Tag: news

Trump’s Racist Judge Attack Expands From Mexicans to Muslims

Last week, Donald Trump said he didn’t think a judge with Mexican heritage should preside over the class action suit against Trump University, because the judge’s background presented, in his words, an “absolute conflict” because of his plan to build a southern border wall.

Over the weekend, Trump defended that position, repeatedly insisting to CNN’s Jake Tapper that the judge, who was born in Indiana, should be removed because of his “Mexican heritage.” And he expanded it, saying that “it’s possible, absolutely” that, in his view, a Muslim judge would be similarly conflicted.

Prominent Republicans have condemned Trump’s remarks, with Newt Gingrich, who has positioned himself as a potential running mate, calling the remarks “completely unacceptable” and Senate Majority Leader Mitch McConnell saying that he didn’t agree with the remarks. Speaker of the House Paul Ryan, who endorsed Trump last Thursday, said too that he “completely” disagreed with Trump’s thinking, and described Trump’s statements as “just out of left field.”

Trump’s remarks, however, aren’t at all odd or unexpected—for Donald Trump. His primary campaign often channeled racial and cultural resentments. He is simply continuing in the same vein.

Trump opened his campaign last summer by calling immigrants from Mexico “rapists” and criminals, and using the United States as their “dumping ground.” He made headlines by proposing a ban on all Muslim immigration to the United States. He refused repeatedly in an interview to disavow the support of former Ku Klux Klan leader and prominent white nationalist David Duke.

The timing of these new remarks—coming after Trump has secured the GOP nomination—suggests that the presumptive Republican nominee has no plans to change his approach during the general election.

As recently as April, Trump’s campaign manager, Paul Manafort, had promised otherwise, telling GOP officials in a private meeting that Trump has been playing a part designed to appeal to Republican base in order to win the primary. “That’s what’s important for you to understand: That he gets it, and that the part he’s been playing is evolving.” Trump would play a different part during the general election, Manafort said. “The negatives are going to come down, the image is going to change.”

Some Republican leaders seem to have believed this. “I think we’re much more likely to change him because if he is president, he’s going to have to deal with sort of the right-of-center world, which is where most of us are,” Sen. Mitch McConnell said last week.

Trump isn’t going to alter his rhetoric or his style, because it’s not an act. It’s central to his character. It’s the only way he knows how to campaign, and how to get attention. He’s going to continue making racially charged remarks, and continue appealing to the racism and nativism of his supporters.

So, no: Trump’s new remarks about the heritage of the judge in the Trump University case aren’t coming out of left field. They’re a product of the same ugly stew of resentments that has driven much of his campaign so far. They are perfectly in line with his behavior since he started his run. This is who Trump is, and he’s not going to change. 

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Teenagers Less Mad for Reefer: New at Reason

Ever since 1996, when California became the first state to recognize marijuana as a medicine, drug warriors have been warning that loosening legal restrictions on cannabis “sends the wrong message” to the youth of America, encouraging them to use a drug they would otherwise avoid. Twenty years later, with marijuana legal for medical or recreational use in two dozen states and the nation’s capital, there is little evidence that adolescents have responded in the way pot prohibitionists predicted. In fact, data from government-sponsored surveys show that teenagers are less likely to use marijuana and, if they do, less likely to abuse it than they were before this sea change in state policy.

According to the Monitoring the Future Study, which surveys students in the eighth, 10th and 12th grades, the share of high school seniors who saw “great risk” in occasional marijuana use fell from 26 percent in 1996 to 16 percent in 2015. For regular marijuana use, the drop was even bigger, from 60 percent in 1996 to 32 percent in 2015. Disapproval of occasional or regular marijuana use also fell significantly. Yet during the same period, the share of high school seniors who reported using marijuana in the previous month fell slightly, from 21.9 percent to 21.3 percent. Past-year use fell from 40.2 percent to 38.6 percent. And the trends for eighth-graders and 10th-graders are similar. Perceived harmfulness is down, disapproval is down (albeit only slightly among eighth-graders), and so is marijuana use. 

View this article.

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Ronald Bailey Comments on The Age of Em at Cato Tomorrow

AgeofEmCoverTomorrow, June 7, at 11 a.m., at the Cato Institute in Washingon, D.C., George Mason University economist and transhumanist Robin Hanson will present insights from his new book, The Age of Em: Work, Love, and Life When Robots Rule the Earth. I will be making some comments on the book and joining the discussion with the audience. From my Reason review of the book:

Move over, humans; the emulations are coming and our world is going to get really weird. That’s the premise of the George Mason economist Robin Hanson’s fascinating new book, The Age of Em: Work, Love, and Life When Robots Rule the Earth, a worthy addition to the growing canon of visionary literature about exponential technological progress. The book tries to discern how the world will change when it becomes possible to upload human minds into computational substrates.

Hanson argues that three supporting technologies are required to achieve this: fast, cheap computers; fast, cheap brain scanners; and detailed and effective models of brain cells. Once all three become available later this century, it will be possible to scan a human brain and emulate it on computer hardware. At that point we’ll enter the Age of Emulation—or the Age of Em, for short. And then what?

Come and find out. Cato urges folks to register this morning for the event tomorrow. Go here to register. See you tomorrow.

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The Keynesians Stole The Jobs

Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

Late last week the markets were shocked by a surprisingly bad May jobs report – the worst monthly report in nearly six years. The experts expected the US economy to add 160,000 jobs in May, but it turns out only 38,000 jobs were added. And to make matters worse, 13,000 of those 38,000 were government jobs! Adding more government employees is a drain on the economy, not a measure of economic growth. Incredibly, there are more than 102 million people who are either unemployed or are no longer looking for work.

Gold reacted to the report quickly and decisively, gaining 2.5 percent to $1,243 per ounce on Friday. Gold mining stocks also saw significant gains on the day.

As recently as late May, there was confident talk about a rate increase when the Federal Reserve meets in June.

Transcripts of the Federal Reserve’s April meeting showed that the central bank was seriously considering a June rate hike. With last week’s jobs report and other bad news, that is increasingly unlikely. In fact, citing the weak May employment numbers, Goldman-Sachs is now predicting that there is a zero percent chance of a rate hike in June. Of course they also see this as a temporary blip in an otherwise robust economy, predicting a 40 percent chance of a rate hike in July.

I don’t mean to rain on Goldman’s parade, but there are no miracles between now and July that will propel the economy to where according to their terms a rate hike would be appropriate.

Many will point to the May employment numbers and the weak economy in general and pin all the blame on President Obama. However, Obama is only part of the problem. The real culprit is an economic philosophy shared by both Republicans and Democrats for many decades. It is a belief in the fantasy of effective central economic planning by the Federal Reserve. It is a belief that a central bank can determine better than the free market what interest rates should be. This belief results in mal-investment, spiraling debt, distorted markets, inflation, bubbles, and finally economic depression.

I was not surprised by the lousy May employment numbers. Actually, I am surprised that so many others were surprised. While the “experts” have talked about our “economic recovery” since the crash of 2008, I happen to believe we have been in a recession or even a depression for the past eight years. The government manipulates the statistics to hide how bad the economy really is, until finally a bit of the truth leaks out and everyone seems surprised.

The people sense something is wrong but many don’t fully understand what it is. They have been told that more government spending will stimulate the economy and bring back jobs, and that more tinkering with interest rates will finally produce ideal economic conditions. But the real problem is that there is a cancer out there and it needs to be aggressively treated, not handed an aspirin. What we are seeing is an epic failure of the Keynesians who have tricked so many people into believing that economic interventionism can create a perfect economy. They have mismanaged the economy and I am afraid the worst is yet to come.

All is not lost, however. I am encouraged that so many people are seeing through government deception and are turning to the study of Austrian economics to understand what is wrong with our current system and how we can rebuild the economy. Reading Mises and Rothbard is the best way to understand what is really wrong with our economy…and how it can be fixed.

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Don’t Expect Much From Yellen’s Speech Today

When previewing today’s Janet Yellen speech, we first focus on BofA’s chief economist Ethan Harris who looks not so much at today’s event as at recent appearances by Yellen and various Fed governors and president, and is clearly getting more disenchanted by the Fed’s ongoing flip-flopping, because as he says “it is fair to say that many clients are a bit confused and frustrated with Fed communication.”He continues:

The Fed seems to be constantly changing its focus from one meeting to the next. They seem to regularly promise hikes, only to back off at the last second. Fed statements often seem stale, reflecting where the economy and markets were a couple months ago, rather than current conditions. They say their 2% inflation target is not a ceiling, and yet they only plan to bring inflation back to 2%. They argue that the risks to the outlook are very asymmetric—with rates near zero they have limited anti-recession ammunition—and yet their inflation target is symmetric. This is policy transparency?

In light of the above one could say that the June rate hike odds are an efficient measure of the Fed’s overall credibility in recent months.

As we noted earlier, Yellen is the last scheduled Fed official to speak publicly before the quiet period Fed officials typically observe the week before a Federal Open Market Committee meeting. She’ll give remarks at the World Affairs Council in Philadelphia at 12:30 p.m. local time, then will attend a roundtable discussion at the West Philadelphia Skills Initiative starting at 2 p.m. The appearances give her a chance to talk July back onto the table by signaling that the June data may have been a blip. Alternatively, she could push expectations back further by emphasizing the negative developments.

Yellen could note that the May report does not necessarily suggest a more permanent gloom for the labor market, where unemployment at 4.7% is at its lowest level since the beginning of the recession. On rates, she could repeat her line from a week-and-a-half ago that a rise could be appropriate “probably in the coming months.” Millan Mulraine, deputy chief economist at TD Securities in New York, said he expects the Fed Chair to reiterate a “relatively upbeat outlook on growth and inflation, while continuing to emphasize the need for caution.”

While likely keeping a July rate hike on the table, Yellen “will emphasize that any decision to act will be highly data-dependent,” he wrote in a note to clients.

Another take of what to expect in today’s key speech comes from DB’s Jim Reid, who says that the weak jobs report “makes for an interesting appearance from Yellen as surely she can’t confidently signal a summer hike now? However she was relatively hawkish when she spoke 10 days ago at Harvard so will one number knock her back to her normal dovish leanings. The market has certainly voiced its opinion. We’ve had a big round trip in June and July hike expectations over the last month. Only 4 weeks ago the probabilities were 4% and 17%. They then climbed to a peak of 34% and 54% on May 24th before landing at 4% and 27% this morning.”

Still, anyone expecting a full dovish flip by Yellen was who quite humiliated by the payrolls report (confirming what Gundlach said originally that she should have been dovish), will be disappointed because as Bloomberg writes, “being opaque has been paying off for Janet Yellen. That’s one reason not to expect razor-sharp clarity as she speaks in Philadelphia later on Monday.”

Call it Yellen’s metamorphosis into a lite-version of Alan Greenspan.

Still, following her hawkish assessment of the economy 10 days ago, Yellen may need to update her tone slightly in response to renewed labor market uncertainty, perhaps softening or further qualifying her May 27 statement that an increase will probably be appropriate “in coming months.” That said, economists and strategists say it’s unlikely that she’ll give a more definitive timeline on when to expect the second hike in a decade.

Quoted by Bloomberg, Guy Lebas, fixed-income strategist at Janney Montgomery Scott who expects a September increase, said that “we’re going to get a vague promise of future rate hikes that does not specify a date,” said . “You can’t claim data dependence, have the most recent data be what it was, and still take upward rate action.”

Actually, the Fed can’t claim data dependence period, unless the ‘data’ it references is the Yuan exchange rate or the closing price of the S&P500. In the weeks leading up to the employment report Friday, several Fed officials had signaled that they were in favor of a rate increase in coming months. Markets were increasingly pricing in a hike at either the Fed’s June 14-15 or July 26-27 meeting as a result, but that reversed following the latest jobs data.

The result is shown in the chart above.

Most likely what Yellen will do is repeat the broad generalities she has reiterated for months: “The last thing Yellen wants to do is talk herself into a corner,” said Gennadiy Goldberg of TD Securities who expects Yellen to stick to her call for an increase in “coming months” while emphasizing that it depends on data holding up. “That was the beauty of Yellen’s recent remarks – it was enough to put the markets on notice, without painting herself into a corner if the data should sour.”

Actually she did paint herself into a corner considering July rate hike odds promptly surged to series highs in the hours following her last speech, only to tumble subsequently.

Girard and Kevin Cummins at RBS Securities expect Yellen to repeat her prior comments, hardly a precise signal. “She will stick to the script that a rate hike ‘in coming months’ would be appropriate if things unfold as the Fed expects, which could mean June, July or September,” they wrote.

No matter what Yellen says, however, the best news for the Fed is that the BLS just reset the recent drop in the Chinese Yuan, courtesy of its peg to the US dollar which just had a dramatic close encounter with gravity on Friday. As such Yellen just bought herself at least a few more weeks of breathing room before fears about Chinese capital outflows and sharp devaluations reemerge. It also means that, now that bad news is again good news, the S&P may easily hit new all time highs in the coming days even as US economic data finally cracks.

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Fill In The Blank: Fed’s Lockhart Says “Policy Continues To Stimulate The ………..”

Economy… or Market?

That word “stimulate” – we don’t think it means what you think it does…

 

But Lockhart didn’t stop there:

  • *LOCKHART: BUSINESS INVESTMENTS BEING IMPACTED BY UNCERTAINTY (right, Fed uncertainty!)
  • *LOCKHART: A BREXIT LEAVE VOTE COULD CAUSE SPILLOVERS TO U.S. (which is the opposite of what they were saying a few months back)

Pure credibility crushing perfection.

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Is The Market Rational After All?

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

This is the market we have now: dominated by delusional, irrational central planners with unlimited powers to create money out of thin air to fund their manipulations.

For the past decade, attempts to explain the psychology of markets have been dominated by behavioral economics: rather than being rational actors as presumed in classical economic models, humans are often profoundly irrational and prone to cognitive distortions and errors that render their choices anything but rational.

Even the wisdom of crowds–that in aggregate, crowds make better decisions than individuals–is being questioned.

Ironically, while the clinical focus has been on individual irrationalities and frailties, markets have been increasingly controlled by a handful of central planners: central banks and state authorities who are intervening in supposedly free markets (i.e. outright manipulation) to an unprecedented degree.

Central banks are buying trillions of dollars, yuan, yen and euros of assets such as mortgages, sovereign bonds, corporate bonds and stocks to prop up markets in these assets as a means of generating confidence and positive sentiment, and suppressing any downturns by selling volatility (the VIX index).

The VIX (volatility) and the stock market are on a see-saw: as volatility leaps higher, markets sell off, and as volatility declines, complacency enables markets to drift higher.

The VIX has been monkey-hammered lower for months. Every time volatility (as reflected by the VIX) starts creeping up into the danger zone, it is sold, effectively pushing the index back down to "safe" complacency ("no worries, mate") levels.

So if individuals and crowds are delusional and irrational, how can a handful of central planners not be equally delusional and irrational? the key to understanding market behavior is not human irrationality. Rather, the key drivers in today's markets are completely rational responses to the incentives created by central planners.

Only an irrational person who wanted to be fired would repatriate billions of dollars in overseas profits to the U.S. and pay 35% in corporate taxes. The only rational response to this disincentive is to find ways to funnel this money into corporate buy-backs that enrich CEOs and other top managers. To do otherwise would be irrational.

if central banks (i.e. central planners) have made it abundantly clear that they will intervene to keep markets aloft, regardless of cost, then the only rational response is buy the dips because central planners will stick-save markets from any panic declines and then push them to new heights.

If central planners routinely hammer volatility down with huge selling, then the only rational response is to align your trades to profit from this ever-present intervention.

This is the market we have now: dominated by delusional, irrational central planners with unlimited powers to create money out of thin air to fund their manipulations.

The only rational response is to trade accordingly: anticipate constant manipulation, anticipate constant bombastic propaganda of the "whatever it takes" variety, and anticipate massive selling of volatility to maintain the ever-so-important illusion that global risks have been disappeared by central banks and central planners.

Until the central planning madness destroys markets' ability to discover price and allocate capital. Then you end up with Venezuela: a failed state and a broken economy that can no longer feed its people despite the nation's vast oil wealth.

Volatility has been chosen as a "signaling device" by central planners. A low VIX signals all is well and risk is non-existent, so central planners suppress VIX.

In a world roiled by staggeringly large risks, can VIX be suppressed forever? That's a difficult question in a market dominated by irrational central planners.

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Key Events In The Coming Week

After last week’s global data deluge which culminated with the worst US jobs reported in 6 years, looking at this week’s calendar we get the usual post-payrolls data lull, punctuated by Yellen’s speech today which will be the last scheduled Fed statement before the June FOMC.

It is a quiet start to proceedings today with just Euro area investor confidence data and German factory orders this morning, while over in the US the labour market conditions index reading is the only data of note. However, in what many say is this week’s most important event, at 12:30pm Yellen will make another appearance, which this time is expected to be far more dovish than the hawkish surprise she unveiled just over a week ago (more shortly).

Tuesday morning during the Asia session we’ll have the usual focus on the China foreign reserves data, while the RBA cash rate decision is also due out (no change expected). In Europe on Tuesday the main data of note is the final revision for Q1 GDP in the Euro area (+0.5% qoq expected), while French trade data and German industrial production data is also due. Over in the US on Tuesday consumer credit, Q1 nonfarm productivity and unit labour costs and the IBD/TIPP economic optimism reading are the main releases of note.

It’s set to be a busy morning in Asia on Wednesday where we’ll get China trade data for May (a slowdown in exports is expected) and the final revision for Q1 GDP in Japan. Over in Europe UK industrial production and French business sentiment data are due, while in the US the April JOLTS job opening report is the sole release on Wednesday.

We’re in China again on Thursday when the May CPI (no change to +2.3% yoy expected) and PPI reports are due out. During the European session on Thursday the main data of note due out is the German and UK trade numbers for April. Over in the US meanwhile we’ll get the latest initial jobless claims print as well as the April wholesale inventories and trade sales report.

In Europe on Friday we’ll get French industrial production and German CPI. We finish in the US on Friday with the May Monthly Budget Statement and a first take on the June University of Michigan consumer sentiment survey.

* * *

A detailed breakdown of just US events in the coming days from Goldman:

Monday, June 6

  • 02:15 AM Boston Fed President Rosengren (FOMC voter) speaks: Federal Reserve Bank of Boston President Eric Rosengren will be discussing quantitative easing in Europe and the U.S. at the Helsinki Central Banking Conference. Recently, President Rosengren remarked that most of the conditions for a rate hike by the FOMC are “on the verge of broadly being met”.
  • 10:00 AM Labor Market Conditions Index, May (consensus -0.8, last -0.9)
  • 12:30 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will be giving a speech titled “Economic Outlook and Monetary Policy” to the World Affairs Council of Philadelphia in Pennsylvania. We expect Chair Yellen to provide an update of her views following last week’s disappointing payrolls report, and to provide additional clarification regarding whether a rate hike is still appropriate in the “coming months”. Q&A is expected.
  • 2:00 PM Fed Chair Yellen (FOMC voter) speaks: Federal Reserve Chair Janet Yellen will take part in a roundtable discussion at the West Philadelphia Skills Initiative, which will include Philadelphia Fed President Patrick Harker among its participants.

Tuesday, June 7

  • 08:30 AM Nonfarm productivity, Q1 final (GS -0.6%, consensus -0.6%, last -1.0%); Unit labor costs (qoq), Q1 final (GS +4.5%, consensus +4.0%, last +4.1%); Unit labor costs (yoy), Q1 final (GS +3.1%, last +2.3%): We expect unit labor costs for Q1 to be revised up to 4.5% (qoq ar) from 4.1% and for Q4 to be revised up to 5.4% from 2.7%, reflecting revisions to aggregate employee compensation in both quarters. As a result, the year-on-year rate for Q1 is expected to be revised up to 3.1% from 2.3%.
  • 3:00 PM Consumer credit, April (consensus $18.8bn, last $29.7bn): Consensus expects consumer credit to rise at a slower pace in April.

Wednesday, June 8

  • 10:00 AM JOLTS job openings, April (consensus 5,650k, last 5,757k): Consensus expects job openings to move down moderately in April, although they remain near a post-crisis high.

Thursday, June 9

  • 08:30 AM Initial jobless claims, week ended June 4 (GS 260k, consensus 270k, last 267k); Continuing jobless claims, week ended May 28 (consensus 2,174k, last 2,172k): We expect initial jobless claims to decline to 260k from 267k last week, and to remain near their post-crisis lows. We continue to read the trend in claims as consistent with low layoff activity nationally.
  • 10:00 AM Wholesale inventories, April (consensus +0.1%, last +0.1%):  Consensus expects wholesale inventories to edge up in April.

Friday, June 10

  • 10:00 AM University of Michigan consumer sentiment (preliminary), June (GS 94.0, consensus 94.0, last 94.7): We expect the University of Michigan consumer sentiment index to decline modestly in the June preliminary estimate. Despite the disappointing jobs report this past Friday, most measures of consumer confidence remain near post-crisis highs.
  • 02:00 PM Monthly Budget Statement, May (consensus -$56bn, last +$106.4bn): Consensus expects the federal budget balance to have been in deficit in May.

* * *

Finally, a chart summarizing all the key events courtesy of BofA

Source: DB, GS, BofA

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Hillary Clinton Wins Puerto Rico, Ohio Prosecutor to Decide on Charges in Gorilla Incident, Swiss Voters Reject Basic Universal Income: A.M. Links

  • Terry McAuliffe celebrating Clinton win in Puerto RicoHillary Clinton won the Puerto Rico primary. The Bernie Sanders campaign accused local officials of fraud.
  • A photojournalist and a translator working for NPR were killed in Afghanistan.
  • A prosecutor in Ohio will announce today whether he will press charges against the family of a child who fell into a gorilla pit at the Cincinnati Zoo.
  • A prosecutor in Michigan says he won’t call a parrot to testify in a murder case.
  • Voters in Switzerland rejected a basic universal income.
  • The government of Luxembourg will spend $223 million on initiatives related to asteroid mining.
  • Researchers say King Tut had a dagger from outer space.
  • The Golden State Warriors defeated Cleveland by more than 30 points to take a 2-0 lead in the NBA Finals.

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