New York Fed Calculates Inflation Is Running Hottest Since 2007

As if inflation wasn’t “mysterious” enough to the Fed already, today the New York Fed joined the Atlanta Fed first in releasing its own measure to track underlying inflation called, simply, the Underlying Inflation Gauge. What is notable is that this latest inflation tracker shows prices behaving quite differently from traditional indexes this year.
According to the UIG’s August measure, broad inflation came in at a red hot 2.74%, the highest since November 2007, according to historical data from the Fed. That compares with just 1.9% annual inflation according to the Labor Department’s CPI and an even more paltry 1.4% as measured by the preferred PCE gauge of Fed policy makers, which matched the lowest since September 2016.

This is what the latest reading showed:
The UIG estimated on the ‘full data set’ increased from a revised 2.64% in July to 2.74% in August. The ‘prices-only’ measure increased from a revised 2.09% in July to 2.17% in August. The August CPI showed a further pick up in inflation from June. In response to the firming of CPI inflation, both UIG measures displayed a rise in trend inflation. he UIG measures currently estimate trend CPI inflation to be in the 2.2% to 2.7% range, with both registering above the actual twelve-month change in the CPI.

This post was published at Zero Hedge on Sep 22, 2017.

Market Talk- September 22nd, 2017

The Australian ASX was probably over-sold yesterday and therefore stood as the only core that performed today. Closing up +0.5% was a healthy recovery after yesterdays 1% decline. China’s downgrade put a small dent in confidence for the cash markets which took the Hang Seng down
-0.8% while the Shanghai closed with just small loss. Geopolitical risks remain present after US President Donal Trump signed to expand measurers to target North Korean trade. the Nikkei although closed lower (-0.25%) was off of its earlier lows as news of the speech-plays increased between the two nations. Having seen gold break the psychological $1300 mark yesterday, today we traded comfortably below that level all day. The Yen has dipped back below 112 again as talks of possible missile launches were circulating ahead of the weekend.

This post was published at Armstrong Economics on Sep 22, 2017.

$5.5 Billion In CMBS Exposed To Toy’s ‘R’ Us Bankrutpcy

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Trepp findings show that 109 outstanding loans totaling about $5.5 billion currently carry Toys ‘R’ Us exposure. A large portion of the loans are CMBS 2.0 and 3.0 notes issued after 2010. Backed by 123 Toys ‘R’ Us and Babies ‘R’ Us stores, the $404.7 million Toys R Us portfolio is the loan with the largest CMBS exposure. The loan is the only one behind the single-asset/single-borrower TRU 2016-TOYS transaction, and also includes a $102.4 million freely payable portion. Those 123 collateral properties span a combined five million square feet across 29 different states. The loan, which amortizes on a 30-year schedule, features relatively conservative underwriting metrics. At securitization in 2016, DSCR (NCF) and LTV clocked in at 1.85x and 58.3%, respectively.
The $380 million Bronx Terminal Market loan, which is split into a $140 million piece that makes up 12.06% of COMM 2014-CR17, a $135 million note that comprises 13.96% of COMM 2014-CR18, and a $105 million piece that represents 10.13% of COMM 2014-UBS3. Toys ‘R’ Us is listed as the fourth-largest tenant (8.43% of the net rentable area) at the 912,333 square-foot, superregional mall in Bronx, New York with a lease that runs through January 2020.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 22, 2017.

German Elections Void of Any Critical Discussion

The German Bundestag election campaign has seen a total black-out of any discussion of the major crisis that is building in Europe. Nobody is mentioning that Euro crisis, ECB monetary policy, disintegration of the EU, refugee crisis, pension crisis, the municipalities on the brink of insolvency, or the drastic increases in taxation coming AFTER the election that will only lower disposable incomes and extend deflation.
The politicians, and the press, are in full swing to hide the real trend at foot. The press is running stories why the Germans Love Merkel, yet she has never won even 40% of the popular vote. Even the press outside of Germany is in on the ‘selling’ of Merkel because she is the leader of Europe – good – bad – indifferent.
Perhaps the monetary policy of the ECB has set the stage for a serious monetary crisis over the coming years that will seriously disrupt the German economy, in one way or another, depending upon the industry. Mario Draghi has experimented with negative rates which has kept the Eurozone governments on life-support – but they have not used the time to reform anything.

This post was published at Armstrong Economics on Sep 23, 2017.

In the Murk- The Live Nightmare Formerly Known As Puerto Rico

This is a syndicated repost courtesy of Kunstler. To view original, click here. Reposted with permission.
Welcome to America’s first experiment in the World Made By Hand lifestyle. Where else is it going? Watch closely.
Ricardo Ramos, the director of the beleaguered, government-owned Puerto Rico Electric Power Authority, told CNN Thursday that the island’s power infrastructure had been basically ‘destroyed’ and will take months to come back
‘Basically destroyed.’ That’s about as basic as it gets civilization-wise.
Residents, Mr. Ramos said, would need to change the way they cook and cool off. For entertainment, old-school would be the best approach, he said. ‘It’s a good time for dads to buy a ball and a glove and change the way you entertain your children.’

This post was published at Wall Street Examiner by James Howard Kunstler ‘ September 22, 2017.

Undun: US Treasury 30Y-5Y Curve Slope Falls To Lowest Level Since November 2007

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
The US Treasury yield curve slope for the 5Y-30Y segment is now at the lowest level since mid-November 2007.

The US Treasury curve is coming undun.
And that is pronouced UN-dun, not as is Kim Jong Un-dun.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 22, 2017.

Big Brother Walmart Tries to ‘Help’ You: ‘It’s Like Magic’

On the bleeding edge of ‘in-fridge delivery.’
It’s great that Walmart is out there on the bleeding edge of technology, coming up with stuff and testing gizmos and doing things differently before it gets run over by Amazon. It’s trying to stay relevant in the era of online shopping and Millennials. Stopping Amazon is a dirty job, but someone has got to do it.
But good grief – connect the lock of our home to the Internet so that Walmart can get into our fridge?
And so soon after the Equifax hack that showed just how easy it is to crack open corporate IT systems even when they contain the crown jewels of consumer data?
How easy must it be to hack the software in a mere door lock, the connection from the door lock to the server, the app that runs that thing, the communication system with Walmart…. One vulnerability in the chain, such as a missed security update on the server of some obscure middleman, and suddenly hackers can let themselves and others into our home at will.
And this: Install security cameras inside our home and connect them to the Internet so that, when the system gets hacked, everyone else can see what’s going on inside our home?
My home used to be my castle.

This post was published at Wolf Street by Wolf Richter ‘ Sep 22, 2017.

SEPT 22A/SENATOR MCCAIN DITCHES LAST ATTEMPT AT REAP OF OBAMACARE AND THAT SENDS GOLD AND SILVER HIGHER/ GOLD ENDS THE DAY UP $1.70 BUT SILVER DOWN 5 CENTS/ BOTH GOLD AND SILVER COT IS GOOD FOR A…

GOLD: $1294.45 UP $1.70
Silver: $16.95 DOWN 5 CENT(S)
Closing access prices:
Gold $1297.50
silver: $17.02
SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)
SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)
SHANGHAI FIRST GOLD FIX: $1303.72 DOLLARS PER OZ
NY PRICE OF GOLD AT EXACT SAME TIME: $1295.85
PREMIUM FIRST FIX: $7.87 (premiums getting larger)
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
SECOND SHANGHAI GOLD FIX: $1306.41
NY GOLD PRICE AT THE EXACT SAME TIME: $1296.60
Premium of Shanghai 2nd fix/NY:$9.81 (premiums getting larger)

This post was published at Harvey Organ Blog on September 22, 2017.

The Federal Reserve’s Unspoken Truth

Originally posted at Briefing.com
The Federal Reserve’s latest policy announcement has generated a lot of opinions about its implications for the capital markets. What it didn’t generate is a lot of movement in the stock market.
The September Federal Open Market Committee (FOMC) meeting was a two-day affair that concluded on September 20 with the issuance of an updated policy directive, the release of updated economic and policy rate projections, an announcement that the Federal Reserve will start its balance sheet normalization process in October, and a press conference by Fed Chair Yellen to discuss it all.
Check out Interview: Louise Yamada on Stocks, Tech, and Interest Rates
There was a whole lot of information to digest. The key talking points from the Fed Day bonanza included the following:
The target range for the fed funds rate was left unchanged at 1.00% to 1.25%. The vote was unanimous. The Federal Reserve said it will start its balance sheet normalization process in October in accord with the framework laid out in the June 2017 Addendum to the Committee’s Policy Normalization Principles and Plans

This post was published at FinancialSense on 09/22/2017.

“Get Out James Comey, You’re Not Our Homie”: Comey Mercilessly Heckled At Howard University Speech

Former FBI Director James Comey was mercilessly heckled this afternoon as he attempted to deliver a speech at the Howard University convocation ceremony. As the Washington Post confirms, a group of 20 Howard students led the heckling session that persisted throughout Comey’s speech and included the following clever chants:
“Get out James Comey, you’re not our homie.”

This post was published at Zero Hedge on Sep 22, 2017.

Fed’s Kaplan Makes A Stark Admission: Equilibrium Rate May Be As Low As 0.25%

As we have hammered away at for years, “the math doesn’t work”, and it appears The Fed just admitted it.
In a stunning admission that i) US economic potential is lower than consensus assumes and ii) that the Fed is finally considering the gargantuan US debt load in its interest rate calculations, moments ago the Fed’s Kaplan said something very surprising:
KAPLAN SAYS NEUTRAL RATE MAY BE AS LOW AS 2.25 PCT, LEAVING FED “NOT AS ACCOMMODATIVE AS PEOPLE THINK” Another way of saying this is that r-star, or the equilibrium real interest rate of the US (calculated as the neutral rate less the Fed’s 2.0% inflation target), is a paltry 0.25%.
What Kaplan effectively said, is that with slow secular economic growth and ‘fast’ debt growth, there’s only so much higher-rate pain America can take before something snaps and as that debt load soars and economic growth slumbers so the long-term real ‘equilibrium’ interest rate is tamped down. It also would explain why the curve has collapsed as rapidly as it did after the Wednesday FOMC meeting, a move which was a clear collective scream of “policy error” from the market.
This should not come as a surprise. As we showed back in December 2015, in “The Blindingly Simple Reason Why The Fed Is About To Engage In Policy Error“, when calculating r-star, for a country with total debt to GDP of 350%…

This post was published at Zero Hedge on Sep 22, 2017.

You Can’t Make This Up, But You Can Apparently Just Make Up the Data

This is a syndicated repost courtesy of Alhambra Investments. To view original, click here. Reposted with permission.
Back in 2014, the Federal Reserve was convinced that the labor market was better than it appeared to be in various data accounts. Though it was called the ‘best jobs market in decades’, researchers at the central bank were keen on showing it. Primarily lacking in wages and incomes, the labor segment was suspected of missing the very elements of sustainable economic growth.
They came up with the Labor Market Conditions Index (LMCI), a factor model purported to give less weight to any of the 19 data points embedded within it that might be outliers. I assume they really thought the weaker points would be those outliers, and therefore the LMCI would overall gravitate toward suggesting the very robust jobs market they were sure was there.
The LMCI, of course, behaved in the opposite fashion. It suggested instead that the labor market was weak and getting weaker, not strong and getting stronger. Worse, after suggesting something like recession, which even GDP revisions have subsequently shown as the correct position, the LMCI failed to indicate a robust rebound befitting the by-then ultra-low unemployment rate.

This post was published at Wall Street Examiner by Jeffrey P. Snider ‘ September 22, 2017.

WTI Hovers Above $50 As US Oil Rig Count Slides To 3-Month Lows

With crude production rebounding back to pre-Harvey levels, and refinery demand coming back on-line, WTI has trod water around $50 all week. The US oil rig count dropped for the 6th straight week (down 5 to 744), back at its lowest level since early June.
*U. S. OIL RIG COUNT DOWN 5 TO 744 , BAKER HUGHES SAYS :BHGE US *U. S. GAS RIG COUNT UP 4 TO 190 , BAKER HUGHES SAYS :BHGE US As Bloomberg reports, it looks like shale billionaire Harold Hamm might be right in saying U. S. producers are being more cautious than government output forecasts seem to imply.
At least that’s what the Baker Hughes weekly drilling report suggests, showing producers idled five oil rigs this week, adding to 19 parked over the previous five weeks.
The numbers released every Friday increasingly make it look like the drilling boom might have peaked, and that should impact output down the road.

This post was published at Zero Hedge on Sep 22, 2017.

Janet Yellen’s 78-Month Plan for the National Monetary Policy of the United States

Past the Point of No Return
Adventures in depravity are nearly always confronted with the unpleasant reality that stopping the degeneracy is much more difficult than starting it. This realization, and the unsettling feeling that comes with it, usually surfaces just after passing the point of no return. That’s when the cucumber has pickled over and the prospect of turning back is no longer an option.
In late November 2008, Federal Reserve Chairman Ben Bernanke put in place a fait accompli. But he didn’t recognize it at the time. For he was blinded by his myopic prejudices.
Bernanke, a self-fancied Great Depression history buff with the highest academic credentials, gazed back 80 years, observed several credit market parallels, and then made a preconceived diagnosis. After that, he picked up his copy of A Monetary History of the United States by Milton Friedman and Anna Schwartz, turned to the chapter on the Great Depression, and got to work expanding the Fed’s balance sheet.

This post was published at Acting-Man on September 22, 2017.

Equifax Breach Is a Reminder of Society’s Larger Cybersecurity Problems

The Equifax data breach was yet another cybersecurity incident involving the theft of significant personal data from a large company. Moreover, it is another reminder that the modern world depends on critical systems, networks and data repositories that are not as secure as they should be. And it signals that these data breaches will continue until society as a whole (industry, government, and individual users) is able to objectively assess and improve cybersecurity procedures.
Although this specific incident is still under investigation, the fact that breaches like this have been happening – and getting bigger – for more than a decade provides cybersecurity researchers another opportunity to examine why these events keep happening. Unfortunately, there is plenty of responsibility for everyone.
Several major problems need to be addressed before people can live in a truly secure society: For example, companies must find and hire the right people to actually solve the overall problems and think innovatively rather than just fixing the day-to-day issues. Companies must be made to get serious about cybersecurity – at a time when many firms have financial incentives not to, also. Until then, major breaches will keep happening and may get even worse.

This post was published at FinancialSense on 09/22/2017.