Do Seasonal Adjustments Help Identify Business Cycles?

Various statistics that governments produce on a regular basis carry the label “seasonally adjusted”. What is the meaning of this label? According to popular thinking the data that is observed over time (labelled as time series) is determined by four factors, which are:
The trend factor The cyclical factor The seasonal factor The irregular factor It is accepted that the trend determines the general direction of the data over time, while the cyclical factor causes movements that are related to the business cycle. The influence of seasons like winter, spring, summer and autumn and various holidays is conveyed by the seasonal factor. The irregular factor depicts the effect of various irregular events. It is held that the interplay of these four factors generates the final data.
Popular thinking regards the cyclical influence as the most important part of the data. It is held that the isolation of this influence would enable the analysts to unravel the mystery of the business cycle. Moreover, to pre-empt the negative effect of the business cycle on people’s well being it is important to observe the influence of the cyclical factor on as short a duration basis as possible. Like any disease the earlier it is detected the better are the chances of combating the disease. Once the central bank has identified the size of the cyclical influence it could offset this influence by means of a suitable monetary policy, so it is held.

This post was published at Ludwig von Mises Institute on August 16, 2017.

Bond Bear Bubbleheads

Conventional wisdom holds that with central banks’ beginning to throw their experimental policies into reverse the strings holding the asset price boom together are slowly being cut. No disagreement here. But while the divergence between the fundamentals and asset prices suggests things like equities are in/near bubble territory, the bond market is not so much a ‘bubble’ as simply a rigged game. Some would disagree…
Former Fed Chairman Alan Greenspan recently offered his opinion about market ‘bubbles’ (or the very subject matter he spent his tenure at the Fed proclaiming could never be identified):
‘By any measure, real long-term interest rates are much too low and therefore unsustainable. When they move higher they are likely to move reasonably fast. We are experiencing a bubble, not in stock prices but in bond prices. This is not discounted in the marketplace.’ Bloomberg
Greenspan added that stocks are enamored with the Fed model and things are about to change: ‘The real problem is that when the bond-market bubble collapses, long-term interest rates will rise. We are moving into a different phase of the economy – to a stagflation not seen since the 1970s. That is not good for asset prices.’

This post was published at FinancialSense on 08/18/2017.

Drudge, NYT: Bannon Out

Bannon had one hell of a run…
— MATT DRUDGE (@DRUDGE) August 18, 2017

As the Post writes, while Bannon had been on the outs with Trump before, the president suspected Bannon was one of the main leakers in the administration, trashing his colleagues in the press.
The notoriously thin-skinned president also resented the publicity Bannon had been getting as the supposed mastermind of Trump’s campaign and upset victory. One White House source told Axios, ‘His departure may seem turbulent in the media, but inside it will be very smooth. He has no projects or responsibilities to hand off.’
Bannon in recent days gave interviews to publications including the New York Times in which he defended Trump’s controversial comments in the wake of the racial violence in Charlottesville, Va., last weekend.
Speaking to the Post, a source close to Bannon added: ‘This week is a good window into what Bannon outside the [White House] would look like: A strong defense of POTUS and ‘fire and fury’ for enemies of the Trump agenda. Get ready for Bannon the barbarian.’

This post was published at Zero Hedge by Tyler Durden . Aug 18, 2017.

Asian Metals Market Update: August-18-2017

The terror attack in Spain is very good for gold demand from Europe. I have been repeating in my previous reports that Islamisation of Europe equals Shariaization of Europe. There will be religious clashes between migrant Islamic radicals and traditional native Europeans. Japan is a peaceful nation as it does not allow migrants. Once Japan allows migrants it will also be on the way to become another Pakistan.
France, Germany, UK, Holland and Portugal all had colonies in Asia. History is repeating itself with Europe.

This post was published at GoldSeek on 18 August 2017.

Fun on Friday: World Gold Panning Championships

As we’ve reported before, panning for gold is a fast-growing hobby. I get it. I can see the fun in getting out into nature with family and friends. You get to experience the beauty of the great outdoors, enjoy some physical activity, and of course, there’s always the possibility of striking it rich – however unlikely that might be.
But in my opinion, some people have taken this gold panning craze a little too far. They’ve turned it into a competitive sport. No kidding. This year marks 40th anniversary of the World Gold Panning Championships.
This year, Moffatt, Scotland will host the championships. They’ve actually been doing this since 1977. The first World Gold Panning Championships were held in Finland.
I don’t want to offend any of you competitive gold panners out there, but I just don’t get it.
Here’s how the competition works, as reported by the BBC.
There are a range of different categories in which 30 competitors at a time each receive a bucket of sand and gravel containing a few flakes of gold. They race against the clock to find as many pieces as they can with the quickest progressing to the next round. The winner on finals day is then crowned world champion.’

This post was published at Schiffgold on AUGUST 18, 2017.

“From Nukes To Terrorism”: Battered Investors Flee Risk For Safety Of C And Gold

The global risk-off mood accelerated overnight on Trump “stability concerns”, coupled with fallout from the Spain terrorist attack and lingering North Korea tensions, even if the VIX is off its latest highs, trading just above 15. Investors fled into German and U. S. Treasury bonds and bought gold for the third day in a row, as the appeal of such top-notch assets grew further due to a deadly attack that killed at least 13 people in Barcelona.
“In a week where we started by worrying about nuclear war, markets have quickly moved on from this, with yesterday’s weak session more of a response to fears that Mr Trump’s strategy for the economy and business is falling apart and later the terrible terrorist attack in Barcelona,” is how DB’s Jim Reid summarized the week’s psychedelic events.
Concerns that Trump’s stimulus is in peril spiked following speculation that his top economic advisor, former Goldman COO Gary Cohn, was set to resign roiled markets on Thursday until reports that he’d opted to stay on board steadied the ship, however heightened terror fears added to the risk off sentiment after at least 13 people died when a van plowed into pedestrians in Barcelona. The terror attack was a reminder of lingering geopolitical risks, with nerves still raw after last week’s escalation of tensions on the Korean peninsula.

This post was published at Zero Hedge on Aug 18, 2017.

The Last Frontier For Gun Control: Washington Court Rules In Favor Of Seattle’s ‘Gun Violence’ Tax

Two years ago, the president of the Seattle City Council offered a rather ludicrous proposition. He wanted Seattle to place a new tax on the sale of firearms and ammunition within the city limits. Ammo would cost an additional 2-5 cents per round, and a firearm would cost an extra $25. But what was even more absurd than the tax itself, is what the money would be going toward. The tax was supposed to pay for gun violence prevention programs and research.
The way City Council President Tim Burgess explained it, this ‘gun violence’ tax would help offset the costs the city pays to treat gunshot victims. Essentially, it was a tax levied on responsible law abiding gun owners, to pay for the actions of violent criminals.
Despite how utterly stupid that sounds, the proposal passed. However, it didn’t have the desired effect. To the surprise of no one who actually understands the relationship between private firearm ownership and crime rates, the violent crime rate in Seattle has dramatically increased since the tax was put in place. It also brought in only a small fraction of the revenue that the city council was expecting. In short, the tax was a total failure.
So it’s no surprise that the tax has faced a lawsuit over the fact that Washington has a law that prevents municipalities from regulating firearms. Unfortunately, the Washington Supreme Court recently ruled against the lawsuit on the grounds that taxes aren’t the same as regulations, and cities are well within their right to levy sales taxes.

This post was published at shtfplan on August 17th, 2017.

Keener Risk Aversion In World Marketplace After Spain Terror Attacks

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.
(Kitco News) – World stock markets were mostly lower in overnight trading. The U. S. stock indexes are pointed toward slightly higher openings when the New York day session begins. The marketplace is reacting with keener risk aversion to an ISIS terror attack in Barcelona, Spain Thursday, in which a van rain into a crowd and killed 13 people. A second attack in another town in Spain was thwarted by police, who killed five terrorists.
Gold prices are higher in pre-U. S. day session trading Friday and hit a 2.5-month high above $1,300 an ounce on some more safe-haven demand and technical buying.
Traders and investors are also pondering the future progress of the Trump administration’s objectives. Many believe the administration is in turmoil.

This post was published at Wall Street Examiner by Jim Wyckoff ‘ August 18, 2017.

Millennials Are Using Financing To Pay For $450 Blenders

Low wages, mounting student debt and rising rents in the trendy urban centers where millennials prefer to live leave young people with little to spend on luxuries like an iPhone, or tickets to Fyre Festival pt. II. So, since millennials can’t seem to buy anything outright, payment companies are partnering with businesses to offer financing options for goods that, in the past, would’ve gone straight on the credit card, according to MarketWatch.
With interest rates ranging from 0% to 30%, compared with the average rate of 17% on credit cards, millennials are increasingly financing purchases from airplane tickets to luxury bedsheets with loans from payment companies like PayPal and Affirm. Indeed, millennials’ seeming inability to pay for anything outright has caused revolving debt in the US to balloon past $1 trillion.

This post was published at Zero Hedge on Aug 17, 2017.

What Ford’s New Guy Said about the Future of Self-Driving Cars

You get to own and steer a car for a while longer, if you insist. Ford Motor Co.’s new CEO, Jim Hackett, is approaching the end of his self-imposed 100-day review of the company’s operations. And self-driving cars is the big thing.
He took over after Mark Fields was sacked on around May 21 for a lack of strategy, a public tiff with the Trump administration, declining US sales and market share, production cuts, layoffs, and most unforgivably, the share price.
The stock sagged nearly 40% from the day Fields had taken over three years earlier until he got fired. Since then, shares have edged down further, closing at $10.64 on Thursday, the lowest since November 2012.

This post was published at Wolf Street on Aug 17, 2017.

“It Is A Battle Between Data And Theory” – Fed PhDs Second-Guess Inflation Model After 5 Years Of Failure

Federal Reserve officials are finally waking up to the fact that there’s something wrong with their inflation models. It only took them five years.
As Bloomberg points out, the minutes from the Fed’s July policy meeting, released yesterday, included a debate about whether the models that help the central bank set its inflation target are no longer functioning properly.
‘Federal Reserve officials are looking under the hood of their most basic inflation models and starting to ask if something is wrong.
Minutes from the July 25-26 Federal Open Market Committee meeting showed a revealing debate over why the economy isn’t producing more inflation in a time of easy financial conditions, tight labor markets and solid economic growth.
The central bank has missed its 2 percent price goal for most of the past five years. Still, a majority of FOMC participants favor further rate increases. The July minutes showed an intensifying debate over whether that is the right policy response.’

This post was published at Zero Hedge on Aug 17, 2017.

Does Your Neck Hurt Yet From The Metals Action?

First published on Sun Aug 13 for members: Reading most metals analysis in 2017 has been like watching a tennis match with the analysis going back and forth over the net between bullishness and bearishness. As the market reaches its highs, analysts turn bullish, and as the market reaches its lows, analysts turn terribly bearish. And, when the sentiment of the market has reached these extremes, it has marked the point in time when the markets have turned.
As I have also tried to warn all year, anyone who uses trend lines as their primary method of analysis has been terribly whipsawed, as the metals love to exceed trend lines right before they reverse strongly. This is one of the biggest reasons many have become terribly bullish at the highs (right before the market has reversed), and terribly bearish at the lows (right before the market reversed as well). So, does your neck hurt from all this back and forth during this whipsaw?
Last weekend, I even noted that the mood in the market had soured due to the frustrating consolidation we have been experiencing:
As I read posts across the internet, I see utter disgust with the metals complex. It seems this sideways action in 2017 has worn investors out. I have seen many cash in their chips in utter disgust over the last few months. Yet, all we have been doing in 2017 is moving sideways, while maintaining over support.
This is simply how the market works. Before you are able to see any major rally, most in the market have to either be out of the market or positioned the wrong way. Just consider where all the money has to come from that chases a 3rd wave into a parabolic rally. And, based upon what I am reading out in the blog-o-sphere, along with the BPGDM being down in the 25 region, it certainly seems the market is doing its job of pushing investors out.

This post was published at GoldSeek on Friday, 18 August 2017.

A Tale of Two ‘Deflationary’ Booms – The Gilded Age vs. Today

The forces of globalization during the past two decades have been stronger than at any time since the era of ‘the Great Deflation’ which started in the aftermaths of the US Civil War and the Franco-Prussian War, and continued through the 1880s. During teh earlier period, the US economy enjoyed record growth in prosperity. But, during the present era of globalization, the US and most advanced economies have grown fitfully and overall slowly. An obvious question is whether that divergence in outcomes is due to the very different monetary environments (The US and most of Europe were on gold in the first era with prices falling, while monetary experimentation under a global 2% inflation standard prevailed in the second).
RELATED: “A Modern Concept of Asset Price Inflation in Boom and Depression” by Brendan Brown
In searching for the answer there are two channels to follow, both involving counterfactual analysis. The first is to study the early episode (the early 1870s to the end of the1880s) and determining whether it would have been less glorious if the monetary environment had been the same as in the present episode (the mid-1990s to now). The other channel is an investigation of the present episode so as to determine whether a sound money regime – as in the earlier episode – would have produced a much better outcome. In conducting the latter search, the analyst should be alert to hints of the world which might have been in the actual world and indeed there are positive findings here.

This post was published at Ludwig von Mises Institute on August 18, 2017.