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Yesterday, in our post-mortem on the Jackson Hole symposium, we found one particular highlight most notable: according to Princeton University economist Christopher Sims, “policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future.” And, as has been customary over the past year, the place where this “shock therapy” will be tested first, will be the same place where 30 years of unconventional monetary policy has so far failed: Japan.

That is the scenario envisioned by Mark Haefele, global chief investment officer at UBS Wealth Management who oversees the investment policy and strategy for about $2 trillion in invested assets.

In a Bloomberg Television interview, on Monday, Haegele said that the BOJ could announce a “massive stimulus program” as the nation desperately seeks to reach a 2% inflation target.

“It is how much they do, and whether they can create that kind of shock and awe at this point in the cycle,” said Haefele, adding “they could announce a massive stimulus program both on the monetary and fiscal side or they could end up reducing their inflation targets. Right now, it looks like they are going to use more stimulus.”

Indeed it does, the question is whether doing even more will lead to a different result: after all the BOJ already owns a third of all JGBs, and is rapidly nationalizing the entire stock market.

During his Jackson Hole appearance, BOJ Governor Haruhiko Kuroda said that the central bank won’t hesitate to boost monetary stimulus if needed, and there is ample space for additional easing. He also said that the central bank will carefully consider how to best use policy to achieve its price stability target.

As Bloomberg adds, consumer prices excluding fresh food — the BOJ’s benchmark inflation gauge — fell 0.5 percent in July from a year earlier, government data earlier this month showed. That was the steepest drop since March 2013, the month before Kuroda launched unprecedented stimulus. 

It is Japan’s inability to achieve its inflation goals has “put that country and that central bank into some kind of jeopardy that they are going to have to work their way out of,” Haefele said.

The BOJ is currently undertaking a review of its monetary policy ahead of its next meeting Sept. 20-21. Whether the central bank adopts more stimulus with the yen at its current level or waits to see if it strengthens more is “an open question,” he said.

“It is hard to say that any one move is going to be enough given the history of stimulus in Japan has been erratic,” Haefele said. “But everybody is hoping that they will give it another try because clearly Japan, despite reaffirming their inflation targets, has not been able to hit them.“

By “everybody” he mostly meant corporations and shareholders; for everyone else another sharp plunge in the Yen will mean a surge in imported inflation, a drop in purchasing power, even more negative savings rates, deteriorating economic fundamentals, and a general decline in the standards of living. However, since Japan is now all in, its only option remains to double down, and when that fails, to double down again until its entire financial system finally cracks.

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Submitted by Charles Hugh-Smith via OfTwoMinds blog,

Based on this analytic structure, Trump may not just win the election in November–he might win by a landslide.

If we believe the mainstream media and the Establishment it protects and promotes, Trump has no chance of winning the presidential election. For starters, Trump supporters are all Confederate-flag waving hillbillies, bigots, fascists and misogynists. In other words. "good people" can't possibly vote for Trump.

Even cartoon character Mike Doonesbury is fleeing to Vancouver to escape Trumpism. (Memo to the Doonesbury family: selling your Seattle home will barely net the down payment on a decent crib in Vancouver.)

For another, Trump alienates the entire planet every time he speaks.

The list goes on, of course, continuing with his lack of qualifications.

But suppose this election isn't about Trump or Hillary at all. Suppose, as political scientists Allan J. Lichtman and Ken DeCell claimed in their 1988 book, Thirteen Keys to the Presidency, that all presidential elections from 1860 to the present are referendums on the sitting president and his party.

If the public views the sitting president's second term favorably, the candidate from his party will win the election. If the public views the sitting president's second term unfavorably, the candidate from the other party will win the election.

(Lichtman published another book on his system in 2008, The Keys to the White House: A Surefire Guide to Predicting the Next President.)

Author/historian Robert W. Merry sorts through the 13 analytic keys in the current issue of The American Conservative magazine and concludes they "could pose bad news for Clinton."

If five or fewer are negative for the incumbent, the incumbent party will win the election. If six or more are negative, the incumbent party loses the election. Merry counts eight negatives for President Obama's second term, which if true spells defeat for the Clinton ticket.

Whether the 13 issues are positive or negative for the candidates is of course open to debate, but consider what it means that Trump won the Republican nomination despite the near-universal opposition of the Establishment.

Consider that some polls found that 68 percent of adults think the country is on the wrong track and a recent average of six polls on the subject concluded that 64% of adults feel the nation is moving in the wrong direction.

This means 2/3 of the nation's adults no longer buy into the Establishment/ mainstream media's narrative that the economy is expanding nicely, things are going in the right direction and Hillary Clinton has a lock on the presidency.

Merry scored the economy as a positive for the incumbent party, but based on the public's view of where the nation is heading, I suspect the reality that the economy is weakening rapidly can no longer be hidden from the voting public. If we score the economy as a negative, that's nine negative keys for the incumbent party, well above the six minimum.

Based on this analytic structure, Trump may not just win the election in November–he might win by a landslide–with landslide usually being defined by an overwhelming advantage in electoral college votes or 60% of the popular vote.

As improbable as this may seem at the moment, consider the improbability of Trump capturing the Republican nomination. Consider the nature of Clinton's support: a mile wide (encompassing the entire Establishment) but only an inch deep.

If the mainstream media has failed to persuade the American public that everything's going in the right direction, why should anyone remain confident that they can persuade the American pubic that Hillary will be their president come heck or high water?

As I have noted before, there are very few ways left to stick your thumb in the eye of the elitist, predatory, self-serving Establishment that won't get you tossed in prison other than voting against their candidate, which in this election is Hillary Clinton.

Memo to Clinton supporters: if you want to persuade the American public the nation is going in the right direction, you'll have to actually change the direction rather than just promise more of the same.

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In what is likely disappointing news for TMZ and meme-creators internet-wide, former Congressman (and somehow still husband of Hillary Clinton top aide Huma Abedin) Anthony Weiner has apparently deleted his Twitter account. The move comes after The Post exclusively reported Weiner had sexted (again) a busty brunette — even sending a lurid crotch shot alongside his toddler son.

As The Hill reports, Weiner, whose career ended after a sexting scandal, was reportedly exchanging messages with a woman on July 31, 2015, when he changed the subject of the explicit conversation, saying, "Someone just climbed into my bed," the New York Post reported.

He then attached a picture of his crotch, with his son curled up nearby.

 

 

“You do realize you can see you[r] Weiner in that pic??” the woman responded, according to the Post.

 

Earlier this month, Weiner gave his phone number and offered to share his location with a college student during a private online chat, according to the Post.

But now – it appears – Weiner has deleted his account with Twitter ow saying that @AnthonyWeiner's account "does not exist."

 

As a reminder, Weiner resigned from Congress in June 2011 after accidentally sharing another lurid crotch shot on Twitter. His New York City mayoral campaign imploded two years later when more online sexual shenanigans surfaced.

Weiner is the husband of Huma Abedin, the vice chair of Hillary Clinton’s presidential campaign – making us wonder how long before he is "Seth Rich"'d?

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After Friday’s Jackson Hole repricing of Fed hike expectations, which made it clear that the fate of a September (and perhaps December) rate hike is now in the hands of the August payrolls number, the main risk event of the week is therefore this Friday’s US NFPs for which consensus expects a reading of 180K, down from last month’s 217K print, leaving 3m trend at 242K. A number substantially above this will make a September hike virtually certain, and potentially risks roiling markets as good news will likely be bad news this time around.

Aside from payrolls, the key economic releases this week are PCE inflation on Monday, and ISM manufacturing on Thursday. There are several scheduled speaking engagements from Fed officials this week.

In the Eurozone, the main data releases include inflation, unemployment rate and a set of possible revisions of PMIs.

In the UK, the main release is manufacturing PMI, where a 49.5 reading is expected.

In Australia, the main releases include capex, retail sales and building approvals.

In Japan the main releases are jobless rate, retail sales and industrial production. The announcement of BoJ’s purchases of JGBs on Wednesday should garner attention.

In Canada, the main data release is Q2 GDP.

* * *

It’s a quiet start to the week in Europe this morning with Italy confidence indicators the only data due out and markets in the UK shut for a bank holiday. In the US we already saw the July personal income and spending reports, both of which printed as expected, along with the PCE core and deflator readings. Later on we’ll also get the Dallas Fed’s manufacturing survey.

We kick off in Japan on Tuesday where we’ll get the latest jobless rate reading along with retail sales data. In Europe we’ll then get UK money and credit aggregates data, Euro area confidence indicators and Germany CPI for August. In the US tomorrow we’ll get the S&P/Case-Shiller house price index and also the August consumer confidence reading.

Turning to Wednesday, the early data in Asia comes in the form of Japan industrial production, housing starts and construction spending, and also China consumer sentiment prints. The UK will also report its August consumer confidence reading. During the European session on Wednesday we’ll get France CPI/PPI and consumer spending data, Germany unemployment and finally Euro area CPI for August. During the US session on Wednesday we’ll firstly get the ADP employment change print for August which will be worth keeping an eye on ahead of payrolls, as well as the Chicago PMI for this month and July pending home sales data.

It’s another busy day on Thursday and we start in the Asia session with the official and non-official August PMI’s in China. We’ll then get the final August manufacturing PMI revisions in Europe as well as a first look for those in the UK and also the periphery. We then get a number of reports in the US on Thursday including initial jobless claims, Q2 nonfarm productivity and unit labour costs, the final manufacturing PMI, ISM manufacturing and prices paid for August and finally vehicles sales data for August.

With little to highlight in the Asia and Europe sessions on Friday, as noted above the highlight will be the August employment report in the US and specifically payrolls. Also due out will be the July trade balance, ISM NY, factory orders and final revisions to durable and capital goods orders.

* * *

A tabular summary of global key events and expectations from BofA:

Finally, a focus on just the U, courtesy of Goldman:

Monday

• 8:30 AM Personal income, July (GS +0.5%, consensus +0.4%, last +0.2%); Personal spending, July (GS +0.4%, consensus +0.3%, last +0.4%); PCE price index, July (GS +0.03%, consensus flat, last +0.1%); Core PCE price index, July (GS +0.11%, consensus +0.10, last +0.10%); PCE price index (yoy), July (GS +0.8%, consensus +0.8%, last +0.9%); Core PCE price index (yoy), July (GS +1.6%, consensus +1.5%, last +1.6%): We expect personal income to rise by 0.5% and personal spending to rise by 0.4% in July. We also expect core PCE prices to increase by 0.11% in July after core CPI increased by a moderate 0.09%. The core PCE price index likely rose by 1.6% over the past year.
• 10:30 AM Dallas Fed manufacturing index, August (consensus -3.0, last -1.3

Tuesday, August 30

• 09:00 AM S&P/Case-Shiller home price index, June (GS -0.1%, consensus -0.1%, last -0.1%): The Case-Shiller home price index appears to have been influenced by seasonal adjustment challenges recently. We expect a 0.1% decline in house prices in June report based on the pattern seen last year. Over the past year, the 20-city index has increased by 5.2%.
• 10:00 AM Conference Board consumer confidence, August (GS 98.0, consensus 97.0, last 97.3): Consumer confidence is likely to tick up to 98.0 in August after the index edged down in July. The index remains near the middle of its range over the last year. Indicators of consumer sentiment remain mixed; University of Michigan’s Consumer Sentiment report was softer, but Bloomberg’s Consumer Comfort index was more upbeat.

Wednesday, August 31

• 03:15 AM Fed Presidents Rosengren and Evans speak: Federal Reserve Bank of Boston President Eric Rosengren (FOMC voter) and Federal Reserve Bank of Chicago President Charles Evans (FOMC non-voter) will participate in a panel hosted by the Shanghai Advanced Institute of Finance in Beijing. The topic of the panel is “Business Cycles, Financial Markets and Monetary Policy with Special Application to China.”
• 08:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Federal Reserve Bank of Minneapolis President Neel Kashkari will give a speech on the role of the Fed and the bank’s board of directors in Saint Paul, Minnesota.
• 08:15 AM ADP employment report, August (GS +185k, consensus +175k, last +179k): Based on our understanding of how ADP filters its own proprietary data with other publicly available information, we expect a 185k gain in ADP payroll employment in August.
• 09:45 AM Chicago PMI, August (GS 54.0, consensus 54.0, last 55.8): We expect the Chicago PMI to decrease to 54.0 from 55.8, still above the breakeven level.
• 10:00 AM Pending home sales, July (consensus +0.8%, last +0.2%): Consensus expects a modest gain in pending home sales in July, following a 0.2% increase in June. We have found pending home sales—based on contract signings rather than closings—to be a decent leading indicator of existing home sales with a one- to two-month lag.

Thursday, September 1

• 08:30 AM Nonfarm productivity, Q2 final (GS -0.8%, consensus -0.5%, last -0.5%); Unit labor costs (qoq), Q2 final (GS +4.0%, consensus +2.0%, last +2.0%): We expect unit labor costs for Q2 to be revised up to 4.0% (qoq ar) from 2.0%, reflecting upward revisions to aggregate employee compensation and downward revisions to output in the second release of Q2 GDP.
• 08:30 AM Initial jobless claims, week ended August 27 (GS 255k, consensus 265k, last 261k); Continuing jobless claims, week ended August 20 (last 2,145k): We expect initial jobless claims to edge down to 255k after decreasing by a bit more than expected last week. The largest increase was in Louisiana, which potentially reflected the flooding along the Gulf coast.
• 09:45 AM Markit manufacturing PMI, August final (consensus 52.0, preliminary 52.1): Consensus expects the Markit services survey to be roughly in line with its flash estimate. Most responses to the survey are received by the time of the preliminary release, and revisions in the final release tend to be fairly minor.
• 10:00 AM Construction spending, July (GS +0.3%, consensus +0.6%, last -0.6%): We expect construction spending to increase modestly after a -0.6% decline in June.
• 10:00 AM ISM manufacturing, August (GS 51.5, consensus 52.0, last 52.6): Manufacturing surveys were mostly weaker in August, and we expect ISM manufacturing to soften to 51.5. The Richmond Fed survey contracted (-21pt to -11), and while the Empire State survey (-4.8pt to -4.3) weakened, key underlying components improved. The Kansas City Fed survey improved (+2pt to -4), but still remains in negative territory. The Philly Fed survey improved in August (+4.9pt to +2.0), but details of the report weakened notably. On net, our manufacturing survey tracker—which is scaled to the ISM index—decreased to 49.7.
• 12:25 PM Cleveland Fed President Mester (FOMC voter) speaks: Federal Reserve Bank of Cleveland President Loretta Mester will give a speech on community development in Lexington, Kentucky. Audience and media Q&A is expected.
• 4:00 PM Total vehicle sales, August (consensus 17.3mn, last 17.8mn): Domestic vehicle sales, August (consensus 13.5mn, last 13.8mn)

Friday, September 2

• 8:30 AM Nonfarm payroll employment, August (GS +165k, consensus +185k, last +255k); Private payroll employment, August (GS +155k, consensus +180k, last +217k); Average hourly earnings (mom), August (GS flat, consensus +0.2%, last +0.3%); Average hourly earnings (yoy), August (GS +2.3%, consensus +2.5%, last +2.6%); Unemployment rate, August (GS 4.8%, consensus 4.8%, last 4.9 %): We expect an August payroll gain of 165k, after a 255k increase in July. Our below-consensus forecast partly reflects a tendency for first-print August payrolls to be weak on average. The unemployment rate is likely to edge down one-tenth to 4.8%. We expect average hourly earnings to be flat month over month and decline to 2.3% year over year, largely due to calendar effects rather than any fundamental slowing in wage growth.
• 08:30 AM Trade balance, July (GS -$41.8bn, consensus -$43.0bn, last -$44.5bn): We expect the trade balance to narrow in July. The Census Bureau’s new Advance Economic Indicators report showed that inventory accumulation was less than previously assumed, while the advanced goods trade balance showed a smaller-than-anticipated goods deficit. Overall, we expect the total trade deficit to be -$41.8bn.
• 10:00 AM Factory orders, July (GS +1.9%, consensus +2.0%, last -1.5%): Factory orders likely increased in July, following better-than-expected data on durable goods orders.
• 01:00 PM Richmond Fed President Lacker (FOMC non-voter) speaks: Federal Reserve Bank of Richmond President Jeffrey Lacker will give a speech titled, “Interest Rate Benchmarks” to the Virginia Association of Economists and the Richmond Association for Business Economics at the Richmond Fed.

A handy summary:

Source: DB, BofA, Goldman Sachs

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Submitted by Martin Armstrong via ArmstrongEconomics.com,

Central bankers these days are seriously trapped. They cannot now reverse their policies for that means they have to admit that they have failed. That is far more serious than you might imagine. To even entertain backing down from negative interest rates means they have to admit that Keynesian/Marxist economics has failed and therein socialism, which is based upon the very principle that government CAN and is CAPABLE of managing the economy. This is the real question presented in the American presidential elections, yet nobody will articulate it in this manner. Hillary still preaches the same failed socialist agenda as if government can even do anything other than attack people who earn more money as did Emperor Maximinus of Rome.

Just before Paul Volcker became Federal Reserve Chairman Paul Volcker, who served (August 6, 1979 – August 11, 1987), he delivered his Rediscovery of the Business Cycle in 1978 (published on May 3, 1979). If you Google this book, you will see our site comes up first. You can find used copies around $500. Why is this book so rare? Because before Volcker became Fed Chairman, he told the truth.

“The Rediscovery of the Business Cycle – is a sign of the times. Not much more than a decade ago, in what now seems a more innocent age, the ‘New Economics’ had become orthodoxy. Its basic tenet, repeated in similar words in speech after speech, in article after article, was described by one of its leaders as ‘the conviction that business cycles were not inevitable, that government policy could and should keep the economy close to a path of steady real growth at a constant target rate of unemployment.”

This “New Economics” was all about empowering government to manipulate and control the economy. Even Larry Summers, who is the father of Negative Interest Rates, has publicly admitted that government cannot forecast economic declines. Implicitly, he too is conceding that the “New Economics” has failed and his negative interest rates is not bankrupting pensions and has underwritten government debt like never before. Summers has pushed society over the edge. The conundrum in which we now find ourselves is where global central bankers can gather at the U.S. Federal Reserve’s annual symposium in Jackson Hole, Wyoming, but all they can do is hope something happens to save them. Governments are beginning to depart from the grip of austerity forced upon Europe by Merkel which has greatly suppressed economic growth and created an economic depression exactly as what took place during the 1930s. The option of deliberately creating deflation was the policy of Germany only because they misunderstood the causes behind the German hyperinflation of the 1920s. The failure of the economy to rebound in Europe and in Japan, while the United States has been only a dead-cat-bounce, led to governments insisting politically that central banks maintain and extend their own stimulus efforts.

It is clear, central bankers are in a state of panic. They are looked upon as the sole economic magician and this political shift for responsibility has overburdened then dramatically. They know all too well that serious structural reforms are now necessary. However, central bankers can’t be seen to be giving up on this Keynesian/Marxist policy Volcker called the “New Economics” and Larry Summer pushed to Negative Rates. They are now trapped, unable to reverse policy without sending a signal that they’ve have failed. The great fear is the collapse in confidence, which is on the horizon. They wake up from a nightmare in cold sweat fearing the curtain will be pulled back and the world will witness there is no wizard as in that film – the Wizard of Oz.

The central bankers tremble at market sensitivity to any change in the perception of what they are up to next. They sought this power of a demigod, and now live in fear that they might be discovered as confused and powerless. This is now all about policy makers being unable to admit complete and utter failure. This is the foundation from which a Phase Transition can emerge. Once the majority begin to realize that the central bankers have been like con-men, that is when the stampede begins with a mad rush to private assets.

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A broadly in-line-with-expectations print in US income and spending data (+0.4% MoM and +0.3% MoM respectively) hides a bigger problem for the consumption-driven US economy. For the first time since March, the savings rate increased as US consumers dared not spend above their means (up from 5.5% to 5.7%).

Year-over-year, US spending growth is slowing once again, despite a bounce in incomes…

 

Is this some oddly conservative behavior?

 

Pushing the savings rate higher for the first time since March…

 

This does not bode well for Q3 GDP for now with July off to a less exuiberant start.

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Submitted by Michael Shedlock via MishTalk.com,

Last year, over one million refugees poured into Germany. Chancellor Angela Merkel said,“Wir schaffen das” — “We can do it.”

These refugees were supposed to start an economic boom.

The actual results show far more German women were raped or assaulted by the refugees than found employment at the thirty largest German companies.

National Public Radio (NPR) reports Despite Early Optimism, German Companies Hire Few Refugees.

A year ago, as Germany opened its borders to a surge of migrants and refugees, Chancellor Angela Merkel said,”Wir schaffen das” — “We can do it.”

 

Many expected that the influx of new arrivals would help Germany’s economy, already the strongest in Europe. Big players in German business were enthusiastic. Dieter Zetsche, the CEO of Daimler, the big car maker, predicted a new “economic miracle.” Frank Appel, the CEO of Deutsche Post, the huge courier company, praised the additional value for the labor market that the refugees would bring.

 

But the miracle hasn’t happened. One out of three German companies says it plans to hire refugees this year or next. But only 7 percent of all German firms have actually done so in the last 24 months, according to the Institute for Economic Studies in Munich, which polled managers earlier this year.

 

The assumption was that asylum seekers would primarily include people with relatively high education levels, comparable to German degrees. But in fact, many who arrived are unskilled and can understand neither English nor German. [What jackass made that assumption?]

 

And a grand total of 54 refugees have managed to find employment with the country’s biggest 30 companies, according to a survey in June by the daily Frankfurter Allgemeine Zeitung. Fifty of them are employed by Deutsche Post.

Results Speak For Themselves

On New Years evening alone as many as 1,200 women were molested in sexual attacks.

Yeah, “we can do this”.

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Just days after embattled drugmaker Mylan, which over the past two weeks has come under fire for pricing its EpiPen emergency allergy shots at $600, announced it would cut costs of its infamous anti-allergy treatment, when on Monday it announced it would launch the first generic to its allergy auto-injector EpiPen at a discount of more than 50% to the branded product’s list price.

The generic EpiPen will be identical to the branded product and cost $300 per two-pack carton, Mylan said in a statement on Monday. The company also plans to continue to sell the branded version.

Last week the company reduced the out-of-pocket costs of EpiPen for some patients last week amid a wave of criticism from lawmakers and the public over the rapid escalation in the product’s price in the past few years. However, as many politicians chimed in, it still wasn’t enough, demanding more concessions from the senator daughter CEO. As a result, Mylan said it expected to launch the generic product “in several weeks” at a list price of $300. The branded product costs about $600. EpiPen cost about $100 in 2008.

“Ensuring access to medicine is absolutely the core of Mylan’s mission,” Chief Executive Officer Heather Bresch said in the statement accompanying the announcement. “We understand the deep frustration and concerns associated with the cost of EpiPen to the patient, and have always shared the public’s desire to ensure that this important product be accessible to anyone who needs it.”

The EpiPen price increases drew particular attention in Washington because Bresch had successfully pushed legislation to encourage use of the EpiPen in schools nationwide. Mylan spent about $4 million in 2012 and 2013 on lobbying for access to EpiPens generally and for legislation, including the 2013 School Access to Emergency Epinephrine Act, according to lobbying disclosure forms filed with the Office of the Clerk for the House of Representatives.

Meanwhile, as the Mylan scapegoating campaign continues, our rhetorical question to Congress remains: have you received millions in lobby dollars from the US pharmaceutical industry. Incidentally, the answer is yes: some $2.3 billion in the past decade. We would be delighted if Congress members were to disclose just which big pharma companies they received funds from, and what they used them for.

 

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