December 2020.

President Biden followed with another $2 trillion bailout bill in February 2021 and is still pushing for an additional $1 trillion infrastructure bill and a $3.5 trillion welfare bill now pending before Congress. We got $1,200 and $600 checks from Trump and another $1,400 check from Biden.

We had Paycheck Protection Program loans, $50 billion airline bailouts and similar large-scale bailouts for cruise ships, resorts, casinos and other affected industries. Everyday Americans could receive an additional $600 per week on top of regular unemployment benefits, and the benefits period was extended.

Other programs included rent moratoria, eviction moratoria and extended grace periods on repayment of student loans. The list goes on. The total tab could easily exceed $10 trillion in relief-type deficit spending before all is said and done.

No doubt some of this spending was needed; especially in the initial March–June 2020 period when there was so much uncertainty and the economy was locked down tight.

Still, economists question whether this much relief was actually needed and whether the $4.5 trillion of additional spending still on the drawing boards is needed also.

The immediate problem is that the economy is clearly slowing right now, just as many of these programs expire and before new programs come online. New York state will not fill the gap as federal unemployment benefit boosters expire.

The federal unemployment benefit addition of $600 per week expired on Sept. 6. States have the ability to make up the difference from their own resources, but most don’t have the money. New York is clearly a state that has a huge budget deficit on its own and is not allowed by law to engage in more deficit spending to undertake new programs.

Other states may have the funds but are choosing not to spend the money because they believe that unemployment recipients should be motivated to get a job. Apart from the merits of these debates, there is no doubt that the federal supplement to incomes is expiring at the same time the economy is slowing for other reasons.

Already Too Much Debt

The Biden administration will slow U.S. and global growth with a combination of higher taxes, more regulation and wasteful spending on programs such as the Green New Deal.

Biden administration deficit spending, which will approach $6 trillion of new authorizations in fiscal 2021, is continually claimed as stimulus.

In fact, there is no stimulus from such spending because the U.S. debt-to-GDP ratio is now approaching 130%. There is good evidence that debt-to-GDP ratios in excess of 90% produce less growth than the amount of new debt itself.

In other words, there is no stimulus and only an increasing debt-to-GDP ratio that makes the situation worse.

The U.S. was facing slower growth in the years ahead with or without the Biden administration’s policies because of high debt and a central bank that does not understand monetary economics.

Now that Biden’s policies are fully revealed and becoming law, it is clear that growth will be even worse than would otherwise be expected.

This is characteristic of a new great depression.

A recession is technically defined as two or more consecutive quarters of declines in GDP. A depression is not technically defined but is understood as a prolonged period of growth that is either below the long-term trend or below potential growth.

Technical recessions can occur during depressions. There were two technical recessions (1929–1933 and 1937–1938) during the Great Depression (1929–1940), yet the entire period was characterized by below-trend growth, high unemployment and deflation. Stock markets and commercial real estate prices did not recover their 1929 highs until 1954, a full 25 years later.

The New Depression Continues

We are in a new depression now. Growth declined in 2008. The 2009–2019 recovery averaged annual growth of about 2.2%, well below the long-term trend of 3.5–4.5%. GDP declined again by 3.4% in 2020, the steepest one-year decline since 1946.

Annualized growth for the first half of 2021 is 6.4%, but that is slowing quickly; the latest estimate for the third quarter of 2021 from the Atlanta Fed is annualized growth of 3.7%.

The December 2019 level of output was not recovered until July 2021. Interest rates have been declining sharply. That’s a sign of disinflationary expectations and may be an early warning of a new recession in 2022.

This is characteristic of a new great depression that can last for many years. Once the inflation narrative fades and the disinflation narrative comes to the fore, we can expect a stock market correction as asset prices adjust to the return of an era of slow growth.

Looking out even further ahead, the effects of the pandemic on the economy will be intergenerational. Most financial panics or recessions are followed by recovery within a year or less.

Pandemics produce different patterns.

No Recovery Until 2045?

One study from the Federal Reserve Bank of San Francisco in collaboration with outside academics showed that of the 19 highest fatality pandemics since the Black Death in the mid-1300s, the average time needed to return to normal levels of interest rates, growth and employment is more than 30 years.

This pattern of recovery from extreme events was seen in the aftermath of the Great Depression (although that was an extreme economic collapse, not a pandemic). While the Great Depression was over in 1940 (partly because of war spending as the U.S. moved toward World War II), the behavioral changes it produced did not fade until the late 1960s.

The 1950s were a period of peace and prosperity in the U.S. Still, Americans maintained high savings rates, mostly avoided conspicuous consumption and lived frugally as they had learned to do in the 1930s and during World War II.

This did not change until the baby boomers became young adults and teenagers in the late 1960s. The behavioral changes induced by the Great Depression did not fade until 30 years after the Depression was over. Such is the staying power of social trauma whether it be war, depression or pandemic.

We will not recover from this pandemic fully until 2045 or later in terms of savings, consumption, disinflation, low interest rates and low growth.

The only exception to this estimate would be if the pandemic were followed by another equally shocking event such as war or a financial panic.

Isn’t that reassuring?

According to The Hill on Sunday, the Biden administration is currently debating whether or not to implement a policy to require that passengers for all commercial air travel in the United States show proof of a Covid-19 vaccine:

The Biden administration is facing an internal debate over whether to impose vaccine mandates for air travel, with President Biden’s chief medical adviser Anthony Fauci saying he would support a mandate but the White House claiming a new policy isn’t forthcoming.

In began with Fauci’s comments on theSkimm podcast days ago wherein he was asked about the possibility. “I would support that if you want to get on a plane and travel with other people that you should be vaccinated,” Fauci said.

In follow-up White House Press Secretary Jen Psaki was asked about Fauci’s commments on Thursday, to which she responded: 

“We haven’t taken options off the table, but I don’t have any updates to share with you at this point. Our focus is on implementation of the big steps we announced last week.”

Psaki said the administration is currently focused on things like mask mandates:

“Right now, our focus is on implementing those. Part of that was also doubling fines for people who were not wearing masks on planes – a step that we feel would help keep people safe on flights and reduce the spread,” she said in the Thursday remarks.

White House chief of staff Ron Klain also later confirmed a vaccine mandate for all domestic air travel is something under consideration, The Hill notes.

The trade association and D.C.-based lobbying group representing all major US airports has meanwhile issued a statement saying they don’t think a vaccine mandate is coming soon, and would be concerned if that happened. The Hill cites their statement as follows: 

“We have been informed that there is no imminent policy proposal regarding domestic travel, and echo concerns expressed by government about the implementation and enforcement of such a policy. We remain in communication with the Administration and continue to lean into science to guide policies that prioritize the safety and wellbeing of the traveling public.”

Without question such a potential mandate impacting all traveling Americans would result in huge pushback from both Republicans in Congress and a large segment of the US population.

Previously the CDC put out a public plea which “asked” Americans who remain fully unvaccinated to not travel over the Labor Day holiday weekend. “First and foremost, if you are unvaccinated, we would recommend not traveling,” CDC Director Dr. Rochelle Walensky had said in a briefing at the start of September.

This unusual request from a top health authority for Americans to restrict their movement suggests the political momentum in Washington is moving in the direction for more severe measures like limiting unvaccinated people’s movement within the United Sates – something which many officials and pundits have slammed as unconstitutional. Such a policy would also likely require some kind of universal ‘vaccine passport’ system as a means of showing proof and boarding a plane.

Authored by Lee Friday via The Mises Institute,

Canadians are heading to the polls on September 20, and Prime Minister Justin Trudeau’s questionable ethics are under a microscope, with Chris Selley of the National Post suggesting that Canadians “could do a lot worse than choosing whichever leader they judge the most eager and likely to govern with integrity.”

Okay, I’ll bite. Let’s assess the eagerness and integrity of the leaders of the three main political parties:

• Justin Trudeau – Liberal Party

• Erin O’Toole – Conservative Party (farther to the left than US Democrats)

• Jagmeet Singh – New Democratic Party

There is no doubt that all three of them are very eager to govern, so eagerness is not an issue.

But What About Integrity?

A person of integrity does not break promises, but Trudeau has broken many promises.

A person of integrity is not a hypocrite, but Singh violates covid protocols that he professes to support. He also criticized Trudeau for calling an election during a pandemic, yet he enthusiastically campaigned for his NDP colleagues when they called an election in British Columbia last fall.

A person of integrity does not change his policies when it is politically expedient to do so. But O’Toole has reversed himself on gun control, as well as access to abortion and MAID (medical assistance in dying).

All three candidates are guilty of other transgressions, too numerous to list.

Selley writes “O’Toole insists he has lived his life as a principled man, and would hold himself to those same principles as prime minister.” However, a principle, by definition, is not open to compromise, and Selley ignores the flipflops of his favoured candidate. Thus, Selley himself lacks the integrity he is seeking to promote.

Is Political Integrity Even Possible?

The lack of political integrity is a standard feature of democracy, not a flaw. This is because politicians are not, in any meaningful way, held accountable for their actions, so they make and break promises at will. Their actions become arbitrary, allowing them to serve whichever interest groups they please, which means that regular citizens – regardless of election outcomes – have virtually no influence on government policy.

Does this mean that all politicians lack integrity? No, but they are few in number, because human nature dictates that the lack of accountability will be a magnet for those who lack integrity. Furthermore, people with integrity do not usually want to surround themselves with people (other politicians) who lack integrity. This paves the way for a large degree of immoral uniformity within the political class. As F.A. Hayek wrote in his book The Road to Serfdom, in a chapter titled Why the Worst Get on Top:

“[T]he higher the education and intelligence of individuals become, the more their tastes and views are differentiated. If we wish to find a high degree of uniformity in outlook, we have to descend to the regions of lower moral and intellectual standards where the more primitive instincts prevail. This does not mean that the majority of people have low moral standards; it merely means that the largest group of people whose values are very similar are the people with low standards.”

Low moral standards. Hayek is referring to people like Trudeau, O’Toole, Singh, and others of their ilk in the political class. That is why Canadian voters will not find integrity on the ballot.

However, if the will of the people is to be genuinely expressed through a majority or plurality of votes in an election, then perhaps a degree of integrity can be restored by adding another name to the ballot.

None of the Above

Add None of the Above (NOTA) to the ballot.

Article 21 of the United Nation’s 1948 Universal Declaration of Human Rights states that:

The will of the people shall be the basis of the authority of government; this will shall be expressed in periodic and genuine elections.

Within this context, a vote for NOTA means that none of the candidates appeal to the voter. Therefore, if NOTA wins a majority of seats, it logically follows that there is no basis for the authority or legitimacy of government. The government must be terminated. Any action other than termination of the government violates our democratic principle of The Will of the People.

If NOTA was a Genuine, Non-Symbolic Option

We must become critical thinkers, and question the idea that the government provides the indispensable glue that holds society together. As Historian Carroll Quigley wrote:

[T]here was clearly a period, about 900 [AD], when there was no empire, no state, and no public authority in the West. The state disappeared, yet society continued. It was discovered that economic life, religious life, law, and private property can all exist and function effectively without a state.

Wider acceptance of Quigley’s historical observation would radically alter the nature of election campaigns if NOTA was a genuine, non-symbolic ballot option. Numerous NOTA supporters would be motivated not only to vote for NOTA but to actively campaign for NOTA. Let’s not forget that one third of eligible Canadians don’t even bother to vote – does this reflect their distrust of government? If a groundswell of support for NOTA develops, other candidates might be forced to make – and keep – promises to significantly reduce the size and scope of government.

The fact that NOTA is not a genuine, non-symbolic ballot option proves that the political class merely pays lip service to the concepts of integrity and the will of the people.

Authored by Enrico Trigoso via The Epoch Times,

Thousands gathered near Central Park in Manhattan on Saturday to express their discontent with the vaccine mandates and passport requirements implemented on the city by Mayor Bill de Blasio this month.

New York City started enforcing a COVID-19 vaccine mandate Monday, with de Blasio warning that “there’ll be consequences” for those who do not follow the rules.

The mandate requires establishments to put up certain signage and verify customers’ COVID-19 vaccine proof, such as vaccination cards issued by the Centers for Disease Control and Prevention (CDC), New York City vaccination records, other official immunization records, the NYC COVID Safe App, or the Excelsior Pass.

Participants at the Freedom Rally at Columbus Circle in Manhattan on Sept. 18, 2021. (The Epoch Times)

Participants first gathered at Columbus Circle and then marched to Times Square, led by one of the speakers, Jo Rose.

“If you took the vaccine, I love you. This not against you, we are pro-freedom,” she announced to passersby.

Jo Rose at the Freedom Rally at Columbus Circle in Manhattan on Sept. 18, 2021. (The Epoch Times)

Participants chanted “my body, my choice,” “no vaccine passports,” and “freedom over fear!”

Freedom Rally participants march to Times Square in Manhattan on Sept. 18, 2021. (The Epoch Times)

At the rally in Times Square, people spoke about standing up for their rights and against tyranny.

1000s take over Time Square in NYC for the protest against the mandatory shot. At the world Freedom rally #NYC #Corona #freedomrally pic.twitter.com/l1OY43nVTc

— Leeroy Johnson (@LeeroyPress) September 18, 2021

Among the diverse group of speakers, the themes of unity and freedom were often brought up.

One speaker said, “The only thing that gathers us all together, different groups, different types, is our stance against tyranny. When they try to take away our freedoms, we stand.”

Another said, “Don’t use this as a political front. I don’t care about Biden. I don’t care about Trump. I don’t care if you’re a Republican. I don’t care if you’re a Democrat. I don’t care if you’re black, yellow, white, purple. I don’t care if you’re Christian, Muslim, gay, straight. I don’t care. This is a human issue and it should be bringing us all together.”

The crowd cheered in response.

Participants at the Freedom Rally at Times Square in Manhattan on Sept. 18, 2021. (The Epoch Times)

Artist Tessa Lena also spoke at the rally: “It’s not about even those injections, it’s about establishing a system for artificial immunity.” She spoke about how “we are people of love, we are going to win with love.”

Mayoral candidate Bill Pepitone also spoke at the rally: “We have a president and a so-called mayor who are telling us we can’t go to work, we can’t feed our family. Our police officers can’t protect us, unless they comply. Our firefighters can’t protect us, unless they comply … our health care workers, they can’t save lives unless they comply.” He then led the crowd to chant, “We will not comply.”

Speaker Kevin Jenkins said, “This is about the very essence of what God gave us, and that is the power to be free. … It’s about the power of love that will allow us to win this battle.”

Jenkins compared the vaccine segregation to racial segregation in the 1960s. “Sixty years ago, I couldn’t walk in a restaurant because they said I was unclean … Now they’re telling us we are unclean again, not just black people, not Latino people, but all of us. We have to unify beyond race and love each other as humans.”

He urged people to only patronize restaurants that support freedom.

“When they tell you no to your humanity, you tell them no to their business.”

Mary Josephine Generoso, manager of the Pasticceria Rocco bakery in Brooklyn, said she would not be discriminating against customers by requiring proof of vaccination, defying the mandate implemented by the mayor. The business has placed signs announcing its policy to customers.

Mary Josephine Generoso, manager of the Pasticceria Rocco bakery in Brooklyn, at the Freedom Rally in Times Square on Sept. 18, 2021. (The Epoch Times)

“I heard de Blasio speak, and immediately we created that sign that said ‘we do not discriminate.’ There is not a bone in my body that will allow me to discriminate against anybody for any reason any day of the year.”

She called de Blasio “the greatest unifier of New York City, because he’s brought us all together for one cause.”

“I’m taking this stance against the vaccine mandate because obviously, it’s completely discriminatory. It’s forcing me to segregate customers based on a vaccine,” she told The Epoch Times.

She also said she is being forced by the mayor to get vaccinated, even though she has natural immunity. “I am not employed by the city of New York, I don’t get a paycheck from the city of New York, I don’t get a pension from the city of New York, so I don’t understand how Mayor de Blasio is able to tell me that I have to be vaccinated in order to work in my own establishment.”

In the past month, a feud has broken out between the so-called “team transitory”, comprising mostly of pro-Fed, pro-Biden commentators, who urge the public to ignore the “transitory” hyperinflation that by now is painfully obvious to everyone (see today’s UMich report for the gruesome details), and not to blame either the Fed or the administration for the collapse in the dollar’s purchasing power. Then there are the realists who see a much more ominous trend in deglobalization – you know, the same trend that allowed inflation to decline along with interest rates since the early 1980s – and warn that even when the currently supply chain logjam ends some time in 2022, inflation will still be far higher than in the past few decades.

The latest CPI print was viewed as a victory for “team transitory” because some of the prices that had spiked during the pandemic eased, led by used cars, whose prices this year soared amid supply chain disruptions and a rebounding economy has been a major contributor to the jump in U.S. inflation.

This was enough for TT to declare victory and proclaim that it’s all downhill from there.

There is just one problem: real-time data is now showing that used car prices are once again on the rise after the summer slippage, confirming what we said moments after the CPI report was published this week.

Used car prices drop just in time for the next supply chain congestion wave pic.twitter.com/Ej0B3SAtj7

— zerohedge (@zerohedge) September 14, 2021

The Manheim U.S. Used Vehicle Value Index, a measure of wholesale used cars, increased 3.6% in the first 15 days of September compared with the same period last month, and is again back near all time highs. That’s the first month-over-month rise in the index since May; in total the index has risen by more than 50% since the COVID lows in early 2020. 

The index jumped 24.9% from the same period a year ago through the middle of the month, indicating that not only has the drop in used car prices ended but that higher prices are coming, and with them more humiliation for team transitory, as the spike in the Mannheim index assures a sharp jump in the CPI print either next month or in November.

“The latest trends in the key indicators suggest wholesale used vehicle values will likely see further gains in the days ahead,” according to the Manheim report.

“Wholesale used vehicle prices rose rather significantly in the first half of September compared to the first half of August,” Michelle Krebs, an executive analyst at Cox Automotive, told Bloomberg. “Dealers appear to be stocking up on used vehicles, which have seen supply stabilize somewhat, to have something to sell because new vehicle inventory remains low.”

Elevated used car prices have primarily been due to snarled supply chains and a shortage of materials (such as semiconductors) for new car production, which pushed dealer inventories to all time lows…

… and forced consumers to buy on the secondary market.

“The main pressure continues to come from new car supply shortages. With the increase of delta variant, many manufacturers have significantly cut their production,” said Brian Benstock, general manager and vice president of Paragon Honda and Acura, a dealership in Woodside, Queens, in New York City. “A story about used cars cannot leave out the story about new cars.”

Incidentally new car prices are now also surging, and will likely continue to rise as carmakers have said production of new vehicles this fall will continue to be constrained by a chip shortage and the spread of Covid-19 in Southeast Asia. IHS Markit slashed its vehicle production forecast for this year by 6.2%, or 5.02 million vehicles, the biggest decrease to the outlook since the chip shortage emerged. In the latest sign of fallout, on Thursday, General Motors said Thursday it is cutting production at six North American assembly plants.

Finally, even ignoring used car prices, a more ominous increase is emerging in such core inflation as shelter costs and Owner Equivalent Rent.  Commenting on whether core inflation slowed or sped up in August, Bank of America economists said that the traditional measure of core CPI inflation rose just 0.1% mom in August, below the consensus (0.3%), BofA said the following:

• The weakness was due to a bigger than expected reversal of the reopening spikes in a number of components.
• Stripping the most volatile components of the CPI leaves a modest upward trend in “true” core inflation.

As BofA concludes, when it asks rhetorically “Is it time to break out the champagne” for team transitory, the bank responds “We don’t think so.”

Authored by Lance Roberts via RealInvestmentAdvice.com,

Market Starts A Correction Right On Cue

As noted last week:

“That correction started on Monday with the week ending in 5-straight down days which is the worse slide since February.

However, while that sounds terrible, the total decline for the week was just -1.69%. Yes, that’s it, less than 2%. While CNBC probably ran their “Markets In Turmoil” segment, traders huddled over candles and incense chanting incantations at the Fed for more accommodation.“

The hope, of course, was that retail investors would step in to “Buy The Dip,” as they have done repeatedly this year, at the 50-dma. But, interestingly, such was not the case with the market finishing the week down, as shown below.

If you back the time frame up a bit, you kind of need to squint to see the correction.

Perspective is always important.

Waiting On The Fed

We can attribute the weakness on Friday to “quadruple witching,” where every type of option (stock index futures, stock index options, stock options, and single stock futures) all expired simultaneously.

However, history is also not on the market’s side, with the S&P 500 averaging a 0.4% decline for September, the worst of any month, according to the Stock Trader’s Almanac. Friday, in particular, began a historically weak period for stocks as those September losses typically come in the back half of the month.

Also, the markets are a bit nervous about the Fed’s meeting next week with an announcement of “tapering” asset purchases expected.

While all that sounds terrible, the total decline for the last two weeks is just -2.4%. Yes, that’s it, just 2.4%. As noted, it looks much worse on a short-term chart due to the low volatility advance this year.

As noted last week, the sell-off to the 50-dma was not a surprise.

“With sell signals in place, volume rising, and breadth weak, a retest of the 50-dma early next week will not be a surprise. The question will be whether traders show up again, as they have done every other time over the last 6-months to ‘buy the dip.’

As shown, the market remains well confined to its rising trend with support sitting at the 50-dma. Volatility did pick up late last week as volume spiked suggesting more selling pressure on Monday.

With the market very oversold, a counter-trend bounce next week will not be a surprise. However, if the market fails to hold the 50-dma, the risk of a more substantial correction is likely.

Longer-term market risk remains exceptionally high.

It’s Always Time To Buy Stocks

When looking at long periods of market history, the current market stands out as an apparent anomaly. Many younger investors in the markets today are unaware of the “melt-up” in prices and the Fed’s naivety of the laws of physics. After more than a decade of rising prices, accelerating markets seem entirely normal, detached from underlying fundamentals. During these periods, investors create new acronyms like “TINA” and “BTFD” to rationalize accelerating prices.

However, a more extended look at price history suggests the current market environment is anything but ordinary. More importantly, the“moral hazard”created by the Federal Reserve’s continuous bailouts have put individual investors at significant risk.

In the short term, like the chart above, prices don’t seem that extraordinarily stretched. However, this is because the chart lacks context from a historical perspective. Once we look at the market from 1900 to the present, a different picture emerges compared to its exponential long-term growth trend.

Usually, I would present a long-term chart like this using a log-scale which reduces the impact of large numbers on the whole. However, in this instance, such is not appropriate as we examine the historical deviations from the underlying growth trend.

What you should take away from the chart above is apparent. Investing capital when prices are exceedingly above the underlying growth trend repeatedly had poor outcomes. Investing capital at peak deviations led to very long periods of ZERO returns on capital. (Interestingly, as the Fed became active in the markets, the periods of zero returns got cut in half.)

The Slope Of Hope

Sir Issac Newton discovered the relationship between the motion of the moon and the motion of a body falling freely on Earth. His dynamical and gravitational theories established the modern quantitative science of gravitation. Moreover, Newton realized that this force could be, at long range, the same as the force with which Earth pulls objects on its surface downward.

Notably, there is a clear “gravitational pull” of prices to the exponential growth trend line. Thus, without fail, when prices have deviated well above the trend line, there was an eventual reversion below the trend.

Even on a short-term basis, 1990-present, the current advance also stands out. The chart below shows the slope of the linear regression of the market. Historically, markets trade above and below that linear trend. However, currently, the slope is surging higher.

It is important to note that these are all monthly data points. As such, change will come slowly. The problem for investors is that when a “warning” doesn’t immediately devolve into a correction, it gets assumed the warning is wrong.

Therefore, it is essential to be aware of the excesses that currently exist in the financial markets. At some point, something will happen, and a change in “psychology” will occur. When the algorithms eventually switch from “BTFD” to “STFR” (Sell The ****ing Rally), it will be too late for most to avoid capital destruction.

For now, BTFD remains alive and well, as long as the Fed “put” remains.

But is that about to change? Maybe not.

A Reason The Fed Can’t Taper…Yet

While the market expects the Fed to announce “taper” plans next week, there is one reason they might stall.

“As repo expert Scott Skyrm said, ‘for the past several years, Congress always reached a compromise before the possibility of a ‘technical default’ creeped into the markets. This year, as we get closer to the ‘drop dead date’ (which hasn’t yet been determined) the markets will start pricing in distortions.

Mitch McConnell, Senate Minority Leader, repeated to Secretary Yellen what he has said publicly since July: ‘This is a unified Democrat government, engaging in a partisan reckless tax and spending spree. They will have to raise the debt ceiling on their own and they have the tools to do it.” – Zerohedge

As we discussed previously, the current mandatory spending of the Government consumes more than 100% of existing tax revenues. Therefore, all discretionary spending plus additional programs such as “infrastructure” and “human infrastructure” comes from debt issuance.

As shown, the 2021 budget will push the current deficit towards $4-Trillion requiring the Federal Reserve to monetize at least $1 Trillion of that issuance per our previous analysis. We discussed this previously, but there is a critical point.

The scale and scope of government spending expansion in the last year are unprecedented. Because Uncle Sam doesn’t have the money, lots of it went on the government’s credit card. The deficit and debt skyrocketed. But this is only the beginning. The Biden administration recently proposed a $6 trillion budget for fiscal 2022, two-thirds of which would be borrowed.” – Reason

The CBO (Congressional Budget Office) recently produced its long-term debt projection through 2050, ensuring poor economic returns. I reconstructed a chart from Deutsche Bank showing the US Federal Debt and Federal Reserve balance sheet. The chart uses the CBO projections through 2050.

For The Democrats It’s “Reconciliation Or Bust!”

The problem for the Democratically controlled Congress is they can not issue a “Continuing Resolution” solely to lift the debt ceiling. Such would entail passing a resolution that takes last year’s base budget spending and adding 8% to it.

While doing so would immediately solve the funding problem for the Government, it would force Congress to abandon the “reconciliation process” for passing their massive socialistic, debt-driven agenda. For the Democrats, who only hold slim majority control, their spending plans depend on the reconciliation process. The process is a budgetary procedure to align the House and Senate on spending bills and only requires a majority vote. (51%).

Such was a point made by Bloomberg:

“The expansive $3.5 trillion package entails much of Biden’s first-year agenda and includes a mix of tax increases on the wealthy and corporations, as well as greater spending in areas including child care, health care, and climate change. 

With Republicans unified in opposition, Democrats are pushing it through the Senate using a process called reconciliation that lets them skirt a GOP filibuster. But with the slimmest of majorities in both chambers, Democrats will have to be unified in support.

The differences among Democrats manifested themselves as the House panels finished their work. The Ways and Means Committee deferred action on raising the limit on the state and local tax deductions, or SALT, and a sweeping proposal to regulate drug prices failed to win approval in the Energy and Commerce Committee. It will be up to party leaders to decide whether those provisions can be inserted later in the process and still muster the votes needed to pass the final bill.“

Caught In Their Own Trap

If the Democrats pass a continuing resolution to raise the debt ceiling and fund the Government without including the $3.5 trillion “human infrastructure” bill, then the spending bill would require a 60-vote margin to pass. Given that no Republicans will support the spending bill, a failure to include it in the budget process is a “death knell.”

“In reconciliation, we’re going to all come together to get something big done and it will be our intention to have every part of the Biden plan in a big and robust way. We’re going to work very hard to have unity, because without unity we’re not going to get anything.” – Senator Chuck Schumer, Senate Majority Leader

In other words, the Democrat’s own “greed” to shove their agenda down the throats of the American people, rather than working on a bipartisan solution (the way Congress is supposed to work), now has them trapped into a “do or die” situation.

Given the Democrats recognize this problem, they are unlikely to pass a “C.R.” anytime soon. Such will force the Treasury to use “emergency measures” to fund mandatory spending. If that is indeed the case, the Fed will not be able to “taper” their balance sheet purchases unless they are willing to risk a surge in interest rates, a collapse in economic growth, and a deflationary spiral.

Things are likely to start getting interesting.

Portfolio Update

The expected correction back to the 50-dma occurred right on schedule. As noted in our daily market commentary:

The graph below shows the incredible regularity of the market over the last four months. As shown, every 20 days the S&P 500 tends to decline for a few days, bottom, and then rally back to prior highs.

So the only question is whether this time will be different?

We have no idea what will happen next week, given the Fed’s announcement. Therefore, we are maintaining our current allocations. As noted last week, equity allocations remain underweight, bond duration remains close to our benchmark, and cash remains roughly 10% of our equity allocations.

While there currently seems to be “no risk” to taking on excessive “risk,” this overconfidence in our abilities always leads investors to make overwhelming bad decisions in their portfolio.

Let me close this week with a quote from Howard Marks of Oaktree Capital Management:

“Information and knowledge are two different things. We can have a lot of information without much knowledge, and we can have a lot of knowledge without much wisdom. In fact, sometimes too much data keeps us from seeing the big picture; we can “miss the forest for the trees.”

It’s extremely important to know history, but the trouble is that the big events in financial history occur only once every few generations. In the investment environment, memory and the resultant prudence regularly do battle with greed, and greed tends to win out.

Prudence is particularly dismissed when risky investments have paid off for a span of years. John Kenneth Galbraith wrote that the outstanding characteristics of financial markets are shortness of memory and ignorance of history.“

Have a great weekend.

Liberal hypocrisy has reached peak new levels as it was reported this week that the designer of AOC’s “Tax the Rich” dress that the Congresswoman sported to the Met Gala is, in fact, herself, a tax “deadbeat”.

That was the term the NY Post used when describing the 37 year old designer who “made waves” at the Gala with the dress. The designer reportedly has “unpaid debts” in “multiple states”, the report says. 

Her tax liabilities stem from an LLC she formed in 2011 to serve as parent company of her fashion brand, the report says. 

That parent company has racked up three open tax warrants in New York state for failure to withhold income taxes from employees paychecks in the amount of $14,798. The debts were from 2018 and 2019, the report says, and the company has been slapped with 15 total tax warrants since 2015.

The IRS put six federal liens on the company between April 2018 and April 2019 totaling $103,220 as a result of the company’s “failure to remit employee payroll taxes”.

David Cenedella, a Baruch College taxation lecturer, said: “Just because they take it out of your paycheck doesn’t mean they’re sending it to the government. It’s certainly not something you want. I would not say your average business out there has this. Something went wrong.”

James is also an alleged rent deadbeat, records show.

Her parent company has also faced “multiple legal challenges” for “habitual nonpayment of worker benefits”.

It was fined $17,000 in October 2019 for not carrying workers’ comp insurance and the company currently owes $62,722 to the Workers Compensation Board.

Additionally, James’ company took $41,666 in pandemic aid. She also bought a $1.6 million home in Los Angeles in September 2020. That property is already listed as “delinquent” by the LA County Assessor’s Office, which says $2,504 in taxes are owned on it. 

Some of James’ former contract employees told The Post she was less-than-pleasant to work with:

“I experienced a lot of harassment when I worked for her. Aurora would ask me to do things that were not in anyone’s job description, like scheduling her gynecological appointments. The work environment was so hostile that I was afraid to ask for my check.” 

Republican Staten Island Congresswoman Nicole Malliotakis concluded:

“It’s the height of hypocrisy when socialists attend a $30,000 per ticket gala with a message of ‘tax the rich’ while wearing an overpriced dress by a luxury designer who doesn’t pay taxes. What happened to everyone paying their fair share?”