Sunday, December 25, 2016

Today's Links

1--CIA chief admits Agency's role in Syria


"I think we always like to say that we wish that we would have been able to make a difference, in a way that would have prevented the slide and the situation there," Director of John Brennan said in an interview with National Public Radio (NPR).
"There's no way you can divorce yourself, emotionally or mentally, from these situations that you play a role in," Brennan said, adding that he “felt some responsibility for the horrific bloodshed” in the Syria war.

He then went onto predict that the terrorist forces loss in Aleppo will not end the war in Syria.
"This insurgency is not going to go away until there is some type of viable and genuine political process that will bring to power in Damascus a government that is representative of the Syrian people,” he further stated.
He then went onto admit that the USA has had little influence in being able to shape events in Syria.
"As great a country — as powerful a country — as the United States is, we have, in many areas, limited ability to influence the course of events," Brennan said

2--Americans are now in more debt than they were before the financial crisis

Total debt (including mortgages, auto loans and student loans) is expected to surpass the amounts owed at the beginning of the Great Recession by the end of 2016, NerdWallet found, mostly due to mortgages and student loans. Mortgage debt jumped from $159,020 per household in 2010 to $172,806 in 2016, and debt from auto loans grew from $20,032 in 2010 to $28,535 in 2016.

Nationwide, total household debt (including mortgages, auto loans and student loans) now equals almost $12.4 trillion, up from about $11.7 trillion in 2010

3--Global Domination Star Wars II’ Obama signs defence bill calling for space-based missile systems

The race for space?  A  related provision calls for the Pentagon to start “research, development, test and evaluation” of space-based systems for missile defence.

4--Central banks have cut interest rates 690 times since Lehman Brothers

5--The Markets Say Inflation Is Coming. The Data Show It Isn’t True-- Investors wonder how much further the ‘reflation trade’ can go

"Anyone who thinks one man can reverse on his own the structural forces that led to the multiyear disinflation trend—and I’m talking about excessive debt, globalization, aging demographics and technology—needs to go back to economics school right away,” he said.....

Traders are at odds with consumers when it comes to the inflation outlook, a divergence that some investors are betting will lead to a sharp market reversal.
A University of Michigan survey of consumer expectations for annual inflation over the next five to 10 years hit 2.3% for December, data showed Friday. That is down from 2.6% in June and the lowest reading in records that go back to the late 1970s...

investors have been betting that prices will pick up when President-elect Donald Trump takes office next month, reflecting administration plans to cut taxes, roll back regulations and spend on infrastructure. That outlook has pushed benchmark Treasury yields to multiyear highs, indicating lower prices, while underlying a run to records in major U.S. stock indexes.

But some worry that the vulnerability of this so-called reflation trade is exposed by the latest sign consumers don’t share that outlook.
“The markets have the wrong narrative” on inflation, said David Rosenberg, chief investment strategist at Gluskin Sheff & Associates Inc., a vocal proponent of the lower-for-longer camp on interest rates when many others on Wall Street have deserted.

Mr. Rosenberg said the base effects from higher energy prices would give inflation a short-term boost during early 2017, but that inflation is likely to slow again later in the year....

The inflation outlook carries implications for monetary policy as well, because the Federal Reserve wants to see stable, rising prices before it lifts rates much higher. Climbing prices are thought to be one hallmark of a healthy economy.
The Fed has had trouble getting inflation to its 2% annual target in recent years. The central bank’s preferred gauge of inflation, the personal-consumption expenditures price index, was up 1.4% in November from a year earlier, data showed Thursday. Another measure, the consumer-price index, was up 1.7% from a year earlier in November....

Fed Chairwoman Janet Yellen said this month that there are signs wage inflation is picking up. Yet the nonfarm jobs report this month showed average hourly earnings for private-sector workers declined 0.1% in November. Earnings were up 2.5% from a year earlier, down from October’s 2.8%, which was the strongest annual wage growth since June 2009.
One other factor that may contain the risk of inflation is the U.S. dollar, which rose to a 14-year high against a basket of its main rivals earlier this week. A higher dollar reduces the cost of imported goods that may keep a lid on inflation, potentially delaying the Fed’s goal to push up inflation to its 2% target.

6--The U.S. Interfered in Foreign Presidential Elections 81 Times from 1946-2000

7--The Fed, Money Expansion, and Inflation

Inflation 101
There are two ways to view inflation. One is that inflation exists when the cost of goods and services rises. While this is true, the second view explains “why” prices rise. It states that inflation exists when the value of the dollar declines.

To understand why inflation has been low, we must consider the following points:
1) Most of the new money has not entered the economy
2) The global economy is weak
3) The price of crude oil has collapsed

The New Money
Prior to the 2008 crisis, the Fed’s balance sheet was around $850 billion. As of December 23, 2015, it was over $4.54 trillion. If most of the new money did not enter the economy, where is it?...

The U.S. and Global Economy
Inflation is highly correlated to the condition of the economy. When the economy is strong, demand rises, and prices tend to increase. Currently, the global economy is weak. In addition, global GDP is expected to grow at 2.8% in 2016. Because the global economy is weak, demand is muted, which places downward pressure on inflation.

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