Category: zerohedge

With the Fed now on hold well into 2020 (by which we mean no rates hikes ever and a rate cut as soon as the S&P drops more than 10%), Powell’s reaction function is once again data-dependent, which is why tomorrow’s payrolls report might actually matter to markets: if very strong, it may just skewer stocks as the odds of a rate hike, improbable as they may be, will rise; if ugly – which is far more likely after our analysis over the weekend and yesterday’s disastrous ADP – it could send the S&P to new all time highs as traders anticipate another rate cut in the coming months.

With that in mind, here’s what consensus expects the BLS to release tomorrow at 8:30am ET: An above trend 180k in November; The unemployment rate is seen unchanged, though some gauges suggest the jobless rate could be subject to upside risk. The pace of wage growth is seen rising a touch in the month. Other indicators have been mixed; the ADP gauge of payrolls missed expectations, but did not contain the positive impact from GM workers returning from strikes; jobless claims data surged to a five-month high in the survey week, though has subsequently fallen towards the low end of its recent range, providing a mixed signal. The ISM manufacturing survey’s employment sub index was weak, though the services gauge, which is more representative of the US economy, ticked up slightly. Meanwhile, announced job cuts are down on a monthly and yearly basis, though the YTD measure in November was the highest since 2015.

Here is a summary of the key expectations, courtesy of RanSquawk

• Non-farm Payrolls: Exp. 180k, Prev. 128k.
  • Private Payrolls: Exp. 175k, Prev. 131k.
  • Manufacturing Payrolls: Exp. 38k, Prev. -36k.
  • Government Payrolls: Prev. -3k.
• Avg. Earnings M/M: Exp. 0.3%, Prev. 0.2%.
  • Avg. Earnings Y/Y: Exp. 3.0%, Prev. 3.0%.
• Avg. Work Week Hours: Exp. 34.4hrs, Prev. 34.4hrs.
• Unemployment Rate: Exp. 3.6%, Prev. 3.6%. (FOMC currently projects 3.7% at end-2019, and 4.2% in the long run).
  • U6 Unemployment Rate: Prev. 7.0%.
  • Labour Force Participation: Exp. 63.3%, Prev. 63.3%.

TREND RATES:  The street looks for 180k nonfarm payrolls to be added to the US economy in November, slightly above recent trend rates (3-month average 176k, 6-month average 156k, 12-month average 174k). While the jobless rate is seen remaining at 3.6%, analysts note that the differential between jobs ‘plentiful’ and jobs ‘hard-to-get’ in the CB consumer confidence data narrowed from 35.1 to 32.1, leaving some risk of a rise in the unemployment rate. Consumers are seemingly optimistic on wage growth, with the latest confidence data showing the anticipation of an improvement in future wages rising slightly in the month (from 21.4 to 21.8), while those expecting a decrease declined slightly (6.9 to 6.2).

INITIAL JOBLESS CLAIMS: In the payroll survey week, initial jobless claims printed 228k, the highest weekly print since May, with the four-week moving average rising to 221.25k (compared to 213k weekly print in the October survey week, where the four-week moving average was 215.25k). Pantheon Macroeconomics said that the data got its attention, given it has printed five-month highs in two consecutive weeks. Its economists, however, said that at this point, it cannot be sure if it was a real sign of a change in the labour market, not least because some of the increase appeared to be due to the California wildfires. “We need to see more data before making any sort of macro call, but a clear and sustained increase in claims would be a real warning sign,” Pantheon writes, “so far, all the downshift in job gains has been due to slower hiring; if layoffs rise too, payroll growth will weaken substantially further.”

ADP: According to the ADP’s measure of payrolls, 67k jobs were added to the US economy in November – short of the 145k consensus, and missing even the most pessimistic forecast  (range was between 120-188k); Capital Economics says the data presents downside risks to its 170k forecast, though does note that the official payrolls data will be boosted by an approximately 50k rise in auto sector employment after GM workers returned from strike — the ADP’s data did not include this effect. “This report adds to signs that the labour market is still losing momentum, suggesting that income growth and thus real consumption growth will slow a little further in the near term,” Capital Economics writes, “but it would take a much sharper downturn in employment growth to raise recession fears and prompt the Fed into additional rate cuts.”

ISM: The ISM manufacturing survey saw the employment subindex fall by 1.1 points in the month, taking it to 46.6 points, with the contraction extending to four months. ISM said that three of the six big industry sectors expanded employment, and three contracted during the period, an improvement from the previous month, and also said that labour force-reduction concerns remained generally constant. (NOTE: ISM says that an employment sub-index above 50.8, over time, is generally consistent with an increase in the BLS data on manufacturing employment (you have to go back to the July data for the latest print above that level). The employment sub index within the non-manufacturing ISM told a better story, rising 1.8 points in November to 55.5, with respondents stating “we are in a workforce crisis, unable to attract and/or retain workers” and “hiring more personnel to support operations.

CHALLENGER JOB CUTS: Challenger announced job cut announcements by US firms fell to a rate of 44,569 in November, from 50,275 in October – – down 11% M/M and down 16% Y/Y; however, the YTD figure is higher, with employers announcing plans to cut 559,713 jobs, which is 13.1% higher than the 494,775 cuts announced through November 2018, and the highest January-November total since 2015, when 574,888 cuts were announced. Challenger also said that job cuts announced in 2019 have already surpassed the full-year total in 2018, when 538,659 cuts were announced. The report said “employers did not make large-scale job cut plans in November. While concerns of a downturn may linger, consumer confidence is strong and companies are holding on to their employees in a tight labour market.” On a more optimistic note, the report noted that hiring plans by US companies were at a record high, and that through October, companies announced 1,181,438 hiring plans, 564,781 of which are for the holiday season.

Arguing for a Weaker Report:

• Winter weather. Snowstorms during the survey period in Chicago and other parts of the Midwest may have weighed on November payroll growth. As shown in Exhibit 1, our population-weighted snowfall dataset was above average during the November survey week. While the impact is uncertain, we are assuming a weather impact of around -10k in tomorrow’s report.

• Holiday retail hiring. Thanksgiving was relatively late this year (November 28th n ) and this could reduce the number of holiday retail employees reflected in the November survey period. As shown in Exhibit 2, retail job growth tends to be weak in similar calendar configurations, decelerating relative to the 3-month average in each of the last four instances (though the magnitude of this drag may be waning over time).

• ADP. The payroll-processing firm ADP reported a 67k increase in November private employment, 68k below consensus and well below the 135k average pace over the three prior months. While the inputs to the ADP model argued for a weak reading, the shortfall was considerably larger than expected. The fact that job creation slowed “across all company sizes” in the ADP panel also indicates some legitimate weakness in November job growth.
• Job availability. The Conference Board labor market differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—retrenched by 4.0pt to +32.1 in November. Other job availability readings were similarly softer: JOLTS job openings declined to their lowest level since early 2018 (-277k to 7,024k in September) and the Conference Board’s Help Wanted Online index fell (-3.0pt to 100.5 in October)

Arguing for a Stronger Report:

• End of GM Strike. As indicated in the BLS strike report, 46k General Motors employees did not work during the October payroll period due to a United Auto Workers strike. The return of these workers is set to boost tomorrow’s manufacturing growth reading by 46k (a 2k metalworkers strike will provide a slight offset to the overall payroll impact).
• Labor market slack. With the labor market somewhat beyond full employment, we see the dwindling availability of workers as one factor weighing on job growth this year. However, as shown in Exhibit 3, first-print November job growth often accelerates when the labor market is tight—for example in 1988, 1989, 1997, 1998, 2000, and 2006. We believe some firms may have pulled forward hiring or reduced year-end layoff activity, anticipating a shortage of applicants in future months.
• Employer surveys. Business activity surveys were mixed in November (roughly unchanged on net for headline manufacturing surveys but somewhat stronger for services). While the employment components generally declined for the manufacturing sector (tracker -0.7 to 52.8), they improved for the much larger services sector (+1.0 to 52.4). Service-sector job growth was 157k in October and averaged 136k over the last six months, while manufacturing payroll employment contracted by 36k in October, below its +3k average over the prior six months but quite strong given the 46k drag from the GM strike.
• Job cuts. Announced layoffs reported by Challenger, Gray & Christmas declined by 6k in November to 46k (SA by GS), and were 10k below their November 2018 level. The sequential decline in announced layoffs primarily reflects a reversal in the technology (-8k) sector.
• Census hiring. Temporary employment related to the 2020 Census declined 19k in October as address-canvassing operations wound down. There were still 9k Census employees in the October payroll counts, and we expect a further modest drop in November (we assume -5k)

Source: RanSquawk, Goldman

Authored by Nick Cunningham via OilPrice.com,

The financial struggles of the U.S. shale industry are becoming increasingly hard to ignore, but drillers in Appalachia are in particularly bad shape.

The Permian has recently seen job losses, and for the first time since 2016, the hottest shale basin in the world has seen job growth lag the broader Texas economy. The industry is cutting back amid heightened financial scrutiny from investors, as debt-fueled drilling has become increasingly hard to justify.

But E&P companies focused almost exclusively on gas, such as those in the Marcellus and Utica shales, are in even worse shape. An IEEFA analysis found that seven of the largest producers in Appalachia burned through about a half billion dollars in the third quarter.

Gas production continues to rise, but profits remain elusive. “Despite booming gas output, Appalachian oil and gas companies consistently failed to produce positive cash flow over the past five quarters,” the authors of the IEEFA report said.

Of the seven companies analyzed, five had negative cash flow, including Antero Resources, Chesapeake Energy, EQT, Range Resources, and Southwestern Energy. Only Cabot Oil & Gas and Gulfport Energy had positive cash flow in the third quarter.

The sector was weighed down but a sharp drop in natural gas prices, with Henry Hub off by 18 percent compared to a year earlier. But the losses are highly problematic. After all, we are more than a decade into the shale revolution and the industry is still not really able to post positive cash flow. Worse, these are not the laggards; these are the largest producers in the region.

The outlook is not encouraging. The gas glut is expected to stick around for a few years. Bank of America Merrill Lynch has repeatedly warned that unless there is an unusually frigid winter, which could lead to higher-than-expected demand, the gas market is headed for trouble. “A mild winter across the northern hemisphere or a worsening macro backdrop could be catastrophic for gas prices in all regions,” Bank of America said in a note in October.

The problem for Appalachian drillers is that Permian producers are not really interested in all of the gas they are producing. That makes them unresponsive to price signals. Gas prices in the Permian have plunged close to zero, and have at times turned negative, but gas production in Texas really hinges on the industry’s interest in oil. This dynamic means that the gas glut becomes entrenched longer than it otherwise might. It’s a grim reality plaguing the gas-focused producers in Appalachia.

With capital markets growing less friendly, the only response for drillers is to cut back. IEEFA notes that drilling permits in Pennsylvania in October fell by half from the same month a year earlier. The number of rigs sidelined and the number of workers cut from payrolls also continues to pile up.

The negative cash flow in the third quarter was led by Chesapeake Energy (-$264 million) and EQT (-$173 million), but the red ink is only the latest in a string of losses for the sector over the last few years. As a result, the sector has completely fallen out of favor with investors.

But gas drillers have fared worse, with share prices lagging not just the broader S&P 500, but also the fracking-focused XOP ETF, which has fallen sharply this year. In other words, oil companies have seen their share prices hit hard, but gas drillers have completely fallen off of a cliff. Chesapeake Energy even warned last month that it there was “substantial doubt about our ability to continue as a going concern.” Its stock is trading below $1 per share.

Even Cabot Oil & Gas, which posted positive cash flow in the third quarter, has seen its share price fall by roughly 30 percent year-to-date. “Even though Appalachian gas companies have proven that they can produce abundant supplies of gas, their financial struggles show that the business case for fracking remains unproven,” IEEFA concluded.

Authored by Steve Watson via Summit News,

Violent crime rate has decreased by 48.6 percent in tandem with ownership rise…

Newly released figures from the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives shows that there are now a whopping 422.9 million guns in the hands of Americans. The number equates to 1.2 guns for every person in the country.

The figures also show that in 2018, 8.1 billion rounds of ammunition were produced by the gun industry.

The figures also reveal that the most popular firearm in the country is the much maligned sporting rifle, often mis-identified as an “assault rifle”, the AR-15 being one of the more popular models.

The findings highlight that there are now 17.7 million of them in private hands, a record high, and more than half (54%) of all rifles produced in 2017 were modern sporting rifles.

The ATF figures also reveal that firearms-ammunition manufacturing accounted for nearly 12,000 jobs in the US, creating over $4.1 billion in goods shipped in 2017.

“These figures show the industry that America has a strong desire to continue to purchase firearms for lawful purposes,” said Joe Bartozzi, president of the National Shooting Sports Foundation.

“The modern sporting rifle continues to be the most popular centerfire rifle sold in America today and is clearly a commonly owned firearm with more than 17 million in legal private ownership today.” Bartozzi continued.

“The continued popularity of handguns demonstrates a strong interest by Americans to protect themselves and their homes and to participate in the recreational shooting sports,” Bartozzi added.

Bartozzi also noted that “as lawful firearms ownership in America continues to grow, criminal and unintentional misuse of firearms is falling.”

“During the 25-year period covered in this report (1993–2017) the violent crime rate has decreased by 48.6 percent and unintentional firearm-related fatalities have declined by 68 percent.” he added.

One reason why the popularity of the sporting rifle continues to grow may be because it is routinely criticized and targeted in arguments for stricter gun control.

Justin Anderson of Hyatt Guns, one of the biggest firearm retailers in the country noted that “Sales have definitely been brisk, especially of small, concealable handguns. We also saw a spike in sales of tactical rifles like AR-15s and AK-47s, for which I think we can confidently thank Beto O’Rourke.”

During a failed presidential run, Beto said on multiple occasions that he would ban AR-15s, and even go door to door to confiscate the weapons from Americans.

With a near record high of gun sales on Black Friday last week, Americans are sending a clear message in exercising their Second Amendment rights.

Hillary Clinton went on the Howard Stern show this week for a wide-ranging interview with the popular radio host, specifically focusing on her loss to Trump and what 2020 looks like — a race she’s recently dropped hints she could be prepared to enter, however unlikely that might be. 

While the Wednesday interview was widely covered in the media, there’s one segment largely overlooked in the mainstream, but which is stunning nonetheless. We’ve grown used to her ‘Trump is a Russian asset’ line in her typical blame game fashion anytime she makes a media appearance; however, she did repeat the less common conspiracy that links rival Democrat Bernie Sanders to the Kremlin.

Are we just going to ignore that Hillary Clinton, today, just implied that Bernie Sanders is also a Russian asset? pic.twitter.com/eGc5PlhB4p

— Nicole Alexander Fisher (@_nalexander) December 5, 2019

She wasn’t even asked, but briefly voluntarily inserted the reference while discussing the Mueller investigation.

Speaking of the Russians, she claimed, “They were like – ‘hey let’s do everything we can to elect Donald Trump’. Those are quotes… those are words [they used]… And they also said Bernie Sanders.” 

“But you know that’s for another day…” 

Stern runs with it: “Do we hate Bernie Sanders?” 

“I don’t hate anybody,” but agrees with Stern’s assessment that he took a while to endorse her: “He could have. He hurt me, there’s no doubt about it.”

Then she delivered the final punch at a moment Sanders continues to gain in the polls, especially among young voters: “And I hope he doesn’t do it again to whoever gets the nomination. Once is enough.”

There it is: her disastrous 2016 loss continues to be the fault of everyone else, who are apparently all somehow Russian puppets, even the Leftist Jewish Senator from Vermont (and let’s not forget the Green Party’s Jill Stein). 

* * * 

If you can stomach watching it, she elsewhere describes in detail ‘how she felt’ being present for Trump’s inauguration ceremony. “Which was one of the hardest days of my life, to be honest!”

Authored by Daniel Taylor via OldThinkerNews.com,

It’s not just a social credit score system spreading around the world from China that threatens the free people of the world; India’s Aadhaar National ID program has the full support of Bill Gates and the World Bank as a model for other countries to follow.

Gates said in a 2018 CNBC interview that it was “too bad” if someone thought that Aadhaar was a privacy issue:

The Gates Foundation has pledged to fund the World Bank in an effort to take the ID program to other countries.

Despite Gates plea that there are no privacy issues with Aadhaar, several court cases have gone to India’s supreme court on grounds of privacy violations.

The ID system has had serious security breaches, with access to a billion identities being sold for less than $10 through WhatsApp.

One of the court filings (Mathew Thomas vs Union of India) details the rise of China’s social credit system, comparing the Indian Aadhaar initiative to the Chinese program.

Perhaps the most sensational angle to this story is that the same international tech company that provides the infrastructure to Aadhaar also makes drivers licenses in the United States.

Idemia (formerly Morpho), is a billion dollar multinational corporation. It is responsible for building a significant portion of the world’s biometric surveillance and security systems, operating in about 70 countries. Some American clients of the company include the Department of Defense, Homeland Security, and the FBI.

The company website says that Morpho has been “…building and managing databases of entire populations…” for many years.

In the United States, Idemia is involved in the making of state issued drivers licenses in 42 states.

Idemia is now pushing digital license trials in the U.S. Delaware and Iowa are among five states involved in the trials this year. With the mobile licenses, law enforcement will be able to wirelessly “ping” a drivers smartphone for their license.

The Indian government recently announced a facial recognition program to monitor all social media platforms, called the Advanced Application for Social Media Analytics.

Big tech companies are using China, India, South Korea and other countries as testing grounds for smart cities, surveillance systems and command and control tech that are being stealthily rolled out in the west.

When it comes to Wall Street’s recent flurry of 2020 forecasts, most banks – perhaps with the notable exception of SocGen – agree that the first half of next year will be more of the same smooth sailing for US equities observed for much of 2019 (if not the violent rotations we witnessed below the surface that crippled quant returns this year).

Where where the consensus goes downhill and things gets stormy, is the outlook for the second half of 2020, whose dominant feature will be the November presidential election. And few are as concerned about what the second half of next year may bring than JPMorgan. The bank, which has been steadfastly bullish stocks – and in retrospect correctly so, if for all the wrong reasons (for example, JPM’s bull thesis was predicated on economic growth, not its inverse, and certainly not the barrage of global rate cuts and the Fed’s launch of QE4), retains its cheerful forecast for the first half of 2019, but when it comes to the second half of 2020, not even JPM’s chief equity strategist, Mislav Matejka warns that the “negatives could begin to materialize” and the market might start to discount these some time in the second half of 2020.

Among the factor listed by Matejka are that US politics could become a lose-lose proposition, and trade uncertainty, as well as hard Brexit risk, could come back. Worse, in a striking admission, none other than the largest US bank admits that next year, the “Fed’s credibility might start to be questioned,” as earnings overshoot their trend, while rising credit concerns could come to the fore.

Finally, while JPMorgan repeats that it has “consistently” argued that one should not expect the next US recession ahead of the presidential elections, it then spoils the ending, and in previewing what happens after next November, says that “the odds of a recession might go up significantly.”

** *

We will spare readers the cheerful side of JPM’s year ahead forecast as it is a repeat of many themes covered here previously by the “bullish” JPM and instead focus on the gloomier aspects of the bank’s year ahead predictions, as those are decidedly new and represent a reversal to JPM’s years of relentless optimism.

The first notable item is the US election road map

According to JPM, both the US election and US politics in general, could become a dominant issue relatively soon, as the Democratic nomination process will be heating up towards the end of Q1.

 

As JPM notes, “we might end up with two candidates who are potentially on the extreme ends of the political spectrum. The exhibit above compares the policies of a select number of Democratic candidates and president Trump, based on our interpretation of published policies and public comments. The divergence of policy proposals between the different  Democratic candidates is probably as extreme as the comparison between Trump’s policies and that of any of his Democratic adversaries.”

Of the prominent Democratic candidates, Biden’s nomination is likely to be seen as more market favourable than a Warren nomination, but at the same time the probability of Trump winning vs Biden could be seen as smaller than the probability that he beats Warren.

The key point here, is that the US politics could end up looking like a “lose-lose” proposition for the markets in the runup to and post the US elections according to Matejka. To summarize the possible outcomes, we might either have 2nd Trump’s term, but with the return to confrontational China stance, as he will not be constrained by the markets anymore, or we might have a shift to less equity friendly tax and regulatory regime, in the event of a Democrat victory.

The risk of trade uncertainty escalating again, post the current truce

JPM’s base case over the past months was that Trump will be compelled to move towards a truce with China, given what were the rising risks to the economy, and in particular to the US consumer. The risk is that the current improving sentiment with respect to trade doesn’t hold for too long, and that potentially re-elected Trump resumes his aggressive stance.

An inflecting credit cycle

Some of the credit indicators will soon be turning into a headwind for equities, as we move through 2020.

Notably, G4 credit standards appear to be tightening for both the businesses and for the consumer of late. One typically  sees tightening standards ahead of the downturns.

Corporate leverage is surging

US corporates have been levering up over the past years, with median US company net debt-to-equity ratio at the record highs.

Why is this a risk? Because “if the credit markets weaken, this could reduce the pace of corporate buybacks.” Because where would we be without buybacks…

Economic indicators are looking decidedly late-cycle

The US cycle is now officially the longest one since the WW2, and some of the cycle indicators appear to be rolling over. One such indicator is that job opening rate appears to have peaked. This is what usually happens ahead of the downturns.

Earnings have significantly overshot the trendline

Another key JPMorgan concern is that US profits are now starting to appear stretched vs their long term trendline.

Here Matejka notes that one of the arguments that kept him bullish all this time was the finding that US profits don’t tend to peak for the cycle before they significantly overshoot their long term trend. The size of these overshoots was on average of the order of 20-30%. The current overshoot is at 19%

Profit margins have peaked, which typically bodes negatively for the longevity of the expansion cycle

As we noted recently when discussing real, operating profits, one doesn’t usually have a recession before US profit margins, as measured by NIPA, peaked. The lead-lag between margins peak and the next recession was sometimes very significant.

However, as of this moment, JPM finds that “we are now in unchartered territory”, with US profit margins appearing to have peaked in Q3 ’14, leading to the longest lead-lag on record, and counting…

… while a key profit margin proxy – a difference between the output prices and the input costs – appears to be deteriorating further.

* * *

Putting it together, JPM concedes that while “the time is likely approaching when one should be contrarian again”, this time around through turning bearish vs presently growing consensus bullishness, the bank still thinks that “one should not cut risk-on trades too early, as the bear capitulation, which is currently under way, could have legs.” The only question is when does someone, or something, pull the rug from under the market’s melt-up, triggering what even JPMorgan now see as a coming, and long overdue, day of reckoning for the markets

Authored by Michael Snyder via TheMostImportantNews.com,

If you want to waste your life, a great way to do that is to spend tens of thousands of hours watching television. Today, it is so difficult to get people to leave their homes and get active in their communities, because most of us are absolutely glued to one screen or another. After a long day at school or a hard day at work, most of us understandably want to relax, and from a very early age most of us have been trained to turn to the television as our main source of relaxation. But of course there is great danger in allowing anyone to pump thousands upon thousands of hours of “programming” into our minds.

More than 90 percent of the “programming” that we consume is controlled by just a handful of exceedingly powerful corporations, and those corporations are owned by the elite of the world. So when you endlessly consume their “programming”, you are willingly being bombarded by news and entertainment that reflects their beliefs, their values and their agendas. They openly admit that they are trying to shape the future of society, and up to this point they have been extremely successful.

Unfortunately, we live at a time when most people need television or some other insidious addiction to take their minds off of the gnawing emptiness that they feel deep inside of them. As I was doing some research the other day, a comment that someone posted on an Internet message board really struck a chord with me…

As a kid life seems so amazing and you can dream of big things and have faith. The older you get it seems the world tries to take away your faith. I have had 8 jobs in my life starting in high school and I’m just sick of this ****. I’m lucky to make 100 a day . I know that’s poverty level. But I manage. But thinking ahead I have to do this every day for the next 30 years . How the hell do you guys and gals cope with reality.

I’m on empty.

I want out.

In just a few sentences, this individual summed up what millions upon millions of Americans are feeling.

The harsh realities of modern society have absolutely sucked the life out of so many people around us, and the vast majority of Americans are barely getting by and are living lives of quiet desperation.

If television allows them to forget about their troubles for a while, it is understandable why so many use it as a crutch.

But do we have to watch so much of it? One recent survey found that the average adult will watch more than 78,000 hours of television over the course of a lifetime…

Television has become such a common part of all of our lives that most don’t even think about just how much time they spend staring at their TV screen. Of course, all of those hours are undoubtedly adding up, and a recent survey of 2,000 British adults finds that the average TV viewer will watch an astounding 78,705 hours of programming (movies, sports, news, etc) in their lifetime. That’s a whole lot of screen time that may have been better spent on more productive endeavors.

On a day-to-day basis, the average adult watches TV for three-and-a-half hours, amounting to 1,248 hours each year.

I know that some of my readers will point out that this was a British survey, but the truth is that Americans actually watch even more television. The following comes from Wikipedia…

In the US, there is an estimated 119.9 million TV households in the TV season 2018/19.

In 2017 alone, an average U.S. consumer spent 238 minutes (3h 58min) daily watching TV.

Those numbers are absolutely staggering. And when you break them down further they become even more alarming. In the first survey that I mentioned above, the researchers actually discovered that the average person “will watch 11,278 different TV series”…

The survey, commissioned by LG Electronics, broke down those numbers even further and concluded that the average adult these days will watch 3,639 movies at home, and 31,507 episodes of TV during their lifespan. As far as different programs, the average person will watch 11,278 different TV series as well.

Are there really 11,278 television series worth watching?

I would think that you would have to go really deep into the well to watch that many, but apparently that is what many people are doing.

Of course I am not entirely against television. For example, I think that “Poldark” is an absolute masterpiece. But everything should be done in moderation.

The fact that we are endlessly watching so much television could help to explain why our society has become so “dumbed down”. Yesterday, I discussed a recent study that found that 15-year-old U.S. students are about four grade levels behind 15-year-old Chinese students in math.

I bet those Chinese students are spending a lot more time studying and a lot less time watching television.

At this point, America has truly become an “idiocracy”.

For example, have you heard what the hottest new toy for this holiday season is?

It is actually a “fart launcher” that allows children to blast foul smelling air at one another. The following comes from the New York Post…

Toy insiders and wincing parents tell The Post that the Buttheads Fart Launcher 3000 — a Nerf gun-like gadget that shoots farts instead of darts — is topping off kids’ wish lists this year.

“This is my worst nightmare,” mom Angie Wong, the 42-year-old founder of the private Facebook group Brooklyn Moms, tells The Post. She recently caved and got the gas-blasting gizmo for her 5-year-old son, Will, and 7-year-old daughter, Maddie. “I can see that thing [being] used on my face one unsuspecting morning.”

Of course a “fart launcher” is not the end of the world, but as I document regularly in my articles, there are literally thousands of signs that the fabric of our society is coming apart all around us.

If our society continues to degenerate at this rate, there is only one way that our story can end.

Sadly, most people seem to think that everything is going to be just fine, because that is what their televisions are telling them to think.

Most of us are willingly plugging ourselves into “the matrix” for multiple hours every day, and so it shouldn’t be a surprise that most of us see the world the way that the elite want us to see it.

If you want to start making positive changes in your life, breaking free of your addictions is one of the most important things that you can do.

And at this point, for many Americans watching television is one of the most insidious addictions of all.

EVs were once thought to be the unlimited silver lining behind an automotive industry that has all but collapsed into severe recession in China. 

But now, it’s looking like Beijing isn’t so excited to help sustain the EV niche of the market anymore, according to the Wall Street Journal. 

And Beijing’s ambivalence is starting to show up in the numbers. EV sales fell off a cliff after June of this year, when the government slashed purchase subsidies. From July to October, sales of new energy cars were down 28% from the year prior. 

Many buyers prior to this had purchased vehicles in anticipation of the subsidy cut, which makes the sales “hangover” even worse. But the drop, on its own, still suggests that demand could be waning under the surface without government incentive. EVs are still priced above conventional cars when they are not stapled to a government subsidy. 

Luxury EVs have buyers in places like Shanghai and Beijing, partially because they are exempt from the country’s license plate rationing in these areas. But restrictions on convention ICE cars are now starting to relax as the government continues to seek ways to end the country’s auto recession. Shenzhen and Guangzhou increased their license-plate quota in June and other cities may do the same.

Bernstein analyst Robin Zhu predicts that ride sharing and taxi companies accounted for about 70% of EV sales in the country and that they could represent a large portion of the remaining demand, as they have less sensitivity to subsidy cuts. 

But Beijing hasn’t given up on EVs entirely. It still wants one in four new cars sold by 2025 to be electric, according to a draft of its 15 year plan released this week. This raises its previous target released two years ago. EVs currently only make up about 5% of the country’s market. 

Subsidies are unlikely to come back, however, to meet this target. The government is now aiming for “quality instead of just quantity”, noting that subsidies would be more costly than they were a few years ago, when the market was smaller. Instead, Beijing will spend the money on building out its infrastructure, like its charging stations. 

Maybe Tesla could take a hint from this idea…

Regardless, automakers will continue to push out EVs in China, even if they aren’t profitable. The same is expected to happen in the EU. Beijing, similar to Brussels, requires a certain percentage of cars to meet new energy requirements, which could cause a glut in the market. 

One last shred of demand hope comes from channel stuffing actually comes from the automakers themselves, many of whom are setting up their own ride sharing networks. With this being the case, the “ride” for the EV market looks like it could be bumpy and grim going forward…

Four years after learning their longtime spokesman was a giant pedophile, Subway has suffered yet another embarrassment after a Canadian court threw out a $210 million lawsuit against journalists who tested the company’s meat, only to discoer that Subway chicken contains as little as 42.8% actual chicken.

In February 2017, the Canadian Broadcasting Company’s Marketplace DNA tested six different pieces of chicken from five fast food restaurants – finding that poultry from A&W, McDonald’s, Tim Hortons, and Wendy’s contained between 88.5% and 89.4% chicken DNA.

Subway?

53.6% for their oven roasted chicken contained actual chicken, and 42.8% of their chicken strips. According to the CBC, the rest of it was soy protein, according to VICE.

Needless to say, Subway was a little upset – filing a $210 lawsuit against the CBC, claiming the study was “recklessly and maliciously” published and that the DNA test “lacked scientific rigor.”

The company claims lost customers, lost reputation, and that they had lost a “significant” amount of sales according to the report.

“The accusations made by CBC Marketplace about the content of our chicken are absolutely false and misleading,” the company said after the report was published.

Nearly three years later, the suit has been tossed.

But at the end of November, the The Ontario Superior Court threw Subway’s lawsuit out, ruling that the CBC’s program was an example of investigative journalism, and was protected under an anti-SLAPP (“Strategic Lawsuits Against Public Participation”) statute that “encourages individuals to express themselves on matters of public interest,” without the fear that they’ll be sued if they speak out. (John Oliver covered SLAPP lawsuits and how they’re used to stifle public expression on a recent episode of Last Week Tonight.) –VICE

“The Marketplace report dealt with the ingredients of sandwiches sold by popular fast food chains. It relayed the results of DNA tests performed by the Trent laboratory, which indicated that two types of Subway chicken products contained significantly less chicken DNA than other products tested,” wrote Justice E.M. Morgan in his ruling.

“Furthermore, the Marketplace report raised a quintessential consumer protection issue. There are few things in society of more acute interest to the public than what they eat. To the extent that Subway’s products are consumed by a sizable portion of the public, the public interest in their composition is not difficult to discern and is established on the evidence.”

VICE notes, however, that Justice Morgan did note that Subway’s claims had substantial merit because their own testing revealed just 1% soy filler, not the 40% claimed by the CBC.

The CBC stands by their results, and hired their own expert to vouch  for the lab’s testing.

Subway told VICE in a comment after publication:

Statement from Subway Restaurants:
“The case has not been dismissed in its entirety, and this decision does not validate the tests performed by Trent University. In fact, the judge’s opinion states: ‘The record submitted by Subway contains a substantial amount of evidence indicating that the Trent laboratory tests were of limited or no value in determining the chicken content of Subway’s products,’ and ‘…there is considerable evidence that suggests the false and harmful nature of the information conveyed to the public in the Marketplace report.’

The CBC Marketplace story at issue is wholly inaccurate and built on flawed research, which caused significant harm to our network of Franchise Owners. In 2017, two independent laboratories in Canada and the U.S. found our chicken to be 100 percent chicken breast with added seasoning, verified that the soy content was only in the range of 1 percent, and contested the testing methodology.

The quality and integrity of our food is the foundation of our business, and we will continue to vigorously defend Subway ® Franchise Owners against false allegations such as those made by CBC’s Marketplace program. We are reviewing the recent decision by the Ontario court and are confident in the ability to continue our claims against Trent University while an appeal against the CBC is under review.”

Investors searching for “green shoots” in the global manufacturing sector might not discover them in Brazil.  

Brazil’s auto industry trade group Anfavea reports vehicle production plunged 7.1% in November, on a YoY basis. 

Anfavea said 227,455 vehicles (light vehicles, trucks, and buses) were produced last month, versus 244,771 over the same period the previous year. For the first ten months of the year, vehicle production increased 2.7% from 2,702,306 in 2018 to 2,774,484 in 2019.

The trade group said the number of vehicles exported from Brazil continues to decline.

November vehicle exports were down 7.9% over the year. For the first ten months, vehicle exports plunged 33.2% over the prior year.

Brazil is one of the top five automakers in the world. The sector has struggled in the last several years as a synchronized global downturn gained momentum.

Brazil almost entered a recession during 1H19, mostly due to a manufacturing slowdown, could register below-trend growth as soon as 1H20.

The global macroeconomic situation across the world and in Brazil is so troubling at the moment that Ford had to close its plant in Sao Paulo. 

As a result of the downturn, Anfavea has said production in Q4 has fallen so sharply that three fewer working days have been seen for laborers in factories. 

Last week, we noted that the global auto industry continues to deteriorate, namely due to broke consumers after a decade of low-interest rates and endless incentives. 

We said, “the auto slowdown has sparked manufacturing recessions across the world, including manufacturing hubs in the US, Germany, India, and China. A prolonged downturn will likely result in stagnate global growth as world trade continues to decelerate into 2020.”

As shown in the chart below, global car sales have crashed at a rate not seen since the last financial crisis. 

A global economic rebound depends on the auto industry, with no turn up visible, it’s likely the global economy will continue to decelerate into 2020.