Political Scandals Have Cost U.S. Taxpayers Hundreds of Millions

Congress would rather spend your money on partisan infighting and political scandals than on solving the problems of the nation.
In fact, the Congressional investigations are so expensive that some legislators are gearing up to fight the Trump-Russia probe, claiming that DOJ special counsel prosecutor Robert Mueller’s inquiry is too sprawling and casting too costly a net.
Had that amendment passed, it would have all but ended Mueller’s investigation this November by cutting off his funds just six months after its official start date on May 17. For example, U. S. Rep. Ron DeSantis (R-FL) attempted to introduce an amendment in the House this past August that stated no funds from the spending package ‘may be used to fund activities pursuant to [the special counsel probe] later than 180 days after the date of the enactment of this Act,’ FOX News reported on Aug. 28.
DeSantis’ revision was ultimately nixed, meaning that the investigation will continue in earnest, soaking up legislators’ time and taxpayers’ money.
How much money?
Have a look at the final cost calculations from the federal authorities’ investigations of yore…

This post was published at Wall Street Examiner on October 31, 2017.

US Manufacturing Shrugs Off Fires, Floods, & Storms In October But ISM Disappoints

Against disappointing China PMIs, US Manufacturing PMI surged back near 2017 highs in October – shrugging off the efects of recent storms, floods, and wildfires – with factory jobs near their best since the financial crisis and gains broadening out to smaller firms too. However, ISM Manufacturing disappointed, falling back from 13 year highs.
So take your pick… is manufacturing momentum picking up (PMI) or fading (ISM)?

Under the hood, ISM reported weaker production, lower prices paid, and weaker new orders and while PMI reported a surge to 28-month highs for employment, ISM saw a drop to 3 month lows.

This post was published at Zero Hedge on Nov 1, 2017.

WTI/RBOB Sink As Inventory Draws Disappoint

WTI/RBOB held on to gains overnight following major draws reported by API and more OPEC jawboning (this time from UAE), but the DOE data disappointed compared to API’s huge draws with Crude and Gasoline drawing down but considerably less than API reported (and Distillates barely drawing down at all).
Bloomberg Intelligence energy analyst Fernando Valle:
Strong demand continues to spur inventory drains. Crude-oil stocks remain elevated, but refined-product inventories are looking increasingly tight.
Wide WTI discounts to Brent are likely to push inventories down in coming weeks, driven by exports and increased refinery utilization.

This post was published at Zero Hedge on Nov 1, 2017.

Q3 GDP Advance Estimate: Real GDP at 3.0%

The Advance Estimate for Q3 GDP, to one decimal, came in at 3.0% (2.99% to two decimal places), a decrease over 3.1% for the Q2 Third Estimate. Investing.com had a consensus of 2.5%.
Here is the slightly abbreviated opening text from the Bureau of Economic Analysis news release:
Real gross domestic product (GDP) increased at an annual rate of 3.0 percent in the third quarter of 2017 (table 1), according to the “advance” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.1 percent.
The Bureau emphasized that the third-quarter advance estimate released today is based on source data that are incomplete or subject to further revision by the source agency (see ‘Source Data for the Advance Estimate’ on page 2). The “second” estimate for the third quarter, based on more complete data, will be released on November 29, 2017.

This post was published at FinancialSense on 11/01/2017.

Majority Of Americans Say Trump Era Is “Lowest Point In US History”

How quickly Americans forget…
According to a recent survey by the American Psychological Association, a majority of Americans believe that we are currently living through the lowest point in US history that they can remember…eclipsing such watershed moments in US history like the Watergate Scandal, the Bush administration’s dishonest justification for a war with Iraq, and – oh yeah – World War II and Vietnam, according to Bloomberg.
The APA’s eleventh ‘Stress in America’ survey found that 60% of respondents believe the early Trump era is the lowest point in US history, while a slightly larger percentage – 63% – say they are stressed about the nation’s future.
Almost two-thirds of Americans, or 63 percent, report being stressed about the future of the nation, according to the American Psychological Association’s Eleventh Stress in America survey, conducted in August and released on Wednesday. This worry about the fate of the union tops longstanding stressors such as money (62 percent) and work (61 percent) and also cuts across political proclivities. However, a significantly larger proportion of Democrats (73 percent) reported feeling stress than independents (59 percent) and Republicans (56 percent).

This post was published at Zero Hedge on Nov 1, 2017.

Treasurys Gain, Curve Flattens After Refunding Auction Sizes Remain Unchanged

When previewing today’s FOMC announcement, we said that at least according to some, this morning’s refunding announcement may have a bigger impact on the market as there is less consensus (and more confusion) about what would be unveiled. As JPM analyst Jay Barry told Bloomberg, the quarterly refunding announcement at 8:30am ET Wednesday ‘has the possibility to be a bigger event for markets in the morning than the Fed statement in the afternoon’ as participants are divided on whether the Treasury will announce increases to coupon auction sizes Wednesday, or wait until the 1Q refunding announcement in February:
‘There’s a dispersion of views because of the pivot the Treasury Department has had over last few years,’ specifically toward portfolio metrics and aiming to extend the weighted average maturity of the portfolio. Merely reversing the cuts that have been made to 2Y and 3Y auctions since 2013 wouldn’t serve that objective. ‘If they don’t get announced tomorrow, it’s a muted rally, and if they do, it’s a muted steepening.’
Furthermore, as Bloomberg summarizes, going into today’s announcement, market participants were divided leading into the announcement with most seeing no increase immediately to auction sizes just yet, seeing only bill auction changes for now: Barclays, NatWest, Bank of America, Credit Agricole, Jefferies, Stone & McCarthy Research Associates and Citigroup all saw no change; JPMorgan Chase, among other, looked for small increases across maturities.
Well, moments ago the US Treasury reported the breakdown of the refunding auctions, which led to Treasuries promptly paring some early losses (and leading to the predicted muted curve flattening) after the Treasury Department maintained its coupon auction sizes over the next three months, while the refunding statement did not comment on ultra-long issuance.

This post was published at Zero Hedge on Nov 1, 2017.

An attempt to quantify the immeasurable

To paraphrase Einstein, not everything worth measuring is measurable and not everything measurable is worth measuring. The purchasing power of money falls into the former category. It is worth measuring, in that it would be useful to have a single number that consistently reflected the economy-wide purchasing power of money. However, such a number doesn’t exist.
Such a number doesn’t exist because a sensible result cannot be arrived at by summing or averaging the prices of disparate items. For example, it makes no sense to average the prices of a car, a haircut, electricity, a house, an apple, a dental checkup, a gallon of gasoline and an airline ticket. And yet, that is effectively what the government does – in a complicated way designed to make the end result lower than it otherwise would be – when it determines the CPI.
The government concocts economic statistics for propaganda purposes, but even the most honest and rigorous attempt to use price data to determine a single number that consistently paints an accurate picture of money purchasing power will fail. It must fail because it is an attempt to do the impossible.
The goal of determining real (inflation-adjusted) performance is not completely hopeless, though, because we know what causes long-term changes in money purchasing power and we can roughly estimate the long-term effects of these causes. In particular, we know that over the long term the purchasing power of money falls due to increased money supply and rises due to increased population and productivity.

This post was published at GoldSeek on Wednesday, 1 November 2017.

Market Talk- October 31, 2017

A slow but steady day in Asian equity markets, but happy in the knowledge that the BOJ left almost everything unchanged. The Nikkei closed almost unchanged but has set an impressive two month rally. At above 22k the index closes at a 21 year high, but after the weak opening it took all day to recover unchanged. The Yen was a little weaker (0.5%) as it challenges the 114 handle again. The Australian ASX did open better but drifted throughout the day eventually closing on its low. However, irrespective of todays price action it has been a constructive month for the All Ords with a gain of around 3%. Shanghai managed to shake-off the PMI miss (51.6 against market expectations of 52), with Services also declining. In Hong Kong the Hang Seng we closed down -0.3% with bank stocks weighing on the market.
Although we finished the month on a positive note, volumes were low. This usually is the case when a large index is closed and with Germany on a national holiday the absence of the DAX was noticeable. Spain’s IBEX helped sentiment though with a daily gain of +0.7%. The market is valuing ‘no news’ as positive these days, so with the demand for yield ever present any quiet day is good for low grade paper. This is present when comparing global credits to the states where it is not uncommon to find BBB credits trading even yield with US treasuries. The CAC managed a small +0.2% gain whilst the largest bank (BNP Paribas) recorded as the worst performing European bank stock today (-2.7%). UK’s FTSE managed a small positive for the day but an +0.5% in the currency helped international investors as traders continue to price in a BOE move on Thursday. Talk is that BREXIT discussions may be progressing better than many had expected but we have yet to hear details.

This post was published at Armstrong Economics on Oct 31, 2017.

Home Price Growth Gains Momentum, Over 2X Wage Growth (Seattle Fastest, Washington DC Slowest)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
The S&P CoreLogic Case-Shiller U. S. National Home Price NSA Index, covering all nine U. S. census divisions, reported a 6.1% annual gain in August, up from 5.9% in the previous month. The 10-City Composite annual increase came in at 5.3%, up from 5.2% the previous month. The 20-City Composite posted a 5.9% year-over-year gain, up from 5.8% the previous month.
Seattle, Las Vegas, and San Diego reported the highest year-over-year gains among the 20 cities. In August, Seattle led the way with a 13.2% year-over-year price increase, followed by Las Vegas with an 8.6% increase, and San Diego with a 7.8% increase. Nine cities reported greater price increases in the year ending August 2017 versus the year ending July 2017.

This post was published at Wall Street Examiner on October 31, 2017.

Connecticut Becomes Last State To Pass A Budget After 123-Day Battle

Four months after the beginning of the fiscal year, Connecticut has become the last state in the US to pass a budget after Democratic Gov. Dannel Malloy signed a bipartisan budget bill, but used his line-item veto power to block a section of the nearly 900-page document related to the controversial hospital tax.
The deal marks the culmination of a bitter struggle between Malloy and lawmakers in both chambers of the CT legislature as they struggled to close a $3.5 billion two-year budget deficit. Fiscal problems have plagued the state since the financial crisis thanks to its overly generous benefits from state employees that have left its pension accounts dangerously underfunded. Malloy was effectively frozen out of the budget negotiations after vetoing a bipartisan budget that was sent to his desk in late September.
‘After 123 days without a budget, it is time to sign this bipartisan bill into law and continue the steady and significant progress our state has made over the past several years,’ Malloy said.
‘Connecticut’s families and businesses deserve to have a budget in place, one that provides a stable environment to live and work,” Malloy said.
‘While there are certainly many provisions of this budget I find problematic, there’s also a clear recognition of many of the fiscal priorities and concerns I’ve consistently articulated since January. I appreciate the work of the General Assembly in passing a budget to my desk that I can sign.’
The budget battle became the longest such stalemate in Connecticut history, surpassing the epic, summer-long fight to create the state income tax that ended on Aug. 22, 1991.

This post was published at Zero Hedge on Oct 31, 2017.

Invest In Gold To Defend Against Bail-ins

– Italy’s Veneto banking meltdown destroyed 200,000 savers and 40,000 businesses
– EU bail-in rules have wiped out billions for savers and and businesses, with more at risk
– Bail-ins are not unique to Italy, all Western savers are at risk of seeing savings disappear
– Counterparty-free, physical gold bullion is best defence against bail-ins
One of Italy’s twenty regions is calling for more autonomy from the state following a nonbonding referendum. Why? Because a government supported ‘rescue package’ caused the lifesavings of 200,000 savers to be wiped out during the implosions of Popolare di Vicenza and Veneto Banca.
Since then the banks have been rescued in one way or another yet the impact of the collapse on individuals and small businesses is only just becoming clear.
As in Spain’s Catalonia the region of Veneto is wealthier than the average Italian region, with its own industries and language yet it has been left with a pile of ash when it comes to its banking sector.

This post was published at Gold Core on November 1, 2017.

The Rising Separatist Movements in Europe-Eastern Europe

There are many in Spain who just outright disagree with any right of Catalonia to be independent. History, culture, language, nothing really matters. Some have said it is the Spanish Constitution and all of Spain should vote to let Catalonia leave or stay. All of that said if Madrid had just allowed a fair referendum then whatever the vote was should have stood.
This is all about saving the EU and not Spain. It was the oppression that probably made others vote to leave. All of Spain cannot vote against one region. London did not vote on Scotland and neither did Toronto against Quebec. California has people pushing to separate and that is not a right to be decided by me in Florida.

This post was published at Armstrong Economics on Nov 1, 2017.

Goldman: Global Capex Is Accelerating (But It Might Not Be Good News)

In ‘Capex complex: Seeking a revival in global capex’, Goldman Sachs is reversing its bearish stance and getting bullish on global capex prospects.
Global capex has hit a trough. After three years of declines, aggregate capex for Goldman Sachs’ coverage of c.2,500 companies is set to grow by c.4% yoy in 2017 according to our analyst estimates, in line with c.4% real growth in global GDP and an 8% rise in aggregate sales. However, to call this the beginning of a recovery in ‘growth capex’ seems premature.

We’ll return to the issue of growth versus maintenance capex below but, at the aggregate level, each of the four constraints Goldman previously identified – low nominal GDP growth, overcapacity, uncertainty and technology – is easing.

This post was published at Zero Hedge on Nov 1, 2017.

From Monetary Nationalism to Monetary Imperialism

[This is the 2013 F. A. Hayek Memorial Lecture presented at the Austrian Economics Research Conference, March 22, 2013.] This article has a twofold purpose. Its first goal is to pay tribute to Friedrich von Hayek as an outstanding monetary theorist. Its second objective is to further elaborate, on the ground of Hayek’s main findings, the deficiencies of the contemporary monetary order, namely by presenting the phenomenon of monetary imperialism. Against this background, the article also contains a re-interpretation of present-day monetary institutions and a critique of internationally sponsored economic stabilization policies.
The first section offers a presentation of Hayek’s early monetary thought, especially in the policy area of monetary nationalism. This presentation, even though a due tribute to Hayek, is delivered in full awareness of the fact that Hayek is not the Austrian economist par excellence. Indeed, a number of scholarly articles have demonstrated that, with respect to a few critical issues, Hayek’s economic and social thought is not fully reconcilable, not to say contradictory, with the praxeological method1 or libertarian ethics.2 The second section expands Hayek’s approach to monetary phenomena in order to show how monetary nationalism leads to monetary imperialism. In that respect, a special emphasis is put on the political nature of multiple paper monies and on the fractional reserve banking principle. Finally, within this analytical context, the third section appraises the recent increase in cooperation between governments, as observed since the policy response to the banking and public finance crises in Europe.
In a series of five lectures delivered in 1937, and published under the title Monetary Nationalism and International Stability, Hayek offers an in-depth analysis of the main deficiencies of the present-day monetary system. In a nutshell, he identifies two factors that disrupt international economic relations: the fractional reserve commercial banks and the national central banks. The former are the primary source for the international transmission of the business cycles, while the attempts of the latter to correct the imbalances de facto amplify the resulting instability.

This post was published at Ludwig von Mises Institute on Oct 31, 2017.

Previewing Today’s Fed Policy Decision

While normally Wednesday’s Fed meeting would be the week’s biggest market-moving event, this time – smack in the middle of the busiest earnings week of the year – it may not even make the top three, buried ahead of the coming news of the next Fed Chair (in which Trump is set to unveil Jerome Powell on Thursday), and the GOP tax bill (which just saw its Wednesday release delayed by one day). One can make the argument that tomorrow’s fully priced in FOMC announcement is also secondary to not only Friday’s jobs report, which may help decide who is right, the Fed’s “dots” or the market, but also to tomorrow’s Treasury refunding announcement.
In fact, the latter is precisely what JPM analyst Jay Barry claimed earlier today, saying the “quarterly refunding announcement at 8:30am ET Wednesday ‘has the possibility to be a bigger event for markets in the morning than the Fed statement in the afternoon’ and since market are ‘priced for a December hike,’ the FOMC meeting isn’t likely to alter expectations in a way that would move the market. Where there is confusion is in the Treasury market, where market participants are divided on whether the Treasury will announce increases to coupon auction sizes Wednesday, or wait until the 1Q refunding announcement in February: ‘There’s a dispersion of views because of the pivot the Treasury Department has had over last few years,’ specifically toward portfolio metrics and aiming to extend the weighted average maturity of the portfolio. Merely reversing the cuts that have been made to 2Y and 3Y auctions since 2013 wouldn’t serve that objective.
‘If they don’t get announced tomorrow, it’s a muted rally, and if they do, it’s a muted steepening, but I think it’s all small because the numbers we’re talking about are only $1 billion month, and because Treasury has been clear in communicating that financing needs are moving higher over the medium term’

This post was published at Zero Hedge on Nov 1, 2017.

It Gets Serious: Biggest US Cities Where Rents Are Plunging

Even Seattle rents are under pressure from new construction. But rents are surging in mid-tier markets. Over the past few years, commercial real estate prices have boomed, and so has multi-family construction, enticed by dropping and desperately low rental vacancy rates that have pushed up rents. But vacancy rates bottomed out in Q2 2016 and have since turned up. In Q3 2017, the rental vacancy rate rose to 7.5%, the Census Bureau reported on Tuesday. While still low, it’s the highest rate in over three years:
Rents have started to respond in the most expensive rental markets. In San Francisco, the most expensive major rental market in the US, the median asking rent for a one-bedroom apartment inched up 1.2% year-over-year to $3,420 but is down 6.8% from the peak in October 2015. For a two-bedroom, the median asking rent dropped 5.9% year-over-year to $4,500 and is down 10% from the peak.
These are asking rents in multifamily apartment buildings, that Zumperaggregated in its National Rent Report. Single-family houses or condos for rent are not included. And these asking rents do not consider incentives, such as ‘one month free’ or ‘two months free,’ which effectively slash the rent for the first year by another 8% or 17%. The data is based on ‘over one million active listings,’ Zumper explains in its methodology. Importantly, the data also includes asking rents from new construction.

This post was published at Wolf Street on Nov 1, 2017.

Kentucky Teachers Blast Pension Reform Plan; Warn That 401(k) Plans Will “Dismantle Public Education”

Graves County Superintendent Kim Dublin in Kentucky is apparently concerned that forcing her teachers to accept the same retirement plans offered to almost every private sector employee in the country would literally “dismantle public education” as we know it.
Speaking to a local NBC affiliate in Kentucky, Dublin told reporters that she relies on the excessive generosity of Kentucky taxpayers to underwrite her state’s lavish defined benefit plans that she uses as a recruiting tool to attract the ‘best talent’.
A local school leader says she believes proposed changes to Kentucky’s pension system would dismantle public education.
Any day now, Kentucky Republican Gov. Matt Bevin could call for a special session for a vote on pension reform.
Some changes include putting new teachers – or teachers who have fewer than five years of experience – onto a 401k style system. Teachers with more than five years in the classroom will still be able to retire with a full pension after 27 years.
That would limit how long they could continue paying into a pension after reaching that number of years. The current proposal allows for three additional years.
Graves County Superintendent Kim Dublin is concerned by many aspects of the proposal.
She says the current pension system allows her to recruit and retain qualified teachers. ‘Our success is because of people, not programs,’ she says.

This post was published at Zero Hedge on Oct 31, 2017.

Smallest home in Los Angeles: 264 square foot studio selling for $550,000 highlights collective insanity.

People have once again lost their collective marbles when it comes to real estate. There is now a massive trend with momentum for non-stop housing appreciation. In other words, our housing bubble sins are now fully washed away making way for more aggressive risk taking. I’ve been traveling and seeing real estate from many different locations and thanks to ubiquitous sites like Zillow, virtually every large metro area is seeing massive housing appreciation detached from income growth and people are tracking real estate down like starving hyenas after an injured wildebeest. We are now in a market where potential buyers are in a panic to buy for no other reason beyond they feel they will miss the boat yet again. Today we highlight what is probably the smallest home we have ever featured on the site.

This post was published at Doctor Housing Bubble on October 31st, 2017.

Gold vs. Bitcoin: Goldman Sachs Weighs In

Authored by James Rickards via The Daily Reckoning,
I write and speak a lot on gold. In contrast – and this surprises some people – bitcoin is my least favorite topic. I’m made my views known many times.
Still, interviewers love to get into the ‘gold versus bitcoin’ debate. I continually get dragged into discussing bitcoin in interviews on TV, radio and the internet. So I discuss it whether I want to or not.
From my perspective, you might as well discuss gold versus watermelons or bicycles versus bitcoin. In other words, it’s a phony debate. I agree that gold and bitcoin are both forms of money, but they go their own ways.
There’s no natural relationship between the two (what traders call a ‘basis’).
The gold/bitcoin basis trade does not exist. But people love to discuss it, and I guess Goldman Sachs is no different.

This post was published at Zero Hedge on Nov 1, 2017.