More ‘Transitory’ Non-flation: Child Care Costs Are Soaring

As the middle class erodes in the US, we have pointed out the many things that have continued to financially squeeze what is left of The American Dream out of the average joe, from rent becoming increasingly unaffordable to healthcare premiums exploding higher. We now have another expense that is taking a toll financially on the average American family, and that is child care.
Child care expenses have climbed nearly twice as fast as overall prices since the recession ended in 2009 the WSJ reports, and coupled with lackluster wage gains, families with young children are finding themselves stretched financially.
As the WSJ points out, the cost of child care is so high that in 41 states, the cost of sending a 4 year old to full-time preschool exceeds 10% of a median family income, and full-time preschool is more expensive than the average tuition at public college in 23 states. Care for an infant even costs more than the average rent in 17 states.
Since the recession ended in 2009, the cost of child care and nursery school has increased at a 2.9% annual average, outpacing overall inflation of 1.6% during that seven year period.

This post was published at Zero Hedge on Jul 2, 2016.

The Week in Review: July 2, 2016

Happy Independence Day weekend from everyone at the Mises Institute. It’s fitting that in the week leading up to our American celebration of secession that we have been able to applaud Britain for their own separation from a legislative body that Angel Merkel was forced to admit is about political control, and not free trade. The more the bureaucrats in Brussels try to make the UK pay for Brexit, the more they justify British independence.

This post was published at Ludwig von Mises Institute on 07/01/2016.

Morgan Stanley Explains One Big Reason Why Central Planners Can’t Generate Any Inflation

As China continues to weaken the Yuan, it’s important to note the impact that it has on the inflation expectations of other economies, namely the US, Japan, and Europe. As central planners aggressively try to boost inflation, and in the meantime have created a stunning $11.7 trillion in negative yielding debt, China could be hindering that effort quite a bit.
As Morgan Stanley points out, CNY has weakened over the last year or so versus the Euro, Yen, and Dollar and is helping to explain the continued undershoot of inflation in Japan and Europe – and we would add in the US.
From MS
The RMB decline has materialized mainly against the EUR and even more so against the JPY. This may explain the continued undershoot of inflation in Europe and Japan.

This post was published at Zero Hedge on Jul 2, 2016.

“The Loss Of Central Bank Credibility Is The Biggest Tail Risk” BofA Warns Brexit Threat Remains

Despite the rapid central-bank-inspired decline in short-term risk momentum, there is no doubt in BofA’s mind that the world is a riskier place following the UK’s decision to leave the EU. Hence, they warn, the chances for additional critical stress events as Brexit unfolds remain high, and given the critical role of central banks in supporting markets in recent years, a loss of credibility remains the biggest visible tail risk.
Global Financial Stress (GFSI) remains high… but, as BofA’s Abhinandan Deb exclaims, the decline in some stress measures within GFSI (particularly short-term risks) has been remarkably fast following the UK’s vote to leave the EU.
In fact, short-term volatility in both European and US equities fell at speeds only expected if the UK had voted to “Remain.”

This post was published at Zero Hedge on Jul 2, 2016.

Rail Traffic Declines To Recession Levels (Trains Got The Disappearing Railroad Blues)

This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
To paraphrase Arlo Guthrie from the great Steve Goodman song City of New Orleans, ‘These trains got the disappearing railroad blues.’
Rail freight carloads (shipments) have fallen below the depths of The Great Recession and are seemingly disappearing.

This post was published at Wall Street Examiner by Anthony B. Sanders ‘ July 2, 2016.

More Trouble for the EU – Austrian Election Declared a Fraud

Austria’s Constitutional court has ordered that the May’s presidential election be completely annulled. A new election must be held because of ‘particularly serious cases’ of voting fraud that was detected in the vote. If the election is not rigged, then we may have another country seek to exit the EU or give them a good scare. There are some currents moving under the surface in the EU. The German Finance Minister Mr Schuble really wants a treaty between the EU and the UK covering trading rules and other regulations that would restrict Britain from gaining access to the EU’s internal market. His hard-line approach is designed to deter other European countries from leaving the EU. His view, according to sources, he wants to punish Britain to ensure there are no incentives for other member states when renegotiating relations.
However, Mr Schauble also wants to use BREXIT to begin a reform process in the EU for he wants to change the structure for Germany. He too wants to eliminate the EU Commission and introduce a new structure that would then oversee debts, stability and growth of all members and would have greater control to step-in and reject member states’ budget plans. In reality, he was direct control, however, he seems to also want Germany to have some sort of final say on the financial plans of all countries within the Eurozone.

This post was published at Armstrong Economics on Jul 2, 2016.

Brexit And Silver Update

One week on from the United Kingdom shocking the world by voting to leave the European Union, one would be not be lacking in predictions of doom and gloom across the political and economic board. As one who voted to leave the nascent European Superstate, the oft (mis)quoted words of Benjamin Franklin came to mind when he suggested that those who trade liberty for security deserve neither.
The Pound and British stock markets promptly dived, as did practically all the major stock indices. Reassuring words from the Governor of the Bank of England on currency intervention and possible QE played their part as did the actions of those seeking a bargain in cheaper stocks. At the time of writing, the markets are bouncing back as the realisation that nothing has actually happened yet dawns on investors.
The Prime Minister has to trigger Article 50 of the Lisbon Treaty to begin divorce proceedings and until then, nothing substantial will happen. This will involve at least two years of negotiation, during which time markets will respond as they perceive how the negotiations are proceeding. Crucial will be the negotiation regarding trade tariffs as that will have the biggest impact on the economy of both the UK and EU.

This post was published at SilverSeek on July 1, 2016 –.

So You Want To Run That Organic BeeEss Eh?

Facts trump emotions.
I have repeatedly pointed out that most of the “organic” craze is in fact a crock of crap; all it really does is vacuum your wallet, and is sold based on a false premise: The food is healthier and it’s better for the environment.
Neither is true.
The science says there’s no material difference on nutrition — or safety.
This applies to both vegetables/fruits and meats. While “organic” and “cage-free” animals may in fact enjoy more access to open space this does not necessarily translate into better health; in fact it can be the opposite because at the same time their exposure to pathogens, parasites and predation increases too.
Witness your kitty. The average lifespan for a housecat is about 15 years. Some more, some less, but that’s about right.
The average lifespan for an “outdoor” cat is five years.

This post was published at Market-Ticker on 2016-07-02.

What’s Next for Gold Prices After Their 25% Surge in Q2

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
Gold prices saw another week of gains thanks to the continuing fallout of the Brexit vote.
The building uncertainty around the Brexit has grown so much that it’s even flipped the odds of a Fed rate hike. Before the results showed Britain voted to leave the EU, traders expected at least one rate hike this year. Since then, those odds have dropped to nearly zero.
In fact, the odds of a rate cut before Brexit were 0%. Now it’s being assigned a probability of 10%, putting it ahead of a rate hike. What’s more, traders are pegging a 20% probability of a Fed rate cut at meetings later this year and into early 2017. That was unthinkable just a few weeks ago.

This post was published at Wall Street Examiner by Peter Krauth ‘ July 1, 2016.

Silicon Valley Snake Oil

Authored by Mark St. Cyr,
Years ago when I first began calling out what I deemed as ‘snake oil,’ it was mainly concentrated to what is now referred to as ‘the self improvement/motivation industry.’ Although I believe in (as well as instruct) in self improvement, as well as motivation (motivation being an internal discipline rather than an external) I have not been shy to criticize both the industry, as well as some of the players or constructs they employ.
I was one of the first to openly state the whole Left brain – Right brain mumbo jumbo was for the brain dead. All I’ll say is this; it didn’t win me any friends within the industry.
However, we now know that whole idea of ‘I’m a one-sided brain extraordinaire!’ has been dismissed as rubbish by the scientific community via the scientific method. It’s not a ‘consensus’ opinion. It’s a scientific fact as opposed to the pseudoscience which has perpetuated it.
Yet, that still hasn’t stopped Human Resource departments across the globe from buying some ‘New and Improved’ version as to force down gullets in meeting rooms everywhere as they increase the effectiveness of this dribble with slide after slide in a death by PowerPoint venue washed down with stale pastry and watered down coffee. But I digress.

This post was published at Zero Hedge on Jul 2, 2016.

Doug Noland’s Credit Bubble Bulletin: Greenspan on Bubbles

This is a syndicated repost courtesy of Credit Bubble Bulletin. To view original, click here. Reposted with permission.
Bloomberg’s Tom Keene (Monday, June 27, 2016): ‘If I take Paul Krugman and Alan Greenspan’s primal cry, ‘we want simple models.’ Is our solution now to think simple or is there a value to the complexity of globalization and the complexity of institutions? Which way should we turn now?’
Alan Greenspan ‘You want to have as simple a model as you can get that actually captures the complexity of the forces in play… The FRBUS (Federal Reserve Board US) model… that model works exceptionally well for the non-financial area… The financial model was awful. It captured nothing. It didn’t grasp what the issue is. And I tried to reproduce what I would do in ‘The Map and the Territory 2.0’… And I demonstrate what we have going – that we don’t measure correctly – are bubbles and their implications. Bubbles per se are not toxic. The 2000 bubble collapsed. We barely could see a change in economic activity. On October 19, 1987, the Dow Jones went down 23% in one day. You will not find the slightest indication of that collapse of that bubble in the GDP number – or in industrial production or anything else. So I think that you have to basically decide what is causing what. I think the major issue in the financial models has got to be to capture the bubble effect. Bubbles are essentially part of of the fact that human nature is not wholly rational. And you can see it in the data very clearly.’

This post was published at Wall Street Examiner by Doug Noland ‘ July 2, 2016.

Price To Sales Ratio – Another Nail In The Market’s Coffin?

Authored by Michael Lebowitz of 720Global.com (via RealInvestmentAdvice.com),
720 Global has repeatedly warned that U. S. equity valuations are historically high and, of equal concern, not properly reflective of the nation’s weak economic growth potential. In this article we provide further support for that opinion by examining the ratio of equity prices to corporate revenue also known as the price to sales ratio (P/S). At its current record level, the P/S ratio leads us to one of two conclusions: 1) Investors are extremely optimistic about future economic and earnings growth or 2) Investors are once again caught up in the frenzy of an equity bubble and willing to invest at valuations well above the norm.
Either way, the sustainability or extension of the current P/S ratio to even higher levels would be remarkable. What follows here is an exercise in logic aimed at providing clarity on the topic.
Before showing you the current P/S ratio in relation to prior market environments, it is important to first consider two related concepts that frame the message the market is sending us.
Concept #1 – Investors should accept higher than normal valuation premiums when potential revenue growth is higher than normal and require lower than average premiums when potential revenue growth is lower than normal.

This post was published at Zero Hedge on Jul 2, 2016.

Europe Has a Bigger Problem Than Brexit

This is a syndicated repost courtesy of Economy and Markets. To view original, click here. Reposted with permission.
The Dow dropped nearly 1,000 points (5%) and the London FTSE dropped 10% after the Brexit vote surprised the markets on June 23. After two days though, markets are marching back up again.
That’s just like markets on ‘crack!’ They react to political events, but totally miss the fundamentals.
Yes, Brexit is important. Years from now it will be recognized as the beginning of the end for the great Eurozone experiment.
It isn’t just about the renegotiations on trade agreements with Britain and initial slowing of GDP. It’s also about the threat that more countries will choose to exit the economic bloc. The euro and Eurozone have 40%-plus unfavorable ratings in polls in France, the Netherlands and Italy. That many areas within countries will break free of their overlord. And then this rush for nationalism will spread across the globe like wildfire.

This post was published at Wall Street Examiner by Harry Dent ‘ July 1, 2016.

Queen Urges “Keep Calm” As Scotland Seeks To Block Brexit

“If there is a way to stay in the EU, I am determined to pursue it,” proclaimed Scottish First Minister Nicola Sturgeon in an interview with Greece’s To Ethnos newspaper, noting that Scottish parliament is looking into legal grounds for a new referendum on secession from UK. This confirms JPMorgan’s base case that Scotland will vote for independence and institute a new currency at that point. Shortly after Sturgeon’s comments, The Queen made her first post-Brexit speech (ironically in Scottish parliament) urging Britons to “stay calm and focused,”pointedly noting “real leadership requires deeper and more dispassionate thinking in turbulent times.”
A nation divided…

This post was published at Zero Hedge on Jul 2, 2016.

“Central Bankers Have Lost Control” Grant Williams Warns “The Clock Is Ticking On The Dollar”

“I don’t buy gold, I own it… I buy it for what it does.. not what the price is” begins Grant Williams in this fascinating (and brief) interview as he explains the clock is clearly ticking on the dollar. History says that paper-based currencies will eventually fail.
It has now been 45 years since the US dollar became a completely paper-based currency. Gold, on the other hand, has been a preferred medium of global exchange for over 5,000 years. That makes gold the ultimate hedge against monetary collapse. Despite its long-term record of stability, gold as an asset class still makes up less than 1% of the average investment portfolio. Negative sentiment from the public and media is a key reason why gold continues to be under owned and mispriced.
As Grant Williams explained in the following interview with Mauldin Economics’ Jonathan Roth, ‘Every day, the picture is becoming more and more discernible It is not quite clear as yet, but it is getting there. The credibility of central bankers is slowly fading away.’


This post was published at Zero Hedge on Jul 2, 2016.

Kyle Bass Shares The “Stunning” Thing A Central Banker Once Told Him

If you ever wanted to get a look inside the mind of Kyle Bass, founder and CIO of Hayman Capital Management, here is your chance. In a wide-ranging discussion with Grant Williams, author of Things that Make You Go Hmm and co-founder of Real Vision TV, he shared his thoughts on position-sizing, China, the appeal of holding gold, central banking, interest rates – and much, much more.
Predictably, the one topic that got the most attention was China, where as widely known Bass has made his next “career” wager, expecting a substantial devaluation of the currency, a process which had stalled out in recent months but has once again picked up speed.
Looking at recent data, and specifically something we pointed out two weeks ago, Bass said the country’s $3 trillion corporate bond market is ‘freezing up’ amid rising defaults and canceled debt sales. ‘We’re starting to see the beginning of the Chinese machine literally break down.’

This post was published at Zero Hedge on Jul 1, 2016.