HIGH NOON FOR NOONAN

We love editorial writers as much as the next guy.

Peggy Noonan, the Republican party apologia spokesperson the WSJ likes to roll out regularly, has her tenses badly mixed up. The Republican Party isn't "shattering." It's shattered and has been for so long it should, as is popular in Europe, adopt an acronym. LSRP as in Long Shattered Republican Party might be a decent choice.

In fact, the Journal could possibly attract more readers by running a contest to come up with the best acronym for what once was called The Grand Old Party. We seriously doubt if that was ever true or, for that matter, if there's ever been a grand party to ride heard on its subjects.

In her recent lament, "The Republican Party Is Shattering," she warns "...we are seeing a great political party shatter before our eyes." And that's what this upcoming presidential election, as they all are, is about: Who gets to sit in the saddle. For the incentivized to keep the status quo, Trump isn't the guy. For those who despise smothering governments, neither is Clinton nor Sanders. That leaves most caught in the famous place from Greek mythology, stuck between a political Charybdis and Scalla.

It could also be called pick your poison between two bankrupt purveyors of  more government engorgement and control in your lives. Yes, we're talking those pitiful Democrats and Republicans here  Taking oblique but no less cheap shots at those who may vote for him, she piles on the dangers of a Trump nomination and possible presidency.

Ms Noonan writes, speaking of the demise of  the Grand Old Party,"For me the Republican Party was
always the vehicle of a philosophy, conservative political thought--no more, no less." She then twists her petard of contempt for Trump supporters a little deeper with: "But it should concern his supporters that his brain seems to be a grab bag of impulses, and although he has many views and opinions he doesn't seem to know anything about public policy or the way the White House or the government works."

The problem, dear soul, is just the opposite. He knows exactly how public policy and government works. That's a major part of his appeal.

One of the few things Ms Noonan gets correct is if the party finagled Trump from a nomination he fairly won, Trump supporters, as they should, will bolt. They have in a way been more vilified than the veterans returning from the Vietnam War, maybe not spit upon in public but severely spat upon in the editorial and front pages across this nation. That's a wound that won't be healed with a quick smear of glib rhetoric once this public assassination ends.

She states she's been thinking a lot lately about the establishment and the elites. That's curious. This might come as a surprise to you, Ms Noonan, but you're one of them, hollering down at the masses from the top of your editorial mountain, telling them how thoughtless and ill-informed they are. The political sky will cave if you knaves and dolts put Trump in office.

Well, it's high noon, baby, for you and your Grand Old Party. But it's also high noon for this trumped up facade they call a government for, by and of; and we, like numerous others, say this as someone who has no skin in the outcome and no ponies in the run.

If this election with its pathetic cast of characters, as many claim, is symbolic of anything, it's all the political rot beneath the surface.

SOMETHING'S GOING TO GO BUMP IN THE NIGHT

As the opening paragraph of this article notes, the Chief Editor of Interest Rate Observer needs no introduction. He is James Grant.

Grant has been over his career named many things like perma-bear and goldbug, terms often used to describe anyone who has a different take from the incentivized protectors of the status quo and their MSM cheerleaders.

Like some others noted for taking the less traveled path, Grant is never uninteresting or reluctant in giving his opinions. As we always say, read it and decide for yourself.  Whatever you decide, we hardly think you'll find it uninteresting or ill-informed.

You'll pick up on a few things like central banks being run by academic economists.The major thing academic economists are noted for is not living in the real world. You'll also note, if you don't already understand, what a flying-by-the-seat-if their Ph'd degrees zero interest rates are. As Grant notes it's a tax on savings.

And then there's the upcoming confiscation of the $100 bill and the 500 euro note, attacks not on money launders and terrorists but your personal freedom of choice and sovereignty. It's a good read.

.theepochtimes.com/n3/1975151-james-grant-something-is-going-to-go-wrong

OVERNIGHT

Swollen Chinese industries, that's what seems to be on investors minds going into a series of meeting by Chinese officials in Beijing starting Saturday.

What's on their minds is how, if anything, Chinese officials will try to solve their big overcapacity problem. That means plans, just what are they, when will they start and so forth. Embedded therein is another question on investor minds, do these official even have any plans. 

China's declining economic growth is a problem many failed to see as obvious as it was. Now investors seek to know what if anything are officials going to do about it. Meanwhile, the Nikkei and the Kospi were flat; the Shanghai Conposite Index was close to being flat and the Hang Seng was up slightly at 0.6%.

Brent crude oil dropped slightly, 0.3%, to $36.97 a barrel, but looks set to end the week up nearly 6% in what has turned out to be a more positive couple of weeks since the rocky start to 2016. There's a lot of caution around, however, since many feel these gains, particularly in commodities, are short lived owing to short-covering. 

Gold was up a little at $1272 an ounce while the dollar remained strong after some weakness Thursday..

WHEN IS HALF MOST?

Japan may be the Land of the Rising Sun, but the makeup of its economy is similar to that of other
developed nations. The service sector is the big domestic boy on the block. And after years of monetary stimulus from their central bank, the latest of which includes controversial negative interest rates, a more accurate moniker might be the Land of the Flat Sun.

Manufacturing represents a little over 20 percent of the country's GDP while services account for nearly 65 percent. With that more than 3:1.ratio the service sector plays an important role and the latest numbers for February, though still slightly positive, show a declining trend

According to Reuters, Activity in Japan's services sector expanded in February at the slowest pace in seven months as new business weakened in a worrying sign that the economy is losing momentum, a survey showed on Thursday.

The Markit/Nikkei Japan Services Purchasing Managers Index (PMI) fell to 51.2 from 52.4 in January on a seasonally adjusted basis.

The index remained above the 50 threshold that separates expansion from contraction for the 11th consecutive month but fell to the lowest since July last year.

The index for new business fell to 51.7 from 52.2 in the previous month, with the rate of expansion slower than the average seen over the current 11-month spell of growth, the survey showed.

Overnight Japanese and other Asian shares rallied on the so-called good news about U.S. jobs and higher energy prices. As is MSM's wont the headlines focused on the alleged health of the U.S. economy and rising oil prices warming the hearts of harried investors.

Here is a bit of economic news past over by most.  
Just half of the Fed’s 12 districts reported modest or moderate growth since early January, according to the central bank’s “beige book” summary of regional economic conditions released Wednesday. The prior report showed nine districts expanding at that pace.
Three Fed districts cited the financial-market turmoil that kicked off 2016 as one factor behind consumers’ reluctance to spend, along with economic uncertainty and a reluctance to add to existing debt.

You'd have to look for this WSJ story. wsj.com/articles/fed-beige-book-economic-activity-expanded-in-most-districts.

Note the deception on the headline link. The actual blurb headline reads, "Fewer Fed Districts Report Expansion." When did half become most? To be sure, six is fewer than nine. But there is still a confusing deception here whether intentional or otherwise. You decide, knowing what you know about MSM.
  

OVERNIGHT

It's all about perception and at the moment perception by many investors after the favorable U.S. report on jobs and an upswing in some commodities, namely oil, copper and iron ore, seems to have bolstered investor confidence.

At least that was part of the sentiment in Australia where the market rose 0.8% to the highest level in two months and the Australian dollar continued its strength against the U.S. dollar in light of news that the economy grew last quarter on an annual pace of 3%.

In other markets the Nikkei rose 0.8% adding to the 4% jump just a day ago. The Hang Send was 0.4 higher, the Korean KOSPI was flat, the Shanghai Composite Index was up 0.3% and the Chinese yuan relatively unchanged.

As one market pundit observed: "Things are calm for now, but risk is being repriced and central banks face limited stimulus options." Another added: "China has huge potential to roil markets as the nation navigates a difficult structural transition," he said. "Asian trade, traditionally a bellwether for global growth, is in recession."

What nearly everyone would like to know is this: Have we seen the bottom in commodity and energy markets or is this just another fools's market rally? Cruising around the web, you'll see there are plenty of opinions on both sides of that debate.

So for now perception reins.

WHAT WE FOUND

We had lunch the other day with three fellows who follow the markets pretty closely.
It was one of those little Italian places with red and white check tablecloths, a single white vase with a single artificial rose in the center, cubby holed in a strip shopping mall not far from LAX.

All three it turns out shared with us a recent common thing that happened to them. Bizarre you might even say.The first one who actually started the subject said he looked up the word parse in the dictionary owing to some peculiar urge he said just came over him one afternoon at the office. He said the definition of what he found surprised him:  "Just below 2%."

The second fellow chuckled and said he had a peculiar incident too. But his happened early one morning after he came out of the shower and flicked on the television noting the market was in one of its ugly moods. He said he looked up the term hedge and there it was:"Just below 2%."

We almost hesitate to tell you what the third guy told us when he looked up the word prayer. He denied having any weird urges, just saying he's a dictionary freak.The funny thing is he's not even religious. Life is not always random, you know. But here's what he told us with a straight face only a high stakes Las Vegas poker player would appreciate:  "Prayer: ECB, just below 2%."

This might also surprise you. That started off a rousing discussion of what is "just below 2%?" So all three of us decided to check the dictionary one more once. And this is what we found.

HELLO CHLOE

Just how long did you think it would be?

First, it was robots asking you over your cell phone if the choice you just made was a yes or no and then robot guided checkouts at the supermarket. How long did you think--should you ever trouble your gray matter to consider such things--before Chloe showed up?

While most of you were still waiting for Godot, like a skillful pitcher, they slipped another inside fastball by you, just nicking the strike zone part of the plate. The count's now 0 and 2 with two down and you have nobody on base.

Notice also that it's always those lowering paying jobs that suffer the latest juggernaut move, the same people our esteemed politicos claim to care so much about. It's one of those long distance love affairs: you keep your distance and they'll keep their love.

You can forget Dolly. Say hello to Chloe on your way out of a job.

businessinsider.com/companies-that-use-robots-instead-of-humans-2016.

TITANS AND TYRANTS

There's an old saying about you can't fight city hall.

City hall is symbolic for Titan. Every now and then a Titan gets brought to terra firma, but it's rare. And not without good reasons. Titans not only represent money and power, they have aura going for them, a huge but influential intangible most of us can only daydream about. They also have a platform.

Warren Buffett, the Omaha Scold, is such a Titan. We call him the Omaha Hypocrite. Buffett was, as is his won't and whim, on CNBC recently peddling his views, as one obviously enthraller blogger noted, on "everything." Titans and tyrants share much common DNA. The go together like pizza and delivery.

Titans are not only full of themselves, they're full of opinions. He once owned a house in a tony SoCal seaside community he rarely visited. He claimed he paid more taxes on his Omaha digs than that exclusive home and opined the state should raise taxes on real estate, just what all the non-billionaires in life want: a guy who really doesn't live in your community dictating how you should live there. At the time and we still do now think this is sterling advice, particularly from a guy who once boasted his secretary pays more annual taxes than he does.

Buffett's empire is wrapped in fiat money assets, make no mistake about it. Like any good Titan or, for that matter, economist, he isn't beneath massaging his data. In fact, he's quite skillful and cunning. He is after all really in the insurance business. We're not taking on here the skinny guy who got sand kicked in his face at the sea shore.

So read the linked article and make up your own mind. mishtalk.com/2016/02/29/buffets-math-trumped-by-gold/

OVERNIGHT

Fears of an economic slowdown are apparently over-exaggerated at least that seems to be the opinion of Asian investors overnight who pushed shares across the region higher Wednesday based on a gaggle of good economic news.

Led by Hapan and Hong Kong, the Nikkei was up 4% and the Hang Seng rallied 2.6% apparently bolstered by reports that U.S. manufacturing was better last month, higher for the second month in a row. Constructing spending improved in the U.S. And that good news was added to some good numbers from Australia and Canada, Reuters reported.

The WSJ reported: The Shanghai Composite Index was up 2.3% by the local midday break, despite starting roughly flat. The gains added to its 1.7% jump on Tuesday in the wake of easing measures from China’s central bank earlier in the week.

The region’s recovery was gaining steam after a rally in oil prices overnight and upbeat economic data out of the U.S., which helped calm fears of a global slowdown. A rally had also started to form the previous session as a move by Beijing to lower the amount of reserves banks need to hold came into effect. Investors largely brushed off disappointing Chinese factory activity figures.

In the oil market, Brent crude futures hit eight-week high of $37.25 per barrel, up more than $10, or 37.5 percent, from a 12-year low of $27.10 hit in January.

U.S. crude futures also hit a one-month high of $34.76 per barrel although gains were cut in post-settlement trade on Tuesday after data suggesting a huge build in U.S. crude stockpiles already at record high levels.

Naturally, with all the good news safe haven investments suffered as government bonds sold off

PUSH MEETS SHOVE IN OIL PATCH

 
Remember when oil was over $100 a barrel and fracking, particularly in the U.S., was all the rage for most except the climate change gang?

Then the bottom started falling out of prices and over-production and supply became a MSM major theme. Soon the drop in oil prices started to take a turn with serious ramifications for the economy. And banks. Loss of thousands of high-paying jobs, hardly the phony lower strata ones government officials paraded in the news as a sign their pathetic monetary policy was the much needed elixir of the day, to name just one.

This is what we call push-shove or push-pull. In economics it's called supply and demand. In basic Judo you push and we pull. In a recent interview we read on the Interner JP Morgan Head Honcho Jamie Dimon claimed markets are amoral, banks moral. Beside his comment being a good candidate for being among our silly quotes of the month column, it tells you a lot about the banking world and it's perspective.

Webster's defines amoral as "not to be judged by criteria of morality; neither moral or immoral; without moral sense of principles; incapable of distinguishing between right and wrong." Like a lot of definitions that covers a lot of ground.

Neither moral nor immoral suggests an old Yen saying, neither bad nor good, just is. Markets if left free enough from politicians, bureaucrats and misguided regulators solve things much the way nature does. The old, infirm, weak, over bloated and corrupt disappear first. Dimon would have us believe that the banking industry despite its long history of greed and usury is moral so long as it doesn't damage it's customers in making its profits.

Dimon is a globalist who claims he disdains the term universal bank. In his mind apparently it's too specific. He's a lot like the climate-change gang. Global warming proved too specific a threat to their agenda. Thus roll out a name change. In the universal pharmaceutical industry it's the same game--change the parameters to increase your market share.

Hire some scientists to produce some studies. You're going to need validation. Flex your marketing muscles, massage the data and another 20 or 30 million need a statin to control their lipids. It's great gig, but one with Warren Buffet's favorite criterion for owning a company--a huge moat around it. It's the golf country club of the 1950s. Rich whites only need apply. The rest of you duffers check your local municipal course if there's one near you.

Well, those fracking companies, according to a WSJ piece today, are finally starting to cut production. And is there anyone out there who thinks Exxon Mobile's huge $12 billion dollar bond offering Monday could be a prelude to later drilling for oil on the Street?

Some of America’s biggest shale producers are beginning to ratchet back oil and gas production for the first time in years, bending to the reality that a global glut will keep prices depressed.
The production cuts, announced as shale companies reported dismal earnings in recent days, stand in stark contrast to the past year, when many U.S. drillers kept the taps turned on even as oil prices plunged from nearly $100 a barrel to about $30. American oil satisfies 10% of the world’s daily needs, putting U.S. production on par with output from Russia and Saudi Arabia.

One way companies are trying to put a lid on production this year is by waiting to pump wells they have already drilled. That trend is creating a large inventory of oil and gas wells that will be ready to turn on when crude prices finally do rebound. 

Today another attempt to curtail production was announced, though hardly new:

NEW YORK—Oil markets rose to a two-month high Tuesday as traders focused on the possibility of an output agreement among large producers.

Russia’s energy minister said Tuesday that a “critical mass” of oil-producing countries had agreed to freeze oil production, and that a final decision on such a measure would be taken this month, state news agency TASS reported.

Also on Tuesday, the United Arab Emirates’ energy minister said “everyone should move toward freezing production whether they like it or not,” due to current low oil prices.


Though there is one caveat in the fracking world the Journal notes, if cutbacks cause prices to move up some companies might go back to the wells too soon and reopen the spigots, a turn that could again push prices lower. But anyone who has been around commodities for a while will tell you the cure for high prices is high prices and the cure for low prices is low prices.

They might also, to be safe, insert a qualifier in there, like eventually. But most eventualities only become eventually because of the presence of regulators, bureaucrats and politicians.