Tag: Harald Malmgren

QUOTES OF THE DAY

“OMB Director Mulvaney cites a record high in gov’t revenue. True, revenues hit a high in nominal terms over FY18, growing 0.4% Y/Y, However after adjusting for inflation, growth actually fell by 1.6%”.

Steve Rattner

“Non Farm Payrolls puffed up all year, major negative adjustment to come later. For most Americans this is not a strong economy, regardless of what Fed or Administration says. When the jobs data is benchmarked to the tax data in February, there will be a massive downward revision.

I just ran the October withholding, and there is no way that this number is correct. Withholding was extremely weak. Bureau of Labor Statistics overstating gains all year.”

Lee Adler, Capital Stool

“Thanks [Lee] for the insight on the inconsistency of NFP with payroll withholding. I was about to have a quick look at tax receipts but you saved me from that task. As for avg wages rising I expect much wage gains concentration in top 10% (supervisory), similarly for per capita incomes… [for a truer picture look at median numbers especially in times of record income disparity]

BLS says 250,000 jobs created. Zero attention to how number compiled. BLS number helped each month by “birth-death” ESTIMATE to account for unknown business shutdowns and startups. Guess what? The Birth-death estimate this time was +246,000. Good NFP before midterms.”

Harald Malmgren

QUOTE OF THE DAY

“Administration and Main Stream Media (MSM) say ‘booming’, much faster GDP and jobs growth than previous decade, but the reality is an occasional 1 or 2 quarter surge but baseline 2% growth rate trends remain unchanged.

Only growth in the stock market, other Fed inflated assets, and debt. Maybe we should ask MSM what is ‘booming’. Official jobs numbers obscure 1/3 of labor force without jobs and not job seeking; job holders are a mix of full and part time; average hourly wages are rising because ‘supervisors’ (managers) wages are rising but flat for 90%.

Flawed startup jobs guesses (Birth Death Model) added to lift feeble jobs created. Payroll tax receipts are falling— could the tax receipts decline be explained by tax cuts?

Tax cuts have primarily assisted corporations. They have had a negligible effect on payrolls taxes. Weak withholding receipts reflects continuing rise in part time workers and low wage substituting for full time workers.

And keep in mind the little growth that did take place was debt driven. Despite all the ‘booming economy’ cheerleading, the data shows a flat trajectory for growth at around 2% for the last decade, despite mountains of ‘stimulus’.

A chart of the Dow looks rather different, suggesting all the stimulus went into the stock market instead.

The US economy is not booming. It has begun gradual slowdown. Housing and autos slump is just the most visible indicator of broad based downturn-“

Harold Malmgren

QUOTES OF THE DAY

“No regulatory penalties, no criminal indictments for fraud, no clawbacks, no prohibitions of bonuses at least during early phase of financial market recovery, all of this sticks in my mind as unjustifiable— and imprudent, as it taught a lasting lesson that bankers had immunity.”

Dr. Harald Malmgren

“At the recent market peak, the most reliable measures of U.S. equity market valuation (those best correlated w/actual subsequent long-term returns) were about 200% above (3 times) historical norms. No market cycle, not even 2002, 2009, has ended at valuations even half that level.”

John Hussman

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QUOTES OF THE DAY

“Most American investors unaware rehypothecation is widely practiced inside US, but more limited. Rehypothecation will be the problem!

US law permits moving US client accounts from parent company to subsidiaries in other nations,which enables their use as collateral for loans usable to invest in other securities. Now, clients can specify their assets may not be transferable to a foreign jurisdiction.

Jon Corzine used MF Global to transfer US client accounts to a subsidiary entity in London, where UK rules permitted much higher levels of rehypothecation (i.e .leverage up to 4X, US rule less than 1.5X). A iming to build giant enterprise w/other people’s money, it blew up.”

Dr. Harald Malmgren

“Whoever makes a fortune by a lying tongue
is chasing a bubble over deadly snares.

The soul of the wicked man desires evil;
his neighbor finds no pity in his eyes.

When the arrogant man is punished, the simple are the wiser;
when the wise man is instructed, he gains knowledge.

The just man appraises the house of the wicked:
there is one who brings down the wicked to ruin.

He who shuts his ear to the cry of the poor
will himself also call and not be heard.”

Proverbs 21:6, 10-13

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QUOTES OF THE DAY

“What does Dr Copper want to tell us? The metal with the PhD in economics is now in a bear market, down 21% from recent high in June. Dr. Copper is signaling us that global contraction is now in motion.”

Dr. Harald Malmgren

“Make no mistake, whatever the macro-idiosyncrasies of Turkey, the key to the current turmoil that is spreading into EM generally, is Fed tightening and the strong dollar. As we have repeated ad infinitum, since 1950 there have been 13 Fed tightening cycles, 10 of them ended in recession and the others usually saw the EM blow up – such as the 1994 collapse in the Mexican peso. The Fed always tightens until something breaks.”

Albert Edwards

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QUOTES OF THE DAY

“Caution in handling ‘generally accepted opinions’ that claim to explain whole trends of history is especially important for the historian of modern times, because the last century has produced an abundance of ideologies that pretend to be keys to history, but are actually nothing but desperate efforts to escape responsibility.”

Hannah Arendt, The Origins of Totalitarianism

“Flattening of the yield curve is happening so slowly no one noticing the 2s-10s gap is now 24 bps. Meanwhile yields on 30s are back to 3.02% & falling. Trump and media are talking pickup in US growth, but global institutional investors not buying it, and see trouble in the rest of world.”

Dr. Harald Malmgren

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QUOTE OF THE DAY

“RECORD 95,689,000 Americans ARE NOT IN THE LABOR FORCE: That is how the US official unemployment number can be so low. If we count age-eligible workers who stopped looking for work and no longer in Labor Dept jobs data base unemployment near 10%. AND of those counted as employed, large fraction unwillingly part-time. I have been a longtime critic of all BLS and BEA unreliable & misleading data. 2017+Q1 2018 show higher per capita income, but median essentially no gain. Reason: higher pay for supervisors & professionals, but not 90% underclass.

Many of us kept pointing out the fact unemployment was around 15% during the 0bama regime and the media conspicuously ignored it. NOW you bring it up, conspicuously ignoring the fact it is STILL better than during the 0bama regime. I was saying the same thing not only about entire Obama years employment data but long before then. Each new WH staff discovers labor mkt data can be shaped to give any POTUS à good report card. Even Fed uses that BLS number, aware it is misleading.”

Dr. Harald Malmgren

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QUOTE OF THE DAY

“I spent time in my life analyzing warfare strategies, costs, aftermath consequences, mostly aimed at discouraging military action. Most military leaders focused on deterrence, not initiation of action. Danger primarily lies in careless threats made by political leaders.”

Harald Malmgren

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QUOTE OF THE DAY

“Businesses invest to meet anticipated or actual demand. Not because they have more money. Why is there little demand, not business investment, is the real question. Demand is weak because there is little increase in disposable income for all but the wealthy and high end professionals

Isn’t it rather premature to render such evaluation at this point? Maybe. Spokesmen for corporate America confirming to White House thus far primary use of corp tax cuts will be buybacks and dividends. White House did not expect that outcome, should have asked SEC to have fresh look at SEC reg 10b-18 to curb execs use of buybacks at time of tax cuts…

Ultimately the key question ahead for Fed & other Central Banks is how to manage deleverage of economies and financial markets w/o a market crash from such a high level of debt–or at least moderate a downslide.”

Dr. Harald Malmgren, twitter 3/13/18

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QUOTES OF THE DAY

“If govts take control of virtual currencies no need for tax bills & payment issues. Taxes, fines, etc automatically deducted from your account. Tax collectors & intel community can hardly wait for mandated single ledger for crypto currency systems, (w/global access for them). As govts tighten grip on virtual currencies, individual discretion on money mgmt will become restricted and right of privacy extinguished.”

Dr. Harald Malmgren

“One Ring to rule them all, One Ring to find them,
One Ring to bring them all, and in the darkness bind them,
In the Land of Mordor where the Shadows lie.”

J. R. R. Tolkien, The Lord of the Rings


QUOTE OF THE DAY

“In one of his last speeches as Fed Chair, Bernanke bragged about how Fed didn’t have info it needed in 2009 to say banks were solvent. How would Bernanke know? He never took significant interest in the regulatory findings, simply followed assurances of others. OCC was complicit in tolerating excesses of banks in the lead up to the Great Financial Crisis; in aftermath, teeth never shown.

Essentially, the Great Financial Crisis was result of widespread fraud on the part of sellers of ‘securitized assets’. Books of banks masked huge SPE exposure. ‘Opaque securities’ were sold as investible quality but nothing more than mathematical approximations at time of issue. Yes, it became far more profitable to sell complex MBS risk baskets than identifiable, securitized assets

Were there villains? Of course, there were. Place to look was Wall Street. It compensated much more for selling opaque securities. Well, there’s that reality, too. I’ve been told by more than one current and former banker that the banks tell the regulators what the rules should be.

And let’s keep in mind regulators let each bank devise its own, unique value at risk model, rendering stress tests highly unreliable. The Way governments ended doubts about solvency of opaque banks was with stress tests and pledge of taxpayer funds to maintain solvency.”

Harald Malmgren


QUOTES OF THE DAY

“His [Ben Bernanke] continuing denial that QE wrought damage suggests it is he who cannot handle the truth.

Correlation of 1 across all asset classes combined with high leverage & narrow exits means catastrophically fast implosion, sooner or later.

What i am trying to point out is that markets and even the Fed are acting on unreliable,overoptimistic official data (aka fake news).

World trade contracting,growth stalling, but CNBC advertisers, Bloomberg customers & political leaders don’t want downbeat news. Market illusions.

BEA uses own unique, low deflator (never CPI) to get higher inflation adjusted GDP growth rate, higher consumer spending, hiding feeble real growth.

Most jobs data cherry picked, manipulated, guessed. Declining payroll tax deductions published every day ignored. Job gains illusion.

Occasional glimpses of real economic news reminds how misleading is WH economic recovery spin and its adoption in the form of MSM fake news.

Financial leverage higher now than 2008, systemic risk greater, most jobs created part time, median income down, debt multiple, wealth gap bigger, etc.”

Harald Malmgren tweets