Gregory Mannarino, AM 1/28/22:
"Inflation Continues To Surge; Economy Cratering;
Be Ready For Anything"
So, we rise from the rubble...
Friday, January 28, 2022
Thursday, January 27, 2022
"Kraft-Heinz Again Raises Prices On Dozens Of Products As Inflation Continues To Bite"
"Kraft-Heinz Again Raises Prices On Dozens
Of Products As Inflation Continues To Bite"
by Tyler Durden
"As some on Wall Street warn that the Fed remains dangerously behind the inflation curve (a fear that was given voice yesterday when Fed Chairman Jerome Powell's comments on inflation during the post-FOMC press conference appeared to send stocks spiraling lower), one of America's biggest makers of food and consumer goods has warned that more price hikes are coming.
To wit, Kraft-Heinz (in which Warren Buffett's Berkshire Hathaway owns a big stake) said in a letter to customers that it will raise prices in March on dozens of its most popular products. The hikes will affect brands including Oscar Mayer cold cuts, hot dogs, sausages, bacon, Velveeta cheese, Maxwell House coffee, TGIF frozen chicken wings, Kool-Aid and Capri Sun, CNN reported. Increases range from 6.6% on 12oz packs of Velveeta to a whopping 30% hike on a package of Oscar-Mayer turkey bacon. Most cold cuts and beef hot dogs will go up around 10% and coffee around 5%. Some Kool-Aid and Capri Sun drink packs will increase by about 20%.
"As we enter 2022, inflation continues to dramatically impact the economy," Kraft Heinz said in a letter dated January 24 to at least one of its wholesale customers that was viewed by CNN Business. The wholesaler shared the letter on the condition of anonymity to protect the company's relationship with its suppliers.
Kraft Heinz is just the latest consumer manufacturer to announce plans to boost prices early in the year. Last week, P&G said that it would raise prices on Tide and Gain laundry detergents, Downy fabric softener and Bounce dryer sheets by an average of about 8% in February. Conagra, which makes such brands as Slim Jim, Marie Callender's and Birds Eye, has said it plans to raise prices later this year.
The question now is how much of these price hikes will retailers pass on to customers? Given the thin margins that grocery stores operate on, it's likely that most, if not all, of the hike will be incorporated into prices on the shelf. For Kraft-Heinz, this isn't the first time prices have been raised since the start of the latest "transitory" inflation wave. The brand just announced a 9% price hike on its beef, lean beef, hot dogs and some other products back in November.
Headline consumer prices surged 7% in December according to the most recent CPI data release, which was the strongest level in nearly 40 years. Food prices alone rose 0.5% MoM. Beyond the US, global food prices have soared to levels unseen in a decade led by surging demand for wheat and dairy products following a year of severe drought and other environmental factors limiting production.
The question now is how many more times will K-H and its competitors hike prices before inflationary pressures finally ease?"
"Stock Market Crumbles Today; Robinhood Slammed; FED Will Not Rescue Market; Prepare"
Jeremiah Babe, PM 1/27/22:
"Stock Market Crumbles Today; Robinhood Slammed;
FED Will Not Rescue Market; Prepare"
Gerald Celente, "Canadien Truckers Protest: A Mega Trend For Freedom"
Gerald Celente, PM 1/27/22:
"Canadien Truckers Protest: A Mega Trend For Freedom"
"The Trends Journal is a weekly magazine analyzing global current events forming future trends. Our mission is to present Facts and Truth over fear and propaganda to help subscribers prepare for What’s Next in these increasingly turbulent times."
"Two Shortages That Threaten To Absolutely Eviscerate The Global Economy In 2022"
Full screen recommended.
"Two Shortages That Threaten To Absolutely
Eviscerate The Global Economy In 2022"
by Epic Economist
"We were promised that things would be getting back to normal at this point. But of course, those promises were empty. And here we are at the end of January 2022, realizing that our problems have only gotten worse. As we move forward into February and beyond, we should keep a close eye on two key global shortages that are threatening to disrupt the American status quo. The first is the rapidly spreading fertilizer shortage. It seems that all over the globe, agricultural fertilizing supplies are getting increasingly tighter. The situation is escalating so quickly that even our biased mainstream media is already reporting alarming updates about this shortage. A couple of days ago, the Wall Street Journal ominously warned that “high fertilizer prices are weighing on farmers all across the world”.
The article highlighted that from South America’s avocado, corn and coffee farms to Southeast Asia’s plantations of coconuts and oil palms, skyrocketing fertilizer prices are impacting farmers in every corner of the planet, making it much more expensive to cultivate and forcing many to cut back on production. As a consequence, that means our grocery bills will go up even more in the coming months, following a year in which global food prices have already risen by over 30 percent. And this relentless rise in the cost of food is going to exacerbate hunger crises and food insecurity. In America, at least 24 million people still need aid to have enough to eat. Even more concerning, in Africa, surging fertilizer prices can cause an acute decline in agricultural output, “equivalent to the food needs of 100 million people”, according to the International Fertilizer Development Center.
That’s a very big deal, and if global leaders don’t act to prevent that from happening, we might witness a tragic humanitarian crisis this year. Unfortunately, if we do get to this point, governments and corporations are likely to prioritize profits over human lives, given that consumer demand for food is at all-time highs. We can only hope that doesn’t happen. At the same time, here in the United States, fertilizer shortages and rising prices are also already affecting millions of farmers in the nation. In a recent opinion piece authored by U.S. Senator Roger Marshall, he argued that by now it is no secret that this crisis is having a major impact on domestic food production.
“Prices for phosphorus-based and potassium-based fertilizers have more than doubled in Kansas while Nitrogen-based fertilizers have more than quadrupled. Fertilizer is vital to feeding not only the country but the world. It contains essential nutrients for plant life, and without it, American agricultural yields will quickly suffer as well as food prices in local grocery stores,” Marshall stressed. “If we want to help people in need the best play is to get inflation under control and to encourage economic growth – not stifle it. The unfortunate reality is this is only the beginning. And the effects felt by fertilizer prices at the farm will also be felt at the fork,” he warned.
Moreover, the other shortage that we all need to pay attention to is the worsening computer chip shortage. A new report released by the Department of Commerce revealed that U.S. chip inventories “have become dangerously thin”. Today, the semiconductors needed to produce automobiles and medical devices to meet our national demand are in such short supply that our industries are losing several billion that could be used to generate more jobs and boost economic growth. According to the Washington Post, industry insiders aren’t very optimistic about the near-term outlook for chip production. They say that although federal funding could help build up the long-term supply of chips, it wouldn’t help in the short term because chip factories cannot be built overnight.
Every single industry requires semiconductors to make their machinery, and in some cases, their products operate properly. The vast majority of chip consumers surveyed by the department estimated that shortages will not go away in this year, and some suggested it could take another year until production is normalized. Over the past decade, we’ve become perilously dependent on chips sourced from Asia, and more specifically, from Taiwan.
That’s why, it is “both an economic and national security imperative to solve this crisis," Raimondo says. If the trade conflict between China and Taiwan escalates to an aggressive confrontation, it means that our computer chip supply chain will be completely cut off. Needless to say, things are looking very scary. We should start thinking about all of these issues and the possible outcomes because what was once “unimaginable” can become very real in 2022."
"The Truth About Today’s Blowout GDP Number"
"The Truth About Today’s Blowout GDP Number"
by Brian Maher
"Today the United States Department of Commerce informs us: Fourth-quarter gross domestic product expanded at an annualized 6.9%. 6.9% is plenty handsome - especially in consideration of Omicron’s omnipresence - and ongoing supply chain delinkages. Third-quarter GDP came in at a far less fulsome 2.3%. And Bloomberg’s survey of economic Wrong Way Charlies had projected a 5.5% Q4 expansion. But numbers can conceal more than they reveal. They can spin wondrous tales and tell fantastic lies. What then can we glean from today’s gaudy numbers?
Eternal Optimism: Today’s gaudy numbers reveal wondrous truths and fantastic facts, argues Reuters: "The U.S. economy notched its strongest growth in nearly four decades in 2021 after the government pumped trillions of dollars in COVID-19 relief, and is seen forging ahead despite headwinds from the pandemic, strained supply chains as well as inflation."
Next is the sun-soaked judgment of Mr. Jim Baird, chief investment officer with Plante Moran Financial Advisors: "The strength of the economy last year stood in stark contrast to the collapse in activity in early 2020, but also speaks to the success of both the public and private sector in quickly adapting to the unprecedented challenges created by the pandemic."
Adds a certain Mike Reynolds, he being vice president of investment strategy at Glenmede:
"The Q4 GDP report was a nice upside surprise in a string of recently underwhelming economic data points."
"The Q4 GDP report was a nice upside surprise in a string of recently underwhelming economic data points."
Just so. Yet we are not entirely persuaded that today’s numbers give a true signal of economic dynamism. As said Matthew Sherwood, global economist with the Economist Intelligence Unit: “The result flatters to deceive.”
The Facts About GDP: Assume the government pays a fellow to shovel out a hole. Assume further it pays him to shovel it back in. In the official telling, you have just witnessed an increase to the gross domestic product. Have you? Or have you merely witnessed a derangement, the fruitless birth and death of a hole? Or if the government adds one cup of inflationary water to one cup of milk… do you have two cups of whole milk? Government statistics may infer that you do. Yet two cups of watered milk do not equal two cups of whole milk.
Now return to today’s 6.9% Q4 GDP expansion… Scratch the paint from the dazzling surface. Lift the lid. Peer within. Seize the numbers by the scruff and haul them in for interrogation.
Today’s Numbers, Explained: What do we find? What accounts for the screaming headline number? Inventories… largely. Government number-manglers heap inventories into the column of business investment. Thus in the official telling, inventory piles add figures to the gross domestic product. Inventory values skyshot a preposterous $240 billion in 2021’s fourth quarter. MarketWatch affirms that: "GDP got a big lift at the end of last year from frantic efforts by businesses to restock barren shelves and warehouses in time for the holiday season. The economy grew a lot more slowly if the inventory buildup is set aside…"
The value of inventories soared by $240 billion - one of the biggest increases in decades - as companies ramped up production to try to meet demand. Spending on inventories is a boost to GDP, and was an especially big boost in the fourth quarter. The Bureau of Economic Analysis informs us piling inventories contributed a bulking 4.9 percentage points to the headline figure.
Less Than Meets the Eye: Rinse out their additions… and what do you find? You find fourth-quarter GDP expanded at a 2% annualized rate - not 6.9%. A 2% expansion is an expansion. Yet it is far from a blossoming. Adds MarketWatch: "Investment in housing declined for the third quarter in a row. Shortages and higher prices made companies more cautious about investment spending."
Meantime, real incomes - inflation-adjusted incomes, that is - declined at a 5.8% annual rate in quarter four. That is largely because quarter four’s annualized inflation rate was an income-devouring 6.5%. In all, 2021 consumer prices galloped along at the fastest gait since 1982. Yet rejoice - Q4 GDP vastly trounced all reasonable expectations. Look away from the flames tearing through your dollars.
Cold Water: But perhaps this quarter’s gross domestic product can get a good push from last quarter’s gross domestic product, you say. Perhaps the momentum will add economic velocity to the first quarter… then to the second quarter… and beyond.
Have another guess, argues Daily Reckoning affiliate Wolf Richter. Here he empties frigid water upon Pollyanna’s lovely head: "Rising inventories, which are considered an investment and add to GDP, are eventually followed by a decline in inventories when companies whittle them down again, and there is a price to pay for it… Companies that sit on that inventory and have trouble selling it will at some point cut their orders to reduce their inventories. When this happens, sales drop all the way up the supply chain… when businesses whittle down their inventories by ordering less, it ripples through the economy, lowers GDP growth…"
MarketWatch gives Pollyanna an additional soaking: "The economy won’t get a similar lift from restocking in the first quarter, however, and inventories might even be a negative. Early data point to the U.S. growing at a less than 2% annual clip in the first three months of the year…"
Concludes Cassandra - Ms. Megan Greene, senior fellow at Harvard’s Kennedy School: "Any growth we have from inventories now is sort of at the price of destocking later. Inventories aren’t a strategy for driving growth forward." We must agree. They are not.
Bad News for Wall Street: We believe only true productivity gains will drive growth forward. The Keynesian “multiplier” - the magic of water into wine, of debt into growth - has taken up division. At today’s grievous debt-to-GDP ratio, the borrowed dollar yields no additional growth. It merely yields ashes, ashes in the mouth. What about the stock market? Today’s “good” news landed upon Wall Street with a thud. Here is the reason, as we see it: The Federal Reserve will consider Q4’s superficially gaudy growth added justification for rate hikes. And tighter money is a tightening noose about Wall Street’s neck. Once again, the three major indexes closed trading in red numbers. Also again, the rate-sensitive Nasdaq absorbed the greatest slating, shedding another 189 points. Rates will rise, support will dwindle. We hazard Mr. Powell will once again yield to Wall Street – but only when it is too late."
"A Look to the Heavens"
“A now famous picture from the Hubble Space Telescope featured Pillars of Creation, star forming columns of cold gas and dust light-years long inside M16, the Eagle Nebula. This false-color composite image views the nearby stellar nursery using data from the Herschel Space Observatory's panoramic exploration of interstellar clouds along the plane of our Milky Way galaxy. Herschel's far infrared detectors record the emission from the region's cold dust directly.
The famous pillars are included near the center of the scene. While the central group of hot young stars is not apparent at these infrared wavelengths, the stars' radiation and winds carve the shapes within the interstellar clouds. Scattered white spots are denser knots of gas and dust, clumps of material collapsing to form new stars. The Eagle Nebula is some 6,500 light-years distant, an easy target for binoculars or small telescopes in a nebula rich part of the sky toward the split constellation Serpens Cauda (the tail of the snake).”
"Complexity Theory: the Avalanche and the Snowflake"
"Complexity Theory: the Avalanche and the Snowflake"
by James Rickards
"One of my favorites is what I call ‘the avalanche and the snowflake’. It’s a metaphor for the way the science actually works, but I should be clear: it’s not just a metaphor. The science, the mathematics and the dynamics are actually the same as those that exist in financial markets.
Imagine you’re on a mountainside. You can see a snowpack building up on the ridgeline while it continues snowing. You can tell just by looking at the scene that there’s danger of an avalanche. It’s windswept… it’s unstable… and if you’re an expert, you know it’s going to collapse and kill skiers and wipe out the village below. You see a snowflake fall from the sky onto the snowpack. It disturbs a few other snowflakes that lie there. Then, the snow starts to spread… then it starts to slide… then it gains momentum until, finally, it comes loose and the whole mountain comes down and buries the village.
Question: What do you blame? Do you blame the snowflake, or do you blame the unstable pack of snow? I say the snowflake’s irrelevant. If it wasn’t the one snowflake that caused the avalanche, it could have been the one before, or the one after, or the one tomorrow. The instability of the system as a whole was the problem. So when I think about the risks in the financial system, I don’t focus on the ‘snowflake’ that will cause problems. The trigger doesn’t matter.
A snowflake that falls harmlessly – the vast majority of all snowflakes - technically fails to start a chain reaction. Once a chain reaction begins, it expands exponentially, can ‘go critical’ (as in an atomic bomb) and release enough energy to destroy a city. However, most neutrons do not start nuclear chain reactions, just as most snowflakes do not start avalanches.
In the end, it’s not about the snowflakes or neutrons. It’s about the initial critical state conditions that allow the possibiity of a chain reaction or an avalanche. These can be hypothesized and observed at large scale, but the exact moment the chain reaction begins cannot be observed. That’s because it happens on a minute scale relative to the system. This is why some people refer to these snowflakes as ‘black swans’, because they are unexpected and come by surprise. But they’re actually not a surprise if you understand the system’s dynamics and can estimate the system scale.
It’s a metaphor, but really the mathematics behind it are the same. Financial markets today are huge, unstable mountains of snow waiting to collapse. You see it in the gross notional value of derivatives. There is $700 trillion worth of swaps. ($2.5 Quadrillion by other reputable estimates. - CP) These are derivatives off balance sheet, hidden liabilities in the banking system of the world. These numbers are not made up. Just go to the IS annual report and it’s right there in the footnote.
Well, how do you put $700 trillion into perspective? It’s ten times global GDP. Take all the goods and services in the entire world for an entire year. That’s about $70 trillion when you add it all up. Well, take ten times that, and that’s how big the snow pile is. And that’s the avalanche that’s waiting to come down."
"Feeling Overwhelmed: Breathing into Order"
"Feeling Overwhelmed: Breathing into Order"
by Madisyn Taylor, The DailyOM
"Always know, the Universe works in perfect order and you are never given more thank you can handle. Sometimes we may feel like there is just too much we need to do. Feeling overwhelmed may make it seem like the universe is picking on us, but the opposite is true: we are only given what we can handle. Difficult situations are opportunities to be our best selves, hone our skills and rise to the occasion.
The best place to start is to take a deep breath. As you do, remind yourself that the universe works in perfect order and therefore you can get everything done that needs to get done. As you exhale, release all the details that you have no control over. The universe with it‘s infinite organizing power will orchestrate the right outcome. Anytime stress begins to creep up, remember to breathe through it with these thoughts. Then, make a list of everything you need to do. Note what needs to be done first, and mark the things others may be able to do for you or with you. Though we often think no one else can do it correctly or well, there are times when it is worth it to exhale, let go of our control, and ask for help from professionals or friends. With the remaining things that feel you must do yourself, take another breath and determine their true importance.
Sometimes they are things we’d like to do, but aren’t really necessary. After taking these quick steps, you will find you have a plan laid out, freeing you from frenzied thoughts circling in your head. With calming deep breaths, you are now free to focus more fully on our priorities. Herbal teas or flower remedies along with wise choices about caffeine and food can help keep us from becoming frantic too. But with nothing further from us than our breath, we can breathe in our best intentions and let the rest go with an exhale. Keeping ourselves centered and breathing into and through life’s challenges helps us learn what we are truly capable of doing, and we will find we have the ability to rise to any occasion. Remember you aren’t being picked on, and you are never alone."
The Poet: Theodore Roethke, “The Return”
“The Return”
“Suddenly the window will open
and Mother will call,
it's time to come in.
The wall will part,
I will enter heaven in muddy shoes.
I will come to the table
and answer questions rudely.
I am all right, leave me
alone. Head in hand I
sit and sit. How can I tell them
about that long
and tangled way?
Here in heaven mothers
knit green scarves;
flies buzz.
Father dozes by the stove
after six days' labor.
No - surely I can't tell them
that people are at each
other's throats.”
- Theodore Roethke
"Major Shortage Alert In 2022: Empty Shelves In Grocery Stores Set To Grow Substantially"
Full screen recommended.
"Major Shortage Alert In 2022: Empty Shelves
In Grocery Stores Set To Grow Substantially"
by The Atlantis Report
"The number of empty shelves in grocery stores is about to grow substantially. Injection mandates, staff shortages, supply chain issues. Supply shortages, sick staff and shipment delays during the pandemic have stores struggling to keep inventory on shelves. Shortages here, shortages there, shortages everywhere.
The number of empty shelves in grocery stores is about to grow substantially. That happens when you outsource everything for higher profit, and then transport fails, due to sick workers or high oil prices. We know exactly what destroyed the supply chains.
Forced closures, lockdowns, and failing fiat currency. It's the Venezuela playbook 2.0... Hyperinflation is already happening... Theft is the only thing on the menu. It's how the bankers get out paying for those IOU Notes and Fake Assets. When currency becomes worthless, the profit motive diminishes along with it.
I think that there's an element of sabotage going on as well. These congestions in ports, for instance, would never have happened if the government wasn't intentionally throwing wrenches into the works. It’s a smoke screen acting like its port congestion. I honestly think most containers arriving are empty because let's face it, there are shortages of EVERYTHING. What better way to blame it on something else.
The breakdown of social order is not far-fetched. It's already here. It was 13 years of socialism and Weimar Republic money printing that caused shortages. The worst part of this propaganda about supply chains is that US leadership isn't giving up on socialism and Weimar Republic money printing. They will make excuses rather than change course.
During that time the German government printed money to pay the striking workers not to work. That is what set it off. As long as all of the German marks were getting printed and going abroad there was no cost push inflation inside Germany. Once they started to pay people with printed money not to work, that is when inflation really took off.
Just like they are doing today in paying people not to work. And of course cost inflation is really taking off now. Things are really going to start to break down as we head into the hyper-inflationary curve.
Hyperinflation is coming to America: These sudden supply chain interruptions and issues are artificially created, like the container ship stuck in the Suez Canal. But it will get worse due to our increasing inflation of our fiat currencies. I’m guessing The Power That Be are just front running the issue, that the sheeple will not connect it with the coming hyperinflation. Remember it’s all by design. All part of the plan.
It does remind me of the UK after WWII, it carried on with rationing for 5 years after the end of the war. By then nobody could really remember what pre-war life was like, covered up the lost purchasing power after the loss of GRC status nicely. We are due for another reset. CBDC's will fail because it represents absolute control over what you will be allowed to buy. The Bank for International Settlements plans to rule the US from Europe (they believe they already do). They will fail because people will immediately look for a substitute. Silver is that substitute. Gold is the ONLY currency in wartime for more obvious reasons than hyperinflation.
"It Was Pointless..."
"And it was pointless to think how those years could have been put to better use, for he could hardly have put them to worse. There was no recovering them now. You could grieve endlessly for the loss of time and for the damage done therein. For the dead, and for your own lost self. But what the wisdom of the ages says is that we do well not to grieve on and on. And those old ones knew a thing or two and had some truth to tell for you can grieve your heart out and in the end you are still where you were. All your grief hasn't changed a thing. What you have lost will not be returned to you. It will always be lost. You're left with only your scars to mark the void. All you can choose to do is to go on or not. But if you go on, it's knowing you carry your scars with you. "
- Charles Frazier
○
"Never be ashamed of a scar.
It simply means you were stronger than whatever tried to hurt you."
- Unknown
"Cool Fads and Killer Cads"
"Cool Fads and Killer Cads"
by Bill Bonner
Youghal, Ireland - "Human life is always a struggle. Between good and evil… comedy and tragedy … civilization and barbarism. To and fro… back and forth… between honest, consensual commerce and brute force politics… between those who make it… and those who take it away from them. And between ‘cool’… and the profit motive.
That last item may shock readers. It shocked us. But when you connect the dots; that is what you see: chasing profits improves the world; chasing cool does not.
We begin by declaring that we are not as “fringy” as we may seem. Our major insight is that the post-1971 “fake” dollar (not backed by gold) allowed the feds much more freedom to fudge, fiddle, and fabricate phony wealth than ever before. No one with the power to print money can resist the temptation for long. The Fed’s habitual reticence gave way when Alan Greenspan decided to go for the cool. He wanted his mug on TIME magazine cover; he got what he wanted. Very cool.
Thereafter, the whole economy went wild on EZ credit. At the peak of the US empire’s glory – in about 1999 – the US had about $28 trillion in household, business, and government debt. Now, the feds alone owe $29 trillion. Altogether, the debt pile has grown to over $86 trillion.
(Source: US Board of Governors of the Federal Reserve)
Delirium Tremens: And now, almost every mother’s son in the nation is hooked on it. Mortgages, credit cards, student debt, business debt… and the ‘national’ debt – all depend on artificially low interest rates… which depend on the Fed’s bond buying… which depends on printing more money.
Yes, it’s “inflate or die.” Either the Fed continues to hold down interest rates and print more money… inevitably causing higher rates of inflation… or, it goes cold turkey and the whole economy gets the shakes. And we are not the only ones who think so. The Financial Times: "The more [Greenspan] did to keep markets propped up, the better it was for the business elite, and the less politicians had to do, creating a dysfunctional dance in which the fortunes of asset owners versus everyone else moved further and further apart.
In 2008/2009, one Fed government, former head of the Kansas City Fed branch, Thomas Hoenig tried to stop the music. According to the FT, he “broke out of the traditional Fed consensus and risked public fury (not to mention massive criticism from his peers) to sound the alarm about how a radical experiment in monetary policy, which involved pumping unprecedented amounts of money into the US economy, would increase inequality and encourage ever more risky behavior on Wall Street.”
Mr. Hoenig was un-cool. Almost invisible in 2009, by 2011, he disappeared from the Fed completely. Now, says Hoenig, “we’ve built an entire economic system around a zero rate. “ The Fed went ahead with its ‘experiment.’ It kept its key lending rate below zero (adjusted for inflation) throughout almost the whole of the last decade. Everybody borrowed. And the federal government, the biggest borrower, is now adding to its debt at a record rate.
CNSNews: "When President Joe Biden was sworn in on Jan. 20, 2021, the federal government's debt stood at $27,751,896,236,414.77. When his first year in office ended on Jan. 20, 2022, it stood at $29,867,021,509,573.92. That means that during Biden's first 12 months in office, the federal debt grew by more than $2 trillion — or $2,115,125,273,159.15 to be exact."
How do you put that in perspective? The United States of America had existed for 210 years - and 40 presidents had served as this nation's chief executive - before the debt first topped $2 trillion in 1986. From rich to poor… business to households… the dance has become more and more dysfunctional. More chaotic. More unequal. More like a mosh pit slam than the foxtrot; someone is going to get hurt! This week, we saw that the lion’s share of the new money has gone to the wealthiest people in the country… and that some of them would gladly trade a little of it for more cool.
Killer Cads: Larry Fink is urging corporate CEOs to forsake profits… and pursue zero emissions instead. Mr. Fink seems to think that this will either make the world a better place… improve his status in it… or both. Abigail Disney is calling for the feds to tax away more of the gains. In Mr. Fink’s case, we have no idea whether companies aiming for zero emissions are doing the world a favor or not. Fighting climate change is cool today. As for tomorrow, we don’t know. In Ms. Disney’s case, there is almost no chance that taking money away from rich people and giving it to the government will be a winner. Ms. Disney may gain a few cool points, but any sentient biped – even by accident – can probably invest her money better than the government. At least… if he’s guided by the profit motive.
And here we permit ourselves a little guesswork. For deep down in the heart of man is a very primitive animal. He’s a hunter. A killer. A cad. And he aims for cool… that is, for whatever he wants, when he wants it. “Civilization” restrains him. It dresses him in clothes. It gives him manners. It holds up ‘commandments’ – like stop signs – telling him not to kill, or steal or covet his neighbor’s wife. It also tells him to forget ‘cool’ public policies… and instead follow the path of honest profits.
Would it be cool to rob a bank? Maybe… but he’ll probably make more money if he starts one. Would it be cool to shackle his employees to their desks? Maybe; but, in the modern world, wage slavery is more efficient and less costly that chattel slavery. Would it be cool to watch people starve… to let children run around naked… and see them freeze in the winter? Maybe. But the way to make a buck is to knit sweaters, build houses and plant potatoes! The pursuit of honest profits helped civilize the world. Aiming for cool, on the other hand, is always a step backwards."
"The Wild Ride Continues for this Seesaw Market"
Full screen recommended.
Dan, iAllegedly, AM 1/27/22:
"The Wild Ride Continues for this Seesaw Market"
"The Madness continues. What a wild ride we are living through. There is a selloff due to the Fed's inaction. The economic chaos and volatility is a result of inflation, supply chain nightmare and the employment problems."
○
Related:
Gregory Mannarino, "Critical Updates: Stock Market, Economy, Crude, Dollar, Gold, Silver, Fed."
Gregory Mannarino, AM 1/27/22:
"Critical Updates: Stock Market, Economy,
Crude, Dollar, Gold, Silver, Fed."
"Here's Our Historical Analogy Menu: Rome, the USSR or Revolutionary France"
"Here's Our Historical Analogy Menu:
Rome, the USSR or Revolutionary France"
by Charles Hugh Smith
"There's a definite end of days feeling the world. It's as if everyone knows there is no returning to the good old days of a well-oiled Imperial machine chewing through any and all obstacles, and this realization is so frightening that the need to pretend everything is fine, just fine, overwhelms the last remaining ties to reality.
Let's play the historical analogy game: which collapse will America track most closely? Rome circa 475 AD, the USSR circa 1989, or Revolutionary France circa 1789? I'm tempted to include China's Song Dynasty circa 1276 AD, but the analog of the Mongol invasion isn't a likely fit. The Khmer Empire circa 1350-1430 AD and the Mayan Civilization in the 9th century might be excellent analogies but not enough is known about these complex declines to make an analogy more than guesswork.
Rome, the USSR and Revolutionary France are all compelling analogies due to the hubristic cluelessness of their fractured elites as the pretensions of stability collapsed around them. Even though Nero didn't actually fiddle while Rome burned and Marie Antoinette didn't gush "Let them eat brioche" when notified that the peasants had no bread (or more accurately, could no longer afford it), these myths are handy encapsulations of the disconnect from reality that infested the elites in the last years before the deluge of non-linear chaos overwhelmed the regimes.
While historians gather evidence of tipping points such as pandemics, ecological damage, invasions, droughts, inflation, etc., the core dynamic is ultimately the loss of social cohesion within the ruling elites and in the social order at large. As a generality, the permanence of the status quo is taken for granted by elites, who then feel free to squabble amongst themselves over the spoils of wealth and power. Distracted by their own infighting, the elites are blind to the erosion of the foundations of their power. As coherence in the elites unravels, the ties uniting the elites with the masses unravel as well. One camp within the elites recognizes the danger and seeks reforms, but the reforms are too little, too late, and in any event, the elites who cling most ardently to the past stability fight the reform movement to a standstill.
As social cohesion unravels, systems that once seemed immutable (i.e. linear) suddenly display non-linear dynamics in which modest changes that would have made little difference in the past now unleash regime-shattering disorder.
So take your pick, America: what's the closest analogy? A sclerotic Politburo of elders living in the past, an elite fiddling while the nation disintegrates, or an elite so out of touch with reality that it claims inflation is zero while the populace can no longer afford bread? They all lead to the same destination:
Gregory Mannarino, "Special Evening Report: The Selloff Continues... Stock Futures Are Cratering"
Gregory Mannarino, Late PM 1/26/22:
"Special Evening Report: The Selloff Continues...
Stock Futures Are Cratering"
"Why Finding a Bolthole is More Important Than Ever"
"Why Finding a Bolthole is More Important Than Ever"
by International Man
"International Man: Today, political risks around the world are growing rapidly. Aside from acquiring a second passport or residency and diversifying yourself financially, what are the benefits of physically diversifying yourself and where you live?
Doug Casey: Political risks are indeed growing very, very rapidly. The COVID hysteria is international and has greatly amplified political risk everywhere. By far, the most important reason to diversify remains getting a second passport, or at least legal permanent residency. It’s perverse, but only by becoming the de facto property of another government can you insulate yourself to some degree from the depredations of your home government. It’s a sad testimony to the state of liberty on planet Earth.
There are, however, plenty of advantages besides the political and financial ones to diversifying physically and geographically. The weather and the local culture can only be improved by moving physically to another place. Personally, I prefer mild warm weather to nasty cold weather. Culturally, I wouldn’t want to live in a place like North Korea or Saudi Arabia. Or a war zone. Or a police state.
It’s better to locate where not only the weather suits your clothes but the way people think and act also suits you. Foreigners are more likely to allow an expat his eccentricities than his own countrymen. It can be psychologically as well as politically and financially liberating to expatriate. Most people have the mentality of medieval peasants, who felt that if they wandered over the next hill, there might be dragons. The only way you can overcome that psychological attitude is by proving to yourself there really aren’t dragons over the hill.
International Man: For years, you’ve recommended that our readers find a second crib outside of their home country as a form of diversification. In light of the current global hysteria, what other things should people consider?
Doug Casey: Governments are unpredictable, much in the way a demented individual is. You can’t be sure exactly what they’re going to do, simply because national leaders are almost necessarily psychopaths. As a consequence, the situation is constantly changing.
For instance, when I lived in Hong Kong in the 1980s, the place was great; it was a really free, wide-open international city. It was exotic but low cost - before property prices moved up 10-fold. Since the Chinese government forced the British out, however, it’s become much more constrained. Most recently, with political violence and the COVID bugbear, Hong Kong has become a much less desirable place to live. It’s gone from being one of the freest places in the world to one of the more locked-down places in the world. And that can happen absolutely anywhere. A word to the wise.
The colors of the map on the wall are always running; nothing stays the same in terms of international politics. If you don’t want to be roadkill, it’s important to be proactive, as opposed to reactive. Plan ahead rather than trying to play catch up.
It’s possible to read the writing on the wall to some extent, though. I expect quite a few unpleasant things to develop in any number of countries. Unpleasant, at least, if you care about your personal freedom and financial opportunity.
International Man: What do you say to people who say that the US and Europe are still the best places to live?
Doug Casey: In many ways, they are. But look it at this way. In the ancient world, if you were a free man, probably the best place to live was the Roman Empire. That was true for centuries, until the 220s. It offered the highest standard of living, the most opportunity for self-realization, and the least danger of being robbed and murdered on the highway. It was an advanced, orderly society. The barbarians outside the border mostly had to grub for roots and berries while living lives that were solitary, poor, nasty, brutish, and short. But things started going seriously badly in Rome during the 3rd century.
By the time Constantine took over early in the 4th century, Rome was turning feudal, and he started its transformation into a theocracy. Romans were no longer free citizens; they were subjects. Many were already trying to exit the empire to avoid its onerous taxes.
Still, it was a relatively good place to live. They still had the Roman baths and books. Commodities were still traded around the empire. Things basically still worked. In 378 AD, however, the barbarians won the battle of Adrianople; within two generations, the Roman world had transformed totally, absolutely, and irrevocably. It headed rapidly into the Dark Ages, where it stayed for five centuries.
Why do I bring up this bit of ancient history? It’s pretty much the way both the US and Europe are heading. They’ve gone from being free and open societies with high standards of living to following the path of Rome after Adrianople.
Tens of millions of migrants are going to overwhelm North America and Europe, and they’re going to permanently change things. Some immigrants add some spice to the stew, as it were; everybody enjoys some new ethnic cuisines. But past immigration was fairly orderly and almost all from Europe. However, if you transplant 20 million Nigerians to Canada, it’s going to look like and act like Nigeria, not what used to be Canada. That’s what’s happening on many fronts around the world today.
Is that "good" or "bad"? As a fan of Western Civilization, which is responsible for almost all the progress the world has ever made - and, yes, I understand it’s shockingly un-PC to even think that - I’d say it’s bad. But who knows what humans will say 500 years from now when -hopefully - all the action is elsewhere in the solar system, or even elsewhere in the galaxy?
International Man: The truth is, there is no "perfect place." And at various levels, the governments of every country are engaging in destructive behaviors. Does it come down to personal preference and finding a decent place where you can ride out a crisis?
Doug Casey: Personal preferences matter. There are four things that are important to me personally, namely, to maintain my health, maintain my wealth, maintain my personal freedom, and associate largely with people I like.
Based on that, where can you best maintain those values? It’s becoming problematical, in part because the US and China are heading toward something like World War III. This war will be fought with very different weapons and will be much more destructive than what we saw in World War II. That, however, is an entirely different discussion. For the moment, let’s just say I don’t want to be caught up in it.
One thing for sure is that this COVID hysteria is a godsend for the people that like to control other people. The public is as easily terrified as a herd of sheep. Like herd animals, they stupidly self-control by all conforming to the herd. COVID has transformed the US and Western Europe from lands of whipped dogs to lands of snitching rats. Excuse my mixing several metaphors…
Anyway, this hysteria has been so effective that I’m sure we’re going to have a COVID 2.0 and a COVID 3.0. It’s a great setup for what the horrible people at the World Economic Forum have been talking about very overtly - The Great Reset. They recently said that in 10 years, "you’ll own nothing, and you’ll like it." I’d dismiss them as annoying busybodies - except that they’re rich, powerful, and control the world’s governments. Worse, the hoi polloi seem to respect them. So the situation appears fairly hopeless.
Where can you run and hide at this point? Almost nowhere because the whole world is moving in the wrong direction. The old pieces of the puzzle are going to be completely upset, and I don’t know how the new pieces are going to realign. I’m convinced that this decade is going to be one of the scariest in world history, at least on the order of 1929-1945, maybe, the Thirty Years’ War in the 17th century, or, maybe, the collapse of Rome itself. Definitely exciting, but not in a good way. How’s that for a bearish prediction? It’s time to lay out options for yourself now, so you’re not reacting."
Wednesday, January 26, 2022
"Stock Market Stunned Today; Entire System Is Collapsing; Federal Reserve Plays With Fire"
Jeremiah Babe, PM 1/26/22:
"Stock Market Stunned Today; Entire System Is Collapsing;
Federal Reserve Plays With Fire"
"We’ve Seen This Movie Before"
"We’ve Seen This Movie Before"
by Jim Rickards
"As I expected, the Fed didn’t raise rates today at its January FOMC meeting. If you were thinking the Fed would have to begin raising rates to counteract inflation, you’re probably going to have to wait until March, when the Fed’s Open Market Committee meets again. The Fed says it "will soon be appropriate" to raise rates. It also says it will end asset purchases in March, so all signs point to a March rate hike.
How did the stock market take today’s messaging from the Fed? Stocks traded in a fairly narrow band for much of the day, and then pretty much went south after the Fed’s 2:00 p.m. release. The Dow lost another 129 points today, the S&P lost another six. The Nasdaq managed to pull off a minimal two-point gain.
The All-Important 10-Year Treasury: Yields on the all-important 10-year Treasury note spiked to 1.848% today, a 3.65% increase. That’s an earthquake in bond land. Ten-year yields opened the year under 1.6%, and the increase has spooked the stock market. The 10-year note yield is a good proxy for long-term investment in mortgages, construction and infrastructure projects and therefore reflects expectations about the real economy.
Until recently, the interim high yield on the 10-year note had been 1.745% on March 31, 2021. Rates fell through the summer of 2021 and then began rising again, but the rate spikes fell short of that 1.745% level and then fell back. That pattern prevailed until Jan. 14, 2022, when rates broke through and hit 1.794%. That was the highest level since Jan. 13, 2020, almost exactly two years ago, and before the pandemic became widespread in the U.S. At that time, rates had declined from their pre-pandemic interim high of 2.761% on Jan. 23, 2019, almost exactly three years ago. Again, today’s yield is 1.848%.
What Are Bonds Saying About Inflation? But if rates are not fundamentally higher than they were two years ago and are significantly lower than they were three years ago, what does that say? If a wave of inflation is about to smash into us, why aren’t rates at 3.0% or higher? A yield of 1.848% is pretty puny if the inflation narrative is correct.
People throw the word “stimulus” around, even those who should know better, and say, “The Fed’s cut rates to zero. That’s stimulus. The Fed’s printing money. That’s stimulus.” They then say, “If you’re going to print that much money, you’re going to get inflation.”
The Reality: But none of that is true. It’s far too simplistic. Reality is much more complicated than the simple money printing equals inflation narrative. Yes, the money printing is true. But it’s not inflationary unless the money gets put to use in the economy. If the money gets put to use in the form of widespread lending and spending, that’s a setup where you have to think hard about inflation. But that’s not what we’re seeing.
What happens then to the money the Fed creates? The big banks have accounts at the Fed. They take the money and they leave it at the Fed in the form of excess reserves, meaning basically more reserves than the law requires them to have. So the money doesn’t go anywhere. It’s not being invested. It’s not being loaned out. It’s not being borrowed. It’s not being spent. So it doesn’t matter how much there is if the money doesn’t go anywhere, and that’s exactly the situation we’re facing.
It’s the Velocity, Stupid: I often refer to the velocity of money. Quite simply, velocity is the turnover of money, the rate at which money changes hands. The Fed can create money just by buying bonds with money it creates out of thin air. But velocity is a psychological phenomenon.
It all depends how consumers feel. If they feel prosperous, if they feel that their job is secure, if they feel that their businesses are doing well, they might be more willing to borrow money to expand the business or spend money on personal consumption. But we’re not seeing that. We’re seeing velocity drop. Some people are getting money, whether it’s in the form of government handouts or slightly higher wages, but they’re saving it. They’re not spending it. That doesn’t add up to rampant inflation.
I realize I may be in the minority, but the bond market is telling us that inflation will be much tamer than expected (I expect inflation to return with a vengeance eventually, but not yet). In other words, the U.S. may be seeing peak inflation and peak interest rates for this cycle.
The One Thing the Fed Excels At: I expect the U.S. economy will slow from here (for many reasons including the pandemic, supply chain disruptions and excess debt), rates will level off and then decline and the dollar will weaken. Of course, the Fed is preparing to tighten monetary policy at a time when the economy shows weakening. It’s tightening into weakness. But that’s no surprise. Looking at the entire history of the Fed since 1913, it’s proven that it’s really good at wrecking the economy by doing the wrong thing at the wrong time. And it’s in the process of doing that again.
I feel like we’re watching the same movie that we’ve already seen. We’re seeing this movie again because the Fed did this before. From 2008–2013, the Fed did what they did the last couple of years.
“Normalizing”: They bought bonds, created money supply, blew up the balance sheet and cut rates to zero. The zero interest rate policy, the money printing, they did that from 2008–2013. They took the Fed’s balance sheet from about $800 billion to about $4 trillion (today it’s dramatically higher because of its response to the pandemic).
Then they tried to “normalize.” They began raising rates aggressively. They got the fed funds rate up to 2.25%, with nine 25-basis-point increases between December 2015 and December 2018. They trimmed the balance sheet down. Not greatly, but they brought it down from about $4.5 trillion to about $3.7 trillion. That’s not an insignificant reduction.
Markets Have Seen This Movie Before: In other words, the Fed was trying to raise rates and reduce the balance sheet, and they were succeeding. But it all culminated on Dec. 24, 2018, in what I call the Christmas Eve Massacre. The Fed sank the stock market. It fell 20% in 2½ months. And that was after a long bull market from 2009–2018, when stocks tripled over that time period.
The lesson is that when the Fed tries to normalize, they can’t do it. They’re caught in a trap of their own creation, with no way out, or at least no easy way out without causing a lot of pain. They’re about to make things worse with tightening into weakness, with tapering and with rate increases. The market already sees this coming because they’ve seen the movie before. They know how it ends. And it ends poorly."
Celente & The Judge: "US Presidents = Murder Inc."
Celente & The Judge: "US Presidents = Murder Inc."
"The Trends Journal is a weekly magazine analyzing global current events forming future trends. Our mission is to present Facts and Truth over fear and propaganda to help subscribers prepare for What’s Next in these increasingly turbulent times."
"Get Out Now! Disastrous Stock Market Crash Isn’t Over"
Full screen recommended.
"Get Out Now! Disastrous Stock Market Crash Isn’t Over"
by Epic Economist
"The catastrophic stock market crash isn’t over. In fact, it has just started, and things are about to get much more chaotic from here. After a week-long selloff that has pushed major indexes down to the edge of bear-market territory, Wall Street banks are warning clients that the worst is yet to come, with some experts alerting that the market is about to plunge as much as 70% more as corporate earnings continue to disappoint and the Federal Reserve begins raising interest rates.
The S&P 500 is being dragged down by a seventh straight day of acute losses in the tech sector, falling almost 5% in one single day, and pushing the index down more than 10% for the year. But market veterans are saying that the real meltdown isn’t here just yet, because “a disappointing start to fourth-quarter earnings season is likely to spell a lot more trouble for stocks in the coming weeks,” as noted Goldman Sachs’ David Kostin in a note released on Monday. On the same tone, Morgan Stanley’s Michael Wilson shared a similar warning, telling clients to “hunker down for a few more months, as slowed earnings growth joins monetary policy uncertainty as primary market concerns”.
“It’s too early to be bullish,” Wilson stressed, cautioning that the S&P is about to plummet another 10% in the weeks ahead, and pointing out that only the “most speculative parts” of the market are experiencing the worst of the carnage, with big names such as Peloton crashing up to 75% in recent days. However, the broader market still has a long way down. “Winter is here, and the damage under the surface has been enormous and even catastrophic for many individual stocks,” Wilson continued. “The Fed is serious about fighting inflation, and it’s unlikely that it will be turning dovish anytime soon given the seriousness of these economic threats and the political support to take action.”
Moreover, John Hussman, the president of the Hussman Investment Trust, has a respectable reputation in the financial world for being able to call out moments of speculative excess. He accurately predicted all of the crash cycles from 2000 up until the 2020 tech selloff. And now he’s saying that things are worse today than they were in those instances."We enter 2022 amid the most extreme financial bubble in U.S. history, driven by yield-seeking speculation, amplified by a Federal Reserve that has abandoned any tether to systematic monetary policy," Hussman wrote.
That's quite a powerful statement. Hussman supports his view by pointing out the insane state of current valuations. He mentions the ratio of the total market cap of US firms to their total revenues as the most reliable valuation measure in terms of predicting future returns. It's currently at its highest level ever, meaning that valuations are stretched to the core. The financial expert argues, that such extraordinarily high stock prices are setting up the market for dismal returns for at least the next 10 years. “The prospects for returns over the next 10 years are worse than in prior bubbles. For valuations to return to their regular trend level, the S&P 500 would have to fall about 70%,” he said.
Given that he has accurately predicted major downturns before, his forecast deserves a lot of attention. "Having correctly projected the extent of prospective market losses at the 2000 and 2007 extremes (including a March 2000 projection of an 83% loss in technology stocks), we can project that the S&P 500 would have to lose about 70% of its value here – simply to touch the run-of-the-mill valuation norms that have historically been associated with expected long-term nominal returns of about 10% annually," Hussman wrote.
A 70% crash on top of the losses already suffered would bring a lot more pain for investors, and would be disastrous for financial markets at a time credit and liquidity are being tightened. Everyone who has been watching the stock market screens recently is seeing the color red dominate the charts. With both of the biggest stock market indexes now in correction territory, history tells us that a bubble burst for the broad market is coming next.
Since late last year, many signs are showing that the “bubble of everything” has already started to burst. With inflation soaring to a 40-year high, and lower consumer spending impacting the near-term economic outlook, we’re already able to see the negative effects on asset prices, especially those that are in the riskiest bubbles of the market. And although the most speculative sectors are being hit the hardest, the entire market will suffer and soon, it will collapse altogether. In an environment so full of madness, a massive stock market crash is the only possible outcome."
Gregory Mannarino, "Alert! The FED Fails To Act And Stocks Fall"
Gregory Mannarino, PM 1/26/22:
"Alert! The FED Fails To Act And Stocks Fall"
"I Don't Want..."
“I don’t want to pass through life like a smooth plane ride. All you do is get to breathe and copulate and finally die. I don’t want to go with the smooth skin and the calm brow. I hope I end up a blithering idiot cursing the sun - hallucinating, screaming, giving obscene and inane lectures on street corners and public parks. People will walk by and say, “Look at that drooling idiot. What a basket case.” I will turn and say to them, “It is you who are the basket case! For every moment you hated your job, cursed your wife and sold yourself to a dream that you didn’t even conceive. For the times your soul screamed yes and you said no. For all of that. For your self-torture, I see the glowing eyes of the sun! The air talks to me! I am at all times!” And maybe, the passersby will drop a coin into my cup.”
- Henry Rollins
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