Monday, May 16, 2016

Today's Links

1--Recession Red Flags Waving


We are in the midst of a deceleration in the economy, and the chain of dominoes leading to a recession has started to fall. First, it was a weak global economy. Then, multinationals and business-to-business companies were hit by the resulting decline in global trade and commodity prices. Now, consumers are starting to feel the repercussions as they draw down their growth in spending on discretionary goods and services, which we saw reflected in the first-quarter GDP report.


This is the foreshadowing of a recession. We saw similar indicators prior to recessions in 2001 and 2008. Although there is potential for economic indicators to flip, the current momentum and indicators suggest that the U.S. economy will get worse before it gets better. But we now we have a sense of what the black swan will be for the economy: the weak consumer.


Friday's retail numbers are very significant in telling us just how weak the consumer will be in the second quarter. It is the first critical pit stop on the road to either economic recovery or recession and gives us our first taste for where Q2 GDP will land. Consumers have been propping up the economy over the last two quarters, and as the first month of Q2, this number is the first indicator we'll have into the trajectory of consumer sentiment, and whether deceleration has continued. If the numbers fall below expectations, this will require a huge rebound over the next two months in order to move in the direction of economic acceleration in Q3. If numbers are good, this will be the first good sign that the consumer — and the economy — are making a comeback....



Average weekly earnings for nonsupervisory employees are only 1.3 percent above year-ago levels and slowing. Wage inflation has lost a full percentage point since the beginning of year, bringing us to the lowest rate of wage growth recorded since 2009, when we were bottoming out from recession


2--Eighty-three percent of U.S. CFOs said they believe Hillary Clinton will become the next president of the United States, ...


according to the latest CNBC Global CFO Council survey, conducted between April 29 and May 11.

The CNBC Global CFO Council represents some of the largest public and private companies in the world, collectively managing nearly $4 trillion in market capitalization across a wide variety of sectors — the U.S. companies on the list have a combined market cap of more than $2 trillion....


For the second quarter in a row, the majority of U.S. CFO Council members said that corporate tax reform is the most important political issue to their firms — jumping several points to nearly 50 percent of all respondents.

This quarter, however, income inequality surpassed monetary policy to become the second most-cited "most important" issue. This suggests growing concern over the financial health of consumers among U.S. chief financial officers. Further evidence: Half of U.S. respondents say consumer demand is the biggest external risk factor facing their business. ....


A downgrade for the U.S.

Overall, respondents foreign and domestic have become more bearish about the global economy, lowering their outlook for Japan, Latin America (ex-Brazil), and the United States. When averaging all of the CFO Council members' responses on various current economic situations across the globe, the United States was "downgraded" this quarter from "improving" to "stable."


3--Negative rates trigger bond rally despite strong retail numbers (video Santelli)


Santelli:  "Negative rates make everything with a positive rate look good" (pushing more investors into 10s and 30s)


4--Retailpocalpse, Mish


On Wednesday, Macy’s reported the worst quarterly sales since recession. On Thursday, Nordstrom did the same. Same store sales fell at Nordstrom for the first time since 2009. Kohls posted an 87% drop in profit and an unexpected decline in sales.


5--Retail Irony: Sales Jump 1.3%, Treasuries Rally

6--Big Second Quarter?  Atlanta Fed GDPNow +2.8% vs. New York Fed Nowcast +1.2%, Mish


7--Monetary Shipwreck:  Abenomics Recap, Mish


Record Japanese stimulus coupled with negative rates yield produced no inflation, a flat stock market, a strengthening Yen, falling exports, and a slowdown in bank lending.


Running Out of Road

Bloomberg reports Never Has BOJ Done So Much for So Little Benefit.

Even after arranging a record stimulus program and reducing a key interest rate to less than zero, the central bank has failed to boost inflation to its goal of 2 percent. Stocks are little changed from where they were in October 2014 when Governor Haruhiko Kuroda expanded his package of asset purchases. Exports are declining. One measure of bank lending is at a 14-year high, though loan growth is slowing compared with a year ago. While most sovereign bond yields have turned negative, corporate borrowing costs are lagging behind


8--Recession Watch: Freight Volume Drops, Worst Level since 2010

9--Donald Trump supporters are not the bigots the left likes to demonise

10--Democratic Establishment’s Thuggish Power Grab at Nevada Convention


11--Goldman: The Median Stock Has Never Been More Overvalued


12--How US Dollar Found Itself Backed by Drug Cartels

13--Oppose Obama’s assault on immigrants!


A Reuters news report revealed this week that the Obama administration is preparing to launch a month-long series of raids aimed at arresting Central American immigrants in the United States. Multiple Obama administration officials told Reuters that the raids would specifically target mothers and their children, as well as orphans and other children traveling alone.

These raids will likely surpass in scope those already carried out by the Obama administration in January, when ICE officials targeted women and children in Georgia, Texas and North Carolina, arresting and detaining 121 people


14--NATO-Russia war tensions laid bare at Washington summit


US leaders have sought to defend the system by claiming that it is directed against Iran and other “rogue nations.” The real purpose of the missile deployments, part of the preparation for an offensive and nuclear war against Russia, was made clear by US Deputy Defense Secretary Robert Work, who said the system is geared for “the central and northern arc of NATO,” i.e., Russia’s western and Arctic flanks.

“They aren’t defensive systems, they are part of the US strategic nuclear potential deployed on the periphery, in eastern Europe,” Putin bluntly noted in his own remarks Friday. In an official statement, Russia’s foreign ministry condemned the new base for “gravely undermining the INF Treaty,” referring to the Intermediate Nuclear Forces treaty between Washington and Moscow....


While Putin’s overtures are premised on the assumption that more rational Western leaders might choose to de-escalate in order to avoid an all-out war, the entire history of the imperialist epoch has proven that there can be no lasting peace with, or between, the major imperialist powers. Instead, the current standoff between NATO and Russia, coming after decades of intensifying world crisis, has brought geopolitical tensions to their highest pitch since the 1930s.


Russia, a vast and resource-rich territory with the largest land area of any state, once the core of the Soviet Union, represents the choicest of prizes in the eyes of the American and European elites. They see no way out from their own crisis apart from a mad scramble to dismember and subjugate the Russian Federation, along with China and the ex-colonial nations of Africa and Asia. 


15--Barack Obama and a quarter-century of US wars


The Defense Policy Guidance drafted by the Department of Defense in February 1992 unambiguously asserted the hegemonic ambitions of US imperialism: “There are other potential nations or coalitions that could, in the further future, develop strategic aims and a defense posture of region-wide or global domination. Our strategy must now refocus on precluding the emergence of any potential future global competitor.”.....


The events of September 11, 2001 provided the opportunity for the launching of the “War on Terror,” a propaganda slogan that provided an all-purpose justification for military operations throughout the Middle East, Central Asia and, with increasing frequency, Africa. The military strategy of the United States was revised in line with the new doctrine of “preventive warfare,” adopted by the US in 2002. This doctrine, which violated existing international law, decreed that the United States could attack any country in the world that was judged to pose a potential threat—not only of a military, but also an economic character—to American interests....



In a front-page article published on May 15, the New York Times calls attention to a significant milestone in the presidency of Barack Obama: “He has now been at war longer than Mr. Bush, or any other American president.” Obama overtook his predecessor on May 6. But with eight months still to go in the White House, he is on target to set yet another record. The Times writes: “If the United States remains in combat in Afghanistan, Iraq and Syria until the end of Mr. Obama’s term—a near-certainty given the president’s recent announcement that he will send 250 additional Special Operations forces to Syria—he will leave behind an improbable legacy as the only president in American history to serve two complete terms with the nation at war.”
   



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