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Monday, October 31, 2022

2022-10-31

*** denotes well-worth reading in full at source (even if excerpted extensively here)


Economic and Market Fare:

What Happens When Inflation Hits 8%... And What Must Happen For Inflation To Fall
uhm, no
everyone keeps pointing to historical "parallels" 
i.e. other times when inflation was this elevated, and what happened next
which just means you're comparing now to the 70s-80s
and it just ain't the same; both causes of inflation and structure economy fundamentally different now; there are no "parallels"



.... Fast forward to today and CPI stands at 8.2%Y, a 40-year high and marginally below its peak of 9.1%Y in June. However, M2 is now growing at just 2.5%Y and falling fast. Given the leading properties of M2 for inflation, the seeds have been sown for a sharp fall next year. The implied fall in CPI outlined in Exhibit 1 would be highly out of consensus, and while it won’t necessarily play out exactly as in our chart, we believe it's directionally correct. This has implications for Fed policy and rates. Indeed, part of our call for a rally assumes we are closer to a pause/pivot in the Fed’s tightening campaign, and while we don’t expect to see a dramatic shift at next week’s meeting, the markets have a way of getting in front of Fed shifts. In short, investors may be as offside on inflation today as they were in March 2021, just in the opposite direction.


......... Bottom line, inflation has peaked and is likely to fall faster than most expect, based on M2 growth. This could provide some relief to stocks in the short term as rates fall in anticipation of the change.



........ The other big question mark in the course of inflation is non-shelter services. Here too we are likely to see a good picture. Outside of shelter, inflation in core services is relatively moderate and seems to be headed downward.

......... However, the most important number in the October report will be wage growth. There is no plausible story where the economy sustains a high rate of inflation, if wages are only growing at a moderate pace.

We already got some evidence of slowing wage growth in the Employment Cost Index (ECI) for the third quarter that was released last week. That showed private sector compensation increasing at a 4.4 percent annual rate in the third quarter, down from a 6.0 percent annual rate in the second quarter. This pace is still too high to be consistent with the Fed’s 2.0 percent inflation target, but the direction of change is important. The rate of wage growth is clearly slowing even with unemployment rates at very low levels and vacancy rates at historic highs.

The other major wage series that we rely upon is the average hourly earnings (AHE) series, which will be part of Friday’s report. This series differs from the ECI by looking at average wages for all workers. The ECI holds the mix of industry and occupations constant. The change in mix generally does not have much impact, but the two indices have often differed a great deal in the pandemic recession and recovery.

In the downturn, the AHE series showed much more rapid wage gains because many of the lowest paid workers lost their jobs. This raised the average wage by changing the composition of the workforce, even if the pay of people in each occupation and industry did not change. During the recovery this composition effect went the other way, as low-paid workers got their jobs back.

There was also an issue where many workers may have gotten a pay increase by changing their job title. If a worker at a fast food restaurant was promoted to assistant night manager, but their work did not change at all, the associated pay increase would be picked up in the AHE series, but not in the ECI.

Anyhow, the AHE does show evidence of rapidly slowing wage growth. In the last two months, the AHE has grown at just a 0.3 percent rate. This translates into a 3.6 percent rate of annual wage growth. The monthly data are erratic and subject to large revisions, so these numbers must be treated as provisional.

However, if they hold up through the revisions in the October report, and wage growth in the October data is consistent with the prior two months, then we will have pretty solid evidence that wage growth has slowed sharply. In fact, a 3.6 percent annual rate is only slightly higher than the 3.4 percent rate we saw in 2019, when the inflation rate was comfortably under the Fed’s 2.0 percent target.

If the rate of wage growth is in fact 3.6 percent, it is almost impossible to envision a scenario in which inflation remains uncomfortably high. ......



.... But, according to the Goldman trader, in the latest series of NikiLeaks tweets this morning, the WSJ's Fed mouthpiece is seen as aggressively trying to dial that back ahead of the Fed’s meeting on Wednesday by suggesting that the US consumer is much stronger than otherwise perceived (this is dead wrong, of course, but as a reminder, this is all about setting up the narrative that contains the Fed's reaction function):

“Consumers have a big cushion of savings. Corporations have lowered their debt-service costs. For the Fed, a more resilient private sector means that when it comes to rate rises, the peak or “terminal” policy rate may be higher than expected“ ........






Quotes of the Week:

Hail: I think we have got it broadly right again. The forecast that central banks and most of the economics profession would follow the fashion and inadvisedly keep raising interest rates as though a demand-driven wage-price spiral was driving inflation rates up is proving correct.
This is despite the lack of evidence that interest rates are an effective tool for managing inflation and the fact that the main impact of raising rates is to redistribute income from those with net financial liabilities to those with net financial assets, until something breaks.
...
Meanwhile though, those central banks might rise rates enough to trigger not only the involuntary unemployment of others which they hope for but such an impact on those with net financial liabilities as to produce unintended consequences on asset markets, leading to defaults.
This also will bring inflation down, should it happen, and they can congratulate themselves on being tough and on 'the recession we had to have' when we didn't have to have it at all. What we need is peace, a definite end to the pandemic and action on climate change.



Charts: 
1:



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(not just) for the ESG crowd:

How to build a vision



Other Fare:

Satellite tag data suggests five-month-old migratory bird did not stop during voyage which took 11 days and one hour to reach Tasmania




Contrarian Perspectives

Extra [i.e. Controversial] Fare:

*** denotes well-worth reading in full at source (even if excerpted extensively here)


Krishnamurti: “It is no measure of health to be well adjusted to a profoundly sick society.”


Regular Fare [i.e. Everyday Life Bullshit]:


......Ever get the sense there are things our media hides from us? Hmm. Ever wonder why enormous protests against the policies of the Exceptional Empire and its attack dog, NATO, seem, um, to be downplayed? Ever think our corporate news outlets behave more like the propaganda arm of our neoconservative state department and military than a free press? Well, if so, you may be onto something.


and it's time we the people stopped standing for it.

i have no great faith in or fondness for either of the two major US political parties, but the behavior of team donkey has of late really gone beyond the pale.

deliberate deception has reached a level that cannot be countenanced and the sheer pervasiveness and scale of it has become a threat to societal sanity. it’s so big that the mind struggles to bound it and therefore those refuting it are made to look like the crazy ones because it seems like you are arguing against absolutely everything all the time.

but is it really crazy? regimes do this all the time. ascribe such to china or the soviets and everyone nods sagely and says “yup, regimes like that sure do lie all the time!” but then they cast their gazes at home and say “well, it could never happen here!” despite increasingly similar systems and systemic incentives.

it’s a curious blind spot.

it’s also rapidly unraveling. ....



Obama, with a well-worn penchant for lecturing mere citizens for having the occasional audacity to raise their voices and talk back to their rulers and other experts, was not about to let Friday's vicious attack on Paul Pelosi go to waste. He led the Democratic Party charge in making it a campaign issue in its own right, conflating the assault on Pelosi with the plague of "incivility" sweeping the nation. 

........... The trouble is, despite what these professionals say, the government and its two establishment parties are not just like a family. The CIA is neither intelligent nor part of a "community."  Calling the US war machine the Department of Defense is a sick joke. But it's ever so civil.

Politics is not and never was civil. Nor should it be. It's always a struggle and it's often messy. Therefore, the top-down lectures about "civility" from a former president who deported more people, dropped more bombs, prosecuted more whistleblowers and started more wars than any of his predecessors are laughable on their face.

Obama hectoring others about "civility" is, however, the time-honored way in which rulers shut down opposition and the voicing of legitimate concerns. The ploy of immediately going on the offensive against powerless people also serves to conveniently absolve themselves of culpability for their own foul deeds. After all, since they themselves have such impeccably good manners and have such well-modulated, reasonable tones of voice, they can get away with anything.





Unsustainability / Climate Fare:


.... However, his second shoe that fell at climate week was a reference to the Warsaw International Mechanism for Loss and Damage. He might have had a chance getting the West to ante up some cash for development projects targeting climate Mitigation and Adaptation, but Loss and Damage has been and will remain, a non-starter. Asking England and the US to pay for the environmental damage of the Industrial Revolution is like Latin America asking Spain for reparations for the genocide and slavery of the Colombian Encounter, or First Nations asking for the U.S. to now kindly get out of North America, thank you very much for the iPhones. Those retreats and reparations might even be beneficial for the planet, but they aren’t likely to happen. .....



One of the ‘problems’ besetting the world at present, if the commentary in the mainstream press is anything to go by, is the existence of chronic skill shortages. Survey studies of the shifting demographics in Japan, for example, have produced ‘alarming’ results from a mainstream perspective. See for example, this OECD Report from 2021 – Changing skill needs in the Japanese labour market. I was at a meeting recently in Kyoto and it is clear that many firms in Japan are having trouble finding workers and many have even offered wage increases to lure workers to their companies. Further, many small and medium-size businesses are owned by persons who are over 70 years of age and that proportion is rising fast. The skill shortage scenario is tied in with the ageing society debate, where advanced nations are facing so-called demographic ‘time bombs’, with fewer people of working age left to produce for an increasing number of people who no longer work. The mainstream narrative paints these trends as major problems that have to be confronted by governments, and, typically, because of faulty understandings of the fiscal capacities of governments, propose deeply flawed solutions. I see these challenges in a very different light. Rather than construct the difficulties that firms might be facing attracting sufficient labour (the ‘skills shortages’ narrative), I prefer to see the situation as providing an indicator of the limits of economic activity or the space that nations have to implement a fairly immediate degrowth strategy. ......



RIP Fare:


Endemic Fare:

I've continued to come across too much excellent COVID-related content (with contrarian evidence-based points-of-view!!) to link to it all
Read [almost?] everything by eugyppius; el gato malo; Mathew Crawford; Steve Kirsch; Jessica Rose!
Chudov, Lyons-Weiler, Toby Rogers are also go-to mainstays; a list to which I have added Andreas Oehler, Joey Smalley (aka Metatron) and, Julius Ruechel; Denninger worth staying on top of too for his insights, and especially his colorful language; and Norman Fenton; Marc Girardot; plus Walter Chesnut (on twitter); later additions: Sheldon Yakiwchuk & Charles Rixey & Aaron Kheriarty; and newest additions Meryl Nass and the awesome Radagast; and Spartacus is on substack now!!; I will of course continue to post links to key Peter McCullough material, and Geert Vanden Bossche, and Robert Malone, and Martin Kulldorff, and Jay Bhattacharya, and Sucharit Bhakdi, and Pierre Kory, and Harvey Risch, and Michael Yeadon, and John Ioannidis, and Paul Marik, and Tess Lawrie, and Dolores Cahill, and [local prof] Byram Bridle, and Ryan Cole, and... of course Heather Heying and Charles Eisenstein often bring their insight and wisdom to the topic as well... and if Heying's substack isn't enough, she joins her husband Bret Weinstein at their DarkHorse podcast ....
but, in any case, check out those sources directly as I will my linking to material by those mainstays mentioned above will be reduced to key excerpts and/or essential posts


***** Rigger: Pharmaceutical Carnage

...... Evolution can be thought of as a kind of constrained optimization. There are many things that will impact upon ability to produce successful offspring and being the best at avoiding ‘danger’ X may actually lessen your ability to avoid ‘danger’ Y. So, some kind of bargain has to be struck. Evolution will tend to optimize the outcome across all the various ‘danger’ constraints; kind of like being a jack of all trades but master of none.

Whenever we think of some characteristic generated and honed over millions of years of evolution, we might be tempted to ask “why didn’t evolution make that characteristic a bit better?”. Probably because doing so would cause some weakness in another area that would cause a deviation from the position of overall optimization.

Evolution has generated for us a marvellous and adaptive immune system. It’s a result of millions of years of challenge from all sorts of threats and the complex system that results represents an ‘optimization’, or a near-optimization. But, like most things in evolution, it will be based on a set of judicious trade-offs that give an overall optimization, rather than just optimization with respect to any one specific threat.

Take just one component of our immune defences: antibodies. We don’t continue to produce antibodies after the disease threat has passed; the antibody level wanes. Keeping a continually high level of antibodies against antigen X is costly in terms of resources and so the solution generated by evolution is to produce mechanisms that ‘remember’ the threat, so that if it arises again the antibodies can be quickly re-made.

We fuck about with the methods provided by evolution at our peril. 

..................... Is it any wonder, then, that the mRNA gloop, hastily cobbled together for covid, has been such a monstrous fuck-up?

I’ve talked about evolution as an optimization mechanism, but perhaps it’s worth sparing a thought about how a pharmaceutical company manages the issue of constrained optimization. What are they trying to optimize and under what constraints?

They’re, obviously, trying to optimize their profit. What are the constraints here? Well, that’s not so clear. They’re clearly not optimizing under the constraint of producing an overall morbidity that is at least no worse than the placebo group.

When you don’t optimize properly with respect to sensible constraints you end up with the kind of pharmaceutical carnage we’re seeing with the covid ‘vaccines’.


All COVID-19 Vaccine Studies Used nonQ-RT-PCR to determine case status. All of the estimates of outcome are unreliable. This is the most important study we will ever likely publish in our journal.

.... Specifically, the high false positive rate (42%) of the use of nonQ-RT-PCR means

1. For every 5 true positives, 400 people without SARS-CoV-2 infection or residual fragments will be reported. ...

4. The number of "cases" via positive PCR has been overstated by a factor of 80:1. ...

6. This 80:1 bias is true in any clinical trial or any study that used arbitrarily high Ct values, INCLUDING THE VACCINE STUDIES.

As a direct result of this fatal flaw, combined with CDC’s gaff “PCR+ = COVID-19"?

There are no credible COVID-19 vaccine trial data. ....


The Early Estimates of the Fatality Rate Were Very Wrong



Pushback Fare:

Let’s not declare a pandemic amnesty. Let’s declare a real pandemic inquiry.

I’ll admit, I nearly spit out my coffee when I saw Brown Professor Emily Oster’s new headline in The Atlantic this morning. It’s the headline we’ve been waiting to see—and, in the revisionist, gaslighting style that’s become the journalistic norm on the response to Covid—it’s about the closest thing to an outright admission of guilt that we’ve seen since Covid began

The article is about as pathetically transparent as it is self-serving. Gee, I wonder what Oster did and said during Covid for which she might want amnesty…

Oh…

There’s a lot wrong here. First, no, you don’t get to advocate policies that do extraordinary harm to others, against their wishes, then say “We didn’t know any better at the time!” Ignorance doesn’t work as an excuse when the policies involved abrogating your fellow citizens’ rights under an indefinite state of emergency, while censoring and canceling those who weren’t as ignorant. The inevitable result would be a society in which ignorance and obedience to the opinion of the mob would be the only safe position.

Second, “amnesty,” being an act of forgiveness for past offenses, first requires an apology or act of repentance on the part of those who committed the offense. Not only has no such act of repentance been forthcoming, but in most cases, establishment voices like Oster’s have yet to stop advocating these same policies, much less admit they were wrong. ......



..... 
...... these precautions were totally misguided. In April 2020, no one got the coronavirus from passing someone else hiking. Outdoor transmission was vanishingly rare. Our cloth masks made out of old bandanas wouldn’t have done anything, anyway. But the thing is: We didn’t know.
The thing is, Emily Oster, that we did know. We’ve studied respiratory virus transmission for years. All the virologists and epidemiologists who aren’t total morons knew your 2020 mask routine was crazy and they just didn’t care. They wanted you to do it anyway, because they thought that if they got you to act paranoid and antisocial enough, your insane behaviour might have some limited effect on case curves. Joke’s on you, and it’s sad you still haven’t realised.


el gato malo: emily oster's no good, really bad, terrible idea

brown university econ professor emily oster is out with a new missive in the atlantic (where else?) and it seems to be generating quite a lot of heat.

perhaps this is because it is so seemingly self-serving and tone deaf.

after all, this is quite the spicy take from the woman who did so much to gather so much useful data on masking in schools only to disavow the obvious conclusions it led to because the orthodoxy of those around her at brown U would not allow "masks don't work to stop covid" to be reported. ......

..... ignorance of the law is not excuse. neither is ignorance of ethics or epidemiology.

......... as an economist, surely ms oster must understand incentives. if there is no cost to having acted poorly, rashly, and without consideration or information despite the ill effects it had on others, are we not just subsidizing more such antisocial activity in the future?

i get to run amok, wreck your life, then call "olly olly oxen free" and skate on blame?

sorry about your biz, your kids, the vilification, and the dodgy jabs?

collateral damage...

what kind of system is that?

it's literally calibrated to maximize misbehavior. .....


Tweets:

Implicit in the left’s ask for “Pandemic Amnesty” is an admission that their policies were very wrong and very harmful.
Otherwise no amnesty would be needed


...


Anecdotal Fare:

Yesterday I was wondering when the vaccine zealots who demonized us would apologize. Kudos to Tim Robbins for having the gravitas to take the lead on this important issue.




COVID Conspiracy Fare:

An Analysis of the Origins of the COVID19 Pandemic: Interim Report

Those who have been attending or listening to my recent talks and podcasts may have noticed that I have repeatedly stated that my opinion is that SARS-CoV-2 virus was created in the Wuhan Institute of Virology and somehow entered the general population approximately September 2019. Based on their report, this now appears to also be the interim minority opinion of the Senate Committee on Health Education, Labor and Pensions Minority Oversight Staff ......


***** Radagast: The Banality of Evil

I’ll be honest with you. I’m a broken traumatized man. The reason for that is pretty simple, I drank too much from the cup of knowledge. Once you realize what took place in early 2020, once it really dawns on you what these people did, the metaphysical ugliness of what they have done, then you get into a really dark place.




Back to Non-Pandemic Fare:

War Fare:


I think it’s good to show this again to remind people of some of the historical context of the current proxy war between Russia and the US/NATO in Ukraine. The first portion of the video is of Putin discussing his concerns at the 2016 St. Petersburg International Economic Forum to a group of western journalists about the placing of anti-ballistic missiles in Romania (and later Poland) as a result of the US having pulled out of the Anti-Ballistic Missile (ABM) Treaty in 2002, and the national security threat this poses to Russia and why. The last portion is a clip from Putin’s famous 2007 speech at the Munich Security Conference in which he touched on this same emerging problem.



Other Geopolitical Fare:


Lula da Silva’s victory in Brazil’s presidential election is a blow to the Trudeau government’s Latin America strategy. It is a further rejection of Ottawa’s effort to eliminate leftist governments in the hemisphere and exposes their complicity in the 2016 parliamentary coup.

Political developments in the region have turned sharply against Ottawa recently. The elections of Gustavo Petro, Xiomara Castro, Gabriel Boric, Pedro Castillo, Néstor Kirchner and Andrés Manuel López Obrador have ushered in a new “pink tide” in the hemisphere. It has rekindled regional integration efforts, which are a blow to Trudeau’s Latin America strategy.

The Liberals multifaceted bid to overthrow Venezuela’s government has failed with even Washington looking set to jettison Juan Guaido. A more circumspect regime change effort in Nicaragua has also floundered. In Bolivia the October 2019 Canadian-backed coup against Evo Morales was decisively rejected a year later when Morales’ former finance minister, Luis Acre, won the presidency and his party took a large majority in the legislature.

A similar dynamic has taken place in Brazil. While Lula’s victory is less decisive and Canada’s role in the Workers Party’s downfall far less significant, the geopolitical ramifications of the reversal are far greater. ....




Haitians are saying "no to armed invasion from the international community, because every time there is the so-called 'help' invasion... it results in chaos," said one activist.

........ Madame Boukman, a prominent Haitian political commentator, recently tweeted that “U.S.-style ‘humanitarian’ intervention is like a massive blow to the spine.”

“It has completely paralyzed Haiti’s development,” she added. “Haitians call for a localized, Haitian solution based on the principles of self-determination.” 



Orwellian Fare:


We have been discussing the rising support for censorship on the left in the last few years. Silencing opposing views has become an article of faith for many on the left, including leading Democratic leaders from President Joe Biden to former President Barack Obama. What is most distressing is how many journalists and writers have joined the call for censorship. However, even with this growing movement, the letter of hundreds of “literary figures” this week to Penguin Random House is chilling. The editors and writers call on the company to rescind a book deal with Supreme Court Justice Amy Coney Barrett because they disagree with her judicial philosophy. After all, why burn books when you can effectivelyban them?

The public letter entitled “We Dissent” makes the usual absurd protestation that, just because we are seeking to ban books of those with opposing views, we still “care deeply about freedom of speech.” They simply justify their anti-free speech position by insisting that any harm “in the form of censorship” is less than “the form of assault on inalienable human rights” in opposing abortion or other constitutional rights.





***** CaitOz Fare ***** :


............ “Among the 1.2bn people who inhabit the world’s liberal democracies, three-quarters (75%) now hold a negative view of China, and 87% a negative view of Russia,” the report reads. “However, for the 6.3bn people who live in the rest of the world, the picture is reversed. In these societies, 70% feel positively towards China, and 66% positively towards Russia.”

.......... may also be partly explained by another thought-provoking Arnaud Bertrand thread, which I will quote
It’s actually quite sad, really speaks to the levels of intellectual decrepitude in the West today. The time of the Enlightenment, the big revolutions is well and truly gone. We’re stuck with our mediocre operators.

It’s also why this is such a dangerous time. A positive vision brings confidence, it brings hope, it motivates, it makes people look forward to what’s to come. The West has none of that today.

The future is scary, the dominant feelings are fear and anger.
.... Indeed, we could be striving toward a positive vision for the future, one which seeks “common prosperity” and “improved international relations,” one which works to remedy inequality and address the looming environmental crisis. Instead the world is being bifurcated, split in two, which history tells us is probably an indication that something extremely terrible is on the horizon for our species unless we drastically change course.



Rigger-ous Reads (on Culture Wars, Identity Politics, etc.):

The battle over parental rights has one common denominator



Long Reads / Big Thoughts:

The Study of the Week should reset our prior beliefs about the success of healthcare interventions

................. When you go to the doctor and undergo a test or procedure, or take a new medication, most of us expect that there’s darn good support for it.

This paper suggests that it’s not true.

When I started practice, this data would have surprised me. But as I’ve gathered experience in both practice and in the review of medical evidence, I am no longer surprised.

Everyone is far too confident. .........

Healthcare is hard. The human body is complex. Most stuff doesn’t work.

Patients and doctors alike would do better to be far more skeptical. Not cynical, just skeptical.

This would lead us to want stronger evidence for our interventions—especially when there is harm or high cost involved.

Then we would be less likely to adopt therapies that don’t work, or worse, harm people we are supposed to help.



QOTW:

Yarvin: Twitter is discourse. Discourse is not truth. Discourse is the raw material of truth. Discourse is to truth as coca leaf is to cocaine. Sure it can make a Peruvian peasant work all day in the sun at 10,000 feet. But no one ever did a line of minced coca leaf. You gotta refine that shit. Yet without the leaf—there is no powder.

Aronoff: "Lula winning may well be better news for the climate than anything that’ll happen at COP 27"



Satirical, or Not, Fare:









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