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Daily Digest 8/2 - Why Economic Growth Will Fail, Questioning The Accuracy Of GDP Data

Tuesday, August 2, 2016, 8:35 AM

Economy

Why Economic Growth Will Fail (Brock H.)

The message of Rise and Fall is this. For most of human history, economic progress moved at a crawl. According to the economic historian Bradford DeLong, from the first rock tools used by humanoids three million years ago, to the earliest cities ten thousand years ago, through the Middle Ages, to the beginning of the Industrial Revolution around 1800, living standards doubled (with a growth of 0.00002 percent per year). Another doubling took place over the subsequent period to 1870. Then, according to standard calculations, the world economy took off.

This Has Never Happened Outside Of A Recession (reflector)

In discussing the standards and terms of C&I loans, the report said, "changes to terms on C&I loans for large and middle-market firms were mixed. Specifically, a modest percentage of banks reportedly narrowed spreads of loan rates over the cost of funds, while moderate fractions of banks reportedly increased the premiums charged on riskier loans, on net. Banks also reported that changes in the terms of loans to small firms were mixed: Whereas moderate shares of banks reported having narrowed spreads of loan rates over the cost of funds and having decreased the use of interest rate floors, on net, modest percentages of banks reportedly increased the premiums charged on riskier loans and tightened loan covenants on net."

Social Security and Disability Insurance...A 29% Reduction in Benefits Already Mandated by Law...More Cuts to Come (hamilchr)

The good news is since SS's inception in 1935, the program collected $2.9 trillion more than it paid out. The bad news is that the $2.9 trillion has already been spent. But by law, Social Security is allowed to pretend that the "trust fund" money is still there and continue paying out full benefits until that fictitious $2.9 trillion is burned through. To do this, the Treasury will issue another $2.9 trillion over the next 13 years to be sold as marketable debt so it may again be spent (just moving the liability from one side of the ledger, the Intergovernmental, to the other, public marketable). However, according to the CBO, Social Security will have burnt through the pretend trust fund money (that wasn't there to begin with) by 2029.

New Signs of an Economic Recession in 2017 (Tiffany D.)

Essentially, durable goods orders tell us how confident companies are in growing their business — rising durable goods orders show confidence the economy will continue growing, while falling orders signal a shrinking economy and curtailed spending.

During the past two decades, durable goods spending has only slowed from steady increases on two occasions.

Jamie Dimon questions accuracy of GDP data (lambertad)

Pointing to job creation, rising wages, increased household spending, and other signs that the economy is firming up, Dimon played down the GDP reading as a short-term data point.

“I wouldn’t overreact to short-term data,” Dimon said. “I’m not even sure GDP data is actually that accurate anymore.”

How the Russians are responding to the Yamal anthrax outbreak (and why) (VeganDB12)

Given the atypical case for Yamal, laboratory studies Rospotrebnadzor carried out in several stages in compliance with all the rules of diagnosis of anthrax . Used for most of the samples taken from the tundra "negative" - the diagnosis was not confirmed. No anthrax and the girl translated last week in the intensive care unit for a particular observation. Today, the child feels well and is under observation in the ward. Unfortunately, there are positive findings in the research results. The preliminary diagnosis is confirmed by laboratory medical research in eight patients (3 children) Salekhard hospital. Doctors are used intensive treatment and preventative measures for all patients, including those with a negative diagnosis.

Oil Prices Fall Below $40 As OPEC Ramps Up Output (Josh O.)

To meet an uptick in seasonal demand for oil, Saudi Arabia - OPEC’s de facto leader and top exporter - kept production levels close to record highs in order to limit Iran while it attempts to regain lost market share.

The Wall Street Journal reported that Saudi Aramco had also cut its price per barrel to Asia by sizable margins over the weekend.

Research Update: A Negative Total SPF Event and M7.8 in Indonesia on March 2, 2016 (reflector)

When it comes to peaks in SPF magnetism we have come to expect one or two per year, one positive and one negative. At times when the total SPF does not reverse polarity in a given year, there is only one peak period. The time period from 2015 through the present has been entirely negative due to anomalously weak positive northern SPF magnetism (WSO 2016), and therefore we only expect one peak period of the total SPF magnetism per year. In Figure 1, below, we see both the 2015 and 2016 negative peaks in total SPF magnetism, annotated below the chart. Sometimes a peak period can have a ‘double­peak’ within the overall peak period and this may be the case in 2016 (we should know by July 2016), but it is likely that the March 2, 2016 peak is one of the two, if not the lone peak.

Gold & Silver

Click to read the PM Daily Market Commentary: 7/29/16

Provided daily by the Peak Prosperity Gold & Silver Group

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

8 Comments

saxplayer00o1's picture
saxplayer00o1
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Posts: 4147
Central Bankers Float New Currency System, Safety Net at Confab

Central Bankers Float New Currency System, Safety Net at Confab

Bloomberg-14 hours ago
Simon Potter, an executive vice president of the Federal Reserve Bank of New York, said at the same conference that currencies have become more important ...

 

sand_puppy's picture
sand_puppy
Status: Diamond Member (Offline)
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Posts: 1889
Trump urges supporters to sell stocks

Trump urges supporters to sell stocks.  Warns of some "very scary scenarios" ahead for investors.

This is then interpreted by Tyler Durden as a political move as stock market performance in the months before an election influences voting.

Trump on Tuesday urged his supporters holding 401-(k) to get out of equities as interest rates set by the Federal Reserve are inflating the stock market.“The only reason the stock market is where it is is because you get free money.”

Trump also warned of "very scary scenarios" ahead for investors.

He is not alone.

... both Jeff Gundlach and, as of Sunday night, Goldman Sachs both urged investors to sell equities.

Tall's picture
Tall
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Posts: 564
"You Can't Handle the Truth!"

At this point most people appear to know that something is terribly, terribly wrong in the United States of America. But like the proverbial blind man describing the elephant, Americans tend to characterize the problem according to their economic status, their education and interests, and the way that the problem is impacting their peer group. 

http://www.resilience.org/stories/2016-08-02/you-can-t-handle-the-truth

saxplayer00o1's picture
saxplayer00o1
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Posts: 4147
Fitch: Return to 2011 Yields Could Cost Sov Investors $3.8T

Fitch: Return to 2011 Yields Could Cost Sov Investors $3.8T

Business Wire (press release) - ‎6 hours ago‎
A hypothetical rapid reversion of rates to 2011 levels for $37.7 trillion worth of investment-grade sovereign bonds could drive market losses of as much as $3.8 trillion, according to our analysis. Unconventional monetary policies in Japan, Europe and ...
 
 

Investors Could Lose $3.8 Trillion By Owning 'Safe' Government Bonds

Forbes - ‎5 hours ago‎
Fitch Ratings, for instance, finds that the investors who've plowed $37.7 trillion into investment grade rated sovereign debt could lose nearly 10% of their investment, or $3.8 trillion, if yields reverse course and rise to levels last posted in 2011 ...
 

MarketsRate shock could cost global investors $3.8tn — Fitch

Financial Times - ‎4 hours ago‎
However, a sharp rise in rates would be problematic for fixed income investors, Fitch notes: “A hypothetical rapid reversion of rates to 2011 levels for $37.7tn worth of investment-grade sovereign bonds could drive market losses of as much as $3.8tn”.

U.S. College Endowments Seen Posting Worst Returns Since 2009

Bloomberg-5 hours ago

Public pension funds with more than $1 billion in assets posted annualized returns of 7.35 percent in the 20 years through fiscal 2016, the lowest ever recorded ..

 

Tycer's picture
Tycer
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Posts: 610
I recognize that prose. Remember this?

KugsCheese's picture
KugsCheese
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Posts: 1447
Central Bankers Confab

Sounds like they are truly clueless.  MOAR QE!

Michael_Rudmin's picture
Michael_Rudmin
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Posts: 831
I expect trump supporters who sell to take losses

I fully expect that if the selling appears to crash the market, the central bank will be instructed to borrow money on the backs of the trump supporters, and do whatever it takes to QE the fall away -- then send the bill to the trump supporters.

Rock beats scissors.

Oliveoilguy's picture
Oliveoilguy
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Joined: Jun 29 2012
Posts: 578
ZERP and NERP Forever
saxplayer00o1 wrote:

Fitch: Return to 2011 Yields Could Cost Sov Investors $3.8T

Business Wire (press release) - ‎6 hours ago‎
A hypothetical rapid reversion of rates to 2011 levels for $37.7 trillion worth of investment-grade sovereign bonds could drive market losses of as much as $3.8 trillion, according to our analysis. Unconventional monetary policies in Japan, Europe and ...

There is no way our Government can afford higher interest rates with the huge debt burden...so IMHO the chances of seeing 2011 Yields is somewhere between slim and none.

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