Britain Will Survive

Most have heard those words to the song about "Don't cry for me, Argentina." Well, the tears coming from the crybabies who can't get themselves to accept the Brexit results make those Argentina tears look like a mere cloudburst.

In today's WSJ Simon Nixon writes: " Britain's exit from the European Union promises to be one of the most complex divorce negotiations in history: Untangling this 43-year relationship will require painful decisions that touch upon almost every aspect of national life."

As for the record setting history and complexity of the divorce, it's obvious Mr. Nixon didn't go through ours. There are plenty of longer standing relationships than 43-year ones that bridge this gap. One needs to remind Mr. Nixon that Brits are quite adapted at minding the gap.

He goes on to talk about the types of debates taking place in the UK and the continent over the process and timing since, a popular crybaby stall, nobody has a credible (There's hedge term, if you've ever heard one!) exit plan, the government should hold off invoking Article 50 for two years. Maybe by then, crybabies like Mr. Nixon hope, these rubes who voted to leave will have discovered the error of their ways.

Here's a guy who has the nerve to mention complexity and the EU in the same breath. The EU, my man, coined the original term complexity. You can wager your last beloved sterling it wouldn't take Margaret Thatcher long to make that decision. Even before the vote was announced many EU bureaucrats were quoted that if Brexit passed," leave means now." There's no two year holding period to that. Jean-Claude Juncker, the pathetic EU Commission President, seconded that motion in more ways than one.

Mr. Nixon than bewails the possibility that discussions might become acrimonious. Really. The idea that unless the UK strikes some trade deal with the EU, the island will pull an economic Houdini and disappear from the planet is pure scaremongering. There's probably more souls around the globe willing to purchase UK products now than ever for one simple reason: they had the courage to stand up and strike a blow for liberty for damn near everyone who actually cherishes it.

As for concerns about acrimony, wasn't that what stay people and their Brussels cohorts did nearly the entire pre-election time, bringing in all those scaremongering, name-calling heavyweights. The next UK PM, whoever she is, needs to find her mark on the floor, look the EU bureaucrats dead center in the eyes and: tell them: "We are the proud British people. We played your bureaucratic games for 43years. It's over." And then let the chips fall whichever direction they take. Britain will survive. It's extremely doubtful the EU will.

cafe4now.blogspot.com/

CB Caused Mania

As negative interest rates spread around the globe anyone with even a little common sense should realize this can't end well. Manias hardly ever do.

But if you're looking for people with a bit of that common sense trait, you need to look elsewhere than the confines of central bank edifices. Investor quest for yield is now at mania proportions and only going to get worse as global central bankers in the main continue to pursue what has been and clearly is failed policy.

Last week the yield on 10-year U.S. Treasury notes hit 1.366%, a record close. According to one report, there is currently $13 trillion negative yielding debt floating around the globe and spreading faster than the Zika virus. There was supposedly $11 trillion before UK voters voted to thumb their noses at the EU and as late as mid-2014 none.

Italy, a country hardly known for it economic forthrightness, reportedly has $1.6 trillion negative sovereign debt. A cynic might ask where is the sovereignty in  that? Here's some more sovereignty for you. Fifty year Switzerland bonds, the nation's longest maturity holding, now offer negative yields. We know what's going on in Japan and Germany isn't much different where nearly 80% of government bonds offer negative yields.

Is there anyone left who thought corporate debt was immune to such madness. If so we have a good tax-payer secure job with plush  benefits. Just apply at your local branch of the Federal Reserve Bank. What central bankers have done and are doing us a crime against humanity. Let's start at the beginning nearly a decade now ago when the Fed essentially kicked off this economic chararade.

To assume that these so-called economic experts didn't realize cutting rates would end up ultimately benefitting the few and hurting the many leaves only one of two possible conclusions: either they are not economic experts and haven't a clue or they knew precisely what they where doing: screwing older poeople dependent on fixed income and the like or purposely widening the economic gap between the haves and the with outs to bailout their rich banker and Wall Street friends.

It matters little now because these policies are an outrage and can easily be classed as a crime against humanity. And like anyone else they should be held accountable for their actions. We think is comes under the heading more of gross negligence that the latest MSM buzz "excessive carelessness."

Either way, for those enamored with the idea of a global court, let's see how much these closet globalists like the concept.

 cafe4now.blogspot.com

Overnight

It was called "a referendum on Abernomics" and that's what it turned out to be as Japanese Prime Minister Shinzo Abe's coalition victory "is expected to bolster his grip over the conservative party that he led back to power in 2012 promising to revive the economy with hyper-easy monetary policy, fiscal spending and reforms," Reuters reported.

Some voters apparently saw it as an either or with the economy and it's longstanding problems as the more important of the two, revive economic growth or revise the nation's post-war pacifist constitution. The Nikkei jumped 3.6 percent to 15,654.82 points by mid-morning trade, the highest since July 5. The MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS jumped 1.9 percent to a one-month top. Australia added 1.8 percent and Shanghai .SSEC 1 percent.

Some of the god news came after U.S. equities on Friday on the nonfarm payroll jobs report that reveled the nation has added 287,000 jobs in June, a report that surprised, exceeding most economists' projections, n the coat tail of May's surprisingly weak report. Both reports were explained by a word economists used often when they have no real explanation for the numbers, aberrations. The S&P 500 index Friday brushed against its all-time high mostly on the jobs news.

 Abe might be smiling for now, but here's a story from the WSJ that noted the structural problems his nation faces, not the least of which is guaranteed employment.

Prime Minister Shinzo Abe’s Liberal Democratic Party and its Komeito allies won a stronger majority in Japan’s Upper House election on Sunday. The victory was more a reflection of weak opposition, but perhaps he’ll use this third national victory in a row to salvage Abenomics. 

Instead of the economic reforms he promised, Mr. Abe continues to push the same government spending and monetary loosening Japan has tried since the 1990s. The economy continues to dip into and out of recession, and deflation has returned since March with consumer prices falling 0.4% year on year in May. The election gives Mr. Abe another chance to arrest Japan’s economic slide, whether or not he deserves it, and his best bet is to tackle the labor market.

In 2014 Mr. Abe seemed poised to amend laws that make it difficult for companies to lay off full-time employees. But he backed off amid opposition from labor unions. Instead the Prime Minister focused on reinterpreting Japan’s constitution to allow closer military cooperation with the U.S. That was a worthy initiative, but it was so unpopular that Mr. Abe has lacked the political capital to pass economic reforms.

It’s time to try again. Japan’s labor laws allow even clearly incompetent employees to file wrongful dismissal cases that drag on for years. The Nikkei newspaper cites an estimate that six million full-time workers have nothing to do.

Japan’s lifetime-employment system worked tolerably well during the high-growth postwar years. But as the economy slowed and the population aged, companies shifted their hiring to part-time employees who can be laid off easily. That has created a two-tier system that hurts the young in particular.

The rise of part-time contracts explains why Japan’s low 3.2% unemployment rate hasn’t led to wage increases. Instead of laying off workers, companies reduce the number of hours they employ part-timers. Japan suffers from massive underemployment rather than unemployment.
The government also uses regulation to shelter nonmanufacturing industries from competition. This explains why Japan’s labor-productivity growth has remained below 2% for the past two decades, according to McKinsey. The problem is acute in services, where Japan’s productivity is about half that of the U.S.

University of Tokyo economist Hiroaki Miyamoto suggests Mr. Abe should also target Japan’s seniority-based wage system. Performance-based pay would give workers more flexibility to change jobs or leave to start new companies. Companies should be free to raise their retirement age and keep experienced workers in different capacities.

Resistance to labor reform from the opposition Democratic Party and even within Mr. Abe’s coalition will be intense. But the voters have given him his third successive mandate. This may be his last chance to use an election victory to push through the most critical reform for rejuvenating Japan’s economy.

Before Not After.

The scaremongering never ends. The pundits said the unexpected Brexit outcome would unleash an unprecedented reign of negative economic chaos.

Now all the turmoil from that event might not be in, to be sure. But the longer it goes, the chances increase the weaker it gets. There were a few who claimed Brexit if it won would be another big Y2K event , a big yawn, if you recall all the disaster many expected at the beginning of the new millennium and the world's then rising computer dependence.

Meanwhile, some questionable so-called recent nonfarm payroll jobs numbers have the bull songbirds singing again. It's a known fact people find what they're looking for. There are two sides to it. If you ever spent anytime sitting in a boring college class you might recognize it as the positive and negative halo effects.

Athlete's get hung with it all the time. Just lose a big game and see what happens. Boxing is a classic example. A really good fighter loses a tough fight and he or she and their trainers and everyone else associated with him fall off the globe. A few sports let some also-ran participants into the final match-ups. And occasionally, to be sure, one of them wins it all.

The stock market, even if it makes a new closing high, has gone nowhere for a longtime. Some refer to that as distribution. Valuations are like the bar in the high jump, six feet ain't high for some folks. But the high jump is only one event in the whole meet. What's going on around the stock market?

We'll spare you the litany of negatives and won't insult your intelligence with the MSM cliches like walls of worry. Taking some profits off the table is like having a fully inflated spare tire in your trunk. That presupposed checking it occasionally to see if it's still full. The stock market--if you want to label it such--is about the only shred of credibility the Fed has left. Ironically, however, it's own creation might turn out to be the cause of the Fed's final denouement.

For most of a decade central banks have been spinning their so-called economic magic--if you're Japanese it's been almost forever--and people see the results. You'll have more luck today marrying a California virgin than finding a member of the once sought-after, widely-available middle class. The middle class was once what an associate, without any condescension or contempt because he like the rest of us was a card carrying member, labeled keeping-the-lid-on-segment of our society. Central banks in any global explosion will prove what they are, about as useful as a set of teats on a bull.

Change is afoot in the globe today. Like it or lump it. Change is what all those climate change converts are screaming about, now criticizing absence any tact or remorse the numerous anti-converts for resisting it. And that's what all the revulsion against Brexit is about. How dare you ingrates vote to leave our perfectly structured-elitist-conceived-status quo-interventionist paradise.

Markets reportedly discount the future. Take the hint and structure your portfolio, if you still have one left, before not after it gets here. And sprinkle in some of that glittering stuff along the way just for safe keeping.

Overnight

Friday comes early in Asia ahead of the Friday U.S. jobs report.

That's reasson for investor caution as Asian share eased  lower overnight joining lower oil prices. The  Nikkei 225 dropped0.4%, the Kospi was off 0.6%, the Hong Kong Hang Send fell 0.9% and the Shanghai Composite Index shed 0.9%. The Australian ASX 200 remained flat.

The WSJ reported: Chinese stocks fell amid worries of rising risks in the country’s banking sector. Nonperforming loans surpassed $299.2 billion at the end of May, which increased banks’ bad-loan ratio to 2.15%, said Yu Xuejun, a senior Chinese banking regulator. The loans data swamped the good news that came Thursday after market close about China’s foreign-exchange reserves. The reserves in June rose $14 billion to $3.205 trillion, according to the People’s Bank of China, a surprise increase that suggests currency pressure is easing.

Anxiety in the market seems to be mobile, shifting one session from the Brexit fallout to other concerns another day with  the U.S. jobs report for June's nonfarm payroll numbers coming after the Asian markets close. Gold slid lower overnight to $1,335.85.

MSM Tactics

People easily toss around the term hate in today's world. But who gets to define that term, you, us or some distant agenda-driven bureaucrat or elected official. Just what is hate speech, anything that differs with your beliefs and opinions? Or ours?

So we'll use the term detractor. Detractors are usually a little more subtle about their disdain or dislike. We all know the two current presidential candidates have, like most who seek this office, lots of detractors. One persistent Trump detractor is a guy named Rob Garver, a writer for the Fiscal Times. Garver likes to use deceitful or misleading material to make his point. Here's an example aimed at Trump's possible VP choice.

Tennessee Sen. Bob Corker, the chairman of the prestigious Foreign Relations Committee, was being considered for the post by the Trump campaign. He appeared with Trump on the campaign trail Tuesday, and was showered with praise by the presumptive nominee.

By Wednesday, though, Corker told The Washington Post that he had informed Trump that he was no longer interested in being considered. In a later interview with CNN, he said, "I feel like I'm better suited to other kinds of things and I think there are probably better suited people for this particular job for now.”

The technique here is to make it look as if Coker doesn't want to be associated on the same ticket with the rogue Trump. And that could well be true. But there are other public recorded things about Coker having little to do with Trump that could be just as true for his decision to decline.

This is shaping up to be a bloody, down and dirty campaign, maybe one of most in history. Both sides are going to scraping the bottom looking for dirt, any dirt each might conclude useful and productive. Some even if they feel they don't have anything to hide will opt out for obvious reasons.

Coker's from Tennessee and he's had known problems--some call them over sites--more than once filing his income tax statements correctly. Coker was a real estate investment multiple millionaire long before her came to the Senate. In fact, some of his real estate associations came up again in his hometown of  Chattanooga not too long ago. This is not to suggest Coker did anything wrong, just to point out people have lots reasons for doing what they do.

Garver's intent is clear. A well-known Trump detractor, Garver spends a good deal of his time attacking Trump. Attacking is fine, but insinuating is one of those pathetic, slimy MSM tactics people like Garver try to slide past others everyday. 

When someone asked Carl Sandburg years ago why he wrote three time consuming volumes about Abraham Lincoln, Sandburg relied, "I thought I was in good company."

What's your excuse, Mr. Garver?

A Bridge Closer Now Than Ever

If there's a more pitiful excuse for a political pundit than Karl Rove, we've yet to see him.

His recent WSJ diatribe--a pathetically poorly disguised attack against Donald Trump, "The Off-Staged Battle to Sign Up Voters"--is so full of straw men it would go well on an autumn hayride.

"The GOP is gaining in key states. But with Trump atop the ticket, will that be enough," he writes. Even a high school kid in one of the weakest high school English classes in one of America's weakens high schools--and there are plenty--sees that curves ball coming.

Trump has cut the fat out presidential election year organizing, dispersing with many local party insiders, proving as he has that it can be done without all this dead weight. Rove characteristically true to his biased colors notes:

Mr. Trump prides himself on not needing a conventional organization (Oh! So he's independent enough to have less indebtedness to the status quo.), so he appointed few state chairmen during the primary campaign and virtually no county and local leaders."

Now get ready. The rotund Rove continues: the word fortunately is a surrogate for the conjunction but. And we all know what follows but.

"Fortunately, the Republican National Committee and most GOP parties have made voter registration a top priority." Roves next paragraph is a thing of straw man beauty.

"Given Mr. Trump's disturbing lack of emphasis on building a traditional ground game and his continued gaffes, only time will tell whether the GOP's efforts will be enough to keep the registration advantage Republicans enjoyed going into this election year." In other words, they had what they believed was a better candidate in mind.

Did he omit any of Trump's sins in that paragraph?  Let us count the ways: "continued frequent gaffs"; failed to come genuflecting and begging for their help; shunned the traditional ground game, disturbing lack of emphasis, only time--that great healer--will tell if the GOP's efforts will be enough to undue the damage the intractable, renegade, unpredictable Mr.Trump has done.

Rove, however, is not done there. He cites what those villainous Democrats are doing and urges the only road to victory is to copy cat the pattern of those political cretins. We feel a certain small--very small--tinge of remorse for the Roves and their kind because their time has come and gone. And so too has it for the other side.

If Trump traction represents anything, win or lose, it's bridge sooner or later, and we think sooner, to separate--and leave behind the American people and their greatness--these two pathetic bankrupt parties of so-called democracy.

Especially In This Day And Time

 

Especially in this day and time.

Covenants are not worth the paper they're written on. As an investor you need to know and never lose sight of that. The recent news that six British property funds have pulled a Third Avenue Junk bond move, blocking investors from withdrawing their funds, should tell you plenty.

Sure there are apologists claiming this isn't new, that it's happened before and they will have their obligatory numerous examples to cite. If you get bamboozled by that one you deserve your fate. This has serious contagion possibilities. Probabilities are more likely.

The globe is in a mess. Central bankers are little more than court jesters trying to keep the crowds entertained until they figure out what they're doing. Goldman Sachs, that Wall Street brotherhood closest connected to the Fed, recently issued its 17 stocks set to fall off a cliff and it's list of 13 equities set to soar. That's all part of the entertainment. The one sure thing you know, they had their long and short positions in place before putting out those two blurbs.

An apparent innocent black man was gunned down yesterday outside St. Paul, Minnesota for complying with the law.This is an election year, a very unusual one. There are rumblings among the electorate that the monolithic African-American vote is growing soft on its long-time Democrat party ties with more speaking up and moving toward Trump.

All the facts are not in yet, but these shootings are are too frequent and too timely to be just random. The outrage here will surely take some of the outrage about FBI Director James Comey's insulting, pathetic testimony before Congress earlier today and Hilary's email scandal out of the public eye. This is the kind of story the mouthpiece for the entrenched, MSM, will be all over.

There is also evidence percolating to the surface now that in the terrible Orlando tragedy the timeline of those killed is more than a bit shaky. We questioned the shooting of the UK PM, a proponent of stay, just before the Brexit vote. Desperate people do desperate things and the elitist reaction to Brexit and Trump traction has shown how nervous this controlling Neocons are getting.

Life is cheap today. And murdering an innocent black male has more political cache than the other way around. It's plays to gun control, electing one of the entrenched and a host of other inflammatory issues dividing this nation today. But put nothing above those who will stop at noting to stay in power. That's why and how they got there.

When all the of those insane central bank policies these past several years failed to revive global growth, the establishment blamed the consumers. And why not. They're an easy target. These dangerous people are, however, treading a fine line because if these same consumers lose all confidence in financial markets, it will be point, set, match.

In the 1920s mutual funds were a new, hot proliferating ticket. When the market finally rolled over it took 25 years before they regained their previous popularity and status. Forewarned is forearmed, they say. Protect yourself. Especially in this day and time.

Overnight

Sooner or later everyone has a nightmare. For fixed income investors, fund managers and insurance companies that nightmare is spelled Treasuries as these instrument now sport record low yield right out the yield curve to 30-years.

Reuters reported that there are "$10 trillion government debt around the world offering only negative yields." that can cause a lot of pain not to mention shock and awe if there is an unexpected flush of inflation or rising interest rates.

Meanwhile, Asian shares were mixed overnight Thursday as the Fed showed its more dovish side and oil  finished higher in the U.S. The Nikkei 225 was down 0.25%,  the Kospi traded up 1% and the Hang Send edged higher 0.95%. Mainland Chinese shares were down slightly with Shanghai Composite off 0.17% and the Shenzhen down 0.2%. this followed the previous sell off yesterday as concerns abut global growth captured the attention of investors.

In the currency market, CNBC noted, the dollar traded at 96.081 against a basket of currencies, coming off levels near 96.290 it traded at on Wednesday afternoon Asia time.

The Japanese yen, a safe-haven currency, traded at 100.96 against the greenback, strengthening from an earlier session low of 101.40, and compared to levels near 103 on Friday. Analysts said the fresh strength in the yen was due to a flight to safety amid jitters across financial markets.
The British pound traded at $1.2940 as of 10:35 a.m. HK/SIN on Thursday. The pound dropped to a fresh 31-year low of $1.2796 on Wednesday amid persistent uncertainty surrounding the U.K.'s future as a result of its decision to leave the European Union.

Perhaps the biggest Asian news centered on Australia and Standard & Poor's downgrading the country's sovereign debt to AAA negative, saying that the country's road back to budget surpluses looked weak. That delivered a hit to the Australian dollar. Standard and Poor released a statement saying: “We are revising the rating outlook on Australia to negative from stable because we believe that without remedial action, the government’s fiscal stance may no longer be compatible with the country’s high level of external indebtedness,”

Collection Day

The truth is the Fed doesn't have any better or more insightful outlook on the U.S. economy than anyone else. And that's a truth that needs to be told wide and loud.

Minutes from the last FOMC meeting are out today and MSM will, as is their style, be all over these backward geared notes. A big difference with these minutes is the timing. The meeting took place a week before what now is capturing the attention of nearly all, the mighty Brexit. Though the market has recovered from much of the initial impact, Brexit continues to fray nerves. Rumor has it that's one of the reasons pharmaceutical stocks are up. But we have not checked the numbers.

Things weren't so rosy looking before the UK vote and so pundits will scan the tea leaves of this meeting to postulate more theories to tell us what we already know. It keeps these pundits employed. Fed Chair Janet Yellen, just before the vote, released this blockbuster, it "could clearly have consequences," for markets and the economy. Yellen has a reputation for her cut-to-the-chase specifics.

Since Brexit was a UK event we could have received pretty much the same sterling information for apparently a lot less taxpayer money by simply surveying some public garbage collectors. That's what  author William A. Sherder did way back in 1998. In his book, The Fortune Sellers: The Big Business of Buying and Selling Predictions, Sherder, a business consultant, cites a 1985 article from the Economist that compared the accuracy of UK sanitation workers' predictions with the heads of several top-drawer multinational firms about Britain's future economic growth.

The results: They tied.  Next Tuesday is our collection day. Up to now all we've been doing is tossing the guy an occasional early morning wave. Maybe we can get a better return on our buck and cancel all those expensive subscriptions from here on.