January Retail Sales: Let Them Eat Bacon!

Submitted by Danielle DiMartino Booth – DB Money Strong

Last June, Jeralean Talley, who had been the oldest known living person in the world, passed away in Detroit at the grand old age of 116.  That left Susanna Mushatt Jones, also 116, and the second known living person born in the 1800s, to assume the throne. When asked about the secret to her longevity, the sprightly supercentenarian replied that she ate four strips of bacon every morning. She has a sign in her kitchen that reads, “Bacon makes everything better.”

Jones’ devotion to bacon may have amused the media, which had only just regaled the consuming masses with the results of a study that found bacon and other processed meats exacted untold damage on the human body, presumably resulting in shorter life spans.

Judging from recent retail sales behavior, the public has sided with Jones. “The bacon business appears to be immune to the consumer trend toward healthier cuisine,” noted Ellen Zentner, chief economist at Morgan Stanley in her group’s annual deep dive report into consumption trends.

As for what else has been insusceptible, The Liscio Report’s Philippa Dunne noted that home improvement sales were not only revised up sharply from December but tacked on another neat gain in January taking the growth rate over last January to 1.7 percent. Sales at the Home Depots and Lowe’s of this world likely signal the continued stunted mobility among many Americans who still owe more on their home than it is worth.

That factor aside, there was this little thing called a historic snowstorm that swept the East Coast in January, “Home improvement is just plain strong, seemingly without the help from the weather,” Dunne observed. Blizzard smizzard!

Simple Janet – The Monetary Android With A Broken Flash Drive

Submitted by David Stockman – The Contra Corner Blog

This is getting just plain nuts. Here is what Janet Yellen said today about the possibility of negative interest rates:

In light of the experience of European countries and others that have gone to negative rates, we’re taking a look at them again because we would want to be prepared in the event that we needed to add accommodation.“

The operative words here are “European countries” and “add accommodation”. Yet even a brief reflection on those items demonstrates that Janet is a delusional Simpleton. To adapt Jim Kunstler’s felicitous phrase about Senator Rubio’s 4-Peat incantation during the last GOP debate, our financial system is being led by a monetary android with a broken flash drive.

She says the same damn stupid thing over and over, endlessly.

Someone should tell Janet and her posse of Keynesian money printers that there is no such economic ether as “accommodation”. That’s Fed groupspeak for their utterly erroneous conceit that the US economy is everywhere and always sinking towards collapse unless it is countermanded, stimulated, supported and propped up by central bank policy intervention.

No it isn’t. Janet may prefer a dutch boy hair cut, but she’s not got her finger in the dike, nor is she warding off any other catastrophe. The deluge that is coming is actually the handiwork of the Fed and its bubble ridden Wall Street casino, not the capitalist hinterlands of main street.

There are only two tangible transmission channels through which the Fed can impact our $18 trillion main street economy, as opposed to merely subsidizing Wall Street speculators to artificially bid up the price of existing financial assets.

It can inject central bank credit conjured from thin air into the bond market in order to raise prices and lower yields. And it can falsify money market interest rates and the yield curve. Both of these effects are aimed at inducing businesses and households to borrow more than they would otherwise, and to then spend more than they produce.

That’s the old Keynesian parlor trick and, yes, it worked 50 years ago when Janet’s Keynesian professors first had their way with America’s virgin balance sheets. But now those household and business balance sheets are all used up because we are at Peak Debt, along with most of the rest of the world.

Indeed, in the case of the US household sector the massive leveraging up of wage and salary income between  the late 1960s and 2008 has now begun to slowly reverse.  The credit string that the Fed is pushing on is evident in the chart below. But apparently Janet is still in a time warp obeying the injunctions of James Tobin’s ghost wafting up from the earlier side of the red vertical.

Household Leverage Ratio – Click to enlarge

Sanders’ victory from DiEM’s perspective – on Channel 4 News

Submitted by Yanis Varoufakis  –  The Yanis Varoufakis Blog

Are Americans Too Insouciant To Survive?

Submitted by Dr. Paul Craig Roberts – Institute for Public Economy

When one looks at the deplorable state of the world, one cannot help but wonder at the insouciance of the American people. Where are they? Do they exist or are they a myth? Have they been put to sleep by an evil demon? Are they so lost in The Matrix that they cannot get out?

Ever since Clinton’s second term the US has been consistently acting internationally and domestically as a criminal, disregarding its own laws, international laws, the sovereignty of other countries, and the US Constitution. A worse criminal government has never existed. Yet, Americans remain subservient to the criminals that they have placed in power over themselves.

According to polls, Hillary Clinton and Senator Bernie Sanders are splitting the Democratic vote 50-50 as preferred Democratic presidential candidate. This is extraordinary.

Hillary Clinton represents the interests of Wall Street and the mega-banks, the Israel Lobby, and the interests of the military/security complex. These interests are totally opposed to the interests of the American people.

In his book, What’s the Matter with Kansas, Thomas Frank raised the question of why Americans vote against their own interests? Why do Americans go to the voting both and do themselves in?

Whether you agree with Thomas Frank’s answer or not, Americans do, on a regular basis, harm themselves by voting for people who are agents of vested interests diametrically opposed to the interests of American citizens.

How is it possible, if Democrats are informed people, that half of them prefer Hillary Clinton? Between February 2001 and May 2015 Bill and Hillary collected $153 million in speaking fees. The fees averaged $210,795 per speech. http://www.commondreams.org/news/2016/02/06/no-artful-smear-clintons-paid-153-million-speaking-fees-analysis-shows

I can remember when Bill and Hillary were in public office when their speeches were free. No one wanted to listen to them when the speeches were free. Clearly, Bill is being paid off for his past services to the powerful interest groups that control the United States, and Hillary is being paid off for her future service to the same groups.

How then is it possible that half of Democrats would prefer Hillary? Is it because she is a woman and women want a woman president more than they want their civil liberties, peace, and employment for themselves, their spouses and their children?

Or is it because, given the presstitute character of the American media, the people haven’t a clue?

Gold outlook improves

Submitted by Alasdair Macleod – FinanceAndEconomics.org

There is a conflation of three related events that materially alter the prospects in favour of a higher gold price.

The change in the outlook for US interest rates has probably put an end to the dollar’s four-year bull run, it is clear that there is a growing likelihood of negative interest rates in the future, and the global banking system is no fit state to manage the potential challenges of 2016. This article walks the reader through the likely economic effects relevant to the future purchasing power of the dollar, and therefore prospects for the gold price.

On the 5th February, the price action in gold was significant. At about 9.40AM New York time, a seller dumped 10,000 contracts on the Comex market, worth about $1.2bn. The price fell from $1162 to $1145, a fall of $17. Having risen over the course of the week, it was vulnerable to profit-taking, so in principal it was a good time to take the price down in order to take the steam out of the market. However, from that $1145 level, gold quickly and unexpectedly rose strongly, gaining nearly $30 into the close. Furthermore, the gold price has continued to rise this week.

Of course, we don’t know who the seller was, but he will be nursing some serious losses. If it was the US Government’s Exchange Stabilisation Fund, the cost won’t matter; what would matter is that an attempt to put a cap on the gold price was a dismal failure, and merely exposed a major change in market sentiment, from extremely bearish to growing bullishness. This is backed up by increasing open interest on the Comex market, a clear indication that a rising gold price is no longer driven solely by the closing of short positions, but new buying is now driving the market.

The change in sentiment is notable, and coincided with the Bank of Japan reducing its deposit rate to minus 0.1%. There is a growing realisation that negative interest rate policy (NIRP) could also be on its way for the United States, so we must digress from considering the gold price to explore the potential effects of NIRP.

The Deep State’s Top Choice for President Is…

Submitted by William Bonner, Chairman – Bonner & Partners

Less Popular Than Syphilis

RANCHO SANTANA, Nicaragua – We’re traveling home to the U.S. from our recent meeting with members of our family wealth advisory, Bonner & Partners Family Office. So, we’ll make this short.

The Dow sold off again on Monday. At midday, it was down nearly 400 points. Then it recovered to end down only 178 points – or about 1%. As we’ve been warning, this market is extremely vulnerable. Watch out.

Leftist war-harpy Hillary Clinton – the candidate of the country’s assembled cronies and zombies, in short, the prototypical Deep State representative. We feel reminded of an aged Cersei Lannister every time we contemplate Ms.“best cattle futures trader in the world” (more). Whatever you do America, please refrain from making this harridan your president. Nothing could possibly be worse. Luckily, even syphilis is more popular than Hillary among young voters. This fills us with hope.

Photo credit: Brandon Marshall / REX / AP

Meanwhile… who’s the crony? Democrat front-runner Hillary Clinton is the Deep State’s top choice for president.  She has already received $21 million from Wall Street for her campaign. That’s 280 times more than Bernie Sanders.

This is why Sanders and Donald Trump are doing so well in the polls. People are catching on to how the system works. They know they are being taken for fools. According to a recent CNN poll, 69% of Americans are either “very angry” or “somewhat angry” about “the way things are going” in the U.S.

And according to a recent NBC/Wall Street Journal poll, the same percentage – 69% – are angry because the U.S. political system “seems to only be working for the insiders with money and power, like those on Wall Street or in Washington.” Among young voters, according to a well-watched video, “syphilis is more popular than Hillary.”
But Clinton is the crony favorite, supported by Wall Street and the Pentagon. In the old days, the conservatives believed the U.S. government was the devil at home and an angel abroad. The liberals believed the government was an angel at home and a devil overseas. Hillary believes that government always wears wings – at home and abroad.

No Longer Overseas

Submitted by Jeffrey Snider  –  Alhambra Investment Partners

I use the June 2018 eurodollar futures contract as a significant benchmark in my analysis of money markets because I feel it represents a solid cross section of sometimes conflicting influences. It’s close enough to the front end as to be significant both in terms of monetary policy as a factor but far enough to be as heavily if not more representative of intermediate economic expectations. And on that account, there is still enough volume and open interest where the depth of liquidity cannot be questioned.

As of yesterday, the CME reports open interest of 416,955 contracts each for delivery of $1mm, meaning $417 billion or so in gross contracts written. Thus, to see it move so far so fast being bid is simply astounding. This morning, the June 2018 was as a high as 99.165! In closing price alone, currently at a still impressive 99.01, that’s 30 bps just this week. And that follows a mind-boggling collapse (for Yellen’s dreams) 103 bps in 2016 alone. Yellen ordered a quarter-point hike in federal funds and received instead four of them in reverse across the much more significant and important eurodollar complex.

We must be mindful, too, that China is closed all during this week, surrendering an easy and overseas story for causation. I don’t think China is out of the equation entirely, especially via Japan, rather it seems though the current flurry of bearishness is eurodollar all its own. The curve collapse is similarly beyond easy description.

The Daily Debt Rattle

Submitted by Raúl Ilargi Meijer  –  The Automatic Earth

• Japanese Stock Market Plunges 5% As Global Rout Gathers Pace (Guardian)

• Asian Shares Slip As Bank Fears Add To Global Gloom (Reuters)

• Global Assault on Banks Intensifies as Investors Punish Weakness (BBG)

• Emerging Stocks Rout Deepens on Risk Aversion as Currencies Drop (BBG)

• Yuan Declines Most in Two Weeks as Global Selloff Saps Sentiment (BBG)

• Asia’s Rich Advised to Buy Yen as BOJ’s Negative Rates Backfire (BBG)

• Who Stole The Yen Carry Trade? (CNBC)

• If Credit Is Right, The S&P Is Facing A 40% Crash (ZH)

• How Much Further Could Stocks Fall? (BI)

• S&P Cuts Deutsche Bank’s Tier 1 Securities Rating To B+ from BB- (Reuters)

• The Week When Central Bank Planning Died? (MW)

• China Buys The World With State-Backed Debt (FT)

• China Turns a Glut of Oil Into a Flood of Diesel (BBG)

• 11.5% Of Syrian Population Killed Or Injured (Guardian)

• Greeks At Frontline Of Refugee Crisis Angry At Europe’s Criticism (Reuters)

• The Grandmothers Of Lesvos (Kath.)