Overnight

Fallout or spillover takes different forms and the fact that the U.S. economy has been weaker than predicted or expected by those economic soothsayers came to light as Reuters noted overnight: U.S. gross domestic product increased at a 1.2 percent annual rate in the April-June period, less than a half of a 2.6 percent growth rate economists had expected.

"Investors have been shifting money to Asia, which is likely to be least affected by Brexit and as the U.S. Fed appears to be in no hurry to raise interest rates," said Yukino Yamada, senior strategist at Daiwa Securities. MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS rose 1.1 percent, hitting its highest level in about a year. Asian markets showed limited reaction to a better-than-expected private survey on China's factory sector.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) rose to a 1 1/2-year high of 50.6, beating market expectations of 48.7 and up from 48.6 in June. An official survey showed factory activity eased in July.

The Nikkei 225 was up0.30%, turning around an earlier loss; the Korean Kospi edged higher 0.6%; the Hang Seng rallied  nearly 1.4% and the Australian ASX 200 gained 0.79% while in China shares took a break with the Shanghai Composite falling 1.08% and Shenzhen Composite down almost 2%.

The U.S. dollar hovered near a three-week low against the yen after it's surge Friday following the BOJ's action disappointed investors who were hoping for more help. Up nearly 3% on Friday at 101.97, the yen settled lower overnight at 102.59 against the dollar. The dollar stood near a three-week low against the yen, which got a lift on Friday after the Bank of Japan's stimulus fell short of markets' expectations. Gold XAU= also hit a near three-week high of $1,355.1 per ounce on Friday and last traded at $1,351.5.

Meanwhile, NewYork Federal Reserve President William Dudley made some news, suggesting it was "premature" to count out any rate hikes this year if the economy suddenly improved. Dudley is close with Fed Chair Janet Yellen and viewed as a dove by many. He is, however, along with Yellen and one or two others the top dogs at this Fed  and his barking gets attention accordingly.

Stop At Nothing

Whom do you trust?

Well, if you're a German a fair question today is, do you trust Chancellor Angela Merkel when it comes to your safety?

Given recent events in Germany more and more Germans are saying no, they don't trust her, as the division about open borders spreads around the globe. Globalists want to criticize any and all who question them and their madness for one world government.

Here in the last two paragraphs of the Economist, a globalist-pushing magazine, is everything you need to know if you don't like that status qou and have any questions about the way the globalists have been running things.

They are from the latest issue

As for tactics, the question for pro-open types, who are found on both sides of the traditional left-right party divide, is how to win. The best approach will differ by country. In the Netherlands and Sweden, centrist parties have banded together to keep out nationalists. A similar alliance defeated the National Front’s Jean-Marie Le Pen in the run-off for France’s presidency in 2002, and may be needed again to beat his daughter in 2017. Britain may yet need a new party of the centre.

In America, where most is at stake, the answer must come from within the existing party structure. Republicans who are serious about resisting the anti-globalists should hold their noses and support Mrs Clinton. And Mrs Clinton herself, now that she has won the nomination, must champion openness clearly, rather than equivocating. Her choice of Tim Kaine, a Spanish-speaking globalist, as her running-mate is a good sign. But the polls are worryingly close. The future of the liberal world order depends on whether she succeeds. 

economist.com/news/leaders/21702750-farewell-left-versus-right-contest-matters-now-open-against-closed-new?

There is just about everything you need to know in those two paragraphs if you value personal liberty, sovereignty and free speech. It's also a testimony about how biased MSM is.

As for the Merkel situation, Germans are noted for their reportedly stubbornness. Merkel recently displayed her defiance and lack of concern for the voices of many of her citizens. Callousness is a clear characteristic of the elite class.

With Germany having gone through a surge of seemingly daily killings in the past two weeks when 15 people have died, including four assailants, leaving dozens injured since July 18, the result of two terror attacks and a third killing carried out by men who entered the country as refugees, no one has seen their reputation impacted as much as Angela Merkel. And yet, despite admitting several weeks ago that "terrorists were smuggled in Europe's refugee flow", Merkel has been unrelenting on her immigration policy. 

Seaking at an annual summer press conference in Berlin on July 28, a defiant Merkel ignored critics of her refugee policies and insisted there would be no change to her open-door migration stance. She also said she bears no responsibility for a recent spate of violent attacks in Germany. "We are doing everything humanly possible to ensure security in Germany," she recently said but added, "Anxiety and fear cannot guide our political decisions." Merkel said the goal of jihadists was to "divide our unity and undermine our way of life. They want to prevent our openness to welcoming people. They want to sow hate and fear between cultures and also among religions." The chancellor said she knows that Germans are worried about their personal safety: "We are doing everything humanly possible to ensure security in Germany," she noted, but added, "Anxiety and fear cannot guide our political decisions."
Merkel concluded by refusing to budge: "For me it is clear: we stick to our principles. We will give those who are politically persecuted refuge and protection under the Geneva Convention." She added: "I cannot promise you that we will never have to take in another mass wave of refugees."

The problem for Merkel is that increasingly less of her countrymen share her sentiment. A recent poll found that two-thirds of Germans oppose a fourth term for Merkel. Only 36% of respondents said they wanted Merkel and her CDU to lead the government after federal elections in 2017.
* * *
It got even much worse for Merkel yesterday when Bavaria's premier, a key coalition ally for Merkel's CDU, whose state bore the brunt of recent attacks in Germany, took aim at Chancellor Angela Merkel's open-door refugee policy on Saturday by rejecting her "we can do this" mantra, withdrawing his support over this key aspect of Merkel's domestic policy.

blacklistednews.com/Thousands_Of_Germans_Demand_Merkel's_Resignation.

The people of California several years ago voted on a referendum to tamp down on its borders. The measure passed by a good margin. What did the status quo do, they took it to the judicial system where it's reportedly still tied up. This is what the entrenched think of your right to vote. It's a titular right in every definition of that term.The recent Brexit outcome is still another example as those who opposed the leave results yelled and stomped for another vote owing to the closeness of the outcome or for invoking a system of their elitist checks and balances to correct ignorant rabble mistakes.

As more and more voters in states like California went to referendums to correct government abuses of power, just what you'd expect happened, the call for limiting referendums irrespective of the difficult qualifications necessary to get them approved. Understand, you might be middle management, professional, blue collar, a successful business owner or, heaven forbid, an academic, brown, back, white or the color of a barber pole, it doesn't matter. To these elites you're just rabble.

They want what they want and will stop at nothing to get it.

Not So Fast

More air, please.

All due apologies to Tom Brady.

When in doubt, things looking frail, spirits down, pump more air into the balloon. That balloon goes by the name consumer confidence. MSM has been pushing the pedal for it friends at the Fed that the economy is on more terra firma owing to strong consumer spending. But as one television personality like to chortle, Not so fast.

In an environment where the Fed recently described household spending as "growing strongly," we have often questioned why consumer delinquencies would continue to grow (see "Subprime Auto Delinquencies Soar Past Crisis Levels, Now Highest In 20 Years" and "Subprime Snaps: Largest US Subprime Auto Lender Delays Earnings Due To "Accounting Matters"") if household financial conditions were truly improving.  It turns out that UBS pondered the same question and agrees that deteriorating lending standards just might have something to do with it.  Matthew Mish of UBS, recently updated his strategy piece on the health of the US consumer and the results are less than stellar with Mish concluding that consumer incomes are not expanding in line with consumer credit and therefore "consumer delinquencies...will not fall in coming quarters, consistent with our broader thesis that the credit cycle is in the later innings".  Mish found a growing divide between consumers that are financially sound and those at the lower end of the earnings spectrum where financial conditions are deteriorating.  So while aggregate data may suggest improvement in the consumer overall it's unlikely to impact deteriorating delinquency rates on consumer loans. Per Matthew Mish of UBS:

Our analysis of the consumer lending environment and stressed US consumer fundamentals seems to support the thesis that while lending is extending to riskier consumers, the finances of those consumers are not materially improving. The recipe is likely to result in consumer delinquencies that will not fall in coming quarters, consistent with our broader thesis that the credit cycle is in the later innings as ebbing fears about a corporate earnings recession are offset by rising concerns over higher delinquencies and tighter credit availability.

.zerohedge.com/news/2016-07-30/consumer-lending

The Fix Is In

Here are two stories both about Reuters, owned by the New York Times, that should tell you something about so-called objective journalism.

It should also tell you just how bad the status quo wants a Hillary win in November. If possible, forget who wins for a second and try as hard as it might be to ask yourselves about the state of MSM. Read both depictions of what Reuters just did and see if you feel there is anything wrong here when it comes to journalistic integrity.

This is much like the elites who bitched after the Brexit vote came in saying we'd extended this phony democracy they toss around too far and need to put in checks and balances to over-ride rabble stupidity. In other words, overturn your vote because they don't like your choices.This is hardly new. But what is new is just how blatant it is.

Unfortunately, tragically, human life these days is cheap. But your vote is cheap today too because you can see firsthand how they denigrate and disrespect it. The fix for November is in.

zerohedge.com/news/2016-07-29/why-reuters-tweaking-its-presidential-poll

zerohedge.com/news/2016-07-30/clinton-lead-over-trump-surges-after-reuters-tweaks-poll

Vote Like It

We had no idea when we wrote our two recent pieces about Morgan Stanley global strategist, Ruchir Sharma, he would don the cover of our Saturday morning copy of Barron's.

But here's a guy who apparently keeps tossing out a lazy jab that just cries out to be countered. In his Barron's interview, "Global Thinker," he notes, discussing Brexit, Trump and the global populist uprising: Particularly in emerging market countries, populists leaders, once in power, often turn into demagogues who end up pursuing income-retributive policies that can burn down entire economies. Right-wing populists who now control Poland and Hungry, rarely deliver long-term economic growth because, without the checks and balances of a democracy, strongman rule eventually devolves into cronyism and poor decision-making,

After reading that a couple of times ask yourself these questions:

1. What has occupied the White House these past eight years other than a strongman deliberately trying to expand executive power?

2. Income-redistributive policies sound a lot like the Fed's monetary madness of pumping up asset prices the wealthy not the rabble mostly profit from?

3. Artificially tamped and stomped down interest rates that practically wiped out a whole class of people around the globe living on pensions and fixed incomes?  That sounds like redistribution.

4. Where is and has been the long term economic growth of the status quo, things like wages, benefits and income equality?

5. Cronyism: has it not been alive, well and blossoming under the status quo? What was Graham-Dodd all about, supposedly cronyism.

6. What democratic checks and balances? Does he mean, the ones the elites want to instill now to counteract any so-called foolish voting mistakes the rabble might make by voting for policies or candidates the status quo disdain?

It's no coincidence he mentions Poland and Hungry. At least one of those leaders has made the MSM's major misstep of being complimentary to Trump. Sharma then lists his 4Ds--depopulation, deglobalization, deleveraging and de-democratization. Two of his four, deleveraging and de-democratization are shams. Global debt levels, as he point out, are astronomical and in need of a huge economic global enema. It ain't going to happen without a cataclysmic event. War is one. See Italian banking and Matteo Renzi. Who wants to be the first to bite the economic bullet? The European Union has been arrogantly discriminatory in its policies against its smaller members.

Mr.Sharma conveniently skips over one of the real causes of de-democratization--PC. The policy makers, regulators and power elite create more de-democratization a year that a whole gaggle so-called populists could in decade.  It's cute stuff, he proffers. The trade agreements have benefited the few and, as is often the case with the status quo, harmed the many. The left-wing controlled U.S Senate has threatened China to strengthen its currency for years. See Chuck Schumer. Sounds like a beggar-thy-neighbor tactic to us.

The Federal Reserve is an incompetent, out of control bully and has been, allowing the U.S. to put its political proboscis where it doesn't belong. That's spells industrial-military complex. Sharma does have the decency to admit he's been wrong in the past. We say decency because it might just be the plain  absence of arrogance, a trait that usually never arrives until one has been publicly skinned to the bone without benefit of clergy.

Sharma then notes an interesting category he breaks down into good and bad billionaires. The good ones, of course, are in America and the bad ones places like Russia and Mexico. Let's take the bad first. He classifies them as, Barron's notes, making their fortunes "largely the result of  chicanery, family connections and payoff." Apparently, for all his worldliness he hasn't paid much attention to American politics.

The good ones he cites, pretty much all first or second generation American immigrants, are "self-made who created their wealth by developing unique products and services that boosted jobs and economic growth."  Obviously, to Sharma, payoffs and such are not a part this group. He studies those who inherit their wealth as if what many in this country seek to make a crime and associates it with "wealth achieved through other than honest means."

There are many in this country we would classify in the bad category, the whole gaggle of billionaire climate change nuts who are using their funds to force feed others who question them; the billionaires right and left who attempt to buy election outcomes. He states most of the bad guys loiter in the rent-seeking categories like real estate, energy and mining. In his his rent-seeking category he omits governments themselves. How many Americans became billionaires off their government connections, he fails to mention.

Sharma is an elitist talking down to you. Globalization is your banker's friend not yours. If this or any other government were serious about closing  the income gap they would pass term limit legislation immediately with no possibility of return. That would level the playing field a bit. Bring back a sound, sovereign currency would also help. One nearly billionaire off government connections is running for president.

Meanwhile, hold not your breath or imbibe the Street's favorite pablum.You're on your own. Walk like it, talk like it and vote like it.

Out Of Sync

Apparently, the left hand and the right hand at Morgan Stanley are not in sync. We recently noted a WSJ Opinion article, "The Dollar--the Fed--Still Rule," by Morgan Stanley global strategist Ruchir Sharma who claimed the dollar's demise had been greatly overstated and the economy is all right.

 See financialspuds.blogspot.com/2016/07/the-only-thing-new.

The dollar is set to fall 5 percent in the next few months, the Federal Reserve isn’t raising interest rates anytime soon and U.S. economic data is only going to get worse. That’s what Morgan Stanley chief global currency strategist Hans Redeker told clients in a note published Thursday, citing in-house indicators showing U.S. domestic demand is set to fade in the coming months. It didn’t take long for markets to prove him prescient. The greenback fell 1.3 percent Friday, capping its worst week since April, after the Commerce Department said U.S. second-quarter gross domestic product advanced at about half the rate economists had forecast.

www.wsj.com/articles/the-dollar and-the-fedstill-rule

 
“We are quite pessimistic about, first, the outcome of the U.S. economy,” Redeker said in an interview on Bloomberg Television Friday, before the GDP report’s release. “When you look at our internal indicators, which capture domestic demand very well, they are suggesting that the demand strength is going to fade from here.”

The greenback had rallied in recent weeks on mounting speculation the Fed will hike rates in the coming months following better-than-expected data on jobs, retail sales and industrial production. Dollar bulls’ hopes were dampened Wednesday after a lukewarm policy statement from Fed officials that signaled only a gradual pace towards tighter monetary policy. They were dashed after Friday’s GDP print, which showed a 1.2 percent annualized increase in the April-June period, less than the 2.5 percent median forecast of economists surveyed by Bloomberg.

Derivatives traders are now betting there’s only about a 1-in-3 chance of a rate hike this year, down from more than 50 percent at the beginning of the week. July data on payrolls and manufacturing, set for release next week, will give investors a clearer read on the path of Fed policy through the end of the year.

Further dollar strength will be limited as policy divergence between the U.S., Japan and Europe slows, according to Steven Englander, global head of Group-of-10 currency strategy at Citigroup Inc.

bloomberg.com/news/articles/2016-07-30/morgan-stanley-warns-currency-traders-worst-to-come-for-dollar 
  
As we said in our post cited above, Sharma's article was about dismantling Trump not really about the dollar or the Fed except to keep up the charade about the importance of the Fed and it's role for keeping the status quo of globalization going.

Getting Rid Of Debt

 
Once upon a time it was the Russians are coming. Now it's the Russians who are pushing Donald Trump. Who says paranoia doesn't run deep and wide in the Democrat party.

The media, one and all, have decided that the DNC hack was the work of the Russian government, and the Democrats have taken this one step further and declared that Moscow is pushing the candidacy of Donald Trump due to his oft-stated hope to “get along” with Vladimir Putin. And US government officials have added their voices to this chorus, with the New York Times reporting that unnamed members of the “intelligence community” believe “with high confidence” that the Russian state is behind the hack, Justin Raimondo over on Stockman's Contra Corner reports 

We love MSM and their attribution skills, a source close to my kid sister's mother-in-law who knows one of the janitors whose uncle works in the intelligence community believes with high confidence the Russians did it. Trump says he wants to get along with Putin and now he's in cahoots with them and a possible collaborator. A real Richard Quisling amongst us. This from that pathetic excuse for an objective newspaper, the New York Times. We have another suspicion, a well known CNN broadcaster who got carried away dancing while toasting Hillary's acceptance speech. Booze does some strange things to one's head.

We just had a Hillary advisor, a white dude, tweet in one of those hacked DNC files he hates stupid white people, especially those who support Trump. Do you think the Russians know who Mitch Stewart is yet? That sounds like hate speech to us. We know one thing it most likely wasn't Paul Krugman who conjured up this doozy. This is beyond his level. But it could've been Al Franken. He's a Harvard man with a sense of humor. He might be the only one in the Democrat party. Someone needs to promptly find out who the real culprit is before Joe plagiarizes the whole malarkey and turns it in to a future convention speech. Another good possibility is that politician who hates super-sized sugar drinks. Maybe the Russians were overdosed on them. Naw! That's too linear. It couldn't have been any of these people. It's got the earmark of brilliance.

The Russians did it. They're a convenient target. The neocons want to start a Third World War anyway and if you check around the globe today you'll see their ramping the rabble up for one. The problem with that theme is be careful what you wish for. Just outright defaulting on all that debt might be a kinder, more gentle way of getting rid of it since you have not been successful so far inflating it away. Your game plan from the first time you heard someone say: Ben Bernanke.

But it has to go, so they can get on with the next round of globalizing. Man, those Russians, they think of everything. Some of them must be bankers. 
davidstockmanscontracorner.com/who-hacked-the-dnc

Really?

Sell the house, sell the car, sell the kids, sell everything. That from big time bond guru Jeffery Gundlach in a recent interview.

The stock market might be bouncing around recent record highs but real economic growth is weak and by some lights getting weaker. Lies about corporate profit get bigger almost daily. If you're looking for bargains, try an old fashioned bargain basement store. There are still plenty who will site this market has much room to run and they will roll out all their last-time-this-happened data. Cheerleaders come in all shapes and sizes especially in today's PC-heavy times.

Noting the recent run-up in the benchmark Standard & Poor's 500 index while economic growth remains weak and corporate earnings are stagnant, Gundlach said stock investors have entered a “world of uber complacency.”

The S&P 500 on Friday touched an all-time high of 2,177.09, while the government reported that U.S. gross domestic product in the second quarter grew at a meager 1.2 percent rate.

“The artist Christopher Wool has a word painting, 'Sell the house, sell the car, sell the kids.' That’s exactly how I feel – sell everything. Nothing here looks good,” Gundlach said in a telephone interview.

Anybody can be right and anybody can be wrong. But being prepared, now that's another thing. 

businessinsider.com/r-sell-everythingdoublelines-gundlach-says-2016-7?

The Only Thing New

The apologists for the Fed keep coming out of the financial woodwork, usually telling us how good a job they've done, rescuing the globe and all of its unappreciative, benighted lessors from the financial precipice of economic hell.

Another one, Ruchir Sharma, global strategist at Morgan Stanley Investment Management, displayed his computer keyboard skills with "The Dollar--the Fed--Still Rule"--in the Wall Street Journal. The article begins with what is apparently one of the Journal's editorial page requirements, the usual screed against Donal Trump.

To many readers this article would appear to about The Fed. It isn't. This is about Trump, his followers and anyone contemplating voting for him and their backward ways and inward  turning views that are spreading around the globe. As you might expect, according to this apologist, it's happening at the wrong time. Which should leave you with a fair question: When is the right time, sir? We think we know the answer to that.

What follows is a weak defense of the Fed's incompetence and a not so subtle plea for expanding their mandates. They have screwed up the main two things they claimed they were responsible for, employment and inflation, and now because the interconnectedness of the globe they need to expand their mandate.

"The Fed has been forced to recognize it can no longer focus on America alone," Sharma writes.  He then notes in early 2015 the Fed officially announced for the first time it was considering "international development" into it decisions. The financial crisis began in 2008. This is a real prescient group of non-elected bureaucrats.

"Though Mr. Trump argues that America must tend to its own affairs because it is weak, the Fed's evolving role shows the limits of this argument."  Sharma sets up his straw man with this next line. "The U.S. may have slipped as an economic superpower, falling to 23% of global GDP from 60% in 1960. But as a financial superpower Washington has never been more influential. Forecasts of the dollar's downfall have completely missed the mark."

He shrewdly covers a lot of ground there. So let's break it down piece by piece. On the contrary, the evolving Fed role proves Trump's view. The Federal Reserve is a powerful institution being used to spread U.S. hegemony via the political and military industrial complex at the expense of its citizenry. Another globalist tip is "Washington has never been more influential."  In some corners that would labeled a blatant lie. We will be nice and just call it deceptive. Apparently, Mr. Sharma hasn't been following this administration's foreign policy record very close.

Forecasts about the dollar's lack of weakness is a backhanded shot at gold. It's an attempt to reassure and keep whatever confidence is left in the fiat money world from further decay. Without their printing presses central bankers are nothing more than a group of overpaid bureaucratic eunuchs, cautiously probing their way around on their hand and knees for their dropped set of keys when the power suddenly went out.

"The Fed is caught in a trap," he says. "Every time the U.S. economy starts to perk up, the Fed signals it's intent to start to return interest rates to normal. But the signal sends shock waves through a heavily indebted global economy and back to American shores. (We wonder how long he struggled to come up with that "back to American shores" phrase.) So the Fed delays rate increases as it did in June and again this week."

To begin with, nobody--not the Fed, this author or us--knows what and where normal interest rates are. Only the market can determine normal interest rates. And that won't happen and can't happen because a bunch of bureaucrats, mostly who've never had real jobs, can't fathom the unfathomable. He mentions heavy global indebtedness but fails to suggest who and what caused it. Some how the term politicians isn't mentioned. We were probably asleep at the outhouse, but we'll ask the question anyway: How many times has the U.S. economy started to perk up in the last decade?

The real truth is this gentleman is a globalist, maybe even a neocon, like his editorial friends at the Journal. The Fed is part of the problem. The status quo crowd are trembling weekends in their under ground getaway caves and never is the only good time for the change that is badly needed, the change in part Trump represents but most probably won't achieve if elected.

The only thing new and it isn't new. But we all know history tells us what that is. Like the words of an old song slightly rearranged: The only thing different, the only thing new, he's got your picture and I'm stuck here with you. For now.

Overnight

The WSJ reported that "The Bank of Japan announced an extra dose of monetary stimulus Friday, joining fresh efforts by Prime Minister Shinzo Abe to reboot the economy.

The central bank said it would buy ¥6 trillion worth of exchange-traded funds annually, up from ¥3.3 trillion previously, in an attempt to stoke inflation and economic growth. It said it would leave its asset-purchase target at ¥80 trillion a year.
 
The monetary policy board voted approved the expansion of ETF purchases by a vote of 7-2.
The BOJ left unchanged its purchases of Japanese government bonds, which comprise the bulk of its asset buying, underscoring concerns about whether the program would be sustainable if JGB buying were expanded. It already owns more than a third of all outstanding JGBs, with its balance sheet ballooning to 85% of gross domestic product as of May.

The central bank also left a key interest rate on bank reserves unchanged at minus 0.1%. It dropped the rate into negative territory in February to drive yields lower and spur lending and investment, but the move delivered limited results while provoking a backlash from banks and the Japanese public."

As Asian shares hit a one-year high overnight and the yen touch a two-week high as they waited for the BOJ's announcement, but as reported: Japan shares whipsawed and the yen surged after the Bank of Japan threw markets a smaller-than-expected bone in keenly watched decision on Friday. While the BOJ eased its monetary policy further by increasing its buying of exchange-traded funds (ETFs), it didn't change interest rates or increase the monetary base. 
 
Reuters reported the BOJ will increase its ETF buying so that its holdings rise at an annual pace of 6 trillion yen, compared with 3.3 trillion yen previously. The BOJ left its base money target unchanged, said Reuters. The Japanese yen surged against the dollar after the announcement, with the dollar/yen pair falling as low as 102.85, compared with around 103.75 immediately before the decision. The yen was already volatile before the announcement, touching a session high of 105.33.

 The Nikkei 225 traded between gains and losses after the decision, tumbling as much as 1.66 percent immediately after the announcement, before quickly retracing all of its losses to trade up 0.16 percent.On  other markets, Australia, South Korea and China traded mostly flat after the BOJ announcement while Hong Kong's Hang Seng index was down 0.82 percent. Owing to concerns  about oversupply, oil prices fell to three-month lows, with U.S. benchmark now down more than 20 percent from this year's peak.

Overnight

It's about what the Bank of Japan does this Friday from many Asian investors as the Nikkei 225 traded down early Thursday after a strong yen and the fact Wall Street also traded lower whch didn't lend much support.

Caution is the name of the game until Friday when the BOJ ends its two day meeting with what many investors hope is a more than expected monetary policy.the Nikkei was off a little over 1% at 16,488.74. The Shanghai Composite was mixed trading between positive and negative; the Kopsi fell 0.4%, Hang Send 0.4% while the Australian ASX 200 rallied 0.4%.

One source reported:
Gold traded steady early on Thursday, clinging to gains from the previous session when it rose 1.5 percent to a 2-week high on a weaker dollar after the U.S. Federal Reserve left interest rates unchanged. Spot gold was little changed at $1,338.87 an ounce at 0112 GMT. Bullion on Wednesday touched a high of $1,342.18, its best since July 14. U.S. gold rose 0.9 percent to $1,338.7 an ounce. The Federal Reserve, always the hairsplitters, left interest rates unchanged on Wednesday while noting near-term risks to the U.S. economic outlook had diminished.

 The Fed came under fire Wednesday after leaving rates unchanged as was widely expected.
A former advisor to the Dallas Fed, told CNBC's "Power Lunch" there have been many, many opportunities to hike rates. Now its labor markets conditions index, which gauges the health of the job market, has been negative six months running, she said. "[Chair Janet Yellen] doesn't know what to do. They don't know what to do," Booth said. 

"They're scared stiff right now," she added, noting oil prices and the possibility of inverting the yield curve are probably concerns. David Kelly, chief global strategist for JPMorgan Funds, agrees the Fed should have hiked rates a long time ago. 
 
"They've never found the perfect moment, but you never get perfection in life. I think they've made a big mistake by not moving sooner," he told "Power Lunch." This is much of what we've been saying for some time now.

Is This The Face Of A Hate Crime Criminal?

 
We've said for a while now the problem isn't deflation facing the central banks, particularly the Fed, it's the possibility of slow growth coupled with rising inflation, otherwise known as stagflation.

Despite the Fed's famous search for that magical 2% inflation barometer, the Fed has it's sneaky way of keeping real inflation indicators out of the gauges it uses to track inflation. And this is not new. For those of you who have no recall of that kind of scenario, stagflation, it's one where precious metals   usually do well. Your purchasing power doesn't. Now stagflation doesn't happen very often. In most cases somebody has to really screw up to cause.

Consumers have been blamed for many things since this last economic meltdown, most recently their failure to spend to help revive growth. This is a Keynesian canard that people think worked in the 1930s and that it will work again.These are indeed contentious, to use a soft word, times with few signs of any abatement in sight. Yet consumers have enormous power by exercising their collective purse strings. They can refuse to purchase anything but essentials. They can reject the coming cashless society. The can demand no further watering down of their purchasing power by monetary authorities.

If you are one of the ones unfortunately existing on fixed or retirement income these zero and negative interest rates ladled out are not only contemptuous they have decimated your purchasing power. These incompetents at the Eccles Building chose to bail out their Wall Street friends and leave you and yours twisting in the wind. These actions are all part and parcel of the in-crowd, the establishment. 

Make no mistake. There are no racial, religious or party barriers here whether you are brown, yellow, black or white. They couldn't care less. They only pretend to care. Look around. You'll see this is a global problem. The ruling elites know exactly what they want. And they count on you to continue not knowing what you want. More of the same is as far away from having a better life than you and I are from becoming the queen or king of the United Kingdom. We understand the Queen's jewel collection is quite stunning, however.

Without villains there's no need for heroes. What the in-crowd is best at is creating villains, what use to be called divide and conquer. Who they are dividing and conquering is you and me. And if you're dumb enough to play their silly polling game every four years, we'll all get what we deserve, divided and conquered. What the world needs now is not more love, it's a global political enema. The same old faces with with  the same old receding hairlines, the same old pancake make-up, the same old lies.

You have to give it to them. Their cunning, their packaging, their success, we just keep buying and swallowing it. Either that or we're pretty dumb. Mitch Stewart, the elitist Hillary strategist, called Trump supporters "stupid white people."  Does that mean, Mr. Stewart, in your estimation, the black people who support your Caucasian candidate are stupid Oreo Cookies? This is the divide and conquer rhetoric they want you to fall for. You're better than that. The real truth is it's the Mitch Stewarts, white, black, brown or yellow, on both sides of the aisle, who see you that way, not for what you really are, decent, hardworking people trying to live your life out in your own best way without interfering or harming anyone.

We read somewhere else he was quoted as saying he hated stupid white people in general. Now we're not attorneys but that sounds like discrimination and hate speech. He is singling out a large segment of the population that happen to be members of a particular race for supposedly trying to exercise their freedom of choice when it comes to voting. His rhetoric seems to carry a hateful glare to it. Is this a hate crime.?  There just could be some enterprising lawyer or two who want to file the case.. When ignorant people kept all those African Americans from voting in the South for all those years, they were afraid of two things--a difference of opinion and a possible changing of the guard.

Meanwhile, we have a message for Mr. Stewart and his fellow travelers. We're white, not necessarily Trump people and we might be stupid. But we don't think so. One thing is certain, sir, we're here and we have no plans to move.  You, sir, can try to put whatever elitist spin on that you want. We'll still be here.

Now for that stagflation scenario, here is another sign, the weakness of  durable goods orders.




zerohedge.com/news/2016-07-27/durable-goods-orders-crash-most-2-years-longest-non-recessionary-streak-declines-us-

Overnight

Despite the Nikkei 225 rebounding 1.3% overnight Wednesday from its Tuesday losses, it's still a wait and see game for many Asian investors until Friday to find out how much if any stimulus package the Bank of Japan will announce. Rumors floated around the market today it would be something like six trillion yen or $57 billion in direct fiscal outlays over the next few years, a local newspaper reported. Though less than the 10 trillion expected, the hope for some kind central bank easing policy from the BOJ's two day meeting that ends Friday still exists.

In other markets the Kospi was flat at 2,026.93; the hang Send edged 0.3% higher; the Australian ASX 200 was off 0.1% after being up in earlier trading; the Shanghai composite and Shenzhen both surrendered small losses. The yen traded at 105.12 against the dollar after Tuesday's close of 104.64.

What happens in Japan is critical in the eyes of many not only because the nation's been in a long economic funk but there are continuing signs global growth remains weak and just last month the OECD projected slower growth as a sign all the monetary policy moves might not help and could even make the slowdown worse.

Hardly Alone

The dilemma the Fed faces--besides just being genuinely incompetent and the horrible ramifications that can have on ordinary peoples' lives--is they raise rates and growth remains slow.

Part of their reason for raising rates anyway is to give the impression they will have some breathing room should Katy have to try to bar the door. Millions of American lives center on pension returns either now or in the immediate future. And public pensions like those in California, Illinois and New York are huge with huge obligations and in many case huge deficits.

The Fed's excessive monetary stimulation policies proves once most things can bite two ways. According to the Wall Street Journal, "Pension Returns to Hit New Lows," "Connecticut now allocates 10% of its budget to pay down unfunded pension liabilities that more than doubled over the past decade."  To be sure, there are other causes for this turmoil, mostly politicians who in good times kick pension funding obligations down the road in the name of their favorite giveaways, but that decade also coincides with Fed policies.

One thing we know if things go down the drain, politicians will deny the blame. And that leaves those bureaucrats. Chicago, the city Carl Sandburg once described as "hog for butcher of the world...City of Big Shoulders," has enough problems to make a preacher cry. A homicide rate that gets manipulated more often the Fed jobs data, a growing exodus out of town and, yes, a "$20 billion pension hole" giving its fund a junk rating.

And there's more. A lot of people once they retire move away from where they spent their working careers. States and municipalities take a dim view of that for the most part, showing their attitude you made it here you should spend some of it here as more seek to tax these contributions. These pension liabilities are another way to spell bubble. And bubbles are becoming so frequent  today, so many of them, they're difficult to keep track of.

Now politicians, bureaucrats and academics will no doubt destroy reams of paper, recycled or otherwise, debating and defining what's a bubble. An obligation coming due  seldom meets their criterion. The common lie these so-called fiduciaries tell is short term volatility matters little. It's the long term that counts as these people have a fondness for relying on the future to bail them out.

But as the Journal notes there's been a drop in 20-year annualized returns, those same numbers insurance and annuity firms used to love to quote before the 2008-09 crisis. Long term expectations and performances have suffered from two recessions and abnormally low interest rates over the last  15 years. All three of  these entities--pension funds, insurance and annuity sellers--depend on steady long term returns to meet their needs.

Two California funds, the largest in the U.S. By assets, managing a combined $484 billion for 2.6 million public employees and retirees, saw their 20-year returns target fall below 7.5% to 7.3% for one and 7.1% for the other. Taxpayer or workers are usually on the political hook for funding any shortcomings, the Journal notes. But here's the real rub according to the Center dot Retirement Research at Boston College: "Every one percentage drop in investment returns represents an increase of 12% in liabilities."

So if you think social security is a landmine waiting to be detonated, it's hardly alone.

We Like Charts Too

We like charts as well as the next person. Here's one the implications of which, if they hold true, a lot of investors might not like so much however. We came across it at davidstockmanscontracorner.com/chart-of-the-day-crash-warning-household-net-worthdpi-at-2000-and-2007-highs



 It's only a chart and there's no cardboard sea to sail over here. It could turn out to be make believe, but at least you've been warned.

Overnight

As we wrote over the past weekend, two central banks meet this week, the Fed and the Bank of Japan. This seemed to make Asian investors somewhat nervous overnight as the Fed's two day meeting opens Tuesday. Though no change in interest rates are expected, investors will be parsing Chair Janet Yellen's words for clues.

Meanwhile, Reuters reported, the Nikkei share average dropped on Tuesday morning to a 1-1/2-week low as Wall Street languished and the dollar fell against the yen ahead of the U.S. Federal Reserve's two-day policy meeting, hurting exporter shares.

The Nikkei fell 1.3 percent to 16,400.47 in mid-morning trade, after falling to as low as 16,344.34, the lowest level since July 14. Exporters were sold after the dollar slipped 0.9 percent against the yen to 104.87, with Toyota Motor Corp shedding 1.5 percent and Honda Motor Co sliding 1.7 percent.Traders said that uncertainty over the Bank Of Japan's policy decision at its two-day meeting starting Thursday is making investors risk averse.

By mid-day the Nikkei was down 1.6% while the yen was up strongly. hitting of 104.77 at one point. In Hong Kong the Hang Seng Index rallied 0.9%, the Australian ASX 200 fell 0.2%,, the Kospi traded up 0/4% as second quarter GDP grew faster than expected, 3.2% on the year, versus 2.8% for the previous quarter.The Shanghai composite Index was up 0.5%. In other markets oil prices were up with Brent crude trading up 0.4% and gold down 0.3%.

Wednesday and Friday are the two big days with investors starting to doubt any massive changes in monetary policy since last week both the Bank of England and the ECB held steady. This coupled with what one trader observed:  "[Japanese] fiscal stimulus looks less bold, and we aren’t sure if [Bank of Japan Gov. Haruhiko] Kuroda will ease further." The Japanese plan calls for spreading any stimulus over several years which would lessen the initial impact on markets, according to one source.

Integrity

Why we like gold.

Most of MSM and the entrenched hate it. Or at least that's what they claim.

One of the largest Dutch banks, ABN Amro, has now warned its business clients a negative interest rate on the business accounts is in the works. The bank is currently updating its terms and conditions and will more specifically include its right to reduce the interest rates below zero as the bank wants to ‘protect itself’ against the continuously changing market circumstances.

Remember Debbie Wasserman Schultz, the Florida Democrat Congresswoman, DNC chair and those
WikiLeaked emails.

Integrity.

She incidentally is up for re-election in Florida this fall. We wonder how the rabble feel about that.

On top of that, people might have forgotten (but we haven’t) that ABN AMRO was –as far as we know- the first bank which defaulted on its obligation to deliver physical gold to some of its clients. Even those clients had the right to redeem a certain investment in physical gold, ABN didn’t honor this commitment and offered those clients a payout in cash rather than delivering the metal which it originally promised to do.

So we have a bank controlled by a government that wanted to repatriate its gold, which is now proposing to reduce the interest rate below zero? We don’t believe in coincidences.

Integrity.

 

Here's a link.zerohedge.com/news/2016-07-24/it-begins-dutch-bank-abn-amro-will-charge-negative-interest-deposits

As another poster recently put it: If you can't touch it, you don't own it.

Educated Points Of View

They say people who can make a living doing what they love are blessed. If you get paid to pen this drivel,"The Perils of Populism," that's a good gig, man. If I were you I'd hold onto it.

I was wondering as I read when you'd roll out one of your profession's favorite terms, visceral. In your vernacular that means: bereft of reason; ill-rational, lack of common sense. When are you people ever going to stop hiding behind semantic covers, get enough testosterone to stand up straight, high water blue jeans or no, and tell the rabble what you really think of them: a hoard of knaves and dolts who spent most of their lives reading public bathroom graffiti instead Ricardo or Samuelson. If your contempt and arrogance were any thicker, sir, one would need a chainsaw to cut it.

But you don't disappoint with this next gem. "Against such emotion it's very difficult," you say, "to introduce studied reflection to the discussion."  One can only marvel at how long it probably took you to come up with that beauty. Concrete?  Abstract? It's a real cutie. And quite obviously it's in the province of only the chosen few.

There are other schools than the ones you note. Two that we know of both begin with the letter S: Streets and Survival, ones we have a nudging feeling you wouldn't excel at. Those are the streets where most of the rabble you and your elitist brethren are so contemptuous of spend most of their existence trying to survive.

It's generous that you grant them your permission. "It's certainly proper and desirable for citizens to question the existing order. And there are certainly policies to aid economic growth and allocate it proceeds equitably," you write. You've nicely set up your straw man here, sir. You're are so subtle. "But we will try to look at things dispassionately." One assumes that "dispassionately," like "studied reflection," is another genetic gift limited to those chosen few. It isn't nerdiness that's a disadvantage to your profession, sir. It's the pseudo-science itself and its pitiful track record. Life teaches many things. One of them is all talk in all breakups ends at some point.

Peddlers come in all sizes, shapes and occupations. Economics is no exception. A better, more accurate title for your piece would've been "Peddling the Perils of Populism." This is just an observation and intended as nothing more. But in case you've yet to notice, the gauntlet in the sand is down. And it's a global gauntlet. Thank whatever powers might be you and your kind are on the other side because it is fruitless to try to introduce studied reflection to the discussion.

advisorperspectives.com/commentaries/20160723-northern-trust-the-perils-of-populism

We publish the link to this article by Carl Tannenbaum of Northern Trust so you can read it for yourself and decided who is out of touch with whom. Northern Trust of Chicago is a firm noted for catering to its wealthy clients, no crime in that, just a fact. But to borrow one of economists' favorite ploys and hedge a bit, there might be some snootiness there.

Speaking of hedges, note Mr.Tannenbaum's last sentence in the article's second paragraph: "But the population's complete detachment from educated points of view could be an unfortunate overcorrection."

Few things in life are given, but here is one: Any time one differs with the educated entrenched, one is completely detached.