The WSJ Editorial Staff

The editorial staff at the WSJ never ceases to amaze.

In their recent blurb, High Trump Anxiety, they sound like a professional big honcho employment agency seeking jobs for some disgruntled out of work so-called political campaign pros. Some might say hacks, but we're feeling a bit more generous today than usual.

Mrs. Clinton has 21 press aides including a communications director, a lead press secretary, a day-to-day spokesman, a travelling press secretary, a rapid-response director, a rapid-response spokesperson and a variety of handlers dedicated to regional and specialized outlets. This is what it takes to drive a coherent national message.

Apparently, the writer of this pathetic paragraph doesn't understand it's a clear, concise reason why many are voting against Mrs. Clinton. It's another version of It Takes Village all over, a mere foreshadowing of how needlessly complicated, heavy-handed and messy government will be under her. Hasn't the Obama tribe after eight years taught this benighted writer anything?

Mr. Trump may believe a similar apparatus is a waste of money, and that he can run his campaign out of his hip pocket like the Trump Organization: shoestring, centralized and ad hoc, with nearly every decision made at the top. He may think, too, that the political professionals are dummies and he’ll keep winning like he did in the primaries.

Dear Editorialist: The public has had a belly full of political professionals. What part of that in this election is it so hard for you to get? There's a certain exclusiveness of "decisions made at the top," especially when you're not there.

But the pros know that competing in a general election, and appealing to a voting-age population of some 240 million, is different than winning 40% of the Republican primary vote. It also doesn’t inspire confidence that Mr. Trump’s political and business operations are so fungible: Many Republicans will conclude that he chose the self-interest of his personal brand in a petty Trump U lawsuit over increasing his odds of winning the White House.

Dear Editorialist: P.S. Spare us the fungible stuff. We won't think any less of your brilliance. Nor for that matter any more. His political and business interchangeability is not why most folks are going to vote for him. That, it seems, is another part you can't get your petty little editorial mind around.

Take our money, please, so we can have some influence if the seemingly impossible happens. Your money here, kind sir--we almost hate to say it--is not fungible.

Vacant And Vermont Rhyme

 
This is welcome talk despite what many might say. First of all, it shows how little Americans know about their own history. It clearly notes how there was in the 1800s more talk about secession among New England states than all those hated (then and still now) southern states.

It also shows that a part of the Declaration of Independence left a way for people to declare their own independence. As far as Bernie and Vermont, should they decide to go, we say God speed you and Good Riddance!

During the Vietnam era you had the Right saying controversial things that drew much objection about America and its war critics:" Love It Or Leave it!" How strange history and time are. Now you have the Left saying get on board or we will force you. Accept climate change as a fact of we will punish you.

These are indeed interesting times. The major networks and media outlets need to use whatever influence they have to stop the stop Trump people because if Clinton and Trump are the two that square off later this year the media will get more viewers than 10 Super Bowls and reap more revenue than even their greedy little fists can hold. You won't need Fourth of July.

It should be a nuclear war and most entertaining. And that doesn't include how many spinoff series cable television networks can come up with once the smoke clears. You might want to pick up some media company shares. This should be a no-holds-barred, let-it-all-handout, rock 'em-sock 'em event with no interference. Forget the fake stagings and the phony niceties. Let it rip.

Let's find out who the real liars are, the real fakirs. Make MSM report the truth as it happens, not as they think it happened. Let the American people decide. This could be, if let alone, one of the most healthy events in the history of this nation. Either you believe the American people are strong enough to take the news or not. We're betting they are. We are also betting they're more decent than given credit for. 

Bernie Sanders will not become president of the United States. But he could still become president of Vermont if the Green Mountain State secedes.

It’s not such a far-fetched notion. Vermont was an independent republic from 1777 to 1791, and despite signing the Constitution, Vermont reserved its right to leave the union. New York, Rhode Island and Virginia explicitly did so.

In researching “Free Dakota,” my novel about secession, I discovered that in the early 1800s, talk of secession was more common among the New England states than among the southern states. Few people questioned a state’s right to secede.

Bernie Sanders refuses to concede defeat to Hillary Clinton, vowing to "continue the fight" for the Democratic nomination despite his rival declaring herself the party's flagbearer for the US presidential race. Video provided by AFP
Media: AFP

It is the Pledge of Allegiance that claims the United States is an indivisible nation. And, of course, the Pledge of Allegiance is not a founding document. It was written in 1892 and popularized by the American Legion and other groups in the 20th century.
For its part, the Declaration of Independence clearly recognizes the right to form a new government when “it becomes necessary for one people to dissolve the political bands which have connected them with another.”

sfgate.com/news/article/How-Bernie-Sanders-can-still-become-president-7969545

In MSM We Trust

One thing you know for sure about this Fed and it's MSM apologists as soon as a disturbing number pops up those apologists will be firing up their key boards.

An example is yesterday's Wall Street Journal story, You Know A Little About the Economy, by James Mackintosh, calling Friday's U.S. payrolls report unusual: "Not just because it was so disappointing (new jobs haven't been so far below expectations since November 2008, shortly after Lehman Brothers failed), but also because the miss might, just possibly, tell us something for a change."

And what that might be, kind sir? You can bet one thing: whatever it is will be some kind of attempt to soften or even fully negate the negative impact. And Mr. Mackintosh doesn't, unlike those payroll numbers, disappoint.

"Investors typically care far too much about the payrolls data, treated now as the most important economic release each month," he notes. "The figures are hyped up and then extrapolated, in Friday's case leading traders to cut the likelihood of a Federal Reserve rate increase this summer. This gave the dollar it's fourth-worst day in seven years against a basket of currencies."

Now here comes the but. Yet and but are from the same semantic school. They're like the jab in boxing designed to set up and disguise the real punch that's on it's way, the straight right hand. "Yet, these aren't numbers on which to bet the ranch. The payroll figures have a huge margin of error, are subject to big revisions and offer little in the way of guidance to the future," he writes.

First off what numbers the Fed follows don't have wide margins for error and don't get widely revised? Name them. And we don't recall anyone betting the farm on these obviously negative numbers. The market responded favorably by going up two days in a row. Most of that probably came from short term traders and hot money. There's an underlying feeling people want to push the indexes to new highs to sweep in maximum profits before the lights go out.

Seldom have we seen MSM print a similar disclaimer when the latest numbers favored their position. The intended message should be clear, things are not so bad as many as saying. Trust us in MSM. We know more about the economy than you do.

For a long time it was believed and pushed by MSM that the Bernanke-Yellen led monetary madness was leading the U.S. economy back to growth and that growth in the globe's largest economy would help lead others to higher ground. The EU was late to the money printing madness. So obviously some will note that. But bond yields in the EU just hit the lowest levels ever and that includes German bonds, a nation with some semblance of financial probity that was not hit nearly as hard as other EU members.

These low bond yields and negatives interest rates symbolize one and only one thing: central bankers around the globe are clueless and panic is their weapon of choice. Here's an interesting chart we came across at David Stockman's site that will shed some indirect light on those jobless numbers. And you can see from the time frames it's no aberration.

 The number of male adults living with mom goes up during every recession and after all this time it's still rising.


In Italy it is more common for adult men to live longer at home with moms, they even have a term for it, but not in the U.S. If you're a bartender the job numbers might be on the upswing, but if one is seeking decent steady employment it's another story--and has been for a long, long time.

If a certain candidate takes over the White House in this fall's election, look for the next administration's Treasury to start printing "In  MSM We Trust" on the currency.

Overnight

Wednesday was mostly a flat day for Asian shares as poor Chinese export data, according to Reuters, offset would-be positive news about U.S. interest rates and a more positive outlook about oil.

The yen appreciation helped push down the Nikkek 225, 0.3%, the Shanghai Conposite fell 0.7% and the Hang Seng lost 0.4%. The MSCI Asia-Pacific slid 0.1%. The Australian ASX 220 was down 0.14%.

CNBC reported: Oil prices advanced overnight on expectations of stockpile drawdowns in the U.S. and global supply shortfalls. Reuters said a report from the American Petroleum Institute, released after prices settled, showed a higher-than-expected crude drawdown of 3.6 million barrels. 

During Asian hours, U.S. crude futures were nearly flat at $50.38, after settling up 1.4 percent on Tuesday. Global benchmark Brent was also flat at $51.41, following a 1.8 percent increase overnight. 

Chinese exports were soft, declining 4.1% in May from last year. Pundits expected a 3.6% drop while imports also fell 0.4% . Six percent was the expect d drop.

Overnight

What some are calling an upbeat speech Monday by Fed Chair Janet Yellen these people propose spilled over into Asian markets Tuesday, sending the dollar south and no doubt upsetting some Japanese officials. The interpretation: interest rate hikes are still on the table.

After nearly a decade now of artificially low interest rates one has to wonder if we needed another boring speech to conclude that? But such that it is, equity markets took the news as good with the MSCI's Asian-Pacific shares up 0.5%, pushing its gains for the week to 6%.

The Hang Seng rose 1%. The Nikkei 225 was mixed early and then moved a bit higher on the back of a weaker yen, the Jorean Kospi edged higher nearly 1% at 0.94%, the ASX 200 was up 0.23%. In China the Shanghai Composite was off 0.3% and the Shenzhen Composite dropped 0.54% So it appears more of the waiting game is in store, not the least of which what central bankers everywhere are taking toward upcoming Brexit.

Here's report about currencies from CNBC:  

In the currency market, the dollar retraced some of its weakness against a basket of currencies. The dollar index had slipped under 94 from levels above 95 on Friday, after the U.S. nonfarm payrolls report for May came in much weaker than expected, spurring analysts to dial back expectations on whether the U.S. Federal Reserve would increase interest rates. The dollar index rose to 94.039 by 10:02 a.m. HK/SIN. "The collapse in the dollar has seen commodity prices surge ...all of this points to building global inflation," said Angus Nicholson, a market analyst at spread bettor IG. Commodity prices are usually denominated in dollars. "The Fed has been at pains to emphasize their concerns over a blowout in inflation, if rates are left too low for too long, and this validates why they may still hike rates even when the economy still looks quite weak," he added.

It's Called Straddling

Let's get realistic here. If Fed Chair Janet Yellen had not played down Friday's job numbers it would have been further interpreted by many as more proof these bureaucrats don't know what they're doing. And they don't. All this chatter about experiential policies is central bank jargon to cover up their lack of a clue. It's a global lack of a clue.

For all the ballyhooing about transparency, obfuscation is a better term to describe the Fed's actions. This is a fence-straddling Fed that fears getting caught too far on one side or the other. It is really a pitiful group of non-elected bureaucrats that the captive American public is saddled with.

Just raise the damn rates and get it over with. Or shut up! The market and the people will adjust and survive. It would be difficult--if downright near impossible--to come up with enough deserved terms to denigrate this pathetic lot. They've been hassling with this and their data-dependent nonsense for so long, it's no longer a hassle. One gets the impression that they might just be a bunch of MSM economic prostitutes seeking attention.

Get over yourselves. You're not that important and do your damn jobs. Or stop supping at the public trough. Not too long ago she claimed she didn't focus on global concerns but the more important domestics ones were her policy. That all changed when earlier it looked like China was looking for a cliff to fall off.

As one wag was quoted after her speech by Marketwatch: Obviously she’s more hawkish than expected by saying we can’t put too much weight on one month’s data,” Aama said. “But I don’t think it was much of a surprise that she was going to have a hedged speech.”

While Yellen said Friday’s report was “concerning,” she also referred to rising employment, household incomes, and consumer confidence as reflecting a relatively healthy domestic economy.

However, she said external factors posing a risk are the U.K. exit from the European Union—known as Brexit—and the considerable challenges facing China as it rebalances its economy. She reiterated the central bank’s focus on economic data as it determines when to normalize monetary policy.

The rising employment number is a joke and anybody with any sense knows it didn't decline legitimately from 5%. to 4.7% without a little help from her friend over at the BLS and some sick math.The real debate is whether she's a bigger fence straddled than her predecessor. He was a guy who never met a fence too wide he didn't love to straddle.

So the silliness continues and the possibility of a stealth rate hike behind closed doors later this month is open, but much more likely this Fed will be waiting to see what Brexit does. Either way it goes, they will have an out. That's called straddling.

Another Look

We keep hearing how the economy is doing better than it looks.

 Is it really? Some are saying it's only the manufacturing sector that's lagging and it represents only 10 percent of U.S. GDP.  From the looks of this chart the service sector doesn't appear in such great shape either.


mishgea.files.wordpress.com/2016/06/ism-2016-06-02a1.png

Overnight

Friday slipped into Monday. At least that's how Japanese investors apparently saw it in early trading Monday as the Nikkei 225 was off nearly 2% at 1.8% before stemming some of those loses. The Australian ASX 200 was up slightly, 0.60%, and the Korean Kospi traded flat and the Hang Send was down 0.22%. The Shanghai Composite was also 0.08.

Friday's poor U.S. jobs report, creating only 38,000 jobs in May when nearly six times that many were expected, sent the dollar lower and the yen higher. For many the sad numbers put on hold any chance for a June hike in interest rates and so now the focus switches to the Fed's July meeting after which the next meeting is scheduled for September just before the November election. Some believe that the Fed won't raise rates that close to election time because of its political overtones.

The dollar index, a benchmark against a basket of six major currencies edged up sightly to 94.112.DX its recent low of 93.855., last seen May 12. The MSCI's broadest  index of Asian-Pacific shares outside Japan was up 0.45%. Much of the investment community is awaiting Fed Chair  Janet Yellen's speech that will open the coming week in the U.S.

Special Is As Special Does

 
France thinks it's special. Nothing new here. But this is just one of the reasons the European Union is doomed to crumble like the walls of some ancient city.

The EU as currently constructed is humorless. None dare criticize it let alone it's Commission. The whole idea from the beginning that this disparate tribe of people called countries would subscribe and heed to an arbitrary guideline for debt smelled from the beginning like the uncollected trash now stinking of parts of Rome.

Back to France. They're the second largest EU economy. Rank is suppose to impose obligations. In France's case the same applies to special privilege. Here's an example. France and it's leaders think they are special. We don't know whether France caught the American disease or the other way around. One thing, however, remains clear. The entrenched in both nations think they're special.

Now, the eurocrats are not just falling into despondency and despair, they’re beginning to turn on each other.

European Commission President Jean Claude Juncker tried to convince a hall packed with French mayors of the need for austerity à la carte in France. The linchpin of his argument was that France has been allowed by the Commission to repeatedly break Eurozone fiscal rules, not just due to its size and influence over EU policy but also its “reflexes, its internal reactions, its multiple facets” — an oblique reference to the tendency of its workers to bring the national economy to a halt whenever the government introduces measures that are not to their liking, as is happening right now.

The irony is that Juncker — who is famous for saying that when things get tough, “you have to lie” — is right on this point. Since 1999 France has broken the Eurozone’s 3% deficit limit during non-recessionary years 11 out of 16 times. That’s one more time than Greece and Portugal, three more times than Italy, and seven more times than Spain (which has broken the limit eight times but four of which were during years of recession, with the Commission’s blessing). wolfstreet.com/2016/06/05/eurocrats-turn-on-each-other-internal-strife-divisions-in-euro-land/

The key term is non-recessionary years. Hard times are one thing, special privileges another.

Roosting Time?

The chart and excerpt below appeared in a Business Insider article a few days ago. We have long questioned, to use a kind term, the quality of corporat earnings. There might be some other birds out circling their way home to roost, businessinsider.com/tsunami-about-to-hit-bond-market-2016-6?, also.

1. Decreasing profits: Mish notes that corporate profits fell 7.6% in the first quarter against the same period a year ago. In order to pay back loans, companies need to continue to make more, and with less cash coming in, there will be less to allocate to debt.
   
   UBS
2. Lending standards are getting tighter: Firms also have the ability to pay down debt that is coming to maturity by issuing new debt, effectively kicking the can down the road. Lending conditions for new debt, however, are getting tighter as banks focus on higher quality borrowers. In turn, this makes it tougher for companies to pay for debt with more debt. 
3. Debt is getting more expensive: Loan spreads, or the difference between what banks have to pay to borrow money and what they charge companies in interest on loans they then give out, are starting to widen. In other words, new debt is getting more expensive. 

Add up these factors and you've got a problem for companies with debt outstanding, and the $1 trillion market for low-grade, risky bonds. This trouble is not just limited to the commodity space. Mish estimates that the default rate for nonenergy firms will creep up to 3.5% in 2016, up from 1.5% currently.