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Saturday, November 25, 2023

2023-11-25

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


Economic and Market Fare:

Declining response rates to official surveys raise the possibility that government and central bank officials have been making decisions based on flawed data.


********** Hussman: Soft Selling a Hard Landing

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Emerging risk of a U.S. recession
I’ve often noted that in every noise-reduction problem, uniformity matters. There is vastly more information in the common signal drawn from multiple sensors than there is in any single measure by itself. While we still don’t have enough data to anticipate a recession with high confidence, my view is that the sudden enthusiasm about a “soft landing” runs exactly opposite to the trend of the data. ......

It’s useful to recognize that the definition of a recession as “two quarters of negative GDP” is a rule-of-thumb, not the actual method by which recessions are dated. Remember, in every noise-reduction problem, uniformity matters. For the NBER, dating a recession is based on the depth, diffusion and duration of retreat across several measures of economic activity: mainly output, income, sales, and employment. ......


..... The difficulty here is that employment is among the most lagging of economic indicators. To obtain a sensitive measure of recession risk from employment-based measures, we have to go back to the idea of drawing information from “uniformity.” For employment, the best measures are those that capture subtle shifts in the labor activity: reduced demand for temporary help, increases in initial and continuing jobless claims, changes in the composition of the employed (for example, part-time “for economic reasons” because full-time work is unavailable), changes in the duration of unemployment, and declines in aggregate hours worked. ...


........ It’s true that valuations have strong implications for long-term, full-cycle market outcomes, but it’s incorrect to view those outcomes as short-term forecasts. Instead, they provide context about where investors stand within the market cycle. Based on prevailing market valuations, we estimate that poor total returns are likely for the S&P 500 in the coming 10-12 years, that equity market returns, relative to bonds, are likely to be among the worst in history, and that a market loss on the order of -63% over the completion of this cycle would be consistent with prevailing valuations and a century of market history. A few quick charts on these long-term, full-cycle risks. ...........


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… Some economists are already taking a victory lap because they didn’t forecast a recession and a recession hasn’t started yet. But we think they’re declaring victory too early. Some of them say that we never should have been worried about a recession while inflation fell because the surge in inflation was due to supply-chain issues, and then the reduction in inflation has been due to fixing those issues.

The problem with their theory is that they ignore the link between the surge in the money supply in 2020-21 and the inflation that followed, as well as the drop in money and the reduction in inflation this year. They think it’s a coincidence, but we think they’re going to get a rude awakening in the year ahead.


Credit-card utilization and delinquency rates are on the rise


We’re seeing too many trucks for too little freight



N-n-n-n-nineteen
Just in time to arrest the growing optimism that a recession has been canceled and not merely postponed, the Leading Economic Indicators extended their losing streak to 19 months. The LEI, which are administered by the Conference Board, smoosh together 10 measures that indicate the strength of the economy, ranging from jobless claims through the stock market to the bond market yield curve. Over time, it’s been one of the most reliable recession indicators there is. ........

..... Belief in a “Goldilocks” outcome is growing. For those who make arguments like this about the lack of precedents for an outcome, there is always the response that the pandemic created conditions unlike anything previously seen in the modern economy.

That said, the guideposts that worked in the past suggest that the plane is in for a bumpy landing.



................ We will get a business-cycle recession eventually because there always is a business-cycle recession eventually because it’s part of the business cycle. The question is when.

Why predictive models that used to work well are failing spectacularly with their recession predictions in this crazy economy will be the topic of a future brainstorming article here when I can wrap my brains halfway around it.



..... Economic data releases remain mixed, but overall, the US economy is holding up better than anticipated at the beginning of this year.

Consequently, market participants have embraced the central banks' rhetoric as accurate and anticipate that interest rates will remain elevated for an extended period. Market participants expect only gradual rate decreases from the Federal Reserve and the European Central Bank in the second half of next year.

........ It seems that market participants may be underestimating the potential deterioration of the economic situation in the Eurozone.

... My perspective remains that the US is nearing a recession and probably will enter one in the current quarter. Empirical data supports the idea that the US yield curve is a reliable recession indicator.

... So far, the data sends mixed signals, leading market participants to interpret things positively for financial markets. This interpretation is driven by the assumption that the Fed has concluded its interest rate hikes. Furthermore, as mentioned earlier, the prevailing consensus suggests a gradual economic slowdown in the coming year, though nothing overly severe. This could imply that the stock market will likely continue to perform well or, to put it differently, may still experience further gains. It's essential to note that when the stock market struggles to ascend and becomes range-bound, that signals a time to adopt a more defensive stance, even though sentiment has recently become somewhat stretched.


Ed Rooney: Are you also aware, Mrs. Bueller, that Ferris does not have what we consider to be an exemplary attendance record?

Katie Bueller: I don't understand.

Ed Rooney: He has missed an unacceptable number of school days. In the opinion of this educator, Ferris is not taking his academic growth seriously. Now I've spent my morning examining his records. If Ferris thinks that he can just coast through this month and still graduate, he is sorely mistaken. I have no reservations whatsoever about holding him back another year.

Katie Bueller: This is all news to me.

Ed Rooney: It usually is. So far this semester he has been absent nine times.

Katie Bueller: Nine times?

Ed Rooney: Nine times.

Katie Bueller: I don't remember him being sick nine times.

Ed Rooney: That's probably because he wasn't sick. He was skipping school. Wake up and smell the coffee, Mrs. Bueller. It's a fool's paradise. He is just leading you down the primrose path.

Katie Bueller: I can't believe it.

Ed Rooney: I've got it right here in front of me. He has missed nine days...
What happened next in Ferris Bueller’s Day Off was priceless, as Mr. Rooney watched Ferris’s absences fall from nine to two on his computer screen. If only the real world operated as flawlessly.

A different kind of ‘nine’ came into focus as we dissected last Friday’s October state jobs data via the Bureau of Labor Statistics (BLS). Around a month ago, with a numerator of 42 and denominator of 51 (including Washington D.C.), we noted that 82% of states had rising month-over-month (MoM) unemployment rates in September. One more month of data in hand and we now tally 50 states with rising unemployment rates MoM, or 98%.

The pandemic aside, since the state unemployment series’ 1976 inception, there have been nine other such instances -- eight of them were during the recessions of 1980, 1981-82, 2001 and 2007-09, while the ninth occurred two months afterthe 2001 recession (top left table).

In theory, we call the Feather a day right here and now. In practice, 2023 has rewritten the rule book. We’ve lost count of the missives we’ve written citing not leading indicators to recession, but rather post-recessionary signposts. To wit, with a hat tip to Eric Basmajian, yesterday’s 19th consecutive negative Leasing Indicator Index (LEI) print track record has only been surpassed in the Great Financial Crisis and the brutal recession of 1974. For good measure, Eric added that the Conference Board’s recession trigger is marked when the LEI’s rate falls below -4.5%; October’s -7.3% marked the 13th in a row beneath this threshold.

Looking back at what’s been a trying year, if it wasn’t for the constancy of the BLS’ negative revisions to the data – private sector payrolls have been revised down for nine months running -- we’d have long since moved on from being dismal to mad scientists.




Quotes of the Week:

Kronawitter: I continue to see the rationale for both a soft landing and a recession, and given we are in unprecedented territory in terms of economic context I don’t think anyone knows. But with the benign case mostly in the price now, I prefer to observe data and market internals over the coming weeks from the sidelines, rather than take the risk of an uncomfortable surprise


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Geopolitical Fare:


........ In other words, the White House is worried that a brief pause in the Israeli massacre of civilians in Gaza will allow journalists to report the truth about the Israeli massacre of civilians in Gaza, because it will hurt the information interests of the US and Israel. They are worried that the public will become more aware of facts and truth.

Needless to say, if you’re standing on the right side of history you’re not typically worried about journalists reporting true facts about current events and thereby damaging public support for your agendas. But that is the side that the US and Israel have always stood on, which is why the US empire is currently imprisoning Julian Assange for doing good journalism on US war crimes and why Israel has a decades-long history of threatening and targeting journalists. .....

Both the US and Israel have been attacking the press in this way because their governments understand that whoever controls the narrative controls the world. They understand that while power is controlling what happens, ultimate power is controlling what people think about what happens. Human consciousness is dominated by mental narratives, so if you can control society’s dominant narratives, you can control the humans. ....

....... The US empire backs Israel for the same reason it backs most of the world’s dictatorships: because a globe-spanning empire can only be held together by nonstop violence and tyranny. Israel and other US-aligned states in the middle east are like the chair and the whip of a lion tamer — weapons used to violently abuse the populations of a crucial geostrategic region into compliance. It suits the empire perfectly to have a nuclear-armed government which exists in a constant state of war in the middle east governed by officials who speak English with American accents and interests which are reliably in alignment with those of the United States.

Stuart Seldowitz is not an aberration but a perfect manifestation of all this. This is the sort of mind which keeps the empire marching along from administration to administration no matter who Americans elect. This is the sort of mind which keeps the weapons flowing, the blood pouring, the fossil fuels burning, and the terrified screams which power the imperial machine continually erupting into the night sky.



...... In truth our world is ruled by tyrants who do whatever they want to do, and their actions are justified by the mass media who function as propagandists for the US-centralized power structure. Pundits weep and rend their garments over Russian crimes while defending, minimizing and obfuscating the far greater crimes of Israel, because Israel is a part of that globe-spanning power structure while Russia is not.

I have never been particularly interested in defending the Russian government. What I am interested in is opposing the murderousness of the globe-spanning power structure I live under, and all the lies, double standards and hypocrisy used to keep the murders going.


How did the Left go from defending the free speech rights of neo-Nazis to demanding censorship, falsely accusing their opponents of being fascists, and seeking their incarceration?



.... Canada has found itself sucked into a series of perilous foreign policy dilemmas that have left it struggling to balance its values, interests and identity. In particular, Canada now finds itself at loggerheads with both India and China — the two most populous nations and the rising powers of this century. ...







Science Fare:

Sitting alongside the neurons in your enteric nervous system are underappreciated glial cells, which play key roles in digestion and disease that scientists are only just starting to understand.


Intermittent fasting regulates biological time and improves disrupted sleep in an Alzheimer’s disease model.







......... We gave people a vaccine against a virus, that leads their bodies to get stuck on the wrong kind of immune response. This made the virus much more potent than it would otherwise have been and prevented it from dying out. The sort of immune response that our bodies now deploy against this virus rapidly becomes exhausted. Hence we see elevated levels of T cell exhaustion in the whole population.

I have spend a lot of effort, to educate people about this.

When you leave billions of people stuck with the wrong kind of immune response, you encourage a virus like this to mutate around that immune response. One way for this virus to achieve this, is by focusing more on infecting our brains, where our antibodies generally can’t reach due to the blood-brain barrier.

So now we have very neurovirulent SARS2 viruses constantly reinfecting us and depleting our immune systems.

In a future post I want to look more at how this problem is going to evolve in the years ahead, but I wanted to show you what their stupidity has caused.


Other Fare:



Are Studies Labelling Dissenters as 'Stupid' Undermining Democracy?

In an era where divisive political and social issues abound, a disturbing trend is emerging in the academic world. Recent studies appear to be aligning cognitive abilities and education levels with specific political and health-related beliefs, seemingly branding those who disagree with mainstream narratives as less intelligent or educated. This phenomenon raises a crucial question: Are such studies a subtle form of intellectual snobbery that undermines the very essence of democratic discourse?

Information is becoming as ubiquitous as the air we breathe but a troubling paradox is emerging: As our access to diverse viewpoints expands, the tolerance for differing opinions seems to be narrowing. Those who challenge the prevailing narrative are often not just disagreed with, but openly derided. But this isn't just a matter of hurt feelings or bruised egos; there's an insidious layer to it, one where academic studies are wielded as weapons to 'prove' the intellectual inferiority of those who think differently.



Almost everything that almost everyone says about meat-eating is stupid. Not everyone certainly, but most people. Usually, this isn’t because they’re dumb people but just because they haven’t thought about it much. But this is quite a screwed-up state of affairs. If you do something multiple times per day that millions of people think is seriously immoral—the worst thing you’re doing by far—then you should think about it for more than 5 minutes. Unfortunately, most people don’t do this, largely because most people are motivated by social conformity and use morality as a cudgel to favor the things that they feel passionately about. Most people care very little about morality in the abstract.

The worst crimes in history generally take place because they’re out of sight and out of mind. Ordinary Germans had heard stories about the terrible things going on in the Nazi death camps and had heard discussions of various massacres. Still, the worst excesses of them were things that they just didn’t spend much time thinking about. So if we you want to know where our society is going wrong, look to the places that everyone sort of knows about in the back of their minds but that almost no one seriously investigates. Two issues that are like that: donating to charities that can save huge numbers of lives and refraining from paying for the flesh of animals who lived their entire lives in unfathomable agony.

People find it deeply offensive when one compares factory farming to other atrocities like slavery and the holocaust. Now, this is in large part because people don’t like to be told that they’re complicit in one of history’s greatest crimes. But if holocaust comparisons are ever fair, then they’re fair here—billions of being are been kept in confinement to be killed later, often by gassing, often in ways that are far worse than gassing. If this was happening to humans, we’d call these death camps and call the practice a holocaust.

Now, perhaps you think that animals don’t matter much—that we can torture them for trivial pleasure and it isn’t a huge deal. But that requires a justification, and no justification that I know of that is remotely plausible has ever been given. Most of the justifications, such as the claim that we can torture animals to eat them because they’re not smart, would imply that it would be okay to reopen Auschwitz and Treblinka as long as we filled them only with the most mentally disabled.

Given that 92.2 billion land animals are killed every year, as long as you think that the death of an animal after it was tortured for its entire life is even slightly bad, factory farming will come in as one of the worst crimes in human history. .....

................ If you stop eating meat but start torturing your dog, total animal suffering will decrease. So if it’s wrong to torture a dog, then it’s also wrong to pay for meat, which comes from animals who lived in conditions of extreme agony. Eating meat causes much more animal cruelty than merely beating a dog so if beating a dog is wrong, so too must eating meat be wrong.

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