The Condition Of Our Condition?

Last week's lowlights... Hot rates: The 30 year briefly below 2% for the 1st time ever, and the 10 year inverted below the 2 year.  

Credentialed MSM financial media, Yellen and El-Erian all claimed that due to distortions, current UST yield curve inversions have less than predictive power for recessions.  None could elaborate as to what those distortions actually where, much less how they came about, nor any of the 5W's?

Does one not pay attention to what negative swap spreads, inverted swap rate and eurodollar futures curves are also screaming? But I digress....  Namely, liquidity "dollar" crisis, and that short term dangers will transmit into longer term economic conditions.  But hey, that's why they get the big bucks?? Moving West...

Hotter rates: Due to extreme heat Texas wholesale spot energy costs surged to new records ($6500 per MW/hr). 

Hottest Temperatures.. NOAA's 140-year global temperature dataset record, which dates back to 1880: June 2019 was the hottest June on record. and giving new meaning to hot off the press... July 2019 was the hottest month ever on record.  

Hot Dog... which POTUS 45 tweeted the mustard off by postponing his China tariff "to save Xmas and face?" which spiked sagging global markets. Moving West...

Following up on Where's Guy Fawkes?  Salmo Trutta commented - 

"in fact it is the opposite" -- Déjà vu. Trumps' tax cuts won't work."

Nattering... Thank you for the cogent comment. Indeed, and how. For further edification, we Nattered last year on that very subject in Silly Tax Cut Tricks Are For Kids?

"The "repatriated" money was used for buybacks and bonus. Individual tax breaks only benefited the rich, who did not spend the money, nor invest it in economic endeavor. TCJA was a complete bust which with it's increasing the twin deficits, budget and trade, and the resulting cuts in spending for services, will only hanker future efforts." 

And how the repatriated booty est. $1T channeled through buybacks and dividends,might have acted as a "hall pass" in propping US markets for most of 2018 in Bearly Immune? 

"In 2018, the 2017 Tax Cuts and Jobs Act (TCJA) took effect. The BEA estimate of the one-time repatriation tax is $250 billion at a quarterly rate ($1 trillion at an annual rate)."

And how those flows caused a divergence in the correlation between Eurodollar futures (slid one year forward) and SP500 index performance during 2018 in COTS: The Early Edition?  FYI, since our July 8th post the predictive power of that model has been spot on.

"Could the ED COTS positions be a clue for the direction of the market going forward? Since 2007, quite accurately with some divergences during monetary disturbances QE1, 2, 3, and the 2018 TCJA repatriation of $1T in corporate funds."

Back to Brexit and breaking the contract, FDR PM'ed the following...

An excellent blog regarding the above subject matter. 

I can’t speak to the U.K. but as for the US besides our politicians selling out its constituencies to the highest bidder, the US citizen voted these kleptocrats in and were culpable in electing Trump through the anachronistic Electoral College.  

Yes, the electorate has been asleep at the wheel, lackadaisical and apathetic.

Nattering - Thank you for the kind words. Pie's soliloquy resonates and as the similarities are surreal or uncanny, one cannot help but substitute US for UK and Trump for Brexit. 

On the subject of Trump's Tariff's:  "all he has to do now to have his recession is to put 25 percent tariffs on the 300 billion....that will cost the average American family another 4000 dollars a year." @anonymous

Tariffs are regressive and hurt low income families the most. Stop buying Chinese goods and shopping at Walmart? That ship sailed, and we can thank the corporate turncoats. For further elucidation see Sir James Goldsmith: The Trap; The Response.

Just curious where does that $4K per family figure come from? As admitted by the posts author, a math error on their part.  Now let's see what the damage might be...

$19B in additional consumer costs divided by 330M people = $58 pp X 2.6 = $150 per household.  Those figures come from National Retail Federation. NRF Press Release and NRF Study  

Hypothetical: the damage was double the NRF estimate or $300... again begging a question even more curious, how does a $150 or even $300 per US household annual regressive tax, much less a Twittiot In Chief turn global markets on their sides? And the retraction of said tariff "to save Xmas and face?" puts global markets through the roof? There is something in this more than natural?

Meanwhile, the "condition of our condition" only seems to worsen.  Speaking of which, perhaps we should "just drop in" to check on said condition?

For the old school traditionalist...


For the latter day neo surrealist...