SOARING RENTS

You can get caught up all you want in the different ways inflation gets measured. Much of that is just a form of intellectual masturbation: Economists writing for other economists, academics writing for other academics and so forth. In truth, the way the Fed measures inflation has over the years had more facelifts than a handful of aging Hollywood stars.

Real live everyday people have to have shelter and they have to have energy for a variety of reasons. Though we would take exception with some of what the author concludes here, this is an article you can read and decide for yourself. We seriously doubt that the government's data, as ugly as it is for renters, captures certain outlying areas like parts of Southern California  and San Francisco where rents have soared.

marctomarket.com/2016/05/great-graphic-us-rents-and-core.

IT'S ALREADY HERE

It isn't this bad in the U.S. yet, but with its love affair with PC it's getting close.

The intolerance of others' views and choices that rattled various campaign gatherings the past few weeks coupled with the barrage of editorial page articles trying to derail the Trump train are just two examples of where we really are as a people and a nation.

 More significantly, it's further evidence neither as a nation nor as a people are we in any condition to tell others around the globe how to conduct themselves. That's a good part of the push back in this election too many--particularly among the elitist crowd--don't get or don't want to get.

If you have any doubt that China's official economic data can't be trusted this should remove all questions. We have been saying for years they're doctoring those numbers even in the good times, but it's more essential to do so in bad times. And China is full of bad times.

There's plenty of other evidence coming out of China about people who criticize or disagree with the government being threatened, quieted or jailed. Don't think it is not happening here. Climate change is a classic example.  One particular U.S. senator has suggested bringing legal action against anyone,scientists or otherwise, who now questions climate change. MSM's persistent covering for an incompetent Fed and it's dangerous monetary policy is another.

That's just one more reason why this upcoming election will be one of the most contentious but important in the history of this nation. There is a strong move afoot to take the reins of controlling the government further out of the hands of the electorate by rewriting the Constitution and centralizing that power in Washington.

BEIJING—Chinese authorities are training their sights on a new set of targets: economists, analysts and business reporters with gloomy views on the country’s economy.
Securities regulators, media censors and other government officials have issued verbal warnings to commentators whose public remarks on the economy are out of step with the government’s upbeat statements, according to government officials and commentators with knowledge of the matter.

The stepped-up censorship, many inside and outside the ruling Communist Party say, represents an effort by China’s leadership to quell growing concerns about the country’s economic prospects as it experiences a prolonged slowdown in growth. As more citizens try to take money out of the country, officials say, regulators and censors are trying to foster an environment of what party officials have dubbed “zhengnengliang,” or “positive energy.”

In the past, Chinese authorities have targeted mainly political dissidents while commentary about the economy and reporting on business has been left relatively unfettered in China in a tacit acknowledgment that a freer flow of information serves economic vitality.

But Beijing has moved to reassert control of the country’s economic story line after policy stumbles that contributed to selloffs in China’s stock markets and its currency last year fed doubts among investors about the government’s ability to navigate the slowdown.

 

IT WON'T STOP

"When everyone is thinking the same thing nobody is thinking."

That insightful gem was tossed out by General Dwight D. Eisenhower who led the Normandy  invasion across a stormy Atlantic when nobody thought it was possible, when conventional thinking recommended waiting until the skies cleared. Later when he became the 42nd president, he gave us another gem. This time about following through.

As a former five star General and Commander in Chief, he was use to giving orders and he was even more use to seeing those orders carried out. After being in office awhile he quipped how much it surprised him hardly anyone in Washington carried out their orders. That was more than half a century ago.

If you think about a slightly expanded definition of orders you'll see that's what elections are suppose to be about, elections include every level, local, state and federal. In this case the orders of the people, like them or lump them. There are primarily three candidates vying in the upcoming November election. If you took the promises and themes of all of them only a third, if you're lucky, will turn out to be honest. And most likely fewer than half of them will ever see the light of action.

Politics gets passed off as the art of compromise. That's old-time BS purer than new born baby poop. The people don't take orders; they give them. It's called elections. What's going on now isn't new. In fact, it's old, really old and tiring. It goes by another name, Democrats and Republicans, the two-party system that's as socially insolvent as most Italian banks are financially. And it will never stop unless you stop it. If you're too lazy or indifferent, then forget about your dreams and aspirations, and those of your offspring too, just get in line to collect your chit and spend it every week at the company store.

Another way in our view of saying it, is when everyone is doing the same thing nobody is doing anything. Think central banks here and a host of others like pitiful management. Names like Puerto Rico, Detroit, Chicago, Atlantic City, Stockton, San Bernardino, to cite just a micro list.

It's in the genetic code of politicians and managers. They get hooked on streams of cash flow they think extend into perpetuity. Or at least until they've ridden into the sunset. They never see or don't want to see the huge hangover coming after the wild partying. Big corporations and whole market sectors like banking and energy and real estate should come to mind. And let's not forget one of the biggest of the Big Daddies, big pharmaceuticals. People rant and rail about corporatism, but the biggest corporation is global government.

The U.S. manufactures more MBAs a year than it does industrial products. It's its own industry. This nation for most of its existence has been run by those with Ivy League pedigrees. To put it kindly, their track record has been less than sterling. It won't stop unless you stop it. Goldman Sachs' new found interest in the proletariat is a case in point. If you see a Goldman Sachs employee approaching walking down the street, you'd be wise to cross over to the other side.

Recognize that globalization is your ticket to the company store. First a one-currency world then a cashless one. Every movement has a hidden meme or two. Convenience and justice are the public ones for a cashless society. More centralized control and less liberty the hidden ones. It won't stop unless you stop it.

A DEAL DONE

We mentioned in our last Overnight that the U.S. just made it harder for Japanese officials to intervene in the currency market to devaluate the yen.

Here's a piece from CNBC about gold and currency manipulation. Note Christine Legarde's comment. She heads the IMF. What do you think she's going to say: "Yes, you've finally caught us with our hands in the currency cookie jar."

Even if she's not jawboning, which we think she is, a deal could be cut without her knowledge. The only damage being done is to her ego.

So which is it: A deal done or a done deal?  What we know is if they're manipulating currencies, they're manipulating gold indirectly. Are they manipulating the price of gold? Deutsch Bank gave us that answer a short time ago.

cnbc.com/2016/05/02/jim-rickards-says-for-gold-prices-will-go-
higher-as-dollar-weaken.

OVERNIGHT

Forget risk on, risk off. The new meme is doubt in, faith out as the Japanese yen continued its climb against the U.S. dollar making a new18-month high Tuesday and investors lose confidence in central banks and their ability to create growth via monetary policy.

If you're a gold investor you see the handwriting clearly. If you're not don't wait too long to put a net under your purchasing power. The debasement of fiat currencies is on. Gold and silver have been two of the better investment in 2016 to date.

To add to the problem China's latest PMI number, minus any attempted MSM spin, continues what has been a bleak story for 14 long months as demand stagnated in April and further job losses mounted. The Caixen purchasing managers index dropped in April to 49.4, below the neutral 50 level indicating further global weakness since China represents the second largest global economy.

All of this wasn't lost on equity investors. Reuters reported that markets in Hong Kong and Taiwan led regional losers down after the report. One of the few bright spot was Australia where the market was up 0.8% ahead the the central bank meeting where economists were not expecting any rate changes. But should one happen it would further add to investor fears about global growth.

In breaking news, RBA cut it's rate 25 basis points to 1.75%. The fallout to investor confidence remains to be seen, but is one investors want to keep an eye on.

In a side bit, noted by Reuters, "The U.S. Treasury put Japan on a new currency monitoring list with four other countries that have large trade surpluses with the United States, seen making it harder for Tokyo to intervene in the markets to stem the yen's gains." Shades of a trade war.

SUPER-SIZED PARADOX

Paradoxes never end.

Former New York City Mayor Michael Bloomberg delivered the commencement speech at the University of Michigan recently where he singled out the importance of having an open mind.

So when is the billionaire going to get one? How about starting with super-sized soft drinks and peoples' right to choose? That might be an interesting place for you to start, Mr. Former Mayor. He then went on to talk about micro spaces, those little dens popping up on college campuses now like wild spring flowers.

They are exclusionary, a lot like high, thick walls that separate countries many young college-aged youth so much loathe today. As we said: paradoxes never end. Mind are just find; it's yours that are screwed up.

The fact that some university boards and administrations now bow to pressure and shield students from these ideas through ‘safe spaces,’ ‘code words,’ and ‘trigger warnings’ is, in my view, a terrible mistake,” he said, to some applause.

But it was his point about the above issue, micro spaces, that bought out some boos. “The whole purpose of college is to learn how to deal with difficult situations — not run away from them. A micro aggression is exactly that: micro,” he said amid a chorus of boos.

According to reports, some of the students hurled epithets are the former mayor as he continued:

“One of the most dangerous places on a college campus is a safe space because it creates the false impression that we can insulate ourselves from those who hold different views,” he said. “In the global economy, and in a democratic society, an open mind is the most valuable asset you can possess.”

We wonder if the good former mayor shared that thinking with all the columnists and reporters who worked for his news organization and have spent that last few months ripping and ranting about and hurling nasty epithets at all those Trump supporters?

As we said, paradoxes never end. Mine are just fine; it's yours that are really all screwed up.

ONLY ONE WAY

Gold for immediate delivery broke above $1,300 an ounce Monday as low interest rates and rumors floated through the market that the G3 agreed to take the dollar down. The last time gold traded there was 18 months ago.

That the Japanese yen crossed most investors and the BOJ officials up by rallying strongly against the dollar after bank officials decided to sit tight was a warning sign. The news is out. Not only is the dollar falling, so is central bank credibility. But that just goes to show the real surprise here is that they ever had any credibility if it weren't falsely hawked  by the Street and their lackeys in MSM.

As we noted before central bankers are caught in their own binary quandary, especially the Fed. Most of them are quivering in their frayed dot-plot suits, afraid at this point to do anything. In their idiotic, senseless chase for the illusive fantasy number, 2% inflation, these economic lemmings have done what central bankers with their data-driven madness do best--create messes.

A weaker dollar, artificially held down interest rates and higher gold prices equate with future inflation, otherwise known as further loss of buying power. They're the standard three legs of buy-on-the-rumor-not-the-fact stools. While the Fed dithers with data to be sure the jobs numbers confirm a demand for higher wages, higher wages won't wait.

The mood of the electorate in the upcoming election has been telling anyone who bothers to listen that for months. It ain't about Bernie or Hilary or Trump. They're just media created symbols for what's rumbling beneath the surface. Forcing down interest rates and holding them down is a form of global rent control. They'll be hell to pay when those controls get lifted. And that spells the fear investors globally are starting to smell emanating from the economic cellars of global bank bureaucrats and their comrades at the World Bank and the IMF.

Fear is to volatility as bureaucrats are to incompetence. Things now are such that just about anything these geniuses do can end up only one way--wrong.

THE WATCH FOR THE PERFECT SET OF DATA

See no evil, hear no evil, speak no evil is an old saying. And  it's one that can easily be applied to the three big central banking hitters, the Fed, the Bank of Japan and the European Central Bank.

With the U.S. central bank hitting cleanup these are some scared central bankers who spend much of their time now whistling past the economic global boneyard. Otherwise called jawboning. In eight years the Fed hiked interest rates once, a measly 25 basis points, and the market immediately went all jelly-legged. So what did these fearless economists, who love to tell anyone foolish enough to listen how all things economic are, do? They backed off.

All three of these central banks are in a quandary. They showed up at a gun battle with a handful of paring knives thinking they'd seen this scrum before and knew exactly what to do. But after a just few hard punches and a couple of mean elbows got thrown, they decided to pack it in, paralyzed inmates trapped in their self-inflicted cells.

We have discussed the downfalls of data driven decision making in the past. One of the central characteristics of this Fed is not just being data-driven but being driven by just the right data. In the wrongs hands it leads to analysis and paralysis. Or gelling with Yellen.  Here are two quotes to make the point.

"The start of the new month does not mean a new trend.  The technical tone of the dollar is weak," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, said in a note to clients. 

"The Federal Reserve acknowledges the continued improvement in the labor market. The problem is that it has not translated to stronger consumption, and business investment remains soft," Chandler said. "Fed officials need more confidence that the six-month economic soft patch has ended." 

On Friday this week, non-farm payrolls for April are expected to show a rise of 200,000.

On a recent CNBC's "Futures Now," Lindsey Group chief market analyst Peter Boockvar made the case that the Fed will never get the "perfect" conditions they seek before increasing short-term rates once again.

The Fed's mandate "isn't to have a perfect world. That only exists in fairy tales, dreams and in your econometric models," Boockvar said in a recent note to clients. He believes that the Fed's monetary has been far too accommodative under Yellen as well as under Ben Bernanke.

Boockvar argued that the Fed has been taking cues from shaky international banks, and that doing so will always offer a reason to keep interest rates low.

In Wednesday's statement, the strategist noted new suggestions that the Fed is shifting its focus to concerns over international development. In its March statement, the Fed said that "global economic and financial developments continue to post risks," a line that does not appear in the more recent language.

"It's been excuse, after excuse, after excuse," Boockvar said. "This is why, eight years into an expansion, they've only raised interest rates once. They're afraid of their own shadow. They're in a terrible hole that they're not going to be able to get out of." 

Whether looking at the Fed, the Bank of Japan, or the European Central Bank, Boockvar sees a landscape littered with policy errors.

"They all believe that, by making money cheaper, you can somehow generate faster growth," Boockvar said. 

Based on this, Boockvar said that central bankers are losing their credibility and their ability to generate higher asset prices, putting the stock market in a precarious position.

"In a world that's already choking on too much debt, the cost of money really isn't an important variable and it is not a binding constraint on anybody's decision making." 

OVERNIGHT

What do you do when your credibility is already in question? Most likely what China did Sunday when it released information that its manufacturing industry sector expanded in April for the second straight month. That was the so-called good news. The bad news for anyone willing to read between the lines was, as reported by Reuters, it grew "only marginally, raising doubts about the sustainability of a recent pick-up in the economy."

In truth the term marginally itself is most likely a hedge to soften just how lousy things really are. Either way, other Asian markets digested the news by selling off with the Nikkei sliding 3.6%, the MSCI ASIA-Pacific index fading 0.4%, Australian shrares falling 0.6% while Hong Kong and Chinese  market are closed Monday. Shares in New Zealand were off 0.2% and Korea's Kospi  was down 0.5%.

The dollar rallied to 106.51 against the yen after falling to 106.20, a low last in October 2014. Central bank officials in Australia are set to meet Tuesday with its cash rate at 2% where many believe it will remain though some economists are expecting a cut. Meanwhile, the Wall Street Journal reported:
Over the weekend, the U.S. Treasury Department, in its semiannual currency report to Congress, called out China, Japan, South Korea, Taiwan and Germany for relying on policies it says threaten to damage the U.S. and the global economy. The move, meant to pave the way for a new pan-Pacific trade deal, may discourage Japanese authorities to directly intervene in the currency market, analysts say.

WE'D LOVE TO SEE

More things than one can shake a stick at have been blamed for the ongoing sour global economy. In case you've forgotten it's same one that began nearly a decade ago.

The latest piece of quasi-Keynesian nonsense is not new: if somehow we just stick more money in consumer pockets they're so dumb they'll traipse right out and spend it, rescuing the world from the tenuous economic precipice it teeters on today.

Now this gem comes after nearly a decade of the wildest foray into monetary policy this semi-civilized world has ever witnessed including the latest insanity appropriately named NIRP. It might be a double negative, but it strains one's gray matter to calculate a positive from two negatives.

That real wages have been flatter than a clip board for longer than one can remember is not debatable even in that rarified air of MSM editorial board meetings. You know who those folks are, the ones who spread the authorized word.

Now, according to a recent WSJ piece, "Anemic Wage Growth Restraining Economy," begins with this white tale: "Years of solid job gains are failing to produce a breakout in wages, suppressing the spark needed for a sustained pickup in economic growth."

The author then quotes the bogus job numbers created over the past four years we've all heard and caps it with how low the unemployment rate now is. Next he cites the obvious, "The U.S. economy, like much of the globe, is stuck in a slow-growth rut. Turmoil overseas and still-weak commodity prices are preventing the manufacturing, trade and energy sectors from supporting growth. That leaves U.S. consumers to boost the expansion."

This is all part of the MSM ploy to distort the facts, things are not good but they're getting better and if employers would just hike wages consumers will ride to the rescue. It's that simple. No mention that many of the banks in Europe are bankrupt, none of the massive global debt and over-spending sprees that were simply for years kick down the highway changed let alone solved, let's just consume some more and get a whole new cycle underway. We will worry about the next nightmare when it gets here.

Then comes the piece de resistance for this crowd, comparing wage growth today with that of previous expansions. It's a popular economic metric. If we just elevate to the same average as then, the words of the noted tune: "It's summer time and the livin' easy. Your daddy's rich and your momma good looking" will start playing again.

Next comes one of the favorite  bamboozles of economists, productivity growth. Just get the boys and girls to produce more per unit of work time. Then all those fortunate ones can genuflect on Mondays for their pittance of increase in salary. No mention of during recessions that those lucky enough to stay employed are forced to double and triple up on their daily workloads. It's common as human nature.

What never gets blamed is bad government management by bad government bureaucrats and politicians and government agencies laced with give-away and con artists. Now that's a productivity index we'd love to see. Unlike what many in the mind of these people believe the buyer of last resort isn't the Fed as we've all been told. It's you and me, if we choose to participate.

A few years ago a business associate told me his hairline started to recede at 12 and by 25 he was completely bald. He said he used to spend 15 to 20 minutes everyday just running his fingers slowly through his hair. And when I asked him why, he said: 'It was leaving me so fast I wanted to appreciate it as much as I could while it was still around."

With a cashless society just over the horizon, you might want to do the same with your cash.