Can Trump Fix The Economy In 2017? – Paul Craig Roberts

In the West Junk Information And Junk Judgment Prevail
The Western world and that part of the world that partakes of Western explanations live in a fictional world. We see this everywhere we look – in the alleged machinations of Russia to elect Donald Trump president of the US, in claims that Saddam Hussein and his (nonexistent) weapons of mass destruction were a threat to the United States (a mushroom cloud over American cities), that Assad of Syria used chemical weapons against his own people, that Iran has a nuclear weapons program, that a few Saudi Arabians outwitted the entirety of the US, EU, and Israeli intelligence services and delivered the greatest humiliation to the ‘world’s only superpower’ in the history of mankind, that Russia invaded Ukraine and could at any moment invade the Baltics and Poland, that the US rate of unemployment is 4.6%, that China’s trade surplus with the US is due to Chinese currency manipulation, and so on and on.
Allegedly we live in a scientific era of information, but what good can come from faulty orchestrated information? As long as fake news delivered by presstitutes serves powerful private and governmental interests, how can we know the truth about anything?
For example, consider the claim found everywhere in US government and US media statements that the massive US trade deficit with China is the result of Chinese currency manipulation, keeping the yuan underpriced relative to the US dollar.

This post was published at Paul Craig Roberts on January 3, 2017.

“The World Has Materially Changed”: Why Morgan Stanley Began To Fade The Trump Rally

Morgan Stanley’s Adam Parker has undergone an epistemological catharsis of sorts in the past year: having called 2013-2015 largely accurately, 2016 threw him for a loop, when he entered the year bullish, only to turn bearish, and then to flip again (along with most other sellsiders) shortly after the Trump victory. Then, going into year end, Parker remained steadfastly optimistic, however much of that appears to have now changed, because, as he admits in his latest research outlook issued early this morning, he has turned decidedly more sour on the market (although he still expects the S&P to close the year at 2,300, same as Goldman), as his “view of the world has materially changed in the last couple of months” following the furious market rally, which has little optimistic upside left.
To wit: “What increasingly optimistic news are we going to start embedding in our earnings outlooks post-inauguration that hasn’t already been contemplated? A number of stocks are up a lot for which we don’t expect much incrementally positive news for at least the next couple of earnings seasons. So to us, it is WHEN, not IF we should fade this recent reflation trade.”
And speaking of the WHEN to fade the reflation trade, Parker provides a tenative answer: “Part of us thinks we should just sell the inauguration. After all, what incrementally positive and exciting outcomes could be produced in the first few weeks after that? We are worried that there is an arrogance in telling people that they should be worried, but to stay bullish for now. We are getting more cautious and are trying to be prudent as the market has materially appreciated.”

This post was published at Zero Hedge on Jan 3, 2017.

Trump Tweets, Ford & GM Counter, their Shares Jump, the Peso Plunges, but the Jobs Won’t ‘Come Back’ to the US

Whacked by slow demand, Ford cancels plant in Mexico, shifts car production to existing plant in Mexico.
President-Elect Trump has been hounding individual businesses with his drive-by tweets, to knock them around some, get their shares to sink, and cut some ‘deals.’ Last year, he singled out Ford, Carrier, Boeing, and Lockheed Martin. Now companies have set up damage-control teams to prepare for and counter a hit of this type.
Today he singled out GM. It was automaker day. It started with a Trump drive-by tweet about threatening GM with a ‘big border tax’ for importing its Chevy Cruze from Mexico:
General Motors is sending Mexican made model of Chevy Cruze to U. S. car dealers-tax free across border. Make in U. S. A. or pay big border tax!
But he got the facts wrong, and GM’s damage-control team instantly retorted:
General Motors manufactures the Chevrolet Cruze sedan in Lordstown, Ohio. All Chevrolet Cruze sedans sold in the U. S. are built in GM’s assembly plant in Lordstown, Ohio. GM builds the Chevrolet Cruze hatchback for global markets in Mexico, with a small number sold in the U. S.
Reality is this: Demand for GM cars has been swooning, and inventories on dealer lots have been ballooning. For example, at the end of November, dealers sat on 127 days’ supply of Cruze models, more than double a healthy level, after sales had plunged 18%. In November, GM had announced the first wave of layoffs. In December, it followed up by announcing 10,000 layoffs and five plant closings [read… ‘Car Recession’ Bites GM: Inventory Glut, Layoffs, Plant Shutdowns].

This post was published at Wolf Street on Jan 3, 2017.

2017 First Half Prediction: Stability But Minimal Growth

Finally… the US industrial economy has some good news.
Goods demand has stabilized and inventory drawdowns are over.
As the chart of inventory shows, starting in the second half of 2015, companies began cutting down on stockpiles. This matters because companies don’t hire or spend when their end-users are saying they have enough stock on hand.
(Payrolls suddenly stopped growing from 240K per month in 2014 to 220K in 2015 and then 160K in 2016.)
Hear Marc Levinson on An Extraordinary Time: The End of the Postwar Boom and the Return of the Ordinary Economy
The US industrial economy has been in a holding pattern of sorts as they bled off the inventory overhang (too much supply for existing demand). The order of the day has been to make less: factory production was cut – Factory Capacity Utilization has fallen to 2014 levels – along with payrolls.
Once the equilibrium shifts away from excess supply, business investment will start to tilt up.

This post was published at FinancialSense on 01/03/2017.

Dow 20k Disappoints For 14th Day As Crude Crumbles, Peso Pounded

Disappointment again…
Early exuberance in stocks – as overnight gains suggested panic buying at the US open, faded rapidly as financials and tech faded and crude plunged (despite better than expected data)… then after NYMEX closed VIX was smashed lower and stocks lifted…
S&P was best on the day, Trannies were red (thanks to Ford news impacting rails)… NOTE – stocks ripped at the open, then dumped into the European close, then went nowhere…

This post was published at Zero Hedge on Jan 3, 2017.

Central Bankers Are In The Process Of Banning Cash One Country At A Time – Episode 1168a

The following video was published by X22Report on Jan 3, 2017
Trump lashes out at GM and Ford and says will impose border tax if jobs are moved out of the country. Manufacturing survey is detached from the hard data, industrial production declining. Pension systems around the country are worse off than everyone realizes. Inflation hits Germany. Greece implements a soft cash ban, the central bankers are slowly banning cash one country at a time. Finland starts helicopter money drops to push spending. EU leaders are now worried that more countries are going to vote to exit the EU. Britains EU ambassador resigns before the BREXIT. The system is coming apart and the central bankers/Elite will react to save it.

New York Governor Proposes “Free Tuition” For Public Universities

There is little doubt that easy access to federally subsidized student loans has contributed to the astronomical increase in the cost of attending college in the United States. After all, what 18 year old would turn down $200,000 in free money to party for 4 years? As an added bonus, when you figure out upon graduation that your degree in anthropology if fairly worthless, you can always just move back in with mom and force taxpayers to pick up your debt burden. Anything less would be a substantial “triggering” event and we just can’t have that.
As we noted roughly a year ago, the amount of student debt outstanding is on track to reach nearly $17 trillion by 2030…which is clearly enough artificial demand to send the price of almost any commodity product soaring.
Well, apparently New York’s Governor doesn’t think that misinformed government policies are doing nearly enough to drive up college tuition costs. As a result, he has decided to jump on the Bernie Sanders bandwagon with a new proposal that would provide free tuition at public state and city colleges to any student whose parents earn less than $125,000.

This post was published at Zero Hedge on Jan 3, 2017.

ISM Manufacturing Index: December PMI Highest in Two Years

Today the Institute for Supply Management published its monthly Manufacturing Report for December. The latest headline Purchasing Managers Index (PMI) was 54.7 percent, an increase of 1.5 percent from 53.2 previous months and its highest since December of 2014. Today’s headline number was above the Investing.com forecast of 53.6 percent.
Here is the key analysis from the report:
‘The December PMI registered 54.7 percent, an increase of 1.5 percentage points from the November reading of 53.2 percent. The New Orders Index registered 60.2 percent, an increase of 7.2 percentage points from the November reading of 53 percent. The Production Index registered 60.3 percent, 4.3 percentage points higher than the November reading of 56 percent. The Employment Index registered 53.1 percent, an increase of 0.8 percentage point from the November reading of 52.3 percent. Inventories of raw materials registered 47 percent, a decrease of 2 percentage points from the November reading of 49 percent. The Prices Index registered 65.5 percent in December, an increase of 11 percentage points from the November reading of 54.5 percent, indicating higher raw materials prices for the 10th consecutive month. The PMI, New Orders, Production and Employment Indexes all registered new highs for the year 2016, and the forward-looking comments from the panel are largely positive.’ [source] Here is the table of PMI components.

This post was published at FinancialSense on 01/03/2017.

‘Everything Else Is Almost Irrelevant’: Era Of Cheap Money Ending, Financial Hell Unleashed

We’re living in the calm before the storm.
That much everyone can sense. The stock market highs and holiday spending spree will soon be over, the inauguration will presumably go as planned, but that’s when everything could start to go off course.
The only question is how the storm is going to stir into a frenzy – there will be a pretext of some kind. What seems certain is that it is past time to get ready for a difficult period. This could be the big, slow squeeze and the long winter.
The economy became immune to stimulus and quantitative easing; the market can only be propped up so long, and the realities of raised interest rates a matter of timing for the Fed to decide. Now, President-elect Trump provides the catalyst necessary for a dramatic rise and fall in the economy.
With the force of the economic avalanche that is poised to fall upon us all, the policies and actions of President Trump will do little to stem the tide of what is already coming; for better or worse, there is little that Trump himself can do even though it may fall squarely on his administration.
There are many putting out the talking points now; the warnings are reaching a crescendo.
Jay L. Zagorsky, Economist and Research Scientist at Ohio State University, is predicting a recession for 2017, in spite of glowing outlooks, that could dominate headlines:
My outlook for 2017 and beyond is that the U. S. economy will likely see another recession.
[…] It could be a sudden trigger like the collapse of Lehman Brothers in late 2008 or just a general loss of confidence.

This post was published at shtfplan on January 3rd, 2017.

Megyn Kelly Leaving Fox News For NBC

An ending, and a new beginning… pic.twitter.com/clyKaDpQTW
— Megyn Kelly (@megynkelly) January 3, 2017

Trump is on a roll: having dispatched of Ford’s Mexican facility plans, followed shortly by the GOP’s proposal to overhaul the independent Ethics office just just a handful of tweets, moments ago the NYT reported that Trump’s old Fox News nemesis, Megyn Kelly is leaving Fox to join NBC.
According to the Times report, Kelly will take a ‘triple role’ at NBC: hosting a daytime news and discussion show, anchoring a Sunday night news show and being a central part of the network’s special coverage of politics and other big events. Kelly’s departure is certainly not due to her ratings: she was the second-most-watched anchor on cable news, behind only Fox’s Bill O’Reilly.
More details from the NYT:

This post was published at Zero Hedge on Jan 3, 2017.

3/1/17: Euro growth greets 2017 with a bit of a bang

December marked another month of rising economic activity indicator for the euro area. Eurocoin, a leading growth indicator published by Banca d’Italia and CEPR notched up to 0.59 from 0.45 in November, implying annualised growth rate of 2.38 percent – the strongest growth signal in 67 months. It is worth remembering that in 2Q and 3Q 2016, real GDP growth slumped from 0.5% q/q recorded in 4Q 2015 – 1Q 2016 to 0.3% in Q2-Q3 2016. Latest 4Q 2016 reading for Eurocoin implies growth rate of around 0.47 percent, slightly below 1Q 2016 levels, but above the 0.31% average for the current expansionary cycle (from 2Q 2013 on).
Charts below illustrate these dynamics

This post was published at True Economics on January 3, 2017.

FINAL VERSION: JAN 3/SILVER SHINES BY ADVANCING 41 CENTS/GOLD ALSO ADVANCES $10.40/GERMANY HAS REPATRIATED ITS ENTIRE 300 TONNES FROM THE USA/ANOTHER HUGE 9.49 TONNES LEAVES THE GLD/NOTHING LEAVE…

Gold at (1:30 am est) $1160.40 UP $10.40
silver at $16.35: UP 41 cents
Access market prices:
Gold: $1159.25
Silver: $16.29
THE DAILY GOLD FIX REPORT FROM SHANGHAI AND LONDON
The Shanghai fix is at 10:15 pm est last night and 2:15 am est early this morning
The fix for London is at 5:30 am est (first fix) and 10 am est (second fix)
Thus Shanghai’s second fix corresponds to 195 minutes before London’s first fix.
And now the fix recordings:
TUESDAY gold fix Shanghai
Shanghai morning fix Jan 3/17 (10:15 pm est last night): $ 1181.81
NY ACCESS PRICE: $1157.00 (AT THE EXACT SAME TIME)/premium $24.81
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
Shanghai afternoon fix: 2: 15 am est (second fix/early morning):$ 119.39
NY ACCESS PRICE: $1156.15 (AT THE EXACT SAME TIME/2:15 am)
HUGE SPREAD 2ND FIX TODAY!!: $23.25
China rejects NY pricing of gold as a fraud/arbitrage will now commence fully
XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
London Fix: Jan 3/2017: 5:30 am est: $.1148.65 (NY: same time: $1148.09 5:30AM)
London Second fix Jan 3.2017: 10 am est: $1151.00 (NY same time: $1151.10 10 AM)
It seems that Shanghai pricing is higher than the other two , (NY and London). The spread has been occurring on a regular basis and thus I expect to see arbitrage happening as investors buy the lower priced NY gold and sell to China at the higher price. This should drain the comex.
Also why would mining companies hand in their gold to the comex and receive constantly lower prices. They would be open to lawsuits if they knowingly continue to supply the comex despite the fact that they could be receiving higher prices in Shanghai.

This post was published at Harvey Organ Blog on January 3, 2017.

How Goldman Sees The S&P In 2017: First Rise, Then Fall

About 3 months ago, Goldman’s year end S&P500 target for 2016, 2017 and 2018 were 2,100; 2,200 and 2,300 respectively. Then, as readers are well aware, everything changed with the Trump election which unleashed a surge in US equities and the dollar, on expectations of reflation and fiscal stimulus. That prompted Goldman to boost its S&P price target by roughly 200 points across the board, as it merely tried to keep up with the price action.
Understandably, there was some confusion, so to address it, overnight Goldman’s chief equity strategist David Kostin released his first “weekly kickstart” report, which summarized Goldman’s latest goalseeked forecasts for the S&P500 as follows: “S&P 500 rose 9.5% for a total return of 12.0% in 2016; We forecast a 5% total return in 2017”
The details:

This post was published at Zero Hedge on Jan 3, 2017.

2017 Stock Market Predictions: Trump Slump in January for Stocks

I begin my 2017 stock market predictions with a recap of last year’s predictions. In an article back in 2015 titled ‘The Epocalypse: What Will D-Day Look Like?’ I predicted the Fed would raise rates on December 16th, 2015, and the US stock market would crash immediately. Counterintuitively, I said it would crash by shooting upward for a few days; then it would round off, and then, in a short time, it would plunge off a cliff. (In all not a pattern you’d likely find anyone else predicting.)
I said the stock market would crash by going up because everyone would look around after the long-dreaded day of the Fed’s first rate hike and see that the sky didn’t fall. That would turn them all smarmy and euphoric over how right they were about the recovery and about the bull market. That would, in turn, give rise to their hopes of a bull market forever and never ceasing. However, parties lead to hangovers. Once you recover from the hangover, reality sets in. That’s when they would begin to panic as they looked around, saw all the bottles and underwear and said, ‘Oh, my gosh, what did we do last night?’
How my 2015/2016 stock market predictions did
That is EXACTLY what happened (perhaps even including the underwear). January became the worst opening month in stock-market history. Now, to be fair, I also said that globally 2016 would turn into the ‘Year of the Epocalypse,’ and it didn’t. (More on that in my next article of 2017 economic predictions, but you have to admit it was one darn weird year, which I think was only the warm-up act for this year.) However, as part of the economic apocalypse I predicted for 2016, I described the following blowup:
Movement from bond funds to stocks will accelerate the bond implosion, wiping out billions in paper wealth on the high-yield bond side. Unfortunately for the market bulls, such mega-bond crashes almost always lead directly into stock-market crashes.

This post was published at GoldSeek on 3 January 2017.

Charts at the Market Close – Things You May Not Want To Hear, But May Wish To Know

This year I think that I am going to be publishing all of the charts in one posting, rather than splitting them up between stocks and metals.
Today was a lazier trading day than the numbers might have indicated. It was easy to lift stocks today, in other words.
There was little of note in the Comex reports from the last day of 2016.
I was looking over some old charts over the weekend, and I think that the direction of the gold and silver markets in the first couple of months will be quite telling for the rest of 2017.
The key level will be for the metals to break out above their ‘election night’ highs when the markets realized that Trump had won.
This atmosphere and tone of the markets reminds me of the period during which the big cup and handle retraced 50 percent or thereabouts in gold, and then took off on a steady run to its all time high. Remember that?
Still, without the breakout, we have nothing but what we have, which is a sideways chop.
A long time reader sent me this link to this live updating chart that compares the metals prices on the dollar and yuan markets.
Another honored patron introduced me today to the twitter feed of Harald Malmgren, a former presidential adviser to JFK, LBJ, Nixon Ford, US Senate Finance.
I thought quite a few things that he said about stocks and other matters were quite to the point.
Some of Harald Malmgren’s tweets from earlier today in descending order by time:

This post was published at Jesses Crossroads Cafe on 03 JANUARY 2017.

Asian Metals Market Update: Jan-3-2017

Last year precious metals and industrial metals had been shared between bulls and bears. In the first half of last year, precious metals zoomed, while in the second half of the year industrial metals and natural gas zoomed. Over the past two years, there have been very gloomy predictions on gold and silver all over the internet. None of the extreme bearish forecast actually came. The message for 2017 is very clear, one needs to trade on a combination of information and technical. Balance on trading strategy as well as balance of mind on which way metals and energies may move on any day will be the key.
Bitcoin is now turning out to be an asset class. It reached $1000 for the first time. Firmness in Bitcoin prices will attract a lot of investment from equities as well as commodities. Silver and gold could get serious competition from bitcoin in the short term unless bearish fundamentals make a U turn.
The period till 20th January could be very tricky to trade as well as invest. Obama is trying his best to ensure that his incumbent Trump is not able to implement his election promises. The next nearly three weeks is anything can happen zone. Once Trump becomes the US president, expectation on implementing announced policies will be the key. After Trump’s win, the US dollar has gained significantly against the Japanese Yen and other major currencies. I have my doubts that the US dollar will be able to maintain the pace of gains of 2016. Any US dollar weakness can result in gold and silver prices getting a short term boost.

This post was published at GoldSeek on 3 January 2017.

U.S. Quietly Drops Bombshell: Wall Street Banks Have $2 Trillion European Exposure

Just 17 days from today, Donald Trump will be sworn in as the nation’s 45th President and deliver his inaugural address. Trump is expected to announce priorities in the areas of education, infrastructure, border security, the economy and curtailing the outsourcing of jobs. But Trump’s agenda will be derailed on all fronts if the big Wall Street banks blow up again as they did in 2008, dragging the U. S. economy into the ditch and requiring another massive taxpayer bailout from a nation already deeply in debt from the last banking crisis. According to a report quietly released by the U. S. Treasury’s Office of Financial Research less than two weeks before Christmas, another financial implosion on Wall Street can’t be ruled out.
The Office of Financial Research (OFR), a unit of the U. S. Treasury, was created under the Dodd-Frank financial reform legislation of 2010. It says its role is to: ‘shine a light in the dark corners of the financial system to see where risks are going, assess how much of a threat they might pose, and provide policymakers with financial analysis, information, and evaluation of policy tools to mitigate them.’ Its 2016 Financial Stability Report, released on December 13, indicates that Wall Street banks have been allowed by their ‘regulators’ to take on unfathomable risks and that dark corners remain in the U. S. financial system that are impenetrable to even this Federal agency that has been tasked with peering into them.
At a time when international business headlines are filled with reports of a massive banking bailout in Italy and the potential for systemic risks from Germany’s struggling giant, Deutsche Bank, the OFR report delivers this chilling statement:

This post was published at Wall Street On Parade By Pam Martens and Russ Marte.