Posts Tagged ‘Jesse’s Americain Cafe’

The Marriage of Mercantilism and Corporatism: When Free Trade Is Not ‘Free’

The Marriage of Mercantilism and Corporatism: When Free Trade Is Not ‘Free’

Courtesy of JESSE’S CAFÉ AMÉRICAIN

"The consequences of this policy are also stark and simple: in effect, China is taxing imports while subsidizing exports, feeding a huge trade surplus. You may see claims that China’s trade surplus has nothing to do with its currency policy; if so, that would be a first in world economic history. An undervalued currency always promotes trade surpluses, and China is no different." Paul Krugman

And he is exactly right. As regular readers know this matter of Chinese mercantilism and its toleration and acceptance by the West has been a key observation and objection here since 2000. Any economist who does not understand that devaluing and then maintaining an artificially low currency peg with a trading partner distorts the nature of that trade should review their knowledge of algebra.

And yet it was in 1994 during the Clinton Administration that China was permitted to obtain full trading partner "Most Favored Nation" status, while vaguely promising to float their recently devalued currency some day, and address the human rights issues that were endogenous to their non-democratic, totalitarian government.

"From 1981 to 1993 there were six major devaluations in China. Their amounts ranged from 9.6 percent to 44.9 percent, and the official exchange rate went from 2.8 yuan per U.S. dollar to 5.32 yuan per U.S. dollar. On January 1, 1994, China unified the two-tier exchange rates by devaluing the official rate to the prevailing swap rate of 8.7 yuan per U.S. dollar." Sonia Wong, China’s Export Growth

This served Mr. Clinton’s constituents in Bentonville quite well, and has some interesting implications for the Chinese campaign contributions scandals. It supported the Rubin doctrine of a ‘strong dollar’ while facilitating the financialization of the US economy and the continuing decline of the middle class wage earners, under pressue to surrender a standard of living achieved at great cost. "How I Learned to Stop Worrying and Love the Currency Collapse." and China’s Mercantilism: Selling Them the Rope

Not to limit this, George W. ratified the arrangement when he took office, and so it has gone on for almost fifteen years…
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Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number

Note to Mish: The BLS Added About 145,897 Imaginary Jobs to the Non-Farm Payrolls Headline Number

Courtesy of JESSE’S CAFÉ AMÉRICAIN

I like Mish Shedlock. He has intellectual integrity, and even when we occasionally disagree, as I recall over the inevitability of deflation and some of its particular consequences and manifestations, I listen to his arguments carefully. He draws conclusions that are difficult to fault. Most of the time we seem to be in agreement.

In his most recent blog, he indirectly poses an interesting question.

"Hidden beneath the surface the BLS Black Box – Birth Death Model added 145,000 jobs. However, as I have pointed out many times before, the Birth/Death numbers cannot be subtracted straight up to get a raw number. It contributed to this month’s employment total for sure, but the BLS will not disclose by how much."

Mish Shedlock, Jobs Decrease by 125,000

Here are the Imaginary Jobs added to the Non Farm Payrolls from the Birth Death Model of the BLS. As Mish reminds us, (thank you Mish. I have been nagging bloggers about this for years), the Imaginary Jobs are added to the unadjusted payroll numbers, which are dramatically impacted by the seasonal adjustments, which are sometimes quite significant.

I include this second chart show the Birth – Death numbers over time to show the historical trend. It is remarkable how ‘regular’ this number has been over the past six years despite an epic recession that devastated small businesses, which is purportedly what this model tracks.

Here is a visual depiction of the Seasonally Adjusted and the Unadjusted Non-Farm Payroll Numbers. As you can see, the adjustment is sometimes very significant. Remember, the Birth Death imaginary jobs are added to the unadjusted number, which is indicated in maroon on this chart.

So obviously one can calculate the ‘seasonality factor’ using a simple formula

Seasonality Factor (SF) = Seasonally Adjusted Number (SA) / Non-Seasonally Adjusted Number (NSA)

I do this each month in the Payrolls Spreadsheet that I maintain. I like to see if the BLS changes its calculations and assumptions over time, especially when they do major revisions.

And although I have never shown it in this blog before, it is relatively…
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Keiser Report No.19: Markets! Finance! Scandal! – And Karl Denninger

Keiser Report No.19: Markets! Finance! Scandal! – And Karl Denninger

Courtesy of JESSE’S CAFÉ AMÉRICAIN

Although I don’t always agree with them, obviously, I am always interested, informed, and entertained by what madcap Max Keiser and his cerebral colleague Stacy Herbert have to say on The Keiser Report. As you may know, Max is the latest American in Paris, having left the States after selling his Hollywood Stock Exchange to Cantor Fitzgerald of Wall Street. Perhaps some day we can have a drink at the Ritz and philosophize, as expatriates are often wont to do, about the tragic transience of empire. The Ritz. Alas, when I was a visiting student at ESSEC I could not afford it, and now that I can, I do not get out much anymore. But who can tell what the future may bring.

The most recent broadcast of the Keiser Report has an added attraction in its second half, Karl Denninger. Karl is probably more familiar to our American patrons as theoutre financial commentator from The Market Ticker.

Karl always has something interesting to say, spoken plainly, and without the kind of courtly manner towards corporate America that is so fashionable among the journalists in the mainstream media who are members of the Wall Street demimonde.

Mr. Denninger is particularly effective, when he gets it right as he frequently does, in describing complex transactions because he is not an economist or a financial professional, but a computer engineer, an honest technical sort, who brings some formidable analytical skills to a relatively unfamiliar subject. He often gets ‘nit-picked’ by the pros who play word games with their jargon, but more often than not he is directionally correct.

And he occasionally admits it when he is wrong, and changes tack, a refreshing trait amongst the greater universe of financial commentators. But if you post on his chat board, be prepared for ideological frisking, and little patience for deviation from the local standards and fundamental assumptions. A weakness perhaps, from the perspective of ideological diversity, but more common than most moderators care to admit.

Enjoy.

 

Bonus post by Jesse at the Cafe, 

How Bad Can It Get?

They have our money. What more can they want?

 


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Alternative View: Housing Prices Have Fallen Significantly Towards the Trend

Update by Jesse at the Cafe regarding housing prices. Glad to see I’m not the only person who struggled with the flu vaccine dilemma. To avoid the mercury, there’s FluMist, with the added attraction of delivering the (attenuated) virus via the natural route, through the respiratory system, rather than injected directly into the blood. It’s not recommended for those with asthma, however. Currently, the swine flu vaccine is not available in my city, but I did manage to track down the seasonal vaccine for a couple loved ones. The seasonal flu vaccine appears to afford some protection against swine flu. Nothing available for me, however, making my indecision rather besides the point for the time being. 

Best wishes for a speedy recovery with no notable residual brain damage, Jesse.  - Ilene

Alternative View: Housing Prices Have Fallen Significantly Towards the Trend

Courtesy of Jesse’s Café Américain

Here is the graph associated with a view of the deflating housing bubble that shows we have appreciably fallen, further than the 25% in the blog entry from yesterday.

For the details on this view read here.

It appears that both sets of numbers, the ones above and the ones from yesterday, have been adjusted somewhat.

The numbers from yesterday are Indexed to 1980 = 100, and are therefore a percentage of increase.

The numbers above are nominal prices, and then adjusted for inflation using some governmental measure presumably.

One appears to be based on median prices, and the other on total transactions.

I have not yet reconciled the two views, as I am rather tired and ‘under the weather,’ compliments of the children’s propensity to bring home their sniffles and sneezes at this time of year, the head colds that seem to linger endlessly, despite the repeated application of vitamins, chicken soup, sudafed, ibuprofen, and the occasional sip of Beaujolais Noveau. But for today at least I am, like Mr. Buffett is to the economic recovery, ‘all in.’

And yes, I did finally break down and listen to the spouse, obtaining a swine flu vaccination. Perhaps the mental slowness is merely due to my mercuy addled brain. Perhaps it will help me think like a Fed banker and figure out their gameplan. lol.

 


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Long Term Weekly Gold Chart Targets 1275

If you missed my enlightening interview with Jesse, click here. – Ilene

Long Term Weekly Gold Chart Targets 1275

Courtesy of Jesse’s Café Américain 

Now that gold seems to have successfully broken out from its continuation pattern (ascending triangle or inverse H&S) we should be able to chart its targets more precisely than the chart from 24 September that at least successfully projected the breakout.

If there is a major liquidation event, such as an equity market dislocation, gold will likely be hit as well, but will provide an exceptionaly buying opportunity and would historically rebound more sharply than equities and most other investments.

As always, this is a forecast with some probablities of success, rather than a prediction. It will therefore be subject to change, and will meet with a variety of success, or not.

Basically, the ascending triangle calls out 1275 and an inverse H&S targets 1300ish. A confirmed breakdown below 1000 deactivates the formations. We will know more about the first pullback when we see how far this current leg goes. It has moved much more quickly so far than most have imagined, but the short term trend is quite apparent on the chart.

gold chart

 


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Phil's Favorites

Hold on for one more day

 

Hold on for one more day

Courtesy of 

Yes I’m quoting a Wilson Phillips song. I don’t know why.

But I talked about holding on for one more day at the end of February at a moment where it felt hopeless to be a responsible, diversified investor while everyone around you is getting insanely rich buying the craziest shit imaginable.

Feb 22nd:

It seems like the world is moving a thousand miles a minute and you’re missing out on everything. Everyone seems to be whooshing by!  It’s like you’re always stuck in second gear…

Take a deep breath.

...

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Chart School

Who is King? The Bond Market or the FED

Courtesy of Read the Ticker

The King Arthur story is battle between a false KING and the true KING. Generally the movie involves surprises, love and violence, and all this coming to the risk on markets very soon. 

The financial blog space expects the FED to do some sort of Yield Curve Control (YCC) to hold interest rates down while inflation moves higher, this is allowing inflation to run hot. The FED wishes to do this over time to deflate the debt away. Very similar to the 1940's post WW2, yields were pegged to 2% and risk on assets went sky high.

However Peter Boockvar suggest the FED may soon learn it is not in control and the true king of the markets is the BOND MARKET. Peter says simply the bond market is telling the FED to bite me!

The FED is not us...

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Zero Hedge

"Days Away From A Crisis": 100,000 Illegal Immigrants Arrested At US Mexico Border; Most For February In 15 Years

Courtesy of ZeroHedge View original post here.

Rep. Henry Cuellar (D-Texas), whose Congressional district lies near the U.S.-Mexico border, warned that more than 10,000 illegal immigrants have been apprehended in a single border sector in Texas in about a week, with Reuters adding that a stunning 100,000 migrants were detained at the border in February, the highest arrest total for the month of February since 2006.

“We are weeks, maybe even days, away from a crisis on the southern border. Inaction i...



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ValueWalk

UK Property Industry On The Halifax House Price Index

By Jacob Wolinsky. Originally published at ValueWalk.

The UK property industry‘s reaction to the ...



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Biotech/COVID-19

88% Of COVID Deaths Occurred In Countries Where Over Half Of Population Overweight

Courtesy of ZeroHedge View original post here.

A new report by the World Obesity Federation found that 88% of deaths in the first year of the pandemic occurred in countries where over half of the population is classified as overweight - which is defined as having a body mass index (BMI) above 25. Of note, BMI values above 30 - considered obese - are associated with 'particularly severe outcomes,' accor...



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Kimble Charting Solutions

Tech Indicator Peaking Again At Dot.com Highs? Joe Friday Says Watch This Index!

Courtesy of Chris Kimble

Technology is at the heart of our economy… the same way that industrials were 100 years ago.

And that leadership has been present in the stock market for the past two decades. Today’s chart illustrates this… as well as a potential “pause” in that leadership vacuum.

Below is a long-term “monthly” ratio chart of the Nasdaq Composite versus the S&P 500 Index. Here you can see how technology stocks...



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Politics

Why repressive Saudi Arabia remains a US ally

 

Why repressive Saudi Arabia remains a US ally

A demonstrator dressed as Saudi Arabian Crown Prince Mohammed bin Salman with blood on his hands protests outside the Saudi Embassy in Washington, D.C., on Oct. 8, 2018. Jim Watson/AFP via Getty Images

Courtesy of Jeffrey Fields, USC Dornsife College of Letters, Arts and Sciences

Saudi Crown Prince Mohammad bin Salman “approved an operation … to capture or kill Saudi journalist Jamal Khashoggi,” according to a...



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Mapping The Market

Which Governments Ordered Johnson & Johnson's Vaccine?

 

Which Governments Ordered Johnson & Johnson's Vaccine?

Courtesy of Niall McCarthy, Statista

On Wednesday, U.S. regulators announced that Johnson & Johnson's Covid-19 vaccine being developed by its subsidiary Janssen Pharmaceuticals in Belgium is effective at preventing moderate to severe cases of the disease. The jab has been deemed safe with 66 percent efficacy and the FDA is likely to approve it for use in the U.S. within days.

The Ad26.COV2.S vaccine can be stored for up to three months in a refrigerator and requires a single shot, ...



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Digital Currencies

Crypto - It Is Different This Time

 

Crypto – It Is Different This Time

Courtesy of Howard Lindzon

?I have been astonished as you know by the growth of crypto.

I remember back in 2017 when I noticed that Stocktwits message volume on Bitcoin ($BTC.X) surpassed that of $SPY. I knew Bitcoin was here to stay and Bitcoin went on to $19,000 before heading into its bear market.

Today Bitcoin is near $50,000.

Back in November of 2020, something new started to happen on Stocktwits with respect to crypto.

After the close on Friday until the open of the futures on Sunday, all Stocktwits trending tickers turned crypto. The weekend messages on Stocktwits have increased 400 percent.

That has continued each weekend...



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The Technical Traders

Adaptive Fibonacci Price Modeling System Suggests Market Peak May Be Near

Courtesy of Technical Traders

Our Adaptive Fibonacci Price Modeling system is suggesting a moderate price peak may be already setting up in the NASDAQ while the Dow Jones, S&P500, and Transportation Index continue to rally beyond the projected Fibonacci Price Expansion Levels.  This indicates that capital may be shifting away from the already lofty Technology sector and into Basic Materials, Financials, Energy, Consumer Staples, Utilities, as well as other sectors.

This type of a structural market shift indicates a move away from speculation and towards Blue Chip returns. It suggests traders and investors are expecting the US consumer to come back strong (or at least hold up the market at...



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Lee's Free Thinking

Texas, Florida, Arizona, Georgia - The Branch COVIDIANS Are Still Burning Down the House

 

Texas, Florida, Arizona, Georgia – The Branch COVIDIANS Are Still Burning Down the House

Courtesy of Lee Adler, WallStreetExaminer 

The numbers of new cases in some of the hardest hit COVID19 states have started to plateau, or even decline, over the past few days. A few pundits have noted it and concluded that it was a hopeful sign. 

Is it real or is something else going on? Like a restriction in the numbers of tests, or simply the inability to test enough, or are some people simply giving up on getting tested? Because as we all know from our dear leader, the less testing, the less...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Promotions

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Feb. 26, 1pm EST

Click HERE to join the PSW weekly webinar at 1 pm EST.

Phil will discuss positions, COVID-19, market volatility -- the selloff -- and more! 

This week, we also have a special presentation from Mike Anton of TradeExchange.com. It's a new service that we're excited to be a part of! 

Mike will show off the TradeExchange's new platform which you can try for free.  

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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About Ilene:

Ilene is editor and affiliate program coordinator for PSW. Contact Ilene to learn about our affiliate and content sharing programs.