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‘Remains Structurally Unsound’

‘Remains Structurally Unsound’



Does anyone remember “transitory?” I know I do. I spent years ridiculing the idea. But after 2019’s interest rate debacle, cuts rather than hikes, the Federal Reserve very quietly banished that particular word. This was, of course, during the course of the central bank’s “exhaustive” study surrounding its major inflation puzzle.

“Transitory” had been the primary way in which Fed officials kept deluding themselves, therefore leading the entire institution (and the public) directly into such prolonged confusion.

Each and every time inflation would inevitably undershoot, authorities would blame “transitory” factors. All that meant was, given time, the economy was supposed to have righted itself and once it did monetary policy success in the form of full employment would be revealed to all.

I still can’t help but chuckle in review about Janet Yellen’s yearlong fixation on Verizon. Verizon. Remember that one? Lack of real economic growth, therefore too little revenue expansion for that key telecom, had pushed the company to start massive price discounting – the data plan wars! To better compete, because it had no pricing power, Verizon unveiled its own unlimited data plan thereby significantly cheapening its service.

The effect was substantial, so much that it materially affected the inflation indices and each of their core measures. And then, get this, it showed up in the FOMC meeting minutes. I mean, this was the middle of 2017, the very launch point for globally synchronized growth, and the FOMC was talking instead about…wireless data plans thwarting confirmation of the economy’s take-off?

If only policymakers could channel such creativity into productive uses.

Verizon had been, of course, just the latest “transitory” factor to spoil the planned QE parade. This particular piece of the farce took off all across the mainstream media always eager to parrot whichever latest absurd excuse, so I wrote at the time in response:

The Fed’s inflation policy is always beset by “oneoff” factors that form an unbroken string tracing back in time now five years. Each of these do, in fact, appear to be plausibly characterized in such a way, at least until put together in a more comprehensive review. Once that happens, their commonality is revealed always as weak consumers.

The first reference to “transitory” I could find came from 2012 and Ben Bernanke right around the time the US (and global) economy “mysteriously” suffered its first setback (Euro$ #2) without yet having recovered from the initial break only a few years prior. More QE!

What followed was about eight years of continuously using the term “transitory” such that the word itself in the central bank sense had lost all meaning; a comical farce with enormously tragic consequences. That alone told you everything you needed to know about how unserious these people are, and the dishonest depths they will stoop to in order to avoid the painful, uncomfortable truth about “stimulus”, central banks, and the real situation in the monetary system. 

Implicit in this year’s central bank’s strategy review and updated “average inflation target” is the very quiet retirement of the expression; “transitory” has finally lived up to its true meaning if not the way in which it had been used for so long. In other words, only years later do these cowards finally admit, and only implicitly, they had it wrong the whole time.

Verizon. Hah!

Inflation isn’t really the issue here, either. It’s what inflation is supposed to represent, and that’s recovery; the real thing, consumer prices backing up and corroborating the unemployment rate. Going back to what I wrote in 2017:

It would only make sense that we detect the chain of causation from economy to consumer prices that instead remains missing from the policy end. In short, there are legitimate concerns as to what may be keeping inflation below the 2% target for such an extended period of time, five years and counting, far more than any tangible proof that monetary policy is or was ever effective let alone pure “money printing.”

This matters in setting our expectations for what comes next, and not just in the context of “reflation.” The US and global economy remains structurally unsound.

It’s that last bit which is relevant in the context of the unemployment rate view once again. This labor market number, as noted last week, has produced a pleasing picture of an economy well on its way to being mended after the earlier severe dislocation. To that end, the central bank is once more forecasting inflationary consequences which would, if they ever do show up, verify that interpretation. 

The Fed is even counting on it, as specified by its “average” baloney.

How can we be right back into the same dissonance? The unemployment rate and the supposedly updated Fed says inflation and growth, maybe even a better “V” than previously thought. Yet, on the other hand, oil and other labor data totally spoiling the party – as if it was 2017 all over again.

For one thing, Jay may say he’ll allow inflation to go above and stay above the policy target for a long time, but he’s been largely silent on just how that actually might happen (just as he’s been silent on why, with “transitory” no longer an option, it hasn’t to this point). In truth, his justifications just won’t matter.

Because just as Powell claims to have hit the gas, what does WTI do? Fed officials can talk however they want, put it in as emphatic language as they can possibly create. Let’s face it, this inflation stuff is going nowhere without crude oil.

This whole J-Hole event had already fallen flat and now it’s at risk of being completely flattened by another “transitory” (sorry, force of habit) oil breakdown.

That’s all the more curious considering what I pointed out earlier this weekhistoric levels of supply cuts in oil (above), and how such massive curtailment of production has completely failed to pull the WTI futures curve out of contango (now steepening again).

This can only point the dirty finger in the direction of economic demand, which means no “V” before even getting to the question of downstream inflation. More importantly, the oil market is hardly alone is setting up these unsettling interpretations.

The government continues to report only minimal progress in terms of regular jobless claims, while at the same time reporting a very alarming rise in the irregular types (federal). That continued yet again in the latest data (which is staggered by week: initial claims are for last week; continued state claims are for the week before; and the federal/pandemic claims are a week still further in arrears).

When you look back on 2017 as the best of times, all of this stuff really does hit home. Repeating what I wrote back then, “The US and global economy remains structurally unsound.” Yep. And if that phrase applied to three years ago when reflation, at least, was actually happening, “remains structurally unsound” sounds ridiculously understated for what we have going on right now.

Transitory is dead. RIP. But that’s only the smallest sliver of progress. Thanks, Jay, for now stating eight (or thirteen) years too late what was obvious the whole time.

This inflation stuff is really just that simple. Forget inflation targets, R*’s, Economist techno-babble econometrics; central bankers haven’t a prayer without oil or an accurate unemployment rate. As Summer 2020 grows long, they don’t have either. Again.

And the reason is equally simple: remains structurally unsound – and then some.

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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"…



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.


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

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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…



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

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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…



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

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