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Thursday, December 8, 2022

2022-12-08

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


Economic and Market Fare:

Market Vet Predicts the Next Decade Will Be Awful for the 60/40 Portfolio. How to Invest.



Stock markets rallied in November as inflation rates subsided a little and the US Federal Reserve began to talk of lower interest-rate hikes from hereon.  Financial investors are hoping that the Fed is set to ‘pivot’ from tightening monetary policy (i.e. reversing its policy interest rate hikes and stopping selling back its stock of government bonds to reduce liquidity).

But financial markets are probably getting ahead of themselves.  That was made clear by speeches from both the head of the Fed, Jay Powell and the head of the ECB, Christine Lagarde.  Both said that they were determined to crush inflation until it returned to their target rates of 2% a year.  In a speech last week Powell summed up his policy in the ‘battle against inflation’.  He noted that the 12-month personal consumption expenditures (PCE) inflation rate – the inflation measure that the Fed mostly follows – was still at 6%.  And stripping out energy and food prices, the core rate was still around 5%, with no indication of any significant fall ahead. .....

...... Indeed, the world economy is not only not returning to the pre-pandemic trends in real GDP growth, investment and employment (which were weak enough), but worse, it is heading into a new slump.  The business activity indexes (PMIs) in most of the major economies are at ‘contraction’ levels (ie under 50). 


  • Is US employment data hot, ‘goldilocks’, or ‘cold’?
  • Have you been inundated by calls and messages with the question, “But have you seen the details of the Household Survey?”
  • Is the Fed right to keep aggressively hiking?
Summary: The US labour market is slowing down despite headline grabbing low unemployment rate and high wage growth rate. The recent details underlying this data show the total number of people employed growing below trend, fewer hours worked and lower quits rate. As a result, the growth rate of total earnings is also going down, the effect being a lower share of national income going to labour and total consumption as a share of GDP stagnating. All this should make the Fed further re-evaluate its aggressively hawkish interest rate policy.

.......... OK, that’s more than I wanted to write regarding the Household Survey. The rest of the note will show why the US employment situation is actually weakening even taking the Establishment Survey as a base.

The three variables of employment

There are three aspects of employment in general as far as assuaging how hot the economy is doing: wages, people employed, and hours worked, i.e., we need to follow this sequence, purchasing power->consumption->GDP) Basically, one needs to know the full product of Wages X Total Employment X Hours Worked (assuming, of course, that wages are per hour worked; not all jobs pay per hour, but those that do have actually increased at the expense of the others – see some of the links above which discuss the prevalence of part-time jobs and multiple job holders).

The economy can be hot even when wages are flat, or even declining, but there are more people entering the workforce or there are more hours worked – there are multiple combinations among the three variables producing various results. The point is to consider all three variables. .......

....... Note, average hourly earnings are still elevated, hovering at previous peaks but this is hardly a reason for the Fed to get more worried about, especially after already delivering the fastest interest rate hiking cycle in recent memory.

In fact, quite on the contrary. Despite all the excitement about the rise in wages, the share of national income going to workers has been on a decline, with the post-Covid spike now quickly reversed. We are back to the familiar territory of the low range post the 2008 financial crisis which is also the lows since the mid-1960s. .....

Bottom line: you do not need to believe in conspiracy theories about Household Survey vs Establishment Survey labour data inconsistency to conclude that the US labour market is far from tight. If anything, it has already started to slow down. Do not be confused by headline numbers of high wage growth rate and low unemployment rate, look at the overall employment picture taking into account trends in overall total compensation. 



History will record that public policy in the Covid era was extraordinarily bad. Lockdowns, school closures and mask mandates were not only ineffective, they exacted a huge toll in overall health, human suffering, learning loss, and economic damage. As we now know, Sweden, virtually the only country to eschew these policies, experienced the lowest excess mortality rate in the world and the healthiest economy.

Back in April/May of 2020 I predicted that "the shutdown of the US economy would prove to be the most expensive self-inflicted injury in the history of mankind." I believe I have been fully vindicated on that score.

In an attempt to mitigate the economic damage of these policies, many countries resorted to massive transfer payments designed to make up for job and earnings losses, and to shore up their economies. The U.S. was arguably the leader among nations in this regard. Sadly, as the dust settles we now see that massive transfer payments were the direct cause of the biggest surge in inflation since the inflationary 1970s. ......





Conventional wisdom says that an inversion of the Treasury yield curve is a good predictor of a forthcoming recession. Today the yield curve is more inverted than at any time since the early 1980s, so many are saying that means the chances of a recession are pretty high. The curve is strongly inverted because the bond market figures that a recession will force the Fed to reduce short-term rates in the future, but not immediately—in fact the market expects at least one more tightening of 50 bps and possible another within 4-5 months.

I've discussed this subject many times here on this blog, and I've tried to make the point that while an inverted yield curve has indeed preceded every recession, so have other indicators: e.g., very high real yields, high swap and credit spreads, and rising unemployment claims. None of those other indicators are flashing recession signals right now. .....



.... The OECD’s recently released flagship annual forecast foresees “a significant slowdown” for the global economy in 2023, decreasing to 2.2%, and then a “little bit of a rebound in 2024” to about 2.7%. For the United States economy, which has been relatively sheltered from the crisis up until now, the outlook is even more grim. The OECD projects that the U.S. economy will grow by just 1.8% this year (compared to 2.2% for the global economy), and a paltry 0.5% next year before ‘recovering’ slightly to achieve a lackluster 1% growth in 2024. We’re clearly headed toward a “brutal economic squeeze” that will be a major stress test for Europe, its allies, and its enemies.













  
Reflexive processes tend to follow a certain pattern. In the early stages, the trend has to be self-reinforcing, otherwise, the process aborts. As the trend extends, it becomes increasingly vulnerable because the fundamentals such as trade and interest payments move against the trend, in accordance with the precepts of classical analysis, and the trend becomes increasingly dependent on the prevailing bias. Eventually, a turning point is reached and, in a full-fledged sequence, a self-reinforcing process starts operating in the opposite direction. ~ George Soros

In this week’s Dirty Dozen [CHART PACK], we look at 2023 hot takes and Top 10 Trade ideas, pore over the growing body of evidence that we’re in the midst of a significant regime change (from Benign to Vicious), discuss some setups in commodities and small caps, and more.
  1. BofA’s 2023 Outlook summary is below. I agree with much of their take, which makes me uncomfortable. Though I do disagree with them on recession timing. I think it’s an H2 23’ affair, as the Household savings buffer keeps the economy humming a bit longer than most expect. 
  2. .....



… we show Treasury 30yr yields in a weekly chart to highlight how ~3.50% may be a similarly-derived resistance for 30's- as it is for 10's at the same level. Note too that weekly momentum (lower panel) still solidly favors lower rates which is why we suggest above that an extension of the rally through year end may be likely. The price momentum winds are at the back of bonds, for sure.







While recent accounts have focused on the erosion of real wages with high inflation, what is true is that average real wages in the private sector, and amongs the lowest paid segment, leisure and hospitality workers, has risen since 2020M02.


Europe will inflict more damage on its own economy than Russia's

....... History will surely look back on the great European energy crisis of 2022-23 as one of the strangest historical phenomena on record. The Europeans have voluntarily destroyed their economies to impose sanctions on Russia that are having no real impact on their target. As the winter cold sets in, we would be well-advised to change course.



Quotes and Tweets of the Week:

Bernstein: long-term Treasury yields tend to peak well before the rate hiking cycle concludes. Since the Fed began targeting the Fed Funds rate in 1982, on average, 30-year Treasury yields have peaked 3 months before the Fed reaches the terminal rate (Table 1). Further, on average the Fed hikes rates 133bps more after the 30-year yield peaks. The 30-year yield also tends to peak at a time when inflation is still near cyclical highs for that period, economic growth is slowing, and earnings are about to turn negative. This sounds awfully familiar to today’s macro environment.

Major: "Our key 10-year US Treasury forecast is 2.50% for end-2023 and 2.0% for 2024, significantly below today's level:"

Major: "Higher yields mean that fixed income investors can reasonably expect to recover more of their 2022 losses... Our key 10-year US Treasury forecast is 2.50% for end-2023 and 2.0% for 2024, significantly below today's level"

Alf: Powell wants Fed Funds 1%+ above core inflation.
So that means Fed Funds ~5% while we wait for the most lagging indicator in the entire macro universe to come down.
As respectable as a monetary policy stance as pineapple on Neapolitan pizza.





Charts: 
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Vid Fare:






(not just) for the ESG crowd:


.... “Humanity has become a weapon of mass extinction and governments must end the “orgy of destruction”, the UN secretary general, António Guterres, said at the beginning of the meeting. .........

Tariq Fancy was the chief investment officer for ‘sustainable investing’ at BlackRock, which is the most important institutional face of the claim that ESG investing has an important role to play in helping the environment, promoting the social good, holding the corporate world accountable, and so on.  Fancy thinks the ESG project is intellectually bankrupt and is damaging.  “In my role at BlackRock, I was helping to popularise an idea that the answer to a sustainable future runs through ESG and sustainability and green products, or in other words, that the answer to the market’s failure to serve the long-term public interest is, of course, more market.  A bit like the NRA’s traditional answer to mass shootings and related concerns around public safety — the answer is more guns.” ....


Emergency moves to end energy dependence on Russia represent a victory for the gas lobby’s plans to lock Europe’s biggest economy into the global market for liquefied natural gas, campaigners warn




A four-day workweek would be one easy way to cut skyrocketing commercial energy consumption.



Other Fare:




Pics of the Week:



A visual tour of unfolding threats and desperate attempts to reverse species' declines.




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 [Everyday Life] Fare:







Unsustainability / Climate Fare:


You may be aware that our food industry is heavily dependent on fossil fuels, to the point that it takes about 10 kcal of energy input to deliver 1 kcal of consumed food. The enormous energy multiplier is due to extensively mechanized plowing, harvesting, processing, and delivery of food; fossil-fueled fertilization (via methane feedstock); refrigeration and preparation; then of course food waste. ........




***** Michaels: The Illusion of Debate

I want to disclose a couple of facts regarding the constant focus in many people's minds of what is considered healthy debate about "renewable," "clean," "green," and "sustainable" energy, electricity, technology, and/or products and services. Those labels are marketing terms, not reality. In other words, they encourage people to buy into these products and services thinking that they are being mindful when in reality they are only continuing the same system that brought the destruction they are trying to prevent in the first place. Buying solar panels, wind turbines, hydroelectric dams, EVs, and other so-called "clean" devices only continues the system of industrial civilization that is causing the destruction of life on this planet. These devices do not reduce carbon emissions but actually INCREASE them through Jevons Paradox. Reducing emissions REQUIRES reducing ecological overshoot, which requires reducing technology use, period.

Human aversion to loss prevents society from gaining grand scale cooperation to reduce technology use. Those with money and power will always work to undermine taking the correct measures to reduce ecological overshoot.........

... For those who just joined my blog and this is your first article, I have some bad news for you. Please visit these three articles here and here and here for more info. Those articles will help you get up to speed on the situation and this one is the real kicker that will help you see the reality of where all this is headed. ......

.... Way too many people still don't comprehend that predicaments don't have solutions, they have outcomes. ......



....... As insects disappear, “we’re losing the limbs and the twigs of the tree of life. We’re tearing it apart. And we’re leaving behind a very simplified and ugly tree.”






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



extreme low fertility persists and mRNA vaccines look more and more like the culprit




Link to the Open Letter & Evidentiary Document sent to the New Zealand Prime Minister and all Ministers: COVID-19 negative vaccine effectiveness and harm evidence in New Zealand and overseas (Results, Call to Action)

Dear Rt Hon Jacinda Ardern, Prime Minister, Hon Andrew Little, Minister of Health, Hon Dr. Ayesha Verrall, Minister of COVID-19 Response, and Hon Peeni Henare and Hon Aupito William Sio, Associate Ministers of Health

In this Open Letter and evidentiary document, I share my research results on overseas government and Ministry of Health (MoH) COVID-19 vaccine surveillance and pharmacovigilance data indicating irreparable vaccine-induced harm. Furthermore, I share important evidence that SARS-CoV-2 originated from gain-of-function research, remind you that no evidence exists for an animal-to human origin, and highlight that its potential source lay beyond Wuhan, China. A series of requests for investigations are made below linked to this evidence, including the statistical biases evident in the Ministry of Health and other healthcare agencies’ calculable unvaccinated COVID-19 case rates. These biases essentially eliminated the negative vaccine effectiveness harm signal from ready public view.



Tweets & Quotes of the Week:

Rigger: Last year’s “winter of death for the unvaccinated”, was so bad that there just aren’t any unvaccinated people left in the US. The latest CDC stats showed they all died, horribly, and sometimes twice, of covi-omni-ebo-flu, and that if you take the new, even better Goo, it’s 3,567% effective at protecting Pfizer against penury. Except if you’re a mouse. If you’re a mouse, you’re fucked. It’s been nice knowing you. And so, once again, we wish all our friends in the US a very Merry Carditis.



CO-VIDs of the Week:

This presentation synopsizes all of the issues that have been discovered in the last two years and I would highly recommend sharing it with those who are on the fence about the vaccines.


Reason Magazine just published this superb 15-minute documentary film on AB 2098 and our lawsuit challenging it, with interviews from Jay Bhattacharya and your scribe.







Anecdotal Fare:

Matt Lost Everything -- But Fulfilled his Duty to Warn His Patients





COVID Corporatocracy Fare:

It seems FDA is not even trying to pretend it is following any of its standards, let alone following the Science



My greatest frustration over the past three years has been the promotion of profound censorship of experts who hold a science-based opinion that differs from messaging parroted by the power brokers that be. This has contradicted the long-held tenet of having open discussions about the full spectrum of ever-emerging science. It is in the best interest of the public to promote public, respectful discussions between experts. Real-time interactions between experts can be extremely revealing in terms of where the real depth of knowledge lies. ............

.............................. Let’s face it, people became downright abusive of those who held legitimate but dissenting viewpoints that, in many cases, have now proven to be correct (and many others may still be proven correct). ..........


My chronology of the Disinformation tactics deployed to paint ivermectin as an ineffective horse dewormer against Covid. Largely taken from the ever-evolving keynote lecture I give at conferences




Back to Non-Pandemic Fare:

War Fare:


This evening news came that Victor Orban has blocked the EU appropriation of 18 billion euros in financial assistance to the Kiev regime for 2023.  This one man stood up against the 26 conformists and cowards who head the other EU Member States.  Orban took this remarkable step, knowing the price to be paid for his insubordination, namely Brussels’ putting a block on Hungary’s 5.8bn euro worth of Covid-19 recovery funds. Nonetheless, he pursued the logic of his months-long attacks on EU policy with respect to the Ukraine crisis as being utterly mad, leading Europe to economic suicide through its Russia sanctions.

One man against 26: what does that tell an unbiased observer? It suggests unbelievable courage of one’s convictions.  And what does The Financial Times, my marker for Western mainstream media, have to say about this display of courage?  It offers its readers the following:

Russia expert András Rácz, of the German Council on Foreign Relations think-tank, described the veto as a “low point in Hungarian foreign policy”.

“Low point”?  On the contrary, I rate this as the high point of Hungarian foreign policy, which is built upon the interests of the Hungarian nation, not on servitude to the United States and preservation of American global hegemony at the expense of all the rest.

Orban’s principled action has to be placed alongside that of Turkish president Erdogan, who also has called out the rank stupidity of European policy with respect to the Ukraine conflict, who has gone directly against the United States on questions of military procurement, and who is holding up NATO accession of Sweden and Finland to get satisfaction of his own demands relating to the political stability and security of his country.  The comforting message in all this is that the world has not gone entirely mad and reason may yet prevail against vile propaganda and the ‘go along, get along’ thinking. 

If I have to find some equivalent to Victor Orban’s brave stand in modern American political history, it would be the extraordinary stand of Senator from West Virginia Robert Byrd in eloquently opposing George Bush the Younger on the coming U.S. invasion of Iraq in late 2002, early 2003. This is the pursuit of Veritas that gives me hope. If only my alma mater would take note!


OUN-B and the 'Capitulation Resistance Movement' (Pt.1)


Some people never grow up.




Vid:

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Other Geopolitical Fare:

US strategy to blow up Taiwan’s semiconductor fabs to deter China might do more harm than good


The US government’s China Initiative sought to protect national security. In the most comprehensive analysis of cases to date, MIT Technology Review reveals how far it has strayed from its goals.



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


Michael Parenti has said that “Poor countries are not ‘under-developed’, they are over-exploited.” The west tends to look down on the rest of the world for reasons that either directly or indirectly relate to the poverty in those nations, which is silly because that poverty comes largely from western theft and exploitation. It’s like mugging someone and then scorning them for their empty wallet.



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


Conservatives have finally woken up to the importance of changing the education system. Opposition to teaching children left-wing dogma on race, gender, and sexuality unites the Right, but politicians have historically been expected to do little about the problem and have delivered even less. Ron DeSantis seems like an exception, and has developed a reputation for “getting things done.” Given that betting markets as of this writing favor him to win the Republican nomination in 2024, this essay seeks to investigate how big of an impact DeSantis has had in one policy area: remaking K-12 education through intervening in school board races. Even if he doesn’t end up on a presidential ticket, any successes that have been achieved in Florida could potentially be a model for other governors going forward.

I focus on K-12 education because this is an easy political issue that I think all sensible people should be united on. If you’re going to select a sanitation commissioner, his views on gender identity matter less than his technical competence. This is the values-competence tradeoff that populists and social conservatives should worry about, even if they often don’t. Education is not the same, as it’s basically glorified daycare, so the most rational things for parents to worry about are that the schools stay open, their kids are not smothered and degraded behind masks, and they don’t teach them crazy ideas about topics like race and sexuality. Conservatives have been on the right side of each of these issues, so anything they can do to remove wokes and covid hysterics from power and replace them with anti-wokes and non-covid hysterics is unambiguously good. And in this area, DeSantis appears to have had an unusual level of success. ...



Long Reads / Big Thoughts:




Other QOTW:

Haiphong: The US is the problem in Ukraine.
The US is the problem in Taiwan.
The US is the problem in Yemen, Haiti, Syria, and dozens of other conflicts.
The US is an EMPIRE. This isn't whataboutism, just the facts.

Webb: Once you realize that Republicans and Democrats are competing factions of the mafia, American politics makes a lot more sense

Introverts Memes: Once an introvert gets pissed, they're done. I mean for real. There's no coming back. They're done with all the thinking. All the pros and cons. All the past & future. All the actions & consequences. You can try everything. Beg & cry. Not gonna change. It's over. Go home.

Bloom: Harsh Truth: Most people don't really care about you.
The Spotlight Effect says that we overestimate the degree to which other people are noticing or observing our actions.
This is liberating—stop worrying about what others think, be yourself, and live according to your values.

Toby: A little bit of sunlight is painful to those living in the dark. The people who:
☢️ created a weaponized chimera virus;
🚩 blocked access to safe & effective medicines;
☠️ forced you to take the most toxic shot ever invented;
🤥 while running the largest censorship, propaganda, & surveillance system in history...
🤡 want you to think that “Elon Musk is a threat to democracy!?”



Satirical Fare:




Pics:



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