12/8/17: Some growth optimism from the Russian regional data

An interesting note on the latest data updates for the Russian economy via Bofit.
Per Bofit: “Industrial output in Russian regions rises, while consumption gradually recovers.” This is important, because regional recovery has been quite spotty and overall economic recovery has been dominated by a handful of regions and bigger urban centres.
“Industrial output growth continued in the first half of this year in all of Russia’s eight federal districts,” with production up 1.5 – 2% y/y in the Northwest, Central and Volga Federal Districts, as well as in the Moscow city and region. St. Petersburg regional output rose 3-4% y/y.
An interesting observation is that during the recent recession, there has been no contraction in manufacturing and industrial output. Per Bofit: “Over the past couple of years, neither industrial output overall nor manufacturing overall has not contracted in any of Russia’s federal districts. Industrial output has even increased briskly in 2015 – 16 and this year in the Southern Federal
District due to high growth in manufacturing and in the Far East Federal District driven by growth in the mineral extraction industries.”

This post was published at True Economics on Sunday, August 13, 2017.

Is The Fed On The Verge Of Losing Control?

Dear Black Bag Confidential Reader,
In the coming weeks, former SEAL sniper Cade Courtley and special operations physician Omar Hamada will each take a turn answering your most pressing survival inquiries.
So send in your questions! Shoot an email to SPYfeedback@LFB.org and be sure to specify who your question is for.
Now let’s take a look at this week’s reader mail.
How do you feel about signage? Apart from a camera, ‘ADT’ and ‘beware of dog,’ do you want to advertise ‘insured by Smith & Wesson’ or ‘trespassers will be shot, survivors will be shot again’?
– Nils M.
Signs like the ones you mentioned, Nils, essentially broadcast that there are firearms on the premises – which is both good and bad. Of course, this kind of sign would probably make a criminal think twice before breaking into your home in the middle of the night, because they will assume you are armed.

This post was published at Laissez Faire on Aug 12, 2017.

Is The Yellen Fed Planning To Sabotage Trump’s Presidency?

Authored by Stefan Gleason via Money Metals Exchange,
The Federal Reserve can make or break a president.
Monetary policy influences all financial markets as well as the cycles in the economy. No president wants to have to run for re-election when the stock market and economy are turning down.
Recall that President George H. W. Bush was sitting on sky-high job approval numbers in 1991 and was expected to coast to victory in his 1992 re-election bid. But then the economy swooned toward recession, giving Bill Clinton the opening he needed.
Bush later blamed Federal Reserve chairman Alan Greenspan for his defeat. Greenspan had held interest rates too high for too long, Bush complained.
On the campaign trail in 2016, Donald Trump complained that Fed chair Janet Yellen was trying to help Hillary Clinton by keeping rates near zero and pumping up the stock market with liquidity.
‘They’re keeping the rates artificially low so that Obama can go out and play golf in January and say that he did a good job… It’s a very false economy,’ Trump told reporters in September 2016. Later that month in the second presidential debate, he declared, ‘We are in a big, fat, ugly bubble. . . The only thing that looks good is the stock market. But if you raise interest rates even a little bit, that’s going to come crashing down.’

This post was published at Zero Hedge on Aug 12, 2017.

Chinese Bank Suffers ‘Rare’ Bank Run, Police Arrest “Rumor-Spreaders”

Chinese police questioned 27 people, detained 12 and “severely” reprimanded 15, over the spreading of gossip about Linshang Bank – a lender with 61 billion yuan ($9.1 billion) in deposits – which caused a rare bank run in Eastern China.
The South China Morning Post reports that a few disgruntled employees at Shandong Sanwei Oil Group, an agricultural processing company, were unhappy after they were placed on leave when production lines were closed at the firm.
The employees spread a rumour that the firm was collapsing with billions of yuan in unpaid loans and that it might also bring down Linshang Bank, the report added. The rumour spread quickly among residents, triggering a run on the local branch of the bank, according to the article. At one point more than 500 depositors gathered outside the branch demanding to withdraw their money.
The bank said in a brief statement on its website that the spate of withdrawals at one of its branches in Linyi in Shandong province on Monday was caused by ‘a few individuals spreading rumours’ that the bank was in trouble.
The lender urged the public ‘not to believe in or spread rumours to jointly maintain good financial order’.
“In the face of rumors, we hope the public reacts rationally, does not believe in rumors, does not rumor-monger, to avoid harming their own interests.”

This post was published at Zero Hedge on Aug 12, 2017.

3 Dead, 35 Injured Amid Violent Protests, Car Attack, & Chopper Crash In Charlottesville

Update 10: City Manager Maurice Jones confirms that 3 people are dead (1 from the car attack and 2 police in a helicopter crash) and 35 more were injured following a disastrous day in Charlottesville. Furthermore, Charlottesville Police Chief Al Thomas confirmed the driver is being charged with criminal homicide.
* * *
Update 9: In a press conference following today’s attacks in Charlottesville, which killed one young woman, and a helicopter crash that killed two offiers, Virginia Gov. Terry McAuliffe had some choice words for far-right demonstrators who converged on the town: “Go home…and never come back.”
‘You came here today to hurt people and you did hurt people. But my message is clear: We are stronger than you. You have made our commonwealth stronger you will not succeed. There is no place for you here there is no place for you in America. Go home…and never come back.’ The driver’s identity and any information about his possible motive for the attack have yet to be released.
* * *
Update 8: In the latest development in what was already a bizarre, tragic day, a police helicopter crashed into a wooded area near a gold course in Charlottesville, not far from where the ‘Unite the Right’ rally was being held.

This post was published at Zero Hedge on Aug 12, 2017.

Doug Noland: Doubled-Down

This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
‘The real trouble with this world of ours in not that it is an unreasonable world, nor even that it is a reasonable one. The commonest kind of trouble is that it is nearly reasonable, but not quite. Life is not an illogicality; yet it is a trap for logicians. It looks just a little more mathematical and regular than it is; its exactitude is obvious, but its inexactitude is hidden; its wildness lies in wait.’ G. K Chesterton
The S&P500 rose to a record 2,490.87 during Tuesday’s session at about the same time the VIX was trading down to 9.52. The DJIA reached a record 22,179 during Tuesday trading. At 5,973, the Nasdaq100 (NDX) was on track mid-day Tuesday for a record close. Tuesday saw the bank index (BKX) trade to a five-month high, with the broker/dealers (XBD) just shy of all-time highs.
‘North Korea best not make any more threats to the United States. They will be met with fire and fury like the world has never seen. He has been very threatening … and as I said they will be met with fire, fury and, frankly, power, the likes of which this world has never seen before.’

This post was published at Wall Street Examiner by Doug Noland ‘ August 12, 2017.

Look Out Manhattan – Chinese Foreign Real-Estate Spending Plunges 82%

Earlier this month, Morgan Stanley warned that commercial real estate prices in New York City, Sydney and London would likely take a hit over the next two years as Chinese investors pull out of foreign property markets.
The pullback, they said, would be driven by China’s latest crackdown on capital outflows and corporate leverage, which they argued would lead to an 84% drop in overseas property investment by Chinese corporations during 2017, and another 18% in 2018.
Sure enough, official data released by China’s Ministry of Commerce have proven the first part of Morgan Stanley’s thesis correct. Data showed that outbound investment in real estate was particularly hard hit during the first half of the year, plunging 82%.
‘According to official data, outbound investment by China’s real estate sector fell 82% year-on-year in the first half, to comprise just 2% of all outbound investment for the period.’ Overall, outbound direct investment to 145 countries declined to $48.19 billion, an annualized drop of 45.8%, according to China Banking News.

This post was published at Zero Hedge on Aug 11, 2017.

This Is How America Would Wage A Nuclear War Against North Korea

Authored by Dave Majumdar via The National Interest,
“It is time to think about the unthinkable…”
The standoff between the United States and North Korea continues to escalate with neither side willing to back down.
With each passing day, the possibility of open warfare breaking out seems to increase as each side ups the ante. Indeed, President Donald Trump has ratcheted up his rhetoric in recent days – seemingly threatening to launch a nuclear first strike against North Korea.
‘North Korea best not make any more threats to the United States,’ Trump told reporters at his golf club in Bedminster, New Jersey. ‘They will be met with fire and fury like the world has never seen. He has been very threatening beyond a normal state and as I said they will be met with fire and fury and frankly power the likes of which this world has never seen before.’

This post was published at Zero Hedge on Aug 11, 2017.

What I Learned at (Economics) Summer Camp

Will Yellen Stay or Go?
Quantitative Tightening
Consensus Forecasts
Lightning Round
Chicago, Lisbon, San Francisco, Denver, and Lugano
All over America, kids who were fortunate enough to go to summer camp are busy telling mom and dad what they did. Their stories will be suspiciously incomplete, but that’s OK. We know they learned something.
Well, I went to camp this summer, too. I go every year, and I always learn more than I can manage to remember. Camp Kotok is an invitation-only gathering of economists, market analysts, fund managers, and a few journalists. It takes place at the historic Leen’s Lodge in Grand Lake Stream, Maine. We fish, talk, eat, drink, and talk some more. It’s a three-day economic thought-fest (and more rich food and wine than is good for me or anyone else at the camp). For me, that’s about as good as life gets.
(Aat the end of the letter in the personal section I’ll describe a typical day at my summer camp. Not exactly arts and crafts and games. Unless poker counts as a game.)
Come along with me as I share some of my main takeaways from the camp and then, in a ‘lightning round,’ touch on on a few various shorter topics.

This post was published at Mauldin Economics on August 12, 2017.

BREAKING AWAY FROM THE WEST: Gold Investment In Germany & The U.K. Surged

While gold demand in the West continues to languish, something has recently motivated renewed interest in the yellow precious metal in Germany and the United Kingdom. Now, when I say ‘renewed interest’, I am referring to a surge in gold investment by Germans and British that we haven’t seen for quite some time.
This big increase in gold investment in Germany and the U. K. over the past year and a half is not from the diehard physical bar and coin investors, rather it is from a source that is even more interesting… it’s coming from investors in the retail Gold ETF Market. You see, this is a much different segment of the population who move into the Gold ETF Market versus the 1% that buy physical bar and coins. When there is a surge of Gold ETF buying, it means the institutional or regular mainstream investor is worried about the overall market.
And why shouldn’t Europeans be worried as the ECB – European Central Bank’s President, Mario Draghi, stated in June that they would continue its bond buying program (QE – Quantitative Easing) until 2019, even though they believe that the ‘regions growth’ looks broadly balanced. This is like a doctor telling his patient, ‘we are going to continue with broad-based Chemo-Therapy’, even though your cancer has gone into remission.

This post was published at SRSrocco Report on August 12, 2017.

Thrill-Seeking Chinese Tourists Rush To Visit North Korea “Before The Regime Collapses”

While nearly two-thirds of Americans view North Korea as a ‘serious threat’ and most would rather vacation literally anywhere else following the death of college student Otto Warmbier, Chinese adventure-seekers are visiting the North in ever-greater numbers, according to Reuters. The wave of tourism has been inspired by the fear that the latest escalation between Pyongyang and Washington might lead to the toppling of the Kim regime, which has successfully kept the forces of modernization at bay for decades, offering tourists a rare opportunity to catch a glimpse into the past that some say reminds them of a “young” China.
North Korea has become a favorite destination among wealthier, more adventurous Chinese travelers. Another tour operator who targets the affluent said he’s been fielding more questions about whether it’s safe to visit the North, Reuters reported.
“But those that inquire often already have their heart set on going,” the operator, who declined to be named, told Reuters. “The idea of a bit of danger adds to the thrill and mystery of North Korea.”

This post was published at Zero Hedge on Aug 11, 2017.

Hamptons Mega-Mansion Market Goes Cold As Folks Search For ‘Modest’ $5-10mm Homes Instead

The wealthy bankers and hedgies of Manhattan celebrated a few weeks back when Douglas Elliman released their 2Q 2017 Hamptons real estate guide showing that the market for excessively priced weekend home was on the rebound. Both pricing and volume of home sales were up ‘bigly’ year-over-year at 12.7% and 22.8%, respectively.
All of which is great news because we had been hearing all sorts of horror stories about people potentially having to give up one of their lambo’s if the market got much worse…

This post was published at Zero Hedge on Aug 11, 2017.

Pat Buchanan Asks “Is The American Empire Worth The Price?”

‘When a man knows he is to be hanged in a fortnight,’ Samuel Johnson observed, ‘it concentrates his mind wonderfully.’
And the prospect of a future where Kim Jong Un can put a nuclear weapon on a U. S. city is going to cause this nation to reassess the risks and rewards of the American Imperium.
First, some history.
‘Why should Americans be first to die in any second Korean war?’ this writer asked in 1999 in ‘A Republic, Not an Empire.’
‘With twice the population of the North and twenty times its economic power, South Korea … is capable of manning its own defense. American troops on the DMZ should be replaced by South Koreans.’
This was denounced as neo-isolationism.

This post was published at Zero Hedge on Aug 11, 2017.

Stock Market Warning Siren is Blaring

Are we blinded yet by the brilliance of corporate earnings?
‘Adjusted’ earnings growth is 10.2% year-over-year in the second quarter, according to FactSet, based on the 91% of the companies in the S&P 500 that have reported results. The energy sector was a key driver, with 332% ‘adjusted’ earnings growth from the oil-bust levels of a year ago.
The sectors with double-digit earnings growth: information technology (14.7%), utilities (10.8%), and financials (10.3%). The rest were single digit. Earnings in the consumer discretionary sector declined.
Revenues grew 5.1%, also led by the energy sector. At the beginning of Q2 last year, the WTI grade of crude oil traded at $35 a barrel. In Q2 this year, WTI ranged from $42 to $53 a barrel.
So the Wall-Street hype machine is cranking at maximum RPM to propagate the great news that earnings are soaring, and that this is the reason why stocks should also be soaring, and forget everything else. The hype machine carefully avoids showing the bigger picture which is dismal for earnings and ludicrous for stock valuations.

This post was published at Wolf Street on Aug 12, 2017.

Weekend Reading: On A Cliff’s Edge

After a week on vacation, I got the joy of coming back to an Administration threatening North Korea over nuclear weapons.
Now, you would suspect the possibility of nuclear war might just be the catalyst to send markets reeling, but looking at the market’s reaction on Thursday, I suspect there will be t-shirts soon reading:
‘I survived the threat of nuclear war and the ‘great crash of 2017′ of 1.5%’
As shown, the market did register a short-term ‘sell signal’ last Friday and downward pressure has continued to build all week. The sell off on Thursday led to a break of the 50-dma and is threatening the bullish trend support line which has existed since the beginning of the year. IF the market does not regain the 50-dma by close of the markets today, I would suspect we will likely be looking for a decline to 2400. Such a correction, a whopping 3.03%, would likely shock many investors who have become overly complacent in recent months due to the abnormally low levels of volatility.

This post was published at Zero Hedge on Aug 11, 2017.

Fat Chicks Need Not Apply: A Look Inside The Bizarre Interviewing Practices Of South Korea

In the United States, interview questions about a candidate’s physical attributes or family history will quickly earn a company a multi-million dollar lawsuit. Hell, if you so much as look at a millennial the wrong way during a first meeting you might quickly find yourself unemployed for your insensitive microaggression.
But, as Bloomberg points out today, questions about physical appearance and family history, among other bizarre stuff we’ll get to shortly, are a common occurrence for young graduates in South Korea. Take the case of 28-year-old Joo Yerim who was required to provide her height and weight on a recent job application.
When 28-year-old Joo Yerim applied for a job at an art distribution company in Seoul last year, she was required to provide her height and weight on the application. The experience left her angry and frustrated.
‘That has nothing to do with my ability to work,’ said Joo, a university graduate who had interned at similar companies in the U. S.

This post was published at Zero Hedge on Aug 11, 2017.

Small Cap Rout Is Flashing Red Flag For US Economy

The post-election small cap bounce in US stocks has now been completely erased as it seems tax-reforms have now been entirely priced-out of markets. However, as BofAML notes, the demise of small cap stocks relative to the broad market augurs badly for forward-looking economic growth…
The Russell 2000 is now the worst performing major index this year, up just 1% YTD…
Via BofAML,

This post was published at Zero Hedge on Aug 11, 2017.

Chapter 54: Eternity vs. Entropy

Christian Economics: Teacher’s Edition
The first came before him, saying, ‘Lord, your mina has made ten minas more.’ And he said to him, ‘Well done, good servant! Because you have been faithful in a very little, you shall have authority over ten cities.’ And the second came, saying, ‘Lord, your mina has made five minas.’ And he said to him, ‘And you are to be over five cities’ (Luke 19:16 – 19). That man is the product of causes that had no prevision of the end they were achieving; that his origin, his growth, his hopes and fears, his loves and his beliefs, are but the outcome of accidental collocations of atoms; that no fire, no heroism, no intensity of thought and feeling, can preserve individual life beyond the grave; that all the labors of the ages, all the devotion, all the inspiration, all the noonday brightness of human genius, are destined to extinction in the vast death of the solar system, and that the whole temple of Man’s achievement must inevitably be buried beneath the debris of a universe in ruins – all these things, if not quite beyond dispute, are yet so nearly certain that no philosophy which rejects them can hope to stand. Only within the scaffolding of these truths, only on the firm foundation of unyielding despair, can the soul’s habitation henceforth be safely built. – Bertrand Russell (1903)
AnalysisI cited Bertrand Russell’s statement in Chapter 1 of Volume 1 of my 1982 economic commentary on the Bible. That chapter is an exposition of Genesis 1:1. It is titled ‘Cosmic Personalism.’ Here I am, 35 years later, ending this book where I began. But I am not dealing here with the doctrine of origins. I am dealing with the doctrine of eschatology.
Eschatology is the doctrine of the last things. Every social philosophy has a distinctive eschatology, either implicit or explicit. There is no such thing as a social philosophy with no eschatology.
I begin with Christianity’s eschatology. Luke’s version of Matthew’s parable of the talents teaches that there is a close relationship between productivity in history and productivity beyond the grave. Economic success in history produces a reward: rulership in eternity. There is a close relationship between God’s imputed value to covenant keepers’ work (point four of the biblical covenant) and His transfer of authority to them after the final judgment (point five). Matthew’s version of this parable appears immediately before the description of the final judgment. Immediately before the parable of the talents is the parable of the ten virgins and their lamps: another description of events leading up to the final judgment. Luke’s version is slightly different. It connects economic success with a broader form of authority: rulership. This makes Luke’s version of the parable the most important passage in the Bible on work beyond the grave. Work in history is a training ground for service beyond the resurrection. Success in history provides personal capital beyond the resurrection.

This post was published at Gary North on August 11, 2017.