Given the continuing equity market rally and multiple expansion, the quote above from prior articles, had to be modified slightly but meaningfully. As of today, the S&P 500 Cyclically Adjusted Price to Earnings ratio (CAPE) is on par with 1929. It has only been surpassed in the late 1990’s tech boom.
I once had an online conversation with a journalist whose name you would instantly recognize that started with a question for me: “Why Russia?” Why, this person wanted to know, are we witnessing a hate campaign aimed at Moscow, decades after the implosion of international communism and the breakup of the USSR? I tried to give him a coherent and comprehensive answer, but Twitter is not conducive to in-depth discussions of that sort, and so I filed it away as a question to be answered at a later date. And certainly now is the time to answer it: the Democratic party and its media minions are demanding an “investigation” (i.e. a fishing expedition) into the burning question of whether the President of the United States is the Manchurian Candidate: “Putin’s puppet,” as Hillary Clinton infamously averred. Our out-of-control intelligence agencies are furiously pushing the same line.
Here We Go Again—-Q1 GDP Estimates Tumble: Goldman, Atlanta Fed Cut To 1.8%, JPM At 1.5%, Bank Of America Sees Only 1.3%
With the Fed telegraphing an imminent rate hike, one which together with the “tempered” Trump speech has once again unleashed the reflation trade, and sent the Dow Jones soaring above 21,000, it appears the Federal Reserve will be hiking in a quarter in which GDP comes in in the mid 1%-range.The reason: while “soft data” – which is important to animal spirits if not actual economic output – continues to surge as shown most recently by today’s Manufacturing ISM survey, the “hard data”, that which actually matters to the economy, is still disappointing.
On the heels of a disappointing revised Q4 GDP print, the US trade balance for January printed a $69.2 billion deficit. This is the second largest deficit since August 2008 (slightly smaller than the March 2015 plunge) as the dollar surge has not helped. The biggest driver the deficit increase was 4.8% MoM increase in Consumer Goods (notably Auto exports rose 9.3%)
“Our fourth quarter results reflect the impact of rapidly-changing consumer behavior, which drove very strong digital growth but unexpected softness in our stores,” lamented Target CEO Brian Cornell this morning in the earnings release. “Unexpected” is a hilarious choice of words. Because we, mere outsiders, have been vivisecting the now structural brick-and-mortar retail quagmire for a long time, and no deterioration is “unexpected.” Target’s revenues in the fourth quarter fell 4.3% year-over-year to $20.7 billion. Revenues for the whole year dropped 5.8% to $69.5 billion. Down from $69.8 billion in fiscal 2011. That makes for six years of sales stagnation. Net income plunged 43% to $817 million for the quarter, and 19% for the year to $2.7 billion. But at least, Target is still making money – unlike other retailers, many of which are either already in bankruptcy or are slithering toward it.
Of course, as the Central States Pension General Counsel notes, the real “pension tsunami” will come when the massive “municipal and state plans go down next.” The same crisis now hitting Local 707 has been stewing among numerous Teamster locals around the country for the past decade, he said, and that includes in upstate New York. “This is a quiet crisis, but it’s very real. There are currently 200 other plans on track for insolvency — that’s going to affect anywhere from 1.5 to 2 million people,” said Nyhan. “The prognosis is bleak minus some new legislative help.” And it’s not just private-sector industries that are suffering, he added. “Municipal and state plans are the next to go down — that’s a pension tsunami that’s coming,” he said. “In many states, those defined benefit plans are seriously underfunded — and at the end of the day, math trumps the statutes.”
Today’s Personal Income and Outlays report shows consumer spending rose less than economists predicted and far less than inflation. The result is a big decline in real spending. Economists surveyed by Econoday missed the mark once again.
The probability that a real estate bubble may burst in China is rising. The financial sector heavily depends on real estate, which in turn exposes the entire Chinese economy to systemic risk. This link means that a downturn in real estate could soon spread to other areas of the Chinese economy if banks face liquidity shortfalls.Also, falling housing prices could result in more non-performing loans (NPLs). While NPLs officially account for only 1.75 percent of all Chinese loans, the government is likely understating the figure. BMI Research, a financial consulting firm, estimated in a 2016 report that NPLs could be close to 20 percent of loans.
Today, smart mommas want their babies to grow up to be Washington lawyers or Wall Street bankers or crony hacks.That’s where the stolen money is… and they know it. But that is not how an economy learns. Those are win-lose deals forced onto people by regulations, legislation, and the fake-money system. Some people win; most people lose. Those who aren’t in on the larceny get stuck in lower-paying, lower-learning jobs. They’re at the checkout counter at Sheetz gas stations in Virginia. Or clearing away trees from the power lines in Ohio. Or they have no work at all…Economist Nicholas Eberstadt at the American Enterprise Institute think tank: Between 2000 and 2015, according to [government statistics office the Bureau of Economic Analysis], total paid hours of work in America increased by just 4% (as against a 35% increase for 1985-2000, the 15-year period immediately preceding this one). Over the 2000-2015 period, however, the adult civilian population rose by almost 18% – meaning that paid hours of work per adult civilian have plummeted by a shocking 12% thus far in our new American century.
Following a series of “hot” inflation prints from Germany’s states, moments ago German inflation rose more than expected, printing at 2.2% above the 2.1% consensus estimate, up from 1.9% in January and surpassing the ECB’s target of a rate just under 2 percent for the first time since August 2012, the peak of the Eurozone debt crisis.