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How Long is Transitory?

The Bank of England meeting on June 24th finishes this round of major central bank meetings.  At its last meeting, Bailey & Co reduced the weekly bond-buying.  The extension of social restrictions well into July provides added reason to be cautious,..

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The Bank of England meeting on June 24th finishes this round of major central bank meetings.  At its last meeting, Bailey & Co reduced the weekly bond-buying.  The extension of social restrictions well into July provides added reason to be cautious, though economic activity is accelerating and consumer prices are rising faster than the medium-term target of 2% for the first time in three years.   

British growth is likely peaking this quarter, perhaps a little above 4%. It would put H1 21 growth around 2.6%.  The pace of activity is activity is likely to slow to around 2% in H2.  Growth in H1 22 may be closer to 1.5%.  Return to normalcy, indeed!

The same can roughly be said about the US as well.  The quarterly pace and the year-over-year increase are expected to peak here in Q2 21 also.  Both the Atlanta and St.Loius Fed tracking GDP models see Q2 GDP at a little more than a 9% annualized rate.  The slowing, however, will be moderated by the mid-July start of two new initiatives designed to help lower and middle-class families: the Child Tax Credit (~36 mln families qualify) and the Earned Income Tax Credit that will run at least through December. As a result, above 3% growth may be achievable into early 2022, but by H2 22 and the mid-term election, growth is likely to return to the status quo ante below 3%.  

The preliminary June PMI reports are the data highlight of the week. They may pose some headline risk, but in the reaction function of policymakers and private decision-makers, the news will be of little consequence, confirming what is already known. The vaccinations are making possible the gradual and uneven social and economic re-opening.   Low interest rates, the fiscal stimulus of various stripes, and rebuilt savings appear to provide a friendly environment for robust economic activity.  The PMI is a useful snapshot of this process.  

Japan is the only G7 country where the composite PMI is below the 50 boom/bust level (48.8 in May). Tokyo and several other prefectures' formal state of emergencies are set to lift on June 20, but reports suggest lighter restrictions may be imposed ahead of the start of the Olympics and Paralympics. Holding the games during Covid was terribly unpopular in Japan, though public opinion appears to have softened a little. Nevertheless, the G7 statement recognized the importance of  holding the event safely and securely "as a symbol of global unity in overcoming Covid-19."  

The central banks of Hungary and the Czech Republic meet next week.  The market anticipates rate hikes, which have very little to do with the Federal Reserve.  Hungary expanded by 2% quarter-over-quarter in Q1.  The multilateral organizations (IMF, World Bank, and OECD) estimate Hungary's growth this year between 4.3% and 6.0% and between 4.7% and 5.9% next year.  CPI is up about 5% from a year ago and is running closer to 8% at an annualized pace over the past three months.  Its key policy rate sits at 60 bp.  To lift it to 90 bp, which the market expects, is hardly a tight monetary policy.  Next week's move will likely begin a sequence of hikes, and the market anticipates two hikes in the second half of the year.  

After contracting by 2% in Q1, the Czech economy's recovery is underway.   The market (Bloomberg survey) anticipates 3.5% growth this year and 4.5% next.  CPI is running around 3%x, while the official rate target is a lowly 25 bp.  It is great that the Czech Republic was able to push its overnight rate well below zero in real terms, but that period is coming to a close, and it has very little to do with decisions made in Washington, DC.  The 25 bp hike appears to be discounted, and the participants appear convinced of at least one more hike this year, and possibly two.    

II

The Federal Reserve, the European Central Bank, the Bank of England, and the Swiss National Bank have argued that the elevated inflation levels are temporary. But, of course, not everyone agrees, and some hedge fund managers seem to be talking their book.  One claimed that US inflation is closer to 12% than the 5% of the national CPI.  Another claimed that if the Fed did not respond more forcefully, he would go "all-in" on the inflation trade.  He defined this as commodities, gold, and crypto.

Central bankers can be lampooned and criticized, but they are not the outliers on this issue.  The June survey by Bank of America found that 72% of the asset managers see inflation as transitory, with 23% saying it is permanent.  Still, the allocation to bonds fell to a three-year low.  Moreover, fund managers see the long commodities trade as the most crowded, eclipsing Bitcoin, which 81% saw  in "bubble territory,"  

Although it has been claimed that crypto, and Bitcoin, in particular, is a good hedge against inflation, the evidence is not there.  For example, the 30-month rolling correlation of the change in US year-over-year inflation and the change in the price of Bitcoin has mostly been inverted in its brief history. Moreover, it peaked in mid-2017 and in Q1 21 in the 0.35-0.40 area when it spiked.  

Gold is not as correlated to US inflation as some may think.  Again, running the correlation at the level of differences of the US CPI and gold on a rolling 30-month basis shows an inversion for most of the past seven years.  The main exception was from August through September 2018, and even then, the correlation was insignificant (less than 0.05). The correlation is slightly positive (0.015) now.  

To avoid confusion, the fact that both gold and Bitcoin have been inversely correlated does not mean they are significantly correlated with each other.  The correlation had been positive (30-month changes) from July 2017 through February 2021. After that, however, it turned negative, and an inverse correlation of about -0.32 is the most extreme it has gotten.  The correlation on more granular time frames (daily and weekly) is also inverse.  

The CRB Index, a basket of commodities, enjoys a better statistical relationship with the US CPI.  Before the pandemic struck, though, the correlation (30-month differences) was a little less than 0.2.  The co-movement intensified after Q1 20 and has been hovering around 0.40 for the past year, which is the upper end of where it has been over the past decade.  Remember, CPI (and PCE deflator) represent a weighted basket of goods and services.  Almost two-thirds of the CPI basket has little to do with commodity prices: shelter (not construction), medical care, education, communication, and recreation.  

Inflation expectations last month seemed to have been egged on by the rise in oil prices.  Since the end of last October, crude oil prices have nearly doubled.  They are third higher than they were at the end of 2019.  However, the 10-year breakeven (the difference between the conventional bond yield and the inflation-protected security) fell from almost 2.6% on May 12 to nearly 2.3% on June 10, even as oil prices continued to climb.  At the end of 2019, the 10-year breakeven was slightly below 1.80%.  It had not been above 2%, the Fed's target, since late 2018. 

Some think a dramatic rise in oil prices is inflationary.  Under the guidance of Trichet, the ECB hiked rates in mid-2008 primarily because it was feared that the rapid rise in oil would spur a general increase in prices.  On the contrary, a dramatic increase in the price of oil is a negative shock for the economy.  In the US, oil shocks have preceded the end of expansions.  The rally in crude (~135%) in July-October 1990 helped knock the US into recession.  The price of oil doubled in 1999-2000, and the recession hit in 2001. The price almost doubled from the 2007 low to early 2008, as the financial crisis hit.  

Central bankers like to maximize their tactical flexibility.  There is a good reason why Powell and Lagarde loathe, to be more specific. The Fed has not even defined the period that its "average" inflation target applies.  Surveys of economists are more precise.  The headline PCE deflator, which the Fed targets, despite the media insisting on calling the core rate the Fed's preferred measure, is expected to return to the 2% target somewhere around the middle of next year.   Just like the pace of US growth is near its peak, the year-over-year rate of inflation is also seen by economists to be peaking soon.  Economists see the eurozone inflation reaching maximum acceleration in Q4 before falling back to below 1.5% for most of next year.  The UK's CPI is expected to peak around 2.3% late this year and early next, before falling below 2% by the end of next year.  

 

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Mike Pompeo Doesn’t Rule Out Serving In 2nd Trump Administration

Mike Pompeo Doesn’t Rule Out Serving In 2nd Trump Administration

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Former Secretary…

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Mike Pompeo Doesn't Rule Out Serving In 2nd Trump Administration

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Former Secretary of State Mike Pompeo said in a new interview that he’s not ruling out accepting a White House position if former President Donald Trump is reelected in November.

“If I get a chance to serve and think that I can make a difference ... I’m almost certainly going to say yes to that opportunity to try and deliver on behalf of the American people,” he told Fox News, when asked during a interview if he would work for President Trump again.

I’m confident President Trump will be looking for people who will faithfully execute what it is he asked them to do,” Mr. Pompeo said during the interview, which aired on March 8. “I think as a president, you should always want that from everyone.”

Then-President Donald Trump (C), then- Secretary of State Mike Pompeo (L), and then-Vice President Mike Pence, take a question during the daily briefing on the novel coronavirus at the White House in Washington on April 8, 2020. (Mandel Ngan/AFP via Getty Images)

He said that as a former secretary of state, “I certainly wanted my team to do what I was asking them to do and was enormously frustrated when I found that I couldn’t get them to do that.”

Mr. Pompeo, a former U.S. representative from Kansas, served as Central Intelligence Agency (CIA) director in the Trump administration from 2017 to 2018 before he was secretary of state from 2018 to 2021. After he left office, there was speculation that he could mount a Republican presidential bid in 2024, but announced that he wouldn’t be running.

President Trump hasn’t publicly commented about Mr. Pompeo’s remarks.

In 2023, amid speculation that he would make a run for the White House, Mr. Pompeo took a swipe at his former boss, telling Fox News at the time that “the Trump administration spent $6 trillion more than it took in, adding to the deficit.”

“That’s never the right direction for the country,” he said.

In a public appearance last year, Mr. Pompeo also appeared to take a shot at the 45th president by criticizing “celebrity leaders” when urging GOP voters to choose ahead of the 2024 election.

2024 Race

Mr. Pompeo’s interview comes as the former president was named the “presumptive nominee” by the Republican National Committee (RNC) last week after his last major Republican challenger, former South Carolina Gov. Nikki Haley, dropped out of the 2024 race after failing to secure enough delegates. President Trump won 14 out of 15 states on Super Tuesday, with only Vermont—which notably has an open primary—going for Ms. Haley, who served as President Trump’s U.S. ambassador to the United Nations.

On March 8, the RNC held a meeting in Houston during which committee members voted in favor of President Trump’s nomination.

“Congratulations to President Donald J. Trump on his huge primary victory!” the organization said in a statement last week. “I’d also like to congratulate Nikki Haley for running a hard-fought campaign and becoming the first woman to win a Republican presidential contest.”

Earlier this year, the former president criticized the idea of being named the presumptive nominee after reports suggested that the RNC would do so before the Super Tuesday contests and while Ms. Haley was still in the race.

Also on March 8, the RNC voted to name Trump-endorsed officials to head the organization. Michael Whatley, a North Carolina Republican, was elected the party’s new national chairman in a vote in Houston, and Lara Trump, the former president’s daughter-in-law, was voted in as co-chair.

“The RNC is going to be the vanguard of a movement that will work tirelessly every single day to elect our nominee, Donald J. Trump, as the 47th President of the United States,” Mr. Whatley told RNC members in a speech after being elected, replacing former chair Ronna McDaniel. Ms. Trump is expected to focus largely on fundraising and media appearances.

President Trump hasn’t signaled whom he would appoint to various federal agencies if he’s reelected in November. He also hasn’t said who his pick for a running mate would be, but has offered several suggestions in recent interviews.

In various interviews, the former president has mentioned Sen. Tim Scott (R-S.C.), Texas Gov. Greg Abbott, Rep. Elise Stefanik (R-N.Y.), Vivek Ramaswamy, Florida Gov. Ron DeSantis, and South Dakota Gov. Kristi Noem, among others.

Tyler Durden Wed, 03/13/2024 - 17:00

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International

Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and…

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Riley Gaines Explains How Women's Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and bewildering tunnel of social justice cultism?  Global events have been so frenetic that many people might not remember, but only a couple years ago Big Tech companies and numerous governments were openly aligned in favor of mass censorship.  Not just to prevent the public from investigating the facts surrounding the pandemic farce, but to silence anyone questioning the validity of woke concepts like trans ideology. 

From 2020-2022 was the closest the west has come in a long time to a complete erasure of freedom of speech.  Even today there are still countries and Europe and places like Canada or Australia that are charging forward with draconian speech laws.  The phrase "radical speech" is starting to circulate within pro-censorship circles in reference to any platform where people are allowed to talk critically.  What is radical speech?  Basically, it's any discussion that runs contrary to the beliefs of the political left.

Open hatred of moderate or conservative ideals is perfectly acceptable, but don't ever shine a negative light on woke activism, or you might be a terrorist.

Riley Gaines has experienced this double standard first hand.  She was even assaulted and taken hostage at an event in 2023 at San Francisco State University when leftists protester tried to trap her in a room and demanded she "pay them to let her go."  Campus police allegedly witnessed the incident but charges were never filed and surveillance footage from the college was never released.  

It's probably the last thing a champion female swimmer ever expects, but her head-on collision with the trans movement and the institutional conspiracy to push it on the public forced her to become a counter-culture voice of reason rather than just an athlete.

For years the independent media argued that no matter how much we expose the insanity of men posing as women to compete and dominate women's sports, nothing will really change until the real female athletes speak up and fight back.  Riley Gaines and those like her represent that necessary rebellion and a desperately needed return to common sense and reason.

In a recent interview on the Joe Rogan Podcast, Gaines related some interesting information on the inner workings of the NCAA and the subversive schemes surrounding trans athletes.  Not only were women participants essentially strong-armed by colleges and officials into quietly going along with the program, there was also a concerted propaganda effort.  Competition ceremonies were rigged as vehicles for promoting trans athletes over everyone else. 

The bottom line?  The competitions didn't matter.  The real women and their achievements didn't matter.  The only thing that mattered to officials were the photo ops; dudes pretending to be chicks posing with awards for the gushing corporate media.  The agenda took precedence.

Lia Thomas, formerly known as William Thomas, was more than an activist invading female sports, he was also apparently a science project fostered and protected by the athletic establishment.  It's important to understand that the political left does not care about female athletes.  They do not care about women's sports.  They don't care about the integrity of the environments they co-opt.  Their only goal is to identify viable platforms with social impact and take control of them.  Women's sports are seen as a vehicle for public indoctrination, nothing more.

The reasons why they covet women's sports are varied, but a primary motive is the desire to assert the fallacy that men and women are "the same" psychologically as well as physically.  They want the deconstruction of biological sex and identity as nothing more than "social constructs" subject to personal preference.  If they can destroy what it means to be a man or a woman, they can destroy the very foundations of relationships, families and even procreation.  

For now it seems as though the trans agenda is hitting a wall with much of the public aware of it and less afraid to criticize it.  Social media companies might be able to silence some people, but they can't silence everyone.  However, there is still a significant threat as the movement continues to target children through the public education system and women's sports are not out of the woods yet.   

The ultimate solution is for women athletes around the world to organize and widely refuse to participate in any competitions in which biological men are allowed.  The only way to save women's sports is for women to be willing to end them, at least until institutions that put doctrine ahead of logic are made irrelevant.          

Tyler Durden Wed, 03/13/2024 - 17:20

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Part 1: Current State of the Housing Market; Overview for mid-March 2024

Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024
A brief excerpt: This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to star…

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Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024

A brief excerpt:
This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to start with inventory, since inventory usually tells the tale!
...
Here is a graph of new listing from Realtor.com’s February 2024 Monthly Housing Market Trends Report showing new listings were up 11.3% year-over-year in February. This is still well below pre-pandemic levels. From Realtor.com:

However, providing a boost to overall inventory, sellers turned out in higher numbers this February as newly listed homes were 11.3% above last year’s levels. This marked the fourth month of increasing listing activity after a 17-month streak of decline.
Note the seasonality for new listings. December and January are seasonally the weakest months of the year for new listings, followed by February and November. New listings will be up year-over-year in 2024, but we will have to wait for the March and April data to see how close new listings are to normal levels.

There are always people that need to sell due to the so-called 3 D’s: Death, Divorce, and Disease. Also, in certain times, some homeowners will need to sell due to unemployment or excessive debt (neither is much of an issue right now).

And there are homeowners who want to sell for a number of reasons: upsizing (more babies), downsizing, moving for a new job, or moving to a nicer home or location (move-up buyers). It is some of the “want to sell” group that has been locked in with the golden handcuffs over the last couple of years, since it is financially difficult to move when your current mortgage rate is around 3%, and your new mortgage rate will be in the 6 1/2% to 7% range.

But time is a factor for this “want to sell” group, and eventually some of them will take the plunge. That is probably why we are seeing more new listings now.
There is much more in the article.

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