Last Week In Review——Scary Times Are Here
Just another week of the “new normal”. Celebratory talk of “helicopter money,” a melt-up in stocks, another terrorist attack in France and a coup attempt in Turkey. Let’s start with Japan, with the preface that “Bubbles Go to Unimaginable Extremes – and Then Double!” and “Things Get Crazy Near the End – During ‘Terminal Phase’ Excesses.”
July 12 – Bloomberg (Emi Nobuhiro and Yoshiaki Nohara): “Japanese Prime Minister Shinzo Abe told former Federal Reserve Chairman Ben S. Bernanke at a meeting in Tokyo he wants to speed up the nation’s exit from deflation, underscoring his commitment to implementing fresh economic stimulus. ‘We are only halfway to the exit from deflation,’ Abe said at the start of the meeting… ‘We want to be steadfast in accelerating our breakaway from deflation.’ Abe’s remarks at the meeting, also attended by the Ministry of Finance’s top currency official Masatsugu Asakawa and adviser Koichi Hamada, came before he ordered Economy Minister Nobuteru Ishihara to compile stimulus measures this month.”
As global markets celebrate Japan’s reckless move to further ramp up fiscal and monetary stimulus, it’s important to place things into a little perspective. Japan has been sporadically ramping up stimulus for more than 25 years. Federal government debt to GDP was about 65% back when the Japanese Bubble burst in 1990. Massive fiscal stimulus saw debt to GDP surge to 140% by the end of the nineties. By 2009, ongoing aggressive deficit spending pushed the ratio through 200%. It’s now almost reached 250%. Meanwhile, expanding $1.0 TN annually, the Bank of Japan’s (BOJ) balance sheet is rapidly approaching 100% of GDP. BOJ assets hovered between 30% and 40% of GDP in the ten-year period through 2012.
Prime Minister Abe must be an eternal optimist if he actually believes Japan is “halfway to the exit from deflation.” The Japanese government this week sharply lowered their fiscal 2017 CPI forecast to 0.4%. After three years of (egregious) “shock and awe” fiscal and monetary stimulus, CPI is now running below the 2013 level. And in the face of massive stimulus, the Japanese economy is forecast to expand less than 1% this year. It’s Scary Time.
Cleveland Police Union Calls for Weapons Ban During RNC
The head of Cleveland's police union called Sunday for the suspension of open-carry gun laws in the city during the Republican National Convention.
Steve Loomis of the Cleveland Police Patrolmen's Association cited the shooting death of three police officers in Baton Rouge, Louisiana, in urging the Ohio's governor, John Kasich, to ban guns for the week.
"This is not an attack on the Second Amendment. This is not an attack on the right to open carry," Loomis told NBC News. "We believe it is a reasonable request to protect the safety of our folks." A statement from Kasich's office said he could not suspend the law.
"Law enforcement is a noble, essential calling and we all grieve that we've again seen attacks on officers," the statement read. "Ohio governors do not have the power to arbitrarily suspend federal and state constitutional rights or state laws as suggested. The bonds between our communities and police must be reset and rebuilt — as we're doing in Ohio — so our communities and officers can both be safe. Everyone has an important role to play in that renewal."
Don’t Reform the Fed, Fed-Exit!
Opponents of a central bank should take advantage of the post-Brexit vote revival of secessionist sentiments to promote a secession from central banking, or “Fed-exit.” Ending the Federal Reserve's monopoly on money is the key to restoring and maintaining our liberty and prosperity.
By manipulating the money supply to fix interest rates, the Federal Reserve engages in price fixing. After all, interest rates are nothing more than the price of money. Like all prices, they communicate information about economic conditions to market actors. Federal Reserve attempts to override the market rate of interest with a Fed-favored rate distort the price signals sent to businesses, investors, and consumers. The result of this distortion is a Fed-created boom, followed by a Fed-created bust.
The Fed’s action affects the entire economy and impacts the lives of all Americans, as well as of people around the word. Therefore, it is no exaggeration to say that the attempt to fix interest rates is the most harmful example of price fixing.
Many who normally oppose government intervention in the marketplace claim that central banking could work if only the Fed adhered to a monetary rule. Supporters of a “rules-based” monetary policy claim that a rules-based approach will bring stability and predictability to monetary policy, and thus put the economy on a path to permanent prosperity. But under a rules-based monetary policy, the Federal Reserve retains the power to manipulate interest rates. So under a rules-based approach, investors and entrepreneurs would still receive distorted price signals, which would still result in a boom-bust cycle. No rule can fix the flaws inherent in our system of monetary central planning.
We’ve Entered a New Leg of a Gold Bull Market
Most Americans Foresee Death of Cash in Their Lifetime
Most Americans (62%) expect the U.S. to become a cashless society in their lifetime, with all purchases being made with credit cards, debit cards and other forms of electronic payment. They express these views as more Americans make payments from an expanding menu of electronic options, and fewer make cash transactions, and as younger populations are becoming more comfortable without cash in their pockets.
Gallup asked Americans in a June 22-23 survey about their opinions of cash and its future role in the economy. Solid majorities in all age groups say they can foresee a U.S. society without cash, including 58% of those 65 and older and 63% of 18- to 29-year-olds.
As Americans move away from using tangible currency for their transactions, the majority (54%) still say they like to have cash on them at all times. Forty-two percent say they are comfortable not having cash on them. Younger Americans between the ages of 18 and 29 are the most likely to be comfortable not having cash. Americans aged 30 and older -- including more than six in 10 among the oldest Americans -- say they would prefer having cash on them at all times, as opposed to not having cash.
Young adults' greater comfort in being cashless aligns with their self-reported behavior. They are using cash in a significantly smaller proportion of transactions than they were even five years ago, so they are clearly adapting to spending without cash.
New Sam’s Club Stores Let Customers Scan Purchases With Phone, Avoid Cashiers
New Sam’s Club stores have a useful feature for people who are in a hurry, or who dislike human interaction. Instead of taking your cart to a cashier at the end of your shopping trip, you can scan items with your mobile phone before putting them in your cart, then check out on your phone as well.
This works in a warehouse club because of its ever-present receipt checkers, since an employee will check your work whether you used a cashier or used smartphone self-checkout. The feature is available at the Longmont, CO store that opened at the end of June, and will also be available at the Columbia, SC store that will open on July 21.
All stores also offer in-store pickup of orders placed online, evidently part of a plan to make shopping at Sam’s as convenient as possible. Will that be enough to attract disgruntled Costco members upset about the credit card transition?
What Sam’s Club really wants are the upper-middle-class shoppers who are attached to those smartphones. Sam’s Club parent company Walmart also wants shoppers walking around glued to their phones, offering a variety of services in its store app that customers can use at home and in stores, from prescription refills to payments at the checkout.
Thousands Of Venezuelans Cross Into Colombia In Search Of Food And Medicine
Thousands of Venezuelans streamed into neighboring Colombia on Sunday to take advantage of a temporary opening of the border to buy food and medicine unavailable at home in their country’s collapsing economy.
Socialist President Nicolas Maduro shut the border last year in an effort to crack down on smuggling of subsidized products. Venezuela’s product shortages have since worsened, creating further incentives to buy goods in Colombia and bring them back.
A plunge in global oil prices have left the OPEC nation’s government unable to maintain lavish subsidies created during the rule of late President Hugo Chavez, while currency controls have left businesses struggling to obtain raw materials and machine parts.
Venezuelans routinely spend hours in lines at home seeking items ranging from corn flour to cancer medication to auto parts. Shoppers complain of violence in lines, and looting is on the rise.
Stock market's moonshot to record highs is all hype, Cornerstone's Worth says
Even as stocks hit record highs, one technical analyst says that the rally is not all it's cracked up to be.
By Friday's market close, the Dow Jones Industrial Average closed a five-day streak of record highs, while the S&P 500 Index posted a four-day record of closing highs.
Many investors flocked to stocks during the rally, while big bank earnings and strong retail sales data drove stocks higher. However, Cornerstone Macro's Carter Worth says that equity performance has actually been rather disappointing.
"I think the issue here is that we know on an absolute basis, one has nothing to show for having been in the market now since May of a year ago," said Worth recently on CNBC's "Fast Money." Investors can get bullish at highs, and bearish at lows, said Worth. That said, "nothing's happened ...in fact [for ]a very long time on a risk-adjusted basis," citing his chart work showing year-over-year change for key assets.
Louisiana Officials Outraged Over Fatal Shooting
Government Considers First Pokemon Go Regulations
Pokemon Go players have certainly had their fair share of run-ins with the law this week — mostly on the wrong side of it. Two men sustained serious injuries and are facing possible charges after falling down a cliff in California chasing Pokemon. Two teens were arrested in Toledo after jumping fence into the Toledo Zoo following the digital creatures. And in LA, police are chasing after Pokemon Go players who wander on to random neighbors’ lawns.
But the app itself is now the target of lawmakers, who want to regulate the game, claiming that the app poses a significant risk to public safety, and the fun must end.
One New York Assemblyman is considering drafting some sort of restriction on the game, claiming that Pokemon Go, which involves battling digital creatures, could have “tragic real-world consequences.” Brooklyn Democrat Felix Ortiz, who is well known for curbing New Yorker’s fun (he’s led crusades against sugar, alcohol, and strip clubs), says that Nintendo has a “corporate responsibility” to make sure that its customers don’t make terrible decisions.
Senator Al Franken is also looking into Pokemon Go. The former SNL star and Minnesota Democrat has written a letter to Niantic, the company responsible for programming the augmented reality portion of the app, asking them how much information they’re collecting from users, and what they plan to do with that information.
Fed Official Confirms "Next Step" in Plan to Consolidate Economic Control
While on a speaking tour overseas, an official of the Federal Reserve has confirmed the “next step” in the Fed’s plan to consolidate complete control over the economy of the United States.
During an interview on Australia’s ABC AM, Loretta Mester of the Cleveland Federal Reserve said that the Fed is “assessing tools” that could be used to increase the influence of the central bank on the flow of money in the United States.
Goldman Sachs, the Fed’s farm team, doesn’t even bother to pretend that the issuing of helicopter money is anything other than, as they explain on their website, “a form of monetary finance, whereby the central bank finances fiscal stimulus through money creation.”
The Central Bank will supposedly improve the economy by creating money and pumping it into the treasury market, which in turn creates increased debt for the U.S. taxpayer. Of course, this is Keynesian economics at its finest. These global statists believe that if an average American looks around and sees money being pumped into the system (by whatever means is irrelevant to the Keynesians), then that American will believe that things are improving economically and that will compel him to go out and spend money, increase his own personal debt, and thus piggyback this increase in cashflow through the system on the back of the Fed’s money printing scheme.
59 percent of Americans are sick and tired of the election
There are over 110 days until the November election, give or take a few hours. But a majority of Americans have already had enough of it: In a recent Pew survey of 4,602 American adults, 59 percent said they feel "worn out by so much coverage of the campaign and candidates."
It's hard to blame them. The 2016 campaign seemed to kick off right around when the votes were tallied in 2012. And when we finally put this year's election to bed on Nov. 8, all we have to look forward to is 2020 election coverage, which will begin on approximately Nov. 9.
Actually, scratch that last bit — the 2020 campaign is already upon us. Majorities of every demographic group surveyed by Pew are already exhausted by the election: 54 percent of seniors and 67 percent of millennials. Sixty-two percent of women and 56 percent of men. Sixty-two percent of whites and 54 percent of nonwhites. Nearly identical proportions of Republicans (54 percent) and Democrats (55 percent).
Americans aren't exhausted because they don't care or aren't interested — in fact, it could be because they care about this election too much. Pew's polling shows that record-high numbers of Americans (80 percent) say they've thought about this election "a lot" — fewer than half of Americans said the same about the 2000 election, for instance.
JPMorgan sets the tone for US banks
Cardless Cash To Roll Out At 70,000 ATMs
The days of sticking your debit or credit card into an ATM may soon be numbered. Cardless ATM cash has arrived - so card skimmers beware.
A new partnership between FIS and Payment Alliance International (PAI), two leaders in the ATM solutions, announced on Friday they will bring cardless cash withdrawals to 70,000 ATMs across the US at retailers, convenience stores, gas stations and more. The banking and technology leap uses Apple's iPhone Touch feature.
Now, instead of entering your PIN and worrying about whether there's a card skimmer stealing your information, people will be able to use their iPhones and a mobile app to withdraw cash. Transactions at the 70,000 PAI-operated ATMs will be authenticated with a person's fingerprint via the Touch ID sensor.
FIS said: "The mobile banking app acts as a remote control for the ATM, providing unparalleled privacy and security for consumers." Withdrawals will only take 10 seconds and electronic receipts will be sent directly to a person's iPhone after the transaction has been completed, the group said.
Dental Care In The U.S. At Premium, ‘Something For Upper Middle And Upper Class’
There’s an old saying that looking at a horse’s teeth can tell a lot about the health of the horse – and studies have proven this is true for humans as well. In fact, poor dentition and gum disease have been associated with heart disease and inflammation in the body, which can serve as a marker for overall wellness when tested by blood work. However, USA Today reports that it doesn’t seem to matter if people know the association or not – they can’t afford dental care even when they have specific dental problems, and particularly not for preventative medicine.
This is true whether or not they have dental insurance, according to USA Today, since most dental insurance providers are separate from overall health coverage and have limitations on what they will and will not cover. Anything beyond basic care and X-rays is usually an out-of-pocket expense for the patient, particularly dental care that includes crowns or implants, or other costly gum and teeth-sparing treatments.
The fact that dental health coverage is not all that helpful for most people is not news to anyone, including dentists. In fact, last year, roughly half of those with dental insurance saw a dentist, as compared to only 17% of the completely uninsured, both abysmal numbers when periodontal disease and tooth decay has been indicated a key factor in the development of heart disease.
Last month, the Department of Health and Human Resources awarded a $156 million dollar grant to be split between 420 facilities that provide dental care for the indigent and uninsured, but that amount is far less than what is actually needed to address the overwhelming problem of dental decay and periodontal disease. Martin Kramer, head of the communications office at the Health Resources and Services Administration, a part of HHS, said the timing is crucial.
HSBC plans more job cuts amid $5B budget cut
A new round of cuts is coming to HSBC.
The embattled bank, which has been struggling to cut costs, is preparing to cut about 15 bond traders across New York, Europe, and Asia as soon as Monday, sources told The Post.
The trimming of the company’s bond desk comes as Wall Street has struggled to squeeze profits out of trading the assets while central banks around the world increasingly lower their benchmark rates, making them less lucrative.
The bank, run by outgoing CEO Stuart Gulliver, has been in cost-cutting mode for two years, and is trying to trim $5 billion by the end of 2017. Earlier this year, the bank said in an internal memo that it was instituting a hiring and pay freeze. Last year, the bank announced it would slash about 50,000 jobs worldwide and focus on its Asian businesses. Under Gulliver, the bank has slashed about 87,000 jobs.
Keiser Report: Preventing Debt Parasites
Official: 6 of 7 Remaining Obamacare Co-Ops on the Brink
Six of the seven Obamacare co-ops that are still in operation are currently on corrective action plans, according to an official from the Centers for Medicare and Medicaid Services.
The Illinois Department of Insurance announced this week that it was requesting an order of rehabilitation for the state’s Land of Lincoln Health co-op because of its unsustainable financial position. The co-op was originally awarded $160.2 million by CMS.
This closing announcement has brought the number of failed co-ops from 15, which was reported earlier this week, to 16.
Kevin Counihan, a top official for the Centers for Medicare and Medicaid services, told lawmakers on Wednesday that of the seven co-ops that are still in operation, six have been placed on corrective action plans. Co-ops are flagged for these plans when the agency has identified issues with the co-ops finances, operations, compliance or management processes.
Ford F-150 Gets 0% For 60 Months Financing
Ford’s (NYSE: F) F-150 is the top selling vehicle in the U.S. For some reason, the No.2 car company in America has started to offer 0% APR for 60 months on it. While this is not as aggressive as some 72-month, or 84-month loans, it is extremely aggressive for a vehicle with sales of 395,244 in the first half of the year.
The F-150’s sales for June were 70,937, up 28.6% from the same month in 2015. This was quite a distance above the second best selling vehicle last month–GM’s (NYSE: GM) Chevy Silverado. The Chevy full-sized pick-up, the primary rival to the F-150, sold 49,662 down 3.7%. For the first half its sales were 273,652, down .8% Chevy is offering heavy discounts on the Silverado as a means to close the gap.The F-150 deal, which according to Ford was “just announced” is part of Ford’s “Freedom Sales Event” and joins new discounts on a number of Ford’s cars which include the Explorer, Expedition, Escape, Edge, Flex, Mustang, Taurus, Focus, Fusion, and Fiesta.
The F-150 promotion reads: "0% APR / 60mos +$1000 Ford Smart Bonus. 3. Not all buyers qualify for Ford Credit financing. 60 months at $16.67 per month per $1,000 financed regardless of down payment." In other words, the buyer needs to use Ford’s finance arm, and might not clear credit hurdles at all.