Headlines

Trump calls for ousting GOP congressman from party ahead of coronavirus relief vote

Coronavirus live updates: Lack of Internet leaves millions cut off, Real ID deadline extended

USA now leads world in cases ... Peak second week in April ...

New York Times blames evangelical Christians  for coronavirus

Poll: Majority approve of Trump’s coronavirus response, but more Americans say he was too slow to start

Trump criticizes GM, CEO Mary Barra for wanting ‘top  dollar’ for producing ventilators

UK rocked: Boris positive ...

Hundreds die in Iran after drinking poison ‘cure’ for coronavirus

Judge orders release of 10 immigration detainees from N.J. jails

Cramer sees oil plummeting below $20 per barrel

Federal Reserve’s balance sheet tops $5 trillion for first time ...

Dr. Deborah Birx steers away from making Doomsday prediction

Headlines

Senate Republicans duck for cover after explosive Taylor testimony

Federal Reserve economist says growth would have been better with negative interest rates

POLL: Approval of [impeachment] inquiry hits new high; 55% ...

Impeachment star witness has long history with Burisma-backed think tank

Maxine Waters slams Zuckerberg, raises specter of breaking up Facebook

Trump says ceasefire in Syria is ‘permanent’ and he will lift sanctions

Judge Judy endorses Bloomberg for president

Military leader of Syrian Kurds thanks Trump

Biden way ahead of the pack in new national poll

IBM and Google disagree on quantum computing achievement

Google computer beats 10,000-year task in mins!

Adam Schiff desperate to hide inconvenient William Taylor testimony

Headlines

Trump abandons effort to add citizenship question to census

Ocasio-Cortez finds herself on the same side as Trump regarding the Federal Reserve

Dow rallies 200 points to close above 27,000 for the first time ever

AOC backpedals: Pelosi ‘absolutely not a racist’

U.S. officials push for sanctions on China over oil purchases from Iran

Trump’s losses in drug pricing battle should be free-market wake-up call to him

Inflation tops projections ...

Report: Michelle Obama rents $23M ‘Shark House’ mansion for L.A. visit

House to vote next week on criminal contempt against Barr and Ross

Tommy Robinson jailed again ...

Radiation leak ‘100,000 times normal level’ from Russian nuclear sub wreck ...

Buttigieg: ICE raids make America ‘less safe’

Headlines

Republicans have an Alger Hiss problem  named Marlia

Trade war turns into dangerous currency war as China weakens the yuan the most in 2 years

GALLUP POLL: Americans don't mention 'global warming' as problem ...

IDF soldier killed by Gaza terror snipers ...

Republicans soften ban on [China's] ZTE in concession to Trump

Dick Bove: Trump poised to take control of Federal Reserve

Chicago named 'rat capital' of nation ...

George H.W. Bush's former doctor gunned down while riding bicycle

House Republicans defeat attempts to subpoena Trump interpreter

California could change law allowing utilities to offset wildfire risk sand  save billions of dollars

Genetic researchers reverse wrinkles, gray hair, baldness in mice ...

Mexican border city gun battle result in 1,169 stolen cars in 6 months

Headwinds

Despite dire predictions, the US stock market is up over 38% since Trump was elected president. However, there are now serious headwinds that likely will keep the breaks on further dramatic advances in equities. They are:

- The Federal Reserve's easy money policy (Quantitative Easing) has stopped. In fact the Fed is well into the process of reducing its balance sheet by about 3.5 trillion dollars. This means that this much liquidity is being removed from our economy.

-Yes, Trump's fiscal measures (tax and regulation reform, trade terms, infrastructure spending) have boosted our economy and corporate earnings. But price-earnings ratios in the stock market are still above historic averages.

- The geo-political risks of Iran and North Korea still pose a dire risk to the world order and stock markets.

- The Fed is on track to raise interest rates multiple time both this year and next. Higher interest rates increase the discount that must be applied to corporate earnings.

- Robert Mueller's team of crack partisan investigators seem hell-bent on taking Trump down. This is a pall on his ability to keep things moving forward.

- Current trade negotiations with China and NAFTA could easily result is trade wars that would take at least a short-term to the US economy.

So, will the stock market make dramatic new highs despite these many headwinds? The odds seem against it. But then Trump has a way of defying the odds.

Headlines

All from Internet news sites. Guess which from Politico?

Key GOP senators open to 'bump stock' ban

Las Vegas gunman may have been aiming at tanks filled with jet fuel

San Diego hepatitis outbreak continues to grow: 481 cases ...

WSJ: Federal Reserve needs an outsider as chairman

3 U.S. commandos killed [by ambush] in Niger

Jobless future: Shake Shack's humans out, robots in

CIA predicts NKorea action on Columbus Day ...

EU orders Amazon to pay nearly $300M for 'illegal tax advantage'

Senate investigators: No conclusion about collusion with Russia in 2016

Warren Buffet bets AGAINST self-driving trucks

Quake swarm at Yellowstone supervolcano now longest ever recorded...

Study: 12 Texas counties have more registered voters than adults

The Hammer

The Obama administration has not been shy about using the levers of government to raise campaign cash or punish those companies or political blocs that have opposed them.  I suppose that this is the Chicago way and, to me, it is very disturbing.  We have seen it in how the IRS blatantly abused its powers during the 2012 elections. Now we are viewing it in how the Justice Department and other government agencies are extorting money from Wall Street firms that didn’t toe the line during these same elections … see: Breitbart Story.  Attorney General, Eric Holder, and the Federal Housing Finance Agency (FHFA) have dropped the hammer on J.P. Morgan to the tune of some $18 billion of unprecedented fines stemming out of the 2008 financial meltdown … see: CNN/Fortune Story and The Guardian Story.

Please don’t get me wrong.  I believe that there were oodles and oodles of real crimes that led up to the sub-prime mortgage crisis.  But have we seen any of the kingpins in these perpetrator firms even go on trial for these travesties?  No.  Most everyone knows who these guilty slimeballs are … yet they luxuriate in their buyout retirements. Instead, we are seeing financial blackmail and extortion.  Monumental fines and fees are being levied against those firms that were told by the United States Treasury Department to adsorb these miscreants’ entities and, now in return, are being financially shaken down.  There is clearly going to be more of this thuggery coming out of this administration … now that our financial firms have been propped up by the Federal Reserve Bank and are thus healthy enough to pony up with some significant pelf.

This behind-the-curtain method of our government’s picking corporate winners and losers is disturbing and presages even more blatant interference in what was once only a slightly corrupt system of political donations.  One can clearly read the message for the upcoming elections in 2014 and 2016.  Support Democrat candidates or suffer similar consequences to J.P. Morgan.  The hammer of big corrupt government is now corrupting the flow of money into political parties further still.  Take that you Supreme Court and your Citizens United decision!  You think that corporations are people and money is free speech?  We will show you that we, guttural government, can subvert the intent of this decision to a fare-thee-well.

How Many Angels …

can dance on Ben Bernanke’s head?  I just finished watching the Bernanke news conference after the Federal Open-Market Committee (FOMC) meeting yesterday and today … and a vigorous round-robin discussion on CNBC with about eight monetary policy experts.  All the while the stock market sold off over 100 points (at closing, it is now down over 200 points) and the yield on the ten-year note bounced around and then climbed to as much as 2.4%.  This was because Fed Chairman, Bernanke said that, if economic conditions continue to improve in the direction of internal Federal Reserve Bank forecasts, its quantitative easing (QE, or $85 billion monthly purchases of U.S. securities and mortgages) would begin to be scaled back later this year … with the possibility that they would end entirely by mid-2014.

What does this all mean?  Only Big Ben really knows … markets move not just on the absolute direction of interest rates … but on the first, second, and even third derivatives of same.  This is reminiscent of the middle-ages theological discussions about how many dancing angels could fit on the head of a pin … or the Talmudic discussions among Hebrew scholars about the implications of a single scripture word.

One thing investors might be able discern from this calculus … and that is, if Bernanke’s sage words do come true, the Fed will soon be "removing the punch bowl" and our economy should slow down … even from current anemic levels.  This means that the Democrats might have a more difficult time recapturing the House of Representatives in 2014 and maybe even holding onto the Senate … but then, because of the resulting economic bounce, they possibly would have an easier time retaining the presidency in 2016. 

And they say that the Federal Reserve Bank is not political …

Race to the Bottom

The world is taking a dangerous and rocky path to universal monetary collapse.  Japan is now following the United States's Federal Reserve in devaluing its currency ... in order to give its economy a shot in the arm, see: CNBC Story.  The U.S. Fed’s Chairman, Ben Bernanke, has been pushing “quantitative easing” (QE) for the last three years in order to sop up all the debt that this country is forced to issue to cover it’s fire-hose federal spending … to the point where it has expanded our money supply (and its balance sheet) by $3 trillion.  And, in order to keep this crushing debt burden from sinking things further, it has kept generic interest rates artificially low with its banking muscle.  It has been able to run the monetary printing presses night and day without setting off crushing inflation because our economy is still so weak …  reflected in our poor employment and wage-increase statistics.

But one economic “benefit” of this monetary expansion is a weak U.S. dollar which tends to help export markets and crimp importers.  Given how poor the U.S. balance of payments actually is … image what a disaster it would be without the Fed’s dollar deflationary measures?  However, our trading partners are losing patience with us and, as indicated in the referenced article, are now mimicking Bernanke’s strategy.  The European Central Bank (ECB), China, Great Britain, Japan, and even Switzerland (for heaven’s sake) are falling over one another to try to devalue their currencies with their own QEs.  A U.S. Dollar slide begets a Chinese Yuan slide which begets an Euro slide which begets a Japanese Yen slide which begets a British Pound slide which begets a Swiss Pound slide.  This is all a very dangerous race to the bottom.

How will this end?  With all this quantitative easing, the world will be, in short order, awash in money.  The balance sheets of the central banks will have reached unsustainable levels … probably the ECB first; and the only way out will be for them to let the dogs out … allow inflation to reduce the carrying-cost pain of their excessive debts.  And, this time, run-away inflation will not be as localized as it was in Germany in the 1920s.  It will be world-wide and will engender political upheavals that are likely to be quite painful.  (At this point Bernanke will not look quite so angelic.)  So be forewarned and be prepared … own real hard assets (not cash) and owe lots of money … and live in an area of relative political sanity.

Old Europe

For hundreds of years we have opened our shores for many millions of old-Europe emigrants to find a better life here in America.  We have fought many wars (and spilled much blood) for (or against) them while they spent much of their discretionary national incomes over the last sixty years on social welfare and beautiful infrastructure ... instead of their own self defense.  We have provided a super-expensive ICBM/nuclear shield for them throughout the cold war.  We spent considerable Marshall-Plan sums clothing, feeding and rebuilding them after World War II. 

Despite (or because of) their not having to spend very much of their GNPs on national defense, they have instead created a cradle-to-grave welfare culture that has sapped much of their national initiative. We have also spent hundreds of billions funding the U.N. that lavishes much this money on their poobahs' luxuriating in Geneva, Rome and Brussels five-star hotels and restaurants.  And throughout it all, we have listened to their derisive sneers and holier-than-thou preachings with general humility.  Recently we have apparently spent many more hundreds of billions of Federal Reserve dollars (that we clearly don't have) shoring up their banks, see the Yahoo! story.  And Ireland, Portugal, Spain and Italy are queuing up behind Greece to get their financial rewards from Brussels for their fiscal mismanagement.  And rumor has it that Uncle Sam will be a banker at this porker poker party.

And what has the United States received as recompense for all this selflessness?  Croissants, truffles, Rick Steves' travel logs, and spaghetti carbonara.

Rush to Judgment

Let me begin by saying that I am a big fan of Rush Limbaugh. He, almost daily, offers insights that enlighten the political and social dialog. But in the last two days he has said two loopy things that have me worried.

Yesterday (or Monday) he said that the U.S. stock market is up in September because the Federal Reserve is buying stocks to prop them up before the elections in November. This clearly is nonsense. The Fed is prohibited from such equity speculation. After a while Rush tried to back off this statement (after his e-mail inbox went viral?) by saying that he meant that the low interest rates that the Fed was charging banks was essentially inflating the money supply which was then being used to buy stocks. Even this is not totally true. Most of the money that banks borrow overnight from the Fed (for essentially the doughnut) is then reinvested in government securities for a small marginal profit. However, the huge dollar amounts of these money flows still make a healthy return for these banks nonetheless.

Today, he opined on Obama’s comments in Albuquerque on how Obama’s Christianity taught him to be “his brother’s keeper.” Now, this reference comes from the Old Testament when God asks Cain where Abel was and Cain says, “Am I my brother’s keeper.” (Rush sounded very much like he had been reading a reference to this incident on the Powerline blog. See here.) However, Rush called this concept the Golden Rule (“Do unto others as you would have others do unto you,” said by Jesus Christ in Matthew 7.12). This mixing of religious dogma was later backtracked by Rush (after another e-mail storm?) but he never really dumped the Golden Rule reference.

Now these brain farts were so unlike Rush that I am concerned that something is afoot. I won’t speculate on what it is here, but, if something transpires in the near future, remember you heard my concern here first.