Connect with us

Government

Liquidity Inertia Keeps Bull Trend Intact

The current investing landscape has been full of surprises and sudden changes that have kept investors and fund managers guessing as to how best to be positioned, even for just the month ahead. Only two weeks ago, the 10-year Treasury was knocking on…

Published

on

The current investing landscape has been full of surprises and sudden changes that have kept investors and fund managers guessing as to how best to be positioned, even for just the month ahead.

Only two weeks ago, the 10-year Treasury was knocking on the door of the 1.0% interest rate threshold before a blowout jobs report and the passage of an infrastructure bill in the Senate infused the reflationary stock sectors and touched off a frantic bout of selling in the Treasury market, taking the 10-year yield up to 1.37%.

At first glance, this setup looked to be a green light for the stock market to pad its gains, and it did. As of last Friday, both the Dow and S&P closed at new all-time highs, with the Nasdaq within a whisper of a new record and the Russell 2000 still lagging. It was a telling moment for the bid under the market as it seemingly shrugged off what was a big downside surprise in consumer confidence.

The preliminary University of Michigan Consumer Sentiment Index for August had a stunning decline to 70.2, compared to a consensus estimate of 81.6, from the final reading of 81.2 for July. That is below the April 2020 low of 71.8, when fear of COVID-19 was sweeping the nation, and is one of the largest monthly declines in the past 50 years.

Two key data points factored hugely in the report. The Current Economic Conditions Index fell to 77.9 from 84.5 and the Expectations Index dropped to 65.2 from 79.0.

According to the analysis by Briefing.com, “The key takeaway from the report is that the plunge in consumer sentiment wasn’t just related to concerns about the Delta variant. It was linked to all aspects of the economy, the report said, from personal finances to prospects for the economy, including inflation and unemployment. Moreover, the deteriorating sentiment was seen across income, age and education subgroups, and observed across all regions.”

Literally, two-thirds of U.S. gross domestic product (GDP) is consumer-dependent, so when a report like this crosses the tape and the market doesn’t give back 3% or more, then it stands to reason that the market narrative is well camped out in the notion that the Fed will maintain quantitative easing (QE) for longer than what was thought just a week ago. Leave no doubt, this is a shocking number on the heels of a banner earnings season accompanied by robust corporate guidance for the third quarter and the balance of 2021.

It would seem within the body of the report that inflation and personal finances are the culprits and not so much the employment component. After all, the most recent labor data showed a robust hiring atmosphere with “For Hire” signs posted everywhere you look. There has been a sudden and sharp pullback in the Personal Savings Rate to pre-pandemic levels, implying Americans went on a spending binge in the second quarter as the economy reopened.

A scarcity of homes, prime rentals, new cars, used cars and travel options have pushed prices for these and scores of other items and services higher. And American consumers gladly paid the premiums, at least for the past three months, according to the chart below. With both the federal and state governments already scaling back and eliminating monthly assistance and forbearance, the pressure to make household budgets falls squarely 100% back on the consumer, at least in the short term.   

The $250-$300 per month cash payment per child under 17, up to $3,600 max per child, has started, but pandemic unemployment insurance will expire Sept. 6. The ongoing health care crisis has people holding out for an extension, and there are advocacy groups calling for continuing the programs, but there is little political momentum behind them right now. Without the supplement, state benefits replace about 38% of a worker’s previous wages on average, according to the Labor Department.

This winding down of benefits affects about 13 million people. While that may sound like a lot, it is less than 4% of the total population. Consumer sentiment crashing like it did this month means future discretionary spending is going to slow and inflation in all its forms isn’t as transitory as the Fed had forecast. This was clearly reflected in last week’s release of the Producer Price Index for July, which showed final demand increased 1.0% month over month, twice the consensus for a 0.5% gain, following a 1.0% increase in June.

According to the Bureau of Labor Statistics, on a year-over-year basis, the Producer Price Index for final demand was up 7.8% on an unadjusted basis, versus 7.3% in June. That is the largest advance since it was first calculated in November 2010. The main takeaway from the report is that producers are, without a doubt, paying higher prices for all manner of inputs, which will likely result in passing on those higher costs to the consumer. And this is just for goods; inflation in the service sector is also way elevated. 

I believe this is what is the largest contributor to the trap-door consumer confidence numbers, and one that doesn’t look likely to be tempered anytime soon, with ongoing global supply chain bottlenecks still very prevalent in key industries. Apparently, custom home builders can’t get Viking ranges until early 2022, or Sub-Zero refrigerators until December, due to the shortage of semiconductors for high-end appliances.

Back to the market’s muted response — the major averages held up well, probably due to the rush back into the biggest mega-tech stocks that represent roughly 25% of total assets in the S&P and 50% of total assets in the Nasdaq. That rotation back into big-cap tech was glaringly obvious in Friday’s session, as risk was reduced in consumer discretionary, financials, energy and industrials. Health care, utilities, consumer staples and real estate investment trusts (REITs) also outperformed, making for a more defensive tone as the week ended.

One last observation is how underneath the record highs for the major averages is a deterioration of the NYSE Advance/Decline Line in June and July, having stabilized this month, albeit on lighter volume due to seasonality (vacations). This bears close monitoring as a sign the bull market is getting thinner. Fewer stocks will lead or participate in further gains. To sum it up, there is a firm bid under the market, but it’s more skewed now toward those best-in-class stocks. 

The post Liquidity Inertia Keeps Bull Trend Intact appeared first on Stock Investor.

Read More

Continue Reading

Government

Survey Shows Declining Concerns Among Americans About COVID-19

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat"…

Published

on

Survey Shows Declining Concerns Among Americans About COVID-19

A new survey reveals that only 20% of Americans view covid-19 as "a major threat" to the health of the US population - a sharp decline from a high of 67% in July 2020.

(SARMDY/Shutterstock)

What's more, the Pew Research Center survey conducted from Feb. 7 to Feb. 11 showed that just 10% of Americans are concerned that they will  catch the disease and require hospitalization.

"This data represents a low ebb of public concern about the virus that reached its height in the summer and fall of 2020, when as many as two-thirds of Americans viewed COVID-19 as a major threat to public health," reads the report, which was published March 7.

According to the survey, half of the participants understand the significance of researchers and healthcare providers in understanding and treating long COVID - however 27% of participants consider this issue less important, while 22% of Americans are unaware of long COVID.

What's more, while Democrats were far more worried than Republicans in the past, that gap has narrowed significantly.

"In the pandemic’s first year, Democrats were routinely about 40 points more likely than Republicans to view the coronavirus as a major threat to the health of the U.S. population. This gap has waned as overall levels of concern have fallen," reads the report.

More via the Epoch Times;

The survey found that three in ten Democrats under 50 have received an updated COVID-19 vaccine, compared with 66 percent of Democrats ages 65 and older.

Moreover, 66 percent of Democrats ages 65 and older have received the updated COVID-19 vaccine, while only 24 percent of Republicans ages 65 and older have done so.

“This 42-point partisan gap is much wider now than at other points since the start of the outbreak. For instance, in August 2021, 93 percent of older Democrats and 78 percent of older Republicans said they had received all the shots needed to be fully vaccinated (a 15-point gap),” it noted.

COVID-19 No Longer an Emergency

The U.S. Centers for Disease Control and Prevention (CDC) recently issued its updated recommendations for the virus, which no longer require people to stay home for five days after testing positive for COVID-19.

The updated guidance recommends that people who contracted a respiratory virus stay home, and they can resume normal activities when their symptoms improve overall and their fever subsides for 24 hours without medication.

“We still must use the commonsense solutions we know work to protect ourselves and others from serious illness from respiratory viruses, this includes vaccination, treatment, and staying home when we get sick,” CDC director Dr. Mandy Cohen said in a statement.

The CDC said that while the virus remains a threat, it is now less likely to cause severe illness because of widespread immunity and improved tools to prevent and treat the disease.

Importantly, states and countries that have already adjusted recommended isolation times have not seen increased hospitalizations or deaths related to COVID-19,” it stated.

The federal government suspended its free at-home COVID-19 test program on March 8, according to a website set up by the government, following a decrease in COVID-19-related hospitalizations.

According to the CDC, hospitalization rates for COVID-19 and influenza diseases remain “elevated” but are decreasing in some parts of the United States.

Tyler Durden Sun, 03/10/2024 - 22:45

Read More

Continue Reading

International

Rand Paul Teases Senate GOP Leader Run – Musk Says “I Would Support”

Rand Paul Teases Senate GOP Leader Run – Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump…

Published

on

Rand Paul Teases Senate GOP Leader Run - Musk Says "I Would Support"

Republican Kentucky Senator Rand Paul on Friday hinted that he may jump into the race to become the next Senate GOP leader, and Elon Musk was quick to support the idea. Republicans must find a successor for periodically malfunctioning Mitch McConnell, who recently announced he'll step down in November, though intending to keep his Senate seat until his term ends in January 2027, when he'd be within weeks of turning 86. 

So far, the announced field consists of two quintessential establishment types: John Cornyn of Texas and John Thune of South Dakota. While John Barrasso's name had been thrown around as one of "The Three Johns" considered top contenders, the Wyoming senator on Tuesday said he'll instead seek the number two slot as party whip. 

Paul used X to tease his potential bid for the position which -- if the GOP takes back the upper chamber in November -- could graduate from Minority Leader to Majority Leader. He started by telling his 5.1 million followers he'd had lots of people asking him about his interest in running...

...then followed up with a poll in which he predictably annihilated Cornyn and Thune, taking a 96% share as of Friday night, with the other two below 2% each. 

Elon Musk was quick to back the idea of Paul as GOP leader, while daring Cornyn and Thune to follow Paul's lead by throwing their names out for consideration by the Twitter-verse X-verse. 

Paul has been a stalwart opponent of security-state mass surveillance, foreign interventionism -- to include shoveling billions of dollars into the proxy war in Ukraine -- and out-of-control spending in general. He demonstrated the latter passion on the Senate floor this week as he ridiculed the latest kick-the-can spending package:   

In February, Paul used Senate rules to force his colleagues into a grueling Super Bowl weekend of votes, as he worked to derail a $95 billion foreign aid bill. "I think we should stay here as long as it takes,” said Paul. “If it takes a week or a month, I’ll force them to stay here to discuss why they think the border of Ukraine is more important than the US border.”

Don't expect a Majority Leader Paul to ditch the filibuster -- he's been a hardy user of the legislative delay tactic. In 2013, he spoke for 13 hours to fight the nomination of John Brennan as CIA director. In 2015, he orated for 10-and-a-half-hours to oppose extension of the Patriot Act

Rand Paul amid his 10 1/2 hour filibuster in 2015

Among the general public, Paul is probably best known as Capitol Hill's chief tormentor of Dr. Anthony Fauci, who was director of the National Institute of Allergy and Infectious Disease during the Covid-19 pandemic. Paul says the evidence indicates the virus emerged from China's Wuhan Institute of Virology. He's accused Fauci and other members of the US government public health apparatus of evading questions about their funding of the Chinese lab's "gain of function" research, which takes natural viruses and morphs them into something more dangerous. Paul has pointedly said that Fauci committed perjury in congressional hearings and that he belongs in jail "without question."   

Musk is neither the only nor the first noteworthy figure to back Paul for party leader. Just hours after McConnell announced his upcoming step-down from leadership, independent 2024 presidential candidate Robert F. Kennedy, Jr voiced his support: 

In a testament to the extent to which the establishment recoils at the libertarian-minded Paul, mainstream media outlets -- which have been quick to report on other developments in the majority leader race -- pretended not to notice that Paul had signaled his interest in the job. More than 24 hours after Paul's test-the-waters tweet-fest began, not a single major outlet had brought it to the attention of their audience. 

That may be his strongest endorsement yet. 

Tyler Durden Sun, 03/10/2024 - 20:25

Read More

Continue Reading

Government

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While “Waiting” For Deporation, Asylum

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several…

Published

on

The Great Replacement Loophole: Illegal Immigrants Score 5-Year Work Benefit While "Waiting" For Deporation, Asylum

Over the past several months we've pointed out that there has  been zero job creation for native-born workers since the summer of 2018...

... and that since Joe Biden was sworn into office, most of the post-pandemic job gains the administration continuously brags about have gone foreign-born (read immigrants, mostly illegal ones) workers.

And while the left might find this data almost as verboten as FBI crime statistics - as it directly supports the so-called "great replacement theory" we're not supposed to discuss - it also coincides with record numbers of illegal crossings into the United States under Biden.

In short, the Biden administration opened the floodgates, 10 million illegal immigrants poured into the country, and most of the post-pandemic "jobs recovery" went to foreign-born workers, of which illegal immigrants represent the largest chunk.

Asylum seekers from Venezuela await work permits on June 28, 2023 (via the Chicago Tribune)

'But Tyler, illegal immigrants can't possibly work in the United States whilst awaiting their asylum hearings,' one might hear from the peanut gallery. On the contrary: ever since Biden reversed a key aspect of Trump's labor policies, all illegal immigrants - even those awaiting deportation proceedings - have been given carte blanche to work while awaiting said proceedings for up to five years...

... something which even Elon Musk was shocked to learn.

Which leads us to another question: recall that the primary concern for the Biden admin for much of 2022 and 2023 was soaring prices, i.e., relentless inflation in general, and rising wages in particular, which in turn prompted even Goldman to admit two years ago that the diabolical wage-price spiral had been unleashed in the US (diabolical, because nothing absent a major economic shock, read recession or depression, can short-circuit it once it is in place).

Well, there is one other thing that can break the wage-price spiral loop: a flood of ultra-cheap illegal immigrant workers. But don't take our word for it: here is Fed Chair Jerome Powell himself during his February 60 Minutes interview:

PELLEY: Why was immigration important?

POWELL: Because, you know, immigrants come in, and they tend to work at a rate that is at or above that for non-immigrants. Immigrants who come to the country tend to be in the workforce at a slightly higher level than native Americans do. But that's largely because of the age difference. They tend to skew younger.

PELLEY: Why is immigration so important to the economy?

POWELL: Well, first of all, immigration policy is not the Fed's job. The immigration policy of the United States is really important and really much under discussion right now, and that's none of our business. We don't set immigration policy. We don't comment on it.

I will say, over time, though, the U.S. economy has benefited from immigration. And, frankly, just in the last, year a big part of the story of the labor market coming back into better balance is immigration returning to levels that were more typical of the pre-pandemic era.

PELLEY: The country needed the workers.

POWELL: It did. And so, that's what's been happening.

Translation: Immigrants work hard, and Americans are lazy. But much more importantly, since illegal immigrants will work for any pay, and since Biden's Department of Homeland Security, via its Citizenship and Immigration Services Agency, has made it so illegal immigrants can work in the US perfectly legally for up to 5 years (if not more), one can argue that the flood of illegals through the southern border has been the primary reason why inflation - or rather mostly wage inflation, that all too critical component of the wage-price spiral  - has moderated in in the past year, when the US labor market suddenly found itself flooded with millions of perfectly eligible workers, who just also happen to be illegal immigrants and thus have zero wage bargaining options.

None of this is to suggest that the relentless flood of immigrants into the US is not also driven by voting and census concerns - something Elon Musk has been pounding the table on in recent weeks, and has gone so far to call it "the biggest corruption of American democracy in the 21st century", but in retrospect, one can also argue that the only modest success the Biden admin has had in the past year - namely bringing inflation down from a torrid 9% annual rate to "only" 3% - has also been due to the millions of illegals he's imported into the country.

We would be remiss if we didn't also note that this so often carries catastrophic short-term consequences for the social fabric of the country (the Laken Riley fiasco being only the latest example), not to mention the far more dire long-term consequences for the future of the US - chief among them the trillions of dollars in debt the US will need to incur to pay for all those new illegal immigrants Democrat voters and low-paid workers. This is on top of the labor revolution that will kick in once AI leads to mass layoffs among high-paying, white-collar jobs, after which all those newly laid off native-born workers hoping to trade down to lower paying (if available) jobs will discover that hardened criminals from Honduras or Guatemala have already taken them, all thanks to Joe Biden.

Tyler Durden Sun, 03/10/2024 - 19:15

Read More

Continue Reading

Trending