Tag: ZIRP

IT’S NOT THE BREXIT STUPID

Just over a week ago the world was coming unglued, as enough British citizens grew a pair and spit in the face of the EU establishment and global elite by voting to exit the EU. The fear mongering by central bankers and their puppet political hacks failed to deter people who have become sick and tired of being abused and pillaged by bureaucrats working on behalf of bankers and billionaires.

Stock markets around the world plummeted on Thursday and Friday. The world braced for another Black Monday. The phone lines were buzzing between central bankers around the world over the weekend as their banker constituents demanded relief. If one thing has been proven over the last seven years, its a coordinated effort between central bankers and Wall Street banks to rig the stock market higher can work over a short time period.

The titans of finance were able to once again confound short-sellers and the prophets of doom with a 5% surge from the Friday lows over the next week. It was surely a coincidence the Fed declared all Wall Street banks, safe, sound, and capable of buying back their stocks to the tune of billions early in the week.

These insolvent zombies were now free to borrow billions to buy back their overvalued stocks, destroying shareholder value, while boosting executive compensation. Poor Jamie Dimon is struggling to get by on his $27 million per year. The Wall Street banks obliged by immediately announcing multi-billion dollar buyback schemes to capitalize on the short-term trading mentality of the 30 year old MBA trading geniuses who bought the news without worrying about the actual value of the stocks they were buying.

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FUNNIEST BLS REPORT EVER

Only a captured government drone could put out a report showing only 38,000 new jobs created, with the working age population rising by 205,000, and have the balls to report the unemployment rate plunged from 5.0% to 4.7%, the lowest since August 2007. If you ever needed proof these worthless bureaucrats are nothing more than propaganda peddlers for the establishment, this report is it. The two previous months were revised significantly downward in the fine print of the press release.

It is absolutely mind boggling that these government pond scum hacks can get away with reporting that 484,000 people who WERE unemployed last month are no longer unemployed this month. Life is so fucking good in this country, they all just decided to kick back and leave the labor force. Maybe they all won the Powerball lottery. How many people do you know who can afford to just leave the workforce and live off their vast savings?

In addition, 180,000 more Americans left the workforce, bringing the total to a record 94.7 million Americans not in the labor force. The corporate MSM will roll out the usual “experts” to blather about the retirement of Baby Boomers as the false narrative to deflect blame from Obama and his minions. The absolute absurdity of the data heaped upon the ignorant masses is clearly evident in the data over the last three months. Here is government idiocracy at its finest:

Number of working age Americans added since March – 406,000

Number of employed Americans since March – NEGATIVE 290,000

Number of Americans who have supposedly voluntarily left the workforce – 1,226,000

Unemployment rate – FELL from 5.0% to 4.7%

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HARD TIMES & FALSE NARRATIVES

The mainstream media mouthpieces for the establishment peddle false narratives, disingenuous storylines, and outright propaganda to keep the ignorant masses confused, oblivious to reality, misinformed, and passively submissive to the opinions of highly paid “experts” and captured fiscal authorities. The existing social order likes things just as they are.

They reap ill-gotten riches, wield unchecked power, and control the minds of the masses. They are the invisible government consciously manipulating the minds, habits and opinions of the multitudes in order to dominate society, control the levers of government, and accumulate obscene levels of wealth through manipulation of the currency and domination of the banking and corporate interests.

One of the false narratives being flogged by the establishment propaganda peddlers is the mass retirement of Baby Boomers causing the plunge in the employment to population rate from 64.4% in 2000 to 59.7% today. They need to peddle this drivel, because the difference between these two rates amounts to 12 million missing jobs. The employment to population ratio is currently at 1984 levels. Any critical thinking person with basic math skills realizes the government reported unemployment rate of 5% is an Orwellian farce.

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DANGEROUS DIVERGENCE

The chart below would appear to be in conflict with the results of a recent Gallup poll regarding stock ownership by Americans. The ratio of household equities to money market fund assets is near a record high, 60% above the 2007 high and 30% above the 1999 internet bubble high. The chart would appear to prove irrational exuberance among the general populace.

In reality, the lowest percentage of Americans currently own stock over the last two decades. With the stock market within spitting distance of all-time highs, only 52% of Americans own stock, down from 65% in 2007. As the stock market has gone up, average Americans have left the market. They realize it is a rigged game and they are nothing but muppets to the Wall Street shysters.

InvestInStocks1

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THE BOOMER RETIREMENT MEME IS A BIG LIE

As the labor participation rate and employment to population ratio linger near three decade lows, the mouthpieces for the establishment continue to perpetuate the Big Lie this is solely due to the retirement of Boomers. It’s their storyline and they’ll stick to it, no matter what the facts show to be the truth. Even CNBC lackeys, government apparatchiks, and Ivy League educated Keynesian economists should be able to admit that people between the ages of 25 and 54 should be working, unless they are home raising children.

In the year 2000, at the height of the first Federal Reserve induced bubble, there were 120 million Americans between the ages of 25 and 54, with 78 million of them employed full-time. That equated to a 65% full-time employment rate. By the height of the second Federal Reserve induced bubble, there were 80 million full-time employed 25 to 54 year olds out of 126 million, a 63.5% employment rate. The full-time employment rate bottomed at 57% in 2010, and still lingers below 62% as we are at the height of a third Federal Reserve induced bubble.

Chart via econimica

Over the last 16 years the percentage of 25 to 54 full-time employed Americans has fallen from 65% to 62%. I guess people are retiring much younger, if you believe the MSM storyline. Over this same time period the total full-time employment to population ratio has fallen from 53% to 48.8%. The overall labor participation rate peaked in 2000 at 67.1% and stayed steady between 66% and 67% for the next eight years. But this disguised the ongoing decline in the participation rate of men.

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WORST CASE SCENARIO = 73% DOWN FROM HERE

As the stock market gyrates higher and lower in a fairly narrow range, the spokesmodels and talking heads on CNBC breathlessly regurgitate the standard bullish mantra designed to keep the muppets in the market. They are employees of a massive corporation whose bottom line and stock price depend upon advertising revenues reaped from Wall Street and K Street. They aren’t journalists. They are propagandists disguised as journalists. Their job is to keep you confused, misinformed, and ignorant of the true facts.

Based on the never ending happy talk and buy now gibberish spouted by the pundit lackeys, you would think we are experiencing a bull market of epic proportions and anyone who hasn’t been in the market has missed out on tremendous gains. There’s one little problem with that bit of propaganda. It’s completely false. The Fed turned off the QE spigot at the end of October 2014 and the market has gone nowhere ever since.

QE1 began in September 2008, taking the Fed balance sheet from $900 billion to $2.3 trillion by June 2010. This helped halt the stock market crash and drove the S&P 500 up by 50% from its March 2009 lows. QE2 was implemented in November 2010 and increased the Fed balance sheet to $2.9 trillion by the end of 2011. This resulted in an unacceptable 10% increase in the S&P 500, so the Fed cranked up their printing presses to hyper-speed and launched the mother of all quantitative easings, with QE3 pushing their balance sheet to $4.5 trillion by October 2014, when they ceased their “Save a Wall Street Banker” campaign.

As Main Street dies, Wall Street has been paved in gold. The S&P 500 soared to all-time highs, with 40% gains from the September 2012 QE3 launch until its cessation in October 2014. Like a heroine addict, Wall Street has experienced withdrawal symptoms ever since, and begs for more monetary easing injections. Yellen and her gang of central bank drug dealers keep the patient from dying by continuing doses of ZIRP and psychologically comforting dialogue designed to cheer up Wall Street bankers.

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YELLEN, DRAGHI, KURODA: DERANGED LAB RATS

The stock market has regained all of its loses year to date as economic indicators continue to flash red, corporate profits continue to plunge, consumers continue to spend less at retailers, real wages continue to fall, and housing sales continue to decline. The entire dead cat bounce has been generated through corporate stock buybacks, Wall Street lemmings trying to make up for their terrible year to date investing performance, and central bankers who will stop at nothing to verbally manipulate markets higher – since their monetary machinations over the last seven years have been a miserable failure in reviving the real economy.

As John Hussman points out, the market is poised to deliver nothing over the next decade, with a 40% to 55% “dip” in the foreseeable future. I wonder how many barely sentient, iGadget addicted, non-questioning, normalcy bias dependent zombies are prepared for a third Federal Reserve generated market collapse in the last 15 years?

From a long-term investment standpoint, the stock market remains obscenely overvalued, with the most historically-reliable measures we identify presently consistent with zero 10-12 year S&P 500 nominal total returns, and negative expected real returns on both horizons. From a cyclical standpoint, I continue to expect that the completion of the current market cycle will likely take the S&P 500 down by about 40-55% from present levels; an outcome that would not be an outlier or worst-case scenario, but instead a rather run-of-the-mill cycle completion from present valuations.

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“Data Dependent” Fed Chickens Out Again – Blames Global Uncertainty For Holding Rates Unchanged, Lowers Rate Hike Forecast

“The last duty of a central banker is to tell the public the truth.”

~ Alan Blinder, former Federal Reserve Board Vice Chairman

 

Tyler Durden's picture

Submitted by Tyler Durden on 03/16/2016 14:02 -0400

With gold up 15% since The Fed hiked in December (and stocks lower) and the market pricing a hike today at just 4% (June 53%), it is not surprising that Janet panicced and folded again in the face of “unequivocally good” data based on what The Fed has said it monitors. Of course there were plenty of excuses:

  • FED MEDIAN FORECAST IMPLIES TWO 2016 RATE HIKES VS FOUR IN DEC
     
  • FED SAYS GLOBAL ECONOMIC DEVELOPMENTS CONTINUE TO POSE RISKS
  •  FED LEAVES RATES UNCHANGED AT 0.25%-0.5% AS EXPECTED
  • FED: GEORGE DISSENTED IN FAVOR OF A RATE RISE TO 0.5%-0.75%

Not too dovish (upgrade uncertainty), not too hawkish (lowered rate hikes), a goldilocks statement – just a little more inflation and just a little less unemployment and just another month or two of near-ZIRP rates is what it takes for the world to get it all together. We are breathless in anticipation.

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VOTING TO DESTROY THE ESTABLISHMENT

“The inability to predict outliers implies the inability to predict the course of history”
― Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable

“I know that history is going to be dominated by an improbable event, I just don’t know what that event will be.” ― Nassim Nicholas Taleb, The Black Swan: The Impact of the Highly Improbable

Nassim Taleb is a prickly arrogant SOB who doesn’t give a crap what intellectuals, academics, and other establishment elitists think about him. He has an Ivy league MBA, but despises everything about the curriculum of Ivy League MBA programs. He has a PhD, but scorns academics and their worship of theories and models. He enjoys poking holes in the storylines of the propaganda spewing corporate media. He glories in ridiculing the predictions of captured “experts” mouthing the talking points of whichever corporate interest is paying them blood money.

I read his brilliant Black Swan book back in 2008. It was a difficult read, but there were so many gems of wisdom throughout the book, it was a powerful tome predicting the financial collapse in real time. He wrote it in 2006. He understands the world doesn’t operate the way Ivy League models say it is supposed to operate. The world is propelled by black swans, not a normal distribution of the world. He was right in 2006 and he’s right now. The paragraph below has been making the rounds in the alternate media this past week. The establishment media would never publicize it, as their job is to protect the crumbling social order.

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THE GREAT CORPORATE EARNINGS FRAUD

“What are the odds that people will make smart decisions about money if they don’t need to make smart decisions–if they can get rich making dumb decisions? The incentives on Wall Street were all wrong; they’re still all wrong.” ― Michael Lewis, The Big Short: Inside the Doomsday Machine

Corporate earnings reports for the fourth quarter are pretty much in the books. The deception, falsification, accounting manipulation, and propaganda utilized by mega-corporations and their compliant corporate media mouthpieces has been outrageously blatant. It reeks of desperation as the Wall Street shysters attempt to extract the last dollar from their muppet clients before this house of cards collapses.

The CEOs of these mega-corporations accelerated their debt financed stock buybacks in 2015 as stock prices reached all-time highs and are currently so overvalued, they will deliver 0% returns over the next decade. This disgraceful act of pure greed by the Ivy League educated leaders of corporate America to boost their own stock based compensation is reckless and absurd.

It is proof education at our most prestigious universities has produced avaricious MBAs following financial models and each other like lemmings going over the cliff. Proof of their foolishness is self evident after perusing the chart below. These intellectual giants evidently never learned the basic rule of buying low and selling high in order to make a profitable trade.

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DERANGED CENTRAL BANKERS BLOWING UP THE WORLD

It is now self-evident to any sentient being (excludes CNBC shills, Wall Street shyster economists, and Keynesian loving politicians) the mountainous level of unpayable global debt is about to crash down like an avalanche upon hundreds of millions of willfully ignorant citizens who trusted their politician leaders and the central bankers who created the debt out of thin air. McKinsey produced a report last year showing the world had added $57 trillion of debt between 2008 and the 2nd quarter of 2014, with global debt to GDP reaching 286%.

The global economy has only deteriorated since mid-2014, with politicians and central bankers accelerating the issuance of debt. These deranged psychopaths have added in excess of $70 trillion of debt in the last eight years, a 50% increase. With $142 trillion of global debt enough to collapse the global economy in 2008, only a lunatic would implement a “solution” that increased global debt to $212 trillion over the next seven years thinking that would solve a problem created by too much debt.

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THE HERD IS HEADING FOR A CLIFF

You would think investors (muppets) would be grateful for the extended topping process of the stock market, as it has given them the opportunity to exit before the inevitable crash. As CNBC and the rest of the mainstream media spin bullish stories to keep the few remaining mom and pop investors sedated and the millions of passive working Americans invested in their 401ks, the Wall Street rigging machine siphons off billions in ill-gotten gains, while absconding with fees for worthless advice.

Does the average schmuck know the S&P 500 stood at 2,063 on November 21, 2014 and currently sits at 2,056, thirteen months later? Based on the media narrative, we are still in the midst of a raging bull market. John Hussman provides the counterpoint to this narrative with unequivocal factual evidence based upon a hundred years of stock market data and valuations. Anyone investing in today’s market should expect ZERO returns over the next ten years and a 40% to 55% plunge in the near future. And as a cherry on top, a recession has arrived.

The summary of this outlook is straightforward. I view the equity market as being in the late-stage top formation of the third financial bubble in 15 years. Based on a century of evidence relating the most historically reliable valuation measures to actual subsequent market returns, neither a market plunge of 40-55% over the completion of the current cycle, nor the expectation of zero 10-12 year S&P 500 nominal total returns, nor the likelihood of substantially negative 10-12 year real returns should be viewed as worst-case scenarios – they are all actually run-of-the-mill expectations from current extremes. Based on the joint behavior of the most reliable leading economic measures (particularly new orders plus order backlogs, minus inventories), widening credit spreads, and clearly deteriorating market internals, our economic outlook has also moved to a guarded expectation of a U.S. recession.

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LIVING A LIE

“Above all, don’t lie to yourself. The man who lies to himself and listens to his own lie comes to a point that he cannot distinguish the truth within him, or around him, and so loses all respect for himself and for others. And having no respect he ceases to love.” –  Fyodor Dostoyevsky, The Brothers Karamazov

The lies we tell ourselves are only exceeded by the lies perpetrated by those controlling the levers of our society. We’ve lost respect for ourselves and others, transforming from citizens with obligations to consumers with desires. The love of mammon has left our country a hollowed out, debt ridden shell of what it once was.  When I see the data from surveys about the amount of debt being carried by people in this country and match it up with the totals reported by the Federal Reserve, I’m honestly flabbergasted that so many people choose to live a lie. By falling for the false materialistic narrative of having it all today, millions of Americans have enslaved themselves in trillions of debt. The totals are breathtaking to behold:

Total mortgage debt – $13.6 trillion ($9.9 trillion residential)

Total credit card debt – $924 billion

Total auto loan debt – $1.0 trillion

Total student loan debt – $1.3 trillion

Other consumer debt – $300 billion

With 118 million occupied households in the U.S., that comes to $145,000 per household. But, when you consider only 74 million of the households are owner occupied and approximately 26 million of those are free and clear of mortgage debt, that leaves millions of people with in excess of $200,000 in mortgage debt. Keeping up with the Joneses has taken on a new meaning as buying a 6,000 sq ft McMansion with 3% down became the standard operating procedure for a vast swath of image conscious Americans. When you are up to your eyeballs in debt, you don’t own anything. You are living a lie.

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FOURTH TURNING – POLITICIANS DRIVING THE WORLD TOWARDS WAR

In Part 1 of this article I discussed the catalyst spark which ignited this Fourth Turning and the seemingly delayed regeneracy. In Part 2 I pondered possible Grey Champion prophet generation leaders who could arise during the regeneracy. In Part 3 I focused on the economic channel of distress which is likely to be the primary driving force in the next phase of this Crisis. In Part 4 I assessed the social and cultural channels of distress dividing the nation. In Part 5 I’ll examine the technological, ecological, political, and military channels of distress likely to burst forth with the molten ingredients of this Fourth Turning, and finally in Part 6 our rendezvous with destiny, with potential climaxes to this Winter of our discontent.

Technological & Ecological Distress

“Technological progress has merely provided us with more efficient means for going backwards.” – Aldous Huxley – Ends and Means

The level of distress being produced by technology was probably underestimated by Strauss & Howe when they wrote their book in 1997. The internet, cell phones and e-commerce were still in their infancy, while cyber security was an unknown concept. Huxley would be shocked by how backwards we have “progressed” through the efficient distribution of iGadgets, creating millions of distracted, non-thinking, passive, easily pliable, willfully ignorant sheep who adore their technological servitude.

A vast swath of the populace never reads a book and can’t go more than a few minutes without checking their iGadget to view the latest funny cat video, the latest update on Kim Kardashian’s ass, Bruce/Caitlyn Jenner’s courage, or Lamar Odom’s latest whorehouse escapade. Our country is drowning in a sea of irrelevance as our infinite craving for diversions and triviality overwhelms any thoughts of confronting our oppressors. The adoration of technology has degraded our ability to think and allowed the Deep State to control the masses by amusing them to death.

The totalitarian Orwellian utilization of technology was exposed by a millennial with courage, intelligence, and love of his country – Edward Snowden. His revelations were very distressful to the felonious government apparatchiks who blatantly flaunt their disregard for the Fourth Amendment to the Constitution. The criminals at the NSA, fully supported by Obama and Congress, have made Big Brother look like an amateur, as they siphon up every phone call, text, email, and facebook entry made by each person in this country and for good measure the political leaders of our allies and enemies.

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THE WORSE THINGS GET FOR YOU, THE BETTER THEY GET FOR WALL STREET

On October 2 the BLS reported absolutely atrocious employment data, with virtually no job growth other than the phantom jobs added by the fantastically wrong Birth/Death adjustment for all those new businesses springing up around the country. The MSM couldn’t even spin it in a positive manner, as the previous two months of lies were adjusted significantly downward. What a shocker. At the beginning of that day the Dow stood at 16,250 and had been in a downward trend for a couple months as the global economy has been clearly weakening. The immediate rational reaction to the horrible news was a 250 point plunge down to the 16,000 level. But by the end of the day the market had finished up over 200 points, as this terrible news was immediately interpreted as good news for the market, because the Federal Reserve will never ever increase interest rates again.

Over the next three weeks, the economic data has continued to deteriorate, corporate earnings have been crashing, and both Europe and China are experiencing continuing and deepening economic declines. The big swinging dicks on Wall Street have programmed their HFT computers to buy, buy, buy. The worse the data, the bigger the gains. The market has soared by 1,600 points since the low on October 2. A 10% surge based upon lousy economic info, as the economy is either in recession or headed into recession, is irrational, ridiculous, and warped, just like our financial system. This is what happens when crony capitalism takes root like a foul weed and is bankrolled by a central bank that cares only for Wall Street, while throwing Main Street under the bus.

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GRANNY’S RENT IS GOING UP 8% WHILE HER SOCIAL SECURITY GOES UP 0% NEXT YEAR

Two little blurbs from Marketwatch tell the story of our country today. In case you haven’t noticed, we’re an aging country. Over 15% of the US population is over 65 years old, collecting Social Security. That is approximately 50 million people. Another 10,000 people per day turn 65. Thanks to Alan Greenspan’s bullshit adjustments to the CPI and the apparatchiks at the BLS weighting the index in a ridiculously false manner, senior citizens are getting screwed and have been getting screwed for years.

Your government has the balls to tell your grandma and grandpa they have no inflation, therefore they don’t need an increase in their pitifully small Social Security check. The CPI is a joke. Not only did plunging gasoline prices drive it lower, but the fake owners equivalent rent calculation doesn’t capture the massive surge in home prices. It drastically under weights the cost of health insurance, and purposely under reports the increases in food costs.

Senior citizens don’t drive much, so lower gasoline costs don’t reduce their expenses much. Many live in apartments and rent is likely one of their largest costs. Rent has been going up at 4% to 5% per year, and landlords plan on increasing rents by 8% next year. Food prices will rise. Energy costs are near decade lows, so in all likelihood will rise. We already know the impact of Obamacare. Health related costs are skyrocketing. Senior citizens tend to have a few health issues. Old people aren’t buying iGadgets, 52 inch HDTV flat screens, and the other Chinese produced shit that falls in price.

The cumulative increase in Social Security payments since 2009 is about 6.2%. Think about that for a minute. This is six years. Does anyone believe inflation in the things senior citizens need to survive have only gone up 6.2% in the last six years? You’d have to be a blithering idiot or a Princeton economist to believe that bullshit. In addition to being screwed by the BLS on their Social Security payments, Helicopter Ben threw them under the bus and Grandma Janet is backing the bus over them again with their 0% interest rates on savings. A widowed grandmother with a modest $200,000 retirement nest egg could earn $10,000 of interest in 2008, to supplement her $16,000 of Social Security. Today she can earn $150 of interest, while her SS  has risen to $17,000.

Do you think the demographic trends of 10,000 people per day turning 65, virtually no increase in their Social Security, the vaporization of interest income to save Wall Street bankers, and real inflation in the real world of 5% or more, has anything to do with the terrible retail sales and stagnant economy? Don’t ask a CNBC talking head or Fox News bimbo. Their job is to convince you all is well, while your grandmother is forced to eat Fancy Feast for dinner.

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