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Dollar Doom Is a Slow Burn!
Dollar Doom Is a Slow Burn!
It will be a LONG time coming.
One article highlighted below brings out a point that I made two years ago when everyone in the alternative press was writing (as many still are) about how the BRICS nations were determined to replace the US dollar as a global currency:
In early June, a rumour began to circulate — which was widely reported in the Indian press as true — that the government of Saudi Arabia had allowed its petro-dollar agreement with the United States to lapse.
This non-exclusive arrangement between the two countries never required the Saudis to limit their oil sales to dollars or to recycle their oil profits exclusively in U.S. Treasury securities (of which it holds a considerable $135.9 billion) and Western banks.
Indeed, the Saudis are free to sell oil in multiple currencies, such as the Euro, and participate in digital currency platforms such as mBridge, a trial initiative of the Bank of International Settlements and the central banks of China, Thailand, and the United Arab Emirates (UAE).
Nonetheless, the rumour that this decades-long petrodollar agreement had come to an end reflects the widespread expectation that a seismic shift in the financial system will overturn the rule of the Dollar-Wall Street regime. It was a false rumour, but it carried within it a truth about the possibilities of a post-dollar or de-dollarised world.
While I would disagree with the downtrend destination for the dollar in the last line, the rest confirms what I’ve said in the past two years about the dollar not being replaced with a BRICS currency (or any other currency) anytime soon, though many of my own readers may wish it would be. Collapse of the dollar is not imminent, though the collapse of anything is eventually inevitable.
…click on the above link to read the rest of the article…
Chaos is Spreading Everywhere!
Chaos is Spreading Everywhere!
Intensifying foreign wars, raging internal political wars, inflation all over again, and disastrous immigration are turning the world into a madding crowd.
Sure, the S&P 500 just broke 5,500 for its first time ever (and then failed miserably), but everything else this past week is proving out all the points I made in my last Deeper Dive, “Why the Fed’s Inflation Fight is Far from Over” and is also building into a “Year of Chaos.”
Take for example, this statement in that Deeper Dive about the one category that did the most to bring a tiny drip to overall CPI in its last report:
Oil, I’ve been saying, is more likely to rise right away, as the summer travel season gets going, than to keep falling. That is elementary because rising in price during the northern hemisphere’s summer is oil’s common pattern because travel in the summer by jet and by car and by RV and by ship all increase in the nations with the largest populations on earth and the most travelers.
What do we see this week but the predictable, which is why no one should have put any stock in that tiny downward blip in CPI, which was dependent on falling oil prices:
“2nd and 3rd busiest days ever for TSA in June”
“This year’s extended AAA Independence Day travel forecast exceeds pre-pandemic numbers, sets new record”
As I continued last weekend,
When so much of the drop in CPI was due to oil prices falling, markets were foolish to think the little wiggle downward in CPI meant anything to the Fed (or to the rest of us who buy gasoline or diesel), as oil is highly likely to reverse that move this month … and, as I keep saying, oil prices into everything else. It affects all prices down the road.
..click on the above link to read the rest of the article…
Economic Collapse is Stalking us Like Death
Economic Collapse is Stalking us Like Death
The exceptional degree to which the Fed has trapped itself (and all of us) in an economic death spiral is becoming evident everywhere now.
My longtime prediction that the Fed will not be able to kill inflation without destroying the economy is showing itself true in articles about hand-wringing from multiple directions today. The short of it is that the Fed either wins inflation but drives us deep into recession, or it rushes to bail out a collapsing economy but lights inflation fully back on fire again. Either route is bringing the collapse of the Everything Bubble that the Fed and multiple federal administrations created.
Let’s look at the concerns that are emerging from all over the financial realm in today’s news headlines to see what many are sensing and what the most reliable economic indicator is now screaming like a siren.
Let’s begin with the “creator” of the very accurate “Sahm Rule, which says that, whenever the unemployment level rises 0.5% from its one-year low, we are plunging into recession, regardless of what low level of unemployment we start from. This indicator has never been wrong as a timer, and we are right there! However, we already also dealing with very broken labor indicators. So, maybe we are well past a 0.5% rise or maybe still a touch under. Who can know when even Jerome Powell has said the government’s labor numbers are clearly wrong and when CNBC took the rare step of saying they looked “cooked,” though it’s not clear that Powell knows by how much or in what direction? Just clearly they don’t add up, but that has been my major warning of peril for a couple of years now.
…click on the above link to read the rest of the article…
The Deeper Dive: Record-Shattering Stealth Recession Approaching
The Deeper Dive: Record-Shattering Stealth Recession Approaching
Why we won’t see the next recession coming and why it may not be reported as a recession even if it is the worst recession since the Great Depression. (But YOU’LL certainly feel it in your bones!)
The next recession has all the ingredients to become the worst since the Great Depression because it will happened due to the collapse of the Everything Bubble—the biggest collection of major market bubbles in history. To size up the potential scale of this economic collapse, consider all the bubbles the Federal Reserve has inflated, each of which has expanded to a hot-air balloon size unseen heretofore:
- Another housing bubble like the solitary bubble that imploded into the Great Recession, but with prices now much, much loftier than anytime in history.
- A commercial real-estate balloon-size bubble rapidly losing altitude now due to the seismic demographic shift away from brick-and-mortar retail trade and away from office space in favor of more remote working.
- A maniacal stock-market bubble of froth built over more than a decade to reach valuations that have extended far above where they were at their peak when the dot-com crash hit or when the Great Financial Crisis plunged us into the Great Recession.
- The most gigantic bond bubble in the history of the world due to central banks—especially the Fed—sucking up more government and commercial bonds at very low interest than at any time in the history of the world. The collapse of this bond bubble will include the defaults of many zombie corporations, which means companies that were only able to survive due to very cheap interest on their corporate bonds being used to keep the lights on and the doors open, which all goes away.
Titillating Tidbits
It’s a slow-news day today in terms of any one big story, so I don’t have much to comment on, other than a few news tidbits of interest:
Fed Governor Waller adds to the weight of statements by other Fedheads who have spoken since the FOMC meeting, saying he will need “several months” of improved inflation data before he would even consider a rate cut. That comes even after the last CPI report that gave the first blip down for inflation in months. (See “CPI’s Little Head Fake.”) He does not see an increase in rates as likely. So, the Fedheads have been consistent in agreeing with me on this—NO PIVOT for several months to come at the earliest. (I alway add one caveat: All bets are off if they’ve managed to blow the entire economy and banking system up prior to seeing enough months of improving inflation data and rising unemployment.)
Several states have taken steps to block the use of central-bank digital currencies within their states. That is a welcome step that will slow down the adoption of CBDCs. The Fed had indicated some significant moves toward a US CBDC would happen a year ago, but their “distributed ledger,” which is the backbone of such a system, was a failure. It couldn’t handle the volume of transactions—not even close. I haven’t heard much about it since, so maybe those hushed failures have sent it back to the drawing board. (If anyone else knows otherwise, please let us known in the comments. It just goes to demonstrate how secure central-bank digital currencies are certain to be.)
Biden has ordered that the entire northeast gasoline reserve be drained in order to combat gasoline inflation this summer … and then be permanently closed…
…click on the above link to read the rest of the article…
Truth or CONsequences?
Truth or CONsequences?
When your government cons you daily with its statistical “facts,” it’s hard to keep your balance. Conned-sumers are feeling the cognitive disconnect from reality.
For years, I’ve been saying it appears the BLS (Bureau of Lying Statistics) publishes fake labor statistics. The numbers always look like the seasonal adjustments are used by each administration to try to make the numbers look better, which means we are operating our country on delusions, not on facts. Ultimately that cannot possibly be as good for the nation as seeing reality as it is and dealing with it together.
Never, however, have the numbers looked so blatantly fake as they have under the Biden administration, and I’ve been pushing that point for months now. Then along came a major mainstream publisher (CNBC) who finally said (first I’d ever heard from the mainstream financial press), “These numbers look rigged.” And now, at last, comes a US congresswoman who tells the head of the BLS she should lose her job if she cannot come up with real numbers, pointing out, as I have for some time now, that it seems a bit too convenient that the numbers always come out initially looking great for her Boss, #NoMoJo Biden, and then get revised down to a more dismal reality later in the year when practically no one is looking … and that this happens EVERY SINGLE MONTH and ALWAYS IN THE SAME DIRECTION!
The fluctuating statistics have finally caught the attention of lawmakers in Congress. Last week, Rep. Mary Miller, R-Ill., grilled Acting Labor Secretary Julie Su about her Biden-friendly reports.
“I pressed the Biden Administration on why their jobs numbers are consistently wrong and quietly revised downward after they are announced. What is going on at BLS?…”
— Rep. Mary Miller (@RepMaryMiller) May 3, 2024
…click on the above link to read the rest of the article…
Yoyo Fed and Yoyo Markets
Once again, we have a report saying consumer sentiment is collapsing just as economists were projecting it would be continuing to float along, and once again we have a report of rising inflation, just as the Fed decided to reduce its fight against inflation by slowing down QT to save the federal government from its overwhelming debt financing burden, and once again we have an actual voting Fed official saying the Fed may have to raise rates. Yet, all of that has been OK apparently, since, once again, stock and bond markets have shot up in a buying frenzy because, once again, Fed Chair Jerome Powell filled them with his hot air so they would rise again on the hopes that rate cuts still might be coming this year.
So, the delusion in markets, continues intensely, causing investors to take back more of the financial tightening in the last three weeks that the Fed had finally put back into place, undoing, ONCE AGAIN, the premise Powell rested his hope of rate cuts on back in November, which was that the markets were doing enough tightening on their own that the Fed could stop its own inflation fight sooner. This is the second time he’s undone that tightening by markets; so, we’ll see more inflation and a worse inflation fight down the road because Powell has encouraged the markets to loosen financial conditions with his false hopes.
The University of Michigan Survey of Consumers sentiment index for May posted an initial reading of 67.4 for the month, down from 77.2 in April and well off the Dow Jones consensus call for 76.
…click on the above link to read the rest of the article…
How Powell Destroyed His Inflation War as he Eats the Poor
I’m going to save discussion of today’s CPI report for my Deeper Dive this weekend because it requires digging deep into the numbers involved in the report to show why it is not the game-changer for the new trend in inflation that the stock market made it out to be today. Not even close. It could, of course, become a first blip in the direction of a new downward trend against the rising trend for inflation that has held all year, but this year’s trend, so far, remains firmly anchored.
Even Minneapolis Federal Reserve Bank President Neel Kashkari said today, after the CPI report came out,…
that he is unsure how restrictive monetary policy is right now, and that borrowing costs should stay where they are as U.S. central bankers take stock of inflation. “The biggest uncertainty in my mind is how much downward pressure is monetary policy putting on the economy? That’s an unknown,” Kashkari told the Williston Basin Petroleum Conference in Bismarck, North Dakota. “And that tells me we probably need to sit here for a while longer until we figure out where underlying inflation is headed before we jump to any conclusions.”
In fact, another article out today claims, as I’ve been claiming here, that Fed policy is not restrictive at all; and that’s the interesting point for the day I want to focus on as I think the article says it well:
Time and again, Jerome Powell has made it clear. Financial conditions, the Federal Reserve’s key lever for cooling the US economy, are tight.
HOWEVER …
After an $11 trillion rally in US equities since late October — and the sudden revival of meme-stock fever — many on Wall Street think he’s dead wrong. Not only are popular gauges of the investing climate famously loose — some are looser than before the Fed kicked off its historic monetary-tightening campaign more than two years ago.
…click on the above link to read the rest of the article…
More Evidence Screams “The Books Are Cooked!”
More Evidence Screams “The Books Are Cooked!”
You just can’t make stuff like this up … except the government does … over and over!
On April 20th, I wrote about how CNBC had reported that something looked rather rigged about the government’s new jobless-claims data in this election year:
What a Wonderful World!·
“Something strange” (REALLY STRANGE) “has been happening with jobless numbers lately” says the CNBC headline. You know it is strange anytime the mainstream media starts agreeing with my longtime criticism of government reports, even using my blunt language—that “the books look cooked.” In fact, the Bidenomics unemployment claims reports don’t just look
Indeed, it was strange at the level of just about statistically impossible:
CNBC just noted that five out of the last six jobless reports gave an identical reading of 212,000 new claims and quoted someone observing that the odds against that exact number happening over and over are astronomical.
As CNBC reported, none of the raw numbers for all of those reports were even close to matching each other, but somehow the government’s “seasonal adjustments” always brought the derived numbers to the same 212K. Imagine that! One would almost think, I commented, they were goal-seeking the headline numbers in order to hit the sweet spot for this election year so that the labor market would look neither too hot for inflation nor two cold for the economy. One would almost think.
Well, they did it again. So, think again. Only this time, having been called out with suspicion by one of their usual parrot-press operations that normally takes all government data as gospel truth, they must have decided they needed to tweak the outcome just a bit. So, today, they reported 208,000 new jobless claims.
…click on the above link to read the rest of the article…
The Federal Reserve Is About to Go Full Banana Republic
The Federal Reserve Is About to Go Full Banana Republic
Peeling back the truth, one banana at a time.
According to an article on Yahoo! today, the top banana in finance, J. Powell, has already decided to go full bananatard. It is the financial hallmark of banana republics to print money in order to finance their debts. The Federal Reserve has never been allowed by law under its charter to do that because politicians were, long ago, smart enough to notice that all nations that take that path to financing their ambitious government programs turn to ash in the flames of hyperinflation.
We already have high inflation to deal with. After just writing a Deeper Dive that explained why we are already in a situation of true stagflation—the very situation that banana republics try to print their way out of—another financial writer this morning says the same thing on Seeking Alpha:
An old “new word” has entered the economic and market narratives in recent weeks: Stagflation. It’s an old word because the United States suffered from two bouts of “stagflation” from the middle 1970s to early 1980s. It’s a new word because there’s a new generation of market participants.
Stagflation is an economic cycle when economic growth is low (the “stag”) and inflation (the “flation”) are high. Low growth in past bouts also included high unemployment. A key factor in those stagflations was OPEC’s manipulation of oil supplies….
One of the key components of inflation has always been energy. We can see that going back a century in the data. It was most acutely felt during the 1970s and early 1980s stagflationary periods.
…click on the above link to read the rest of the article…
Economy Plunges into Stagflation with Both Feet
Economy Plunges into Stagflation with Both Feet
Talk about a one-two-three punch to the ground!
Stagflation came in perfectly on target for The Daily Doom’s predictions today. Real GDP is now falling much harder than was expected yesterday by two-faced Jamie Dimon when he spoke out of his second face, saying the economy is “booming,” backed by “healthy consumer finances.” He called it an “unbelievable” economy. I’ll agree with that part. I certainly didn’t believe it when he said it yesterday.
You see, only the day before, his first face said the economy looked like we could be heading into the stagflation of the 70s, which means a stagnant economy with high inflation. Those are diametrically opposite claims to my way of thinking. After he appeared to walk stagflation back yesterday when he said the economy was booming, today we all learned we are already in the stagflation of the 70s. (We’ve actually been in it all year, but it finally got reported.)
The official report on Q1 real GDP for 2024 showed the economy is stagnant, while the Personal Consumption Expenditures (PCE) price index scored its largest inflation gain all year (at 3.4% annualized). To be specific, GDP fell off to a 1.6% annualized pace (adjusted for seasonality and inflation), according to the Bureau of Economic Analysis. That is a plunge to less than half of the 3.4% growth the BEA claimed for the final quarter of 2023 and the 4.9% in the quarter before that, and it even came in well below the 2.4% that was forecast recently by economists in a Dow Jones survey.
So, the two-faced Dimon should have stayed with what his first face said two days ago because GDP readings under 2% are usually considered borderline recession—far from “BOOMING,” which means the US economy is, in fact, stagnant with rising inflation, which means the 1970s are back … because …
…click on the above link to read the rest of the article…
Bank Failure: MAYBE nothing to see here this time.
Regulators seized their first bank of the year on the same day that regulators are telling other regulators and financial institutions to ready themselves for possible trouble in the major financial clearing houses. (At least, same day in terms of when it hit the news.)
Reminder: It was a badly failed clearing house that became the epicenter of the repo crisis that I referred to as the “Repocalypse” back in 2019, and I have been saying 2024 looks poised for possible similar problems later in the year in that deep layer of interbank lending that keeps financial institutions running through the night to the next day—keeps the system from seizing up.
Clearing houses are often enormous, handling trades totaling trillions of dollars. One might reasonably wonder if the concern to ready financial institutions against a systemic failure that could happen from one of these institutions, as the warning was put, suggests one or more such institutions may be showing signs of trouble. (Nothing in the information provided indicates that is the case, but then nothing ever does. We typically find out on a Monday morning after something crashes … or on a Friday after markets close for the weekend.)
Clearing houses are intermediaries for settling financial transactions of many kinds.
As for Republic First, the small regional bank that failed in the Pennsylvania area, there are no indications in initial announcements that commercial real-estate played an outsized role in the bank’s failure, and 4-5 good seizures of this kind a year are normal. So, with this being the first of the year to be seized by the FDIC, and sold as meat that ran past its sell-by date to Fulton Bank, based in Lancaster, Pennsylvania, there are no immediate fears to be had from the announcement unless something more endemic or systemic is revealed in the days ahead. Just your garden-variety bank failure for now.
…click on the above link to read the rest of the article…
Markets Are Biting Their Lips over Global Chaos
Markets Are Biting Their Lips over Global Chaos
And Fed Chair Powell is joining them because suddenly nothing is going right for his soft-landing plans!
Rising Middle-East tensions are driving up the price of crude oil and driving down the price of stocks and value of bonds. Analysts are saying oil could go to $100/bbl if the conflict between Israel and Iran goes any further. If Israel responds to the recent attack by Iran, some think Iran is likely to fight back with the West in a variation of what it has already done via its proxies. In the worst-case scenario for oil, Iran will block the Strait of Hormuz to tanker traffic, using its proxies to do there as they have already done on the other side of the Arabian Peninsula (or doing that directly, themselves, from Iran). That could raise oil to $130/bbl, which would blow the doors off inflation. Societe Generale puts the risk at $140/bbl if the US gets involved. For now, however, the oil market is just biting its lips … like this:
Well, that’s Fed Chair Jerome Powell, but he is biting his, too, as everything turns against his flight plans for a soft landing at the end of his own war … with inflation.
That’s because the Fed pumped so much money into the economy during the Covid lockdown fiasco that he can’t get the surplus money out quickly enough. As noted yesterday, and caught in the news again today, Powell has clearly pushed rate cuts back once again. In fact, Bank of America is now resetting its calendar for the first cut to March of next year (going for a different March than the one most analysts originally thought they would get…
…click on the above link to read the rest of the article…
Forget the Black Swans; the Vultures already Circling us Are Bad Enough to Kill us
Forget the Black Swans; the Vultures already Circling us Are Bad Enough to Kill us
There is certainly more coming to eat away at your finances as infamous bankster Jamie Dimon laid out quite broadly and plainly this week.
Jamie Dimon never saw a dying bank he didn’t want to eat. Yet, while I think that Dimon’s name should be pronounced less like the clear, crown jewel of choice and more like the horned fiends of Hades, he does often speak of things likely to bring down the banking world or the economy with more candor than any other bankers, including particularly his partners in crime at the Fed. And you can be sure he has his scavenger eye on those things.
Perhaps it is just because he has unparalleled confidence that he is untouchable like a serial killer who talks to police on the street about how sorry he feels that they have had no luck at all finding the serial killer. He’s just that confident his next big take from hauling in a failing bank at fire-sale prices is so certain, he needn’t worry that warning everyone of the coming failures will get in the way of his business. Thus, he can play the saint for warning us all, knowing the greedy will ignore his warnings anyway, and still wait in the wings for that Friday evening call from Fed Chair Jerome Powell that says, “We have another bank for you. Can we meet tomorrow morning to discuss terms and complete a weekend sale?”
Fitting right in with my theme for this weekend’s Deeper Dive for paying subscribers to be titled “The Apoceclypse,” The CEO of JPMorgan Chase warned the world this week that it faces “Risks that eclipse anything since World War II.” I, of course, couldn’t agree more, so I want to spend this article distilling the Dimon’s annual report down to the most essential risks:
…click on the above link to read the rest of the article…
Inflation is Causing Tectonic Shifts
Inflation is Causing Tectonic Shifts
Even if stock investors are acting as if nothing happened along the road they are walking, they will soon wish they had not missed the obvious.
Yesterday when stocks crashed hard, I wrote the following caveat to their epitaph:
Whoa! Delusions broken. At least, for today, but give investors a wisp of faint hope tomorrow, and greed may go from free fall to free floating again.
Indeed, the faintest wisp was all they got in today’s PCE inflation report, but that was all it took to send them deliriously positive in a state of euphoria and denial again. That won’t likely last long, foolish as it is, because the road is likely to be more than bumpy from here on out on the inflation front—more like jagged—and because bond investors today refused to give up the tougher edge they took yesterday with the bond vigilantes holding out for better returns. Never underestimate the foolishness and denial that undergirds this stock market, causing investors to miss the obvious signs on each side of them.
… Because, as I also wrote yesterday …
The 2YR yield is now getting very close to 5%. At those levels Treasuries will be seriously sucking money out of stocks for the practically free ride of doing nothing but sitting home with zero risk and clipping interest coupons. Those days won’t be long in coming.
That is what we saw today in bond action as yields continued to rise. A few articles in the news today highlighted how bond traders are now demanding higher yields from US Treasuries and not letting go of the reins…
…click on the above link to read the rest of the article…
