Month: January 2023

Authored by Steve Watson via Summit News,

Senator Ted Cruz declared Sunday that the FBI should immediately search the home of Hunter Biden to check for classified documents.

In the wake of such documents being discovered in Joe Biden’s home garage and an office he uses in Washington DC, Cruz noted “It seems he leaves classified documents wherever he goes. And we also know that Hunter Biden at times was — declared his residence to be those very same places.”

During the Fox News interview, Cruz added “I also believe it is critical for the FBI to search Hunter Biden’s homes, home and office residences to make sure there are no classified documents there, given all the evidence that’s piling up. We need to ascertain who’s had access to what and when.”

Cruz added that it is imperative that lawmakers find out whether documents Biden had “illegally” involve “family business activities and potential corruption.”

“Whether they involve Burisma and Ukraine, whether they involve Communist China and the entities that were paying the Biden family millions of dollars,” Cruz urged, adding “If he, in fact, had classified documents that implicate his own financial well-being, that raises the potential of very serious criminal liability.”

Cruz also highlighted an email Hunter Biden sent to a Burisma colleague, alleging the correspondence, which was obtained by the New York Post from the infamous laptop from hell, indicates he had access to classified material.

“Hunter Biden didn’t write that,” Cruz stated, explaining that “Hunter Biden is not an expert on Ukraine. He’s not an expert on Eastern Europe. He’s not an expert on Russia, but that email did help get him on the board of Burisma. It did help get him paid $83,000 a month because it showed a level of expertise not coming from him, but he was getting it from somewhere. That’s clearly from some sort of briefing. We don’t know whether it was a classified briefing or not, but that is the sort of analysis that is often within a classified briefing.”

Cruz continued, “there’s a level of scholarship and erudition that if it magically appeared, somehow it doesn’t appear in the other emails he’s sending.”

“The obvious question is what was he cutting and pasting from? What was his source? And it raises the natural inference that Hunter Biden had direct access to these classified documents,” Cruz asserted.

Watch:

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Authored by Mike Shedlock via MishTalk.com,

Assuming no recession, will employment rise or fall this year?

Civilian Noninstitutional Population from BLS, projections by the CBO, chart by Mish

Civilian Noninstitutional Population (CNIP) Definition

Persons 16 years of age and older residing in the 50 states and the District of Columbia, who are not inmates of institutions (e.g., penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces.

CNIP Chart Notes 

• Actual numbers from the BLS for years 2000 through 2022

• December all years

• Total is the sum of parts which induces small but irrelevant rounding errors

CNIP Projection Detail 2021-2030

Civilian Noninstitutional Population from BLS, projections by the CBO, chart by Mish

CNIP 2023 Projected Change From 2022

• Total: +2 Million

• Core 25-54 Age Group: +1 Million

• 55-64 Age Group: No Change

• Age 65+: +2 Million

Employment Level 2000-2030 December All Years as of 2022

Employment levels from the BLS through 2022, 2023-2030 Mish projections

Employment Level Chart Notes

• I made projections by taking the percentage of people working in each  age group in December 2022 and assumed that percentage would be relatively stable going forward.  

• Example: In 2022, for age group 25-54, there were 101.8 million people employed. The percentage of people employed in age group 25-54 was 101.8 (Employed) / 127.32 (CNIP)  = 80.0 percent. For projections, I assumed that number will hold for all subsequent years. 

• These percentages likely will not hold if there is an employment decline due to recession.

Employment Level and Projections 2021-2030

Employment levels from the BLS through 2022, 2023-2030 Mish projections

Employment Level and Projections Assumptions

• No decline in employment due to recession

• The BLS employment levels as of December 2022 are accurate

• The BLS CNIP projections are accurate

• The percentage of people working will be relatively constant

Based on those assumptions, I project a mere rise in total employment for the year of about 300,000. 

Looking further ahead the total employment gain from 2022 to 2030 is a mere 4.1 million in 8 years.

Does this make any sense? Yes, it does. Let’s start with a look at participation rates. 

Labor Force Participation Rates, December All Years 2022

Labor force participation rates 2000-2022 from BLS

Participation Rate Chart Notes

• The Labor Force Participation Rate is the calculated as the labor force divided by the working-age population.

• The Labor force is the number of people working or actively looking for work. Unemployed persons are in the labor force.

• Participation rates have generally been declining except for age group 60-64 and 65+ (the latter declining since 2019). 

• In December 2019, the LFPR was 82.9% and is 82.4% as of December 2022.

Note that in my example above, I used an employment ratio of 80.0 percent. 

The unemployment rate for age group 25-54 in December of 2022 was 2.9%. Subtracting 2.9 from 82.4 yields 79.5 nearly spot on to the slightly higher number that I used. 

To understand why employment is so stagnant, let’s hone in on the demographic reason.

Civilian Noninstitutional Population 2000-2030 Detail 

Civilian Noninstitutional Population from BLS, projections by the CBO, chart by Mish

Civilian Noninstitutional Population Detail Notes

• The number of people age 65+ is rising rapidly 

• The number of people age 55-64 is in decline

The above chart fully explains my stagnant employment projections.

Key Participation Rates 

• Age 55-59: 72.7

• Age 60-64: 58.5

• Age 65+: 19.3

People are rapidly shifting from high participation rates to much lower ones. 

For 2023, the CBO estimates a 2023 increase in the age 65+ population of 2 million and that 2 million accounts for the total rise in population. 

Final Thoughts

There is a big difference between participation rates of 55-59 (72.7)  and 60-64 (58.5). Unfortunately the CBO did not provide that breakdown.

Similarly, there is a big difference between participation rates of 16-19 (37.0) and 20-24 (71.3). Again the CBO did not provide that breakdown.

My employment projections through 2030 are more likely to be off in one direction or another due to those missing numbers than any of the other assumptions. 

Again, the baseline assumption is no employment losses due to a recession!

Finally, by 2030, the CBO projects the 16+ population will grow by 14 million while I project employment based off demographic trends will only rise by 4.1 million.

Importantly, of the 14 million population increase, 13 million of it will be in age group 65+.

Think about that for a second including strains on Medicare and Social Security.

Understanding the Current Discrepancy Between Jobs and Employment

Payroll and employment data from the BLS, chart by Mish

Payrolls vs Employment Since March 2022

• Nonfarm Payrolls: +2,887,000

• Employment Level: +916,000

• Full Time Employment: -288,000

Full time employment is down 288,000 since March and down by 444,000 since May!

For discussion, please see December Jobs: Employment Rises by 717,000 All of Them Part Time

Also note that The BLS Reports Employment in the Second Quarter Fell By 287 Thousand

In addition the average number of hours worked is declining. 

Average Work Week Has Peaked 

Data from BLS, chart by Mish 

For discussion, please see Average Work Week Has Peaked and Total Aggregate Hours Is Rolling Over

Demographics explain the alleged “noise” in falling full time employment while job growth allegedly growing by leaps and bounds. 

Job growth, if real (which I doubt), consists of people taking second part time jobs to make ends meet.

Given my charts assume no recession (or no significant  layoffs in recession), what happens if there is one?

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The Ukrainian presidency’s office is saying that it is already engaged in expedited negotiations with the US regarding the possibility of supplying Kiev forces with long-range missiles and military jets. This despite German Chancellor Olaf Scholz, who was key in the decision of Berlin and Washington to approve tanks, earlier saying that sending jets is not an option. 

Mykhailo Podolyak, an adviser to Zelesnky, was cited in The Associated Press on Saturday as saying that “fast-track” talks are taking place for jets, and which also focus on long-range missiles “to drastically curtail the key tool of the Russian army” by providing the ability to attack weapons warehouses far behind front lines.

Simultaneously, reports emerged in US media over the weekend signaling that a movement within the Pentagon is now gaining steam to press the Biden administration into signing off on jets for Ukraine.

“A contingent of military officials is quietly pushing the Pentagon to approve sending F-16 fighter jets to Ukraine to help the country defend itself from Russian missile and drone attacks, according to three people with knowledge of the discussions,” Politico wrote.

“As Ukraine prepares to launch a new offensive to retake territory in the spring, the campaign inside the Defense Department for fighter jets is gaining momentum, according to a DoD official and two other people involved in the discussions,” the report described, and quoted a defense official as follows: 

“I don’t think we are opposed,” said a senior DoD official about the F-16s, speaking on condition of anonymity to discuss a sensitive debate. The person stressed that there has been no final decision.

The White House meanwhile, has given the typical ‘nothing off the table’ response when asked about the possibility of transferring jets to Kiev:

A White House spokesperson declined to comment for this story, but pointed to remarks by deputy national security adviser Jon Finer. He said the U.S. would be discussing fighter jets “very carefully” with Kyiv and its allies.

“We have not ruled in or out any specific systems,” Finer said on MSNBC Thursday.

But standing in the way will be Germany – though we should note that the Germans caved rather quickly when pressure from half a dozen or more influential NATO allies came to bear on the tank issue earlier this month.

There’s also the question of US public opinion, which remains very much divided on just how far America’s role in this mess needs to be pushed. The unhinged ravings of politicians like Mitt Romney are certainly not going to help the hawks’ cause in the eyes of average Americans (but it’s not as if beltway warmongers ever actually listened to the public will)…

Mitt Romney blows right past all the usual platitudes about “democracy” and “territorial integrity” and admits US policy in Ukraine is ultimately geared toward “weakening Russia” — which he declares to be a “very good thing.” By extension, Romney boasts, this also weakens China pic.twitter.com/n3NG8gBuev

— Michael Tracey (@mtracey) January 27, 2023

Scholz said in a fresh interview as the jet debate emerges: “I can only advise against entering into a constant competition to outbid each other when it comes to weapons systems.”

He insisted that Berlin will not be equipping Ukraine’s military with warplanes. “The question of combat aircraft does not arise at all,” Scholz stressed according to Politico. The only question that remains as a new round of pressure builds (similar to the way the tank issue played out), is whether Germany will hold out and stick to its (purported) principles this time.

By John Kemp, senior energy analyst at Reuters

Portfolio investors have piled into petroleum futures and options at the fastest rate since the first successful coronavirus vaccines were announced in late 2020. China’s exit from a zero-COVID strategy, along with hopes the global economy can avoid a recession and low oil inventories, have contributed to an extraordinary wave of buying across the petroleum complex.

Hedge funds and other money managers purchased the equivalent of 232 million barrels in the six most important futures and options contracts over the six weeks ended January 24.

Purchases were the fastest for any six-week period since December 2020, according to an analysis of position records published by ICE Futures Europe and the U.S. Commodity Futures Trading Commission.

In the most recent week, fund managers purchased the equivalent of 70 million barrels, mostly in Brent (+40 million) and to a much lesser extent NYMEX and ICE WTI (+4 million).

But the wave of buying spread beyond crude to encompass U.S. gasoline (+11 million barrels), U.S. diesel (+8 million) and European gas oil (+7 million).

Refinery shutdowns linked to seasonal maintenance as well as sanctions on Russia’s diesel exports are expected to deplete fuel inventories further.

The net position across all six contracts climbed to 575 million barrels (47th percentile for all weeks since 2013), up from 343 million barrels (11th percentile) on December 13.

The net position is at highest since November 8 and before that June 14.

There was a strongly bullish orientation, with long positions outnumbering short ones by a ratio of 5.93:1 (80th percentile) up from 2.58:1 (23rd percentile) five weeks earlier.

The most bullish ratios are concentrated in Brent (86th percentile), U.S. gasoline (85th percentile) and U.S. diesel (86th percentile), with less optimism about European gas oil (65th percentile) and WTI (41st percentile).

Refinery maintenance in the United States is expected to deplete fuel inventories there but leave WTI prices trailing Brent, which probably explains the differential performance.
 
Hedge funds became more bullish about Brent than at any time since May 2019, before the pandemic erupted and upended the oil industry.

There is a growing tension at the heart of investor positioning. In the bond market, investors are increasingly confident inflation will moderate, allowing central banks to bring an early end to interest rate rises.

In the oil market, investors are increasingly sure continued growth will cause supplies to tighten and send prices higher. But that would be inflationary – and contradicts to the benign outlook assumed by the bond market.

Oil traders and bond traders cannot both be right.

While the headline Dallas Fed Manufacturing Activity Index printed better than expected (-8.4 vs -15.0), it remains in contraction (less than zero) for the 9th straight month (the longest streak since 2016)…

Source: Bloomberg

And in fact, the better than expected print was driven solely by ‘hope’ as current production tumbled in January but ‘expectations’ for future production rose…

Source: Bloomberg

Surprisingly, while the outlook for six-months ahead improved (but remains negative)…

…you wouldn’t know it judging by the responses that The Dallas Fed decided to release for publication… notice a pattern?

Food manufacturing

• We had a customer in the pet food segment significantly decrease its orders due to an inventory backlog.

• Uncertainty from the overall economic downturn is affecting our long-term strategy.

• Business is sluggish. We’re seeing increased illiquidity in our customer base.

Beverage and tobacco product manufacturing

• We are still seeing input costs increase. We had let our gross margin erode over the last couple of years and are now playing catch-up. We are raising prices faster than our inputs increase in a bid to restore an acceptable gross margin. This is resulting in slightly increased dollar sales and increased gross margin, but decreased unit sales. We also had many of our older 3G-based [wireless] credit card readers that we mistakenly thought also had 4G capability stop working due to the phase-out of 3G. New 4G/5G radios are on a several-month back order. Some unknown share of our sales decline is due to lack of credit card readers at the point of sale.

Textile product mills

• Uncertainty is high. Holiday sales were stronger than expected, but January is slow versus last year. Delivery times are down, but future demand and sales sentiment are low.

Paper manufacturing

• Activity continues to slip, and selling prices are coming down. We still can’t find any workers and, with our six-month projection, we have quit looking.

Printing and related support activities

• We have definitely seen a slowdown in activity compared to prior months. It’s as if the spigot got turned off. All our supply-chain constraints are pretty much gone, with delivery times much more like prepandemic times. We have work coming up but right now are very slow and struggling to get our hourly workers even 32 hours per week.

Chemical manufacturing

• Lost production due to Winter Storm Elliot caused tightening of our inventory levels.

• We are seeing a slowdown in orders and clients unwilling to hold additional inventory.

Primary metal manufacturing

• Recession is on its way.

• The residential building and construction industry has seen a significant decrease in orders across the extrusion industry. Also, imports of aluminum extrusions from South America, Mexico, Malaysia, Vietnam, Turkey and India are at record highs. Mexico is gaining more and more business in the U.S. due to not having to pay Section 232 tariffs, whereas U.S. domestic extruders are paying the tariff via our raw aluminum or billet purchases. If action is not taken, the U.S. aluminum extrusion industry as we know it today will be shutting down capacity and plants.

Machinery manufacturing

• We are seeing improvement in the business climate. Our competitors are coming to us to supply their customers. Additionally, we are purchasing new machines to add capabilities in our business and further vertically integrate our manufacturing. This will improve our profitability and reduce lead time to produce our products.

• Order volume has been going down, and we expect the trend to continue. Raw material pricing seems to be stable at the present time.

• Current federal policies are killing small businesses. From diesel prices to shortages, everything costs so much more.

Computer and electronic product manufacturing

• We provided significant (10 percent or more) raises in December after a midyear raise in July 2022. We felt that this was essential in order to keep our employees, and we have successfully retained everyone we wanted to keep. We hope not to need to do another round of raises midyear. Since our employees are blue-collar workers, inflation hits them particularly hard, and they are more willing to look for another job for a 10–15 percent pay increase. We are investing in more automation and removing process bottlenecks to increase productivity and reduce lead time.

Transportation equipment manufacturing

• We have a bleak outlook until the Federal Reserve stops interest hikes and the administration seeks energy independence.

• We are starting to see some customers pushing delivery out due to market uncertainty.

Furniture and related product manufacturing

• Requests for bids continue at a steady rate; we have not yet seen a contraction. The only change is, when posting job openings, we actually have people responding—this is a big change and likely a sign of some layoffs after the holidays from other companies. The biggest issues facing our company are increased regulations and contact from federal, state and local entities regarding a variety of topics. Often it feels as a small business that the government does not want us to succeed.

Miscellaneous manufacturing

• We continue to see large fluctuations in raw material pricing from order to order. Pricing has not corrected from the metals market shutdown in March 2022. Most lead times for raw material remain longer than in previous years.

• Order volumes remain flat across all markets we serve—automotive OEM [original equipment manufacturers], plumbing and ammunition. Raw material costs and lead times have declined since 2022.

Not exactly a picture of the ‘strong as hell’ economy we hear from The White House?

Authored by Martin Young via CoinTelegraph.com,

The price of one Bitcoin (BTC) in Nigeria has skyrocketed to the equivalent of $38,000 in the local currency, the naira…

The price of Bitcoin  in Nigeria has skyrocketed to well above global market levels amid continued efforts by the central bank to push its citizens into digitalized cash.

At the time of writing, the price of 1 BTC on the Nigerian crypto exchange NairaEX is 17.8 million nairas, equating to a whopping $38,792.

This is more than a 60% premium over the current market price of Bitcoin, around $23,700 at the time of writing.

It comes as the Central Bank of Nigeria has continued to impose limits on ATM cash withdrawals amid an ongoing effort to accelerate its shift to a cashless society.

#Bitcoin is Hope‼️

BREAKING: 🇳🇬 Bitcoin is selling for a 60% premium in Nigeria (37,235 USD) because of increased demand.

🇳🇬 Central Bank of Nigeria started limiting cash withdrawals to $44 per day earlier this month.

Now leads the world in Google searches for “Buy #Bitcoin ” pic.twitter.com/SI861WUhVy

— SHIB Bezos (@BezosCrypto) January 29, 2023

Earlier this month, the central bank imposed a limit on cash withdrawals following a December announcement.

As of Jan. 9, citizens are only allowed to withdraw a maximum of 20,000 nairas (around $43.50) from cash machines per day, with a weekly limit of 100,000 nairas (roughly $217).

The move also came just days before new naira banknotes went into circulation with the aim of curbing inflation and money laundering. The central bank imposed a deadline of Jan. 24 for Nigerians to exchange their old, higher denomination bank notes for the new currency.

However, there were long queues and complaints that there was insufficient time to meet the deadline. The central bank has now extended that deadline to Feb. 10, the BBC reported on Jan. 29.

It is not the first time the Bitcoin premium has surged in Nigeria. In February 2021, the central bank banned regulated financial institutions from providing services to cryptocurrency exchanges in the country, driving the BTC premium as high as 36%.

The recent interest in Bitcoin has also seen Nigeria becoming the leading country for Bitcoin web searches, according to Google Trends.

BREAKING: Nigerian central bank introduces new cash withdraw limits (20,000 naira ~ $44 daily) and announced that all old naira bills will be worthless at the end of January.

Nigeria is leading the „How to buy #Bitcoin“ search worldwide 🔥 pic.twitter.com/O26si2nHde

— Carl ₿ MENGER ⚡️🇸🇻 (@CarlBMenger) January 18, 2023

Additionally, on Jan. 26 Reuters reported that the Central Bank of Nigeria launched a domestic card scheme to rival foreign cards like Mastercard and Visa.

The “AfriGo” card scheme was designed to give Nigerians better access to bank card services and circumvent often expensive foreign card fees and exchange costs.

2023 started with a buying-panic in bonds (approaching their best start to a year in over 30 years at one point) as confidence grew about The Fed’s terminal rate (not as high as some feared) and a soft landing (growth cooling and inflation slowing)…

Source: Bloomberg

But, as the last week’s surge in positive macro data (driven largely by better than expected labor market prints), we have seen bonds sold (and stocks bought)…

And hedge funds have piled in, building, as Bloomberg reports, the biggest bearish bet on bond futures on record…

An aggregate measure of net-short non-commercial positions across all Treasuries maturities has hit 2.4 million contracts, according to the latest data from the Commodity Futures Trading Commission as of Jan. 24. The positions cover a multitude of investment strategies from outright bets to yield-curve wagers to relative trades to hedges, but the overall direction clashes with the narrative that a peak in rate hikes is near and a US recession will push investors back into bonds.

“The surge of bets against Treasuries may be driven both by the risk for a hawkish Federal Reserve meeting this week and also the longer-term concern that a soft landing would mean higher yields,” said Chamath De Silva, a senior portfolio manager for Sydney-based BetaShares Holdings.

“If the US economy can thrive in the face of the tightest hiking in recent history then that should mean we end up with a higher neutral rate and and a re-steepening of the yield curve.”

Perhaps even more notably, short-term interest-rate (STIR) markets are starting to price out a dovish Fed in the second half of 2023 (since 1/19 H2 2023 cut expectations have dropped from 54bps to 40bps)…

As the chart shows, the terminal rate remains relatively ‘well-behaved’ below 5.00% (59bps of hikes priced in from here), but expectations for a ‘pivot’ from The Fed are starting to fade (even as stocks squeeze higher on the same hope), more in favor of a pause (as The Fed’s dots and jawboning signal).

Authored by Dave DeCamp via AntiWar.com,

Turkish President Recep Tayyip Erdogan on Sunday suggested for the first time that Turkey could approve Finland’s NATO membership without also approving Sweden’s.

“If necessary, we can give a different response concerning Finland. Sweden will be shocked when we give a different response for Finland,” Erdogan said.

Ankara initially opposed Sweden and Finland joining NATO over their alleged ties with the Kurdish militant group PKK, which Turkey and the EU consider a terrorist organization. But Sweden has a larger Kurdish diaspora, and Turkey has been making more demands of Stockholm than Helsinki.

Turkey has been demanding that Sweden oblige with its extradition requests for suspected PKK members and people accused of being involved in a 2016 coup attempt.

“If you absolutely want to join NATO, you will return these terrorists to us,” Erdogan said on Sunday.

Turkey recently suspended NATO talks with Sweden and Finland over a Quran-burning protest that was held outside the Turkish embassy in Sweden. Enraged by the protests, Erdogan said last week that Sweden shouldn’t expect Turkey to support its NATO bid.

Throughout the application process, Sweden and Finland have said their memberships are linked and that one won’t join the alliance without the other. Finland’s foreign minister, Pekka Haavisto, suggested Helsinki could reconsider the policy, although he later walked back the comments.

Finland joining NATO will raise tensions with Moscow more so than Sweden’s membership, as Finland shares an over 800-mile border with Russia.

Finnish officials have said they won’t rule out hosting nuclear weapons under NATO’s nuclear sharing program, although the country’s president said there’s no indication they would be asked to do so.