Yellen May Quit If Trump Wins – -Please Do!

Even with two years remaining in her term, Federal Reserve Chairwoman Janet Yellen may quit if Donald Trump is elected president, an economist argued on Tuesday.
Paul Ashworth, chief U. S. economist at Capital Economics, said in a note to clients that Trump doubled down on criticism of the Fed during his debate with Hillary Clinton.
Trump said the U. S. economy is in a ‘big, fat, ugly bubble’ and specifically called out Yellen.
‘And we have a Fed that’s doing political things. This Janet Yellen of the Fed,’ he said. ‘The day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you’re going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton.’
Ashworth noted that, after the last meeting, Yellen fought back against earlier charges by Trump that the central bank was acting in a politically motivated manner.

This post was published at David Stockmans Contra Corner By Steve Goldstein via Marketwatch ‘ September 30, 2016.

Five Things You Should Know About the Deutsche Bank Train Wreck

Too big to fail is about to get tested once again.
Deutsche Bank – Germany’s largest, and in many ways the embodiment of the global financial system – as you may have heard, is in a spot of bother.
The U. S. government is considering imposing a fine of around $14 billion on the bank for selling faulty mortgage-backed securities in the run up to the financial crisis. That’s on top of the fact that Deutsche and other European banks have been struggling with negative interest rates, which are squeezing profits. In all, Deutsche Bank’s DB 6.79% market cap has now shrunk to nearly its proposed fine, provoking fears that the bank might have to be helped out the German government, or be wiped out. So far, Germany’s Chancellor Angela Merkel has said that there will be no bailouts for Deutsche Bank.
But while Germany says it won’t stop a Deutsche bank failure, how worried should the U. S., and investors, be about it? Ultimately, the new regulations put in place since 2008 to contain Too-Big-To-Fail banks should mean that there will be no direct impact on the average American. But here are a few reasons why you should still keep an eye on it.
Too Big to Fail was always a bit of a misnomer. What really makes a bank a risk to the financial system as a whole is the degree to which it is interconnected with other institutions, i.e., its ability to spark chain reactions of non-payment if it should ever default. By this measure, Deutsche is frighteningly indispensable. It’s a counterparty to virtually every major bank in the world, in virtually all asset classes. This illustration from an IMF report in June gives you some idea. This is why I argued yesterday that the German government, which together with the European Central Bank is responsible for supervising Deutsche, would be highly unlikely to let it fail in a disorderly manner la Lehman Brothers.

This post was published at David Stockmans Contra Corner on September 30, 2016.

Seeking Affordable Care, Markets Sidestep Obamacare

The American health care system had become the perfect poster child for cronyism long before Obamacare went into effect. Insurance companies, health care providers, and the government have become so intertwined, it’s almost impossible to discern where one ends and the other begins.
While candidates of all ideological persuasions campaign on replacing, repealing, maintaining, or even expanding Obamacare, at this point public and private health care institutions have become so entangled there is almost no feasible way to untie the knot.
Instead of looking to Washington to fix a problem they are at least partially responsible for creating, the private market has taken matters into its own hands by providing options.
The Surgery Center of Oklahoma, for example, discovered that in order to offer patients the best quality care for the lowest possible prices, they were going to have to opt out of the traditional health care system all together.
Prospective patients visiting the center’s website will notice that each procedure offered comes with its own set price tag. By choosing not to accept any insurance policies, the Surgery Center of Oklahoma is able to set its own prices, which often end up being more affordable than services rendered through a traditional hospital and then processed through a third-party insurance company.

This post was published at Ludwig von Mises Institute on Sept 29, 2016.

The Fed’s Monetary Politburo Is Finally Catching Some Flack

Now that’s more like it. Echoing Donald Trump’s Monday night bull’s-eye regarding the Fed’s thoroughly political essence, Rep. Scott Garrett put more wood to Janet Yellen during yesterday’s hearing:
Rep. Scott Garrett, R-N. J., seized Trump’s mantle during Wednesday’s hearing, saying ‘the Fed has an unacceptable cozy relationship’ with the Obama administration and Democrats.
‘As the saying goes, perception is reality,’ Garrett told Yellen. ‘Whether you like it or not, the public increasingly believes that the Fed’s independence is nothing more than a myth.’
Of course it’s a myth, and a dangerous one at that. The truth is, Keynesian monetary central planning is inherently, massively and irremediably ‘political’.
That’s because it interjects the state deeply into the money and capital markets – -the very heart of capitalism – -and thereby in plenary fashion manipulates, rigs and falsifies the prices of all financial assets.
So doing, it supersedes governance by the many via continuous auction and free market processes of financial valuation and allocation with governance by the few, who rule arbitrarily and often secretly via ideological whims and shibboleths that they are pleased to call ‘policy’.
Worse still, the Eccles Building politicians who rule the financial markets directly – -and through them much of the balance of capitalism indirectly – – are unelected and are accountable to no democratic oversight and control whatsoever. They have essentially seized great power in the manner of a coup d’ etat, and have then added insult to injury by proclaiming the utterly spurious doctrine of Fed ‘independence’.

This post was published at David Stockmans Contra Corner by David Stockman ‘ September 29, 2016.

China’s Big Ball of Money Isn’t Going Anywhere Near Stocks

This year is seen going down as the worst since 2011 for China’s stock investors as the memory of last summer’s rout lingers and speculative buying switches to the housing market.
The Shanghai Composite Index will end the year at 3,075, according to the median forecast in a Bloomberg poll of 10 strategists and fund managers. That implies a 13 percent drop over the 12-month period, the steepest in five years, and a gain of 2.9 percent from Wednesday’s close. Fading prospects for monetary easing, a slowing economy and the risk of higher U. S. borrowing costs spurring yuan weakness were among factors weighing on the nation’s shares, the survey showed.
Turnover on the world’s second-largest stock market has collapsed to a two-year low as China’s army of investors, unnerved by 2015′s plunge in equity values, charged into other assets. After a frenzied bet on commodities futures soured, they have set their sights on a bigger target – property. With new home prices now jumping the most in six years, analysts are scaling back projections for interest-rate cuts.
‘The property market and the stock market are like a seesaw,’ said Li Lifeng, a strategist at Sinolink Securities Co. in Shanghai. ‘If the ‘fever’ in the property market doesn’t cool down, funds will flow from equities into real estate.’
Small-cap technology stocks are the least preferred by analysts in the survey because of stretched valuations, while building companies are favored thanks to government efforts to boost infrastructure investment.

This post was published at David Stockmans Contra Corner on September 29, 2016.

Red Capitalism At Work – – China Destroying Global Aluminum Industry

The U. S. aluminum industry’s anti-China drumbeat is gaining volume in Washington this week.
A group that represents aluminum companies is calling for a ‘meaningful dialogue’ with Chinese authorities in a bid to end what they say are incentives and subsidies that are fueling a global glut and squeezing U. S. producers out of the market.
The Aluminum Association is pressing for a deeper investigation by the U. S. International Trade Commission into Chinese policies to save what’s left of the domestic industry, the group’s chief executive officer Heidi Brock and chairman Garney Scott said in Washington on Wednesday. They are scheduled to give testimony Thursday at a Commission hearing.
Primary aluminum production in the U. S. faces the possibility of having to shutter if prices fall below $1,528 a metric ton, according to Austin, Texas-based researcher Harbor Intelligence. Aluminum for delivery in three months settled at $1,665 on Wednesday, down about 50 percent from a 2008 high.

This post was published at David Stockmans Contra Corner on September 29, 2016.

Obama Humiliated: For The First Time, Congress Votes To Override President’s “Sept 11” Bill Veto

Summary: US Congress, first the Senate and then the House, humiliated the president when it voted on Wednesday to override Obama for the first time in his eight-year tenure, as the House rejected a veto of legislation allowing families of terrorist victims to sue Saudi Arabia. The House easily cleared the two-thirds threshold with a 348-77 vote to push back against the veto. The Senate voted 97-1 in favor of the override earlier in the day, with only Democratic Leader Harry Reid voting to sustain the president’s veto.
‘We can no longer allow those who injure and kill Americans to hide behind legal loopholes denying justice to the victims of terror,’ said House Judiciary Committee Chairman Bob Goodlatte (R-Va.).
The White House immediately slammed lawmakers following the Senate vote.
‘I would venture to say that this is the single most embarrassing thing that the United States Senate has done possibly since 1983,’ press secretary Josh Earnest told reporters aboard Air Force One, an apparent reference to a 95-0 vote to override President Ronald Reagan that year.
The override was widely expected in both chambers, with lawmakers from both sides of the aisle characterizing it as an act of justice for the victims of the Sept. 11 attacks.

This post was published at Zero Hedge on Sep 28, 2016.

A Realistic Decomposition Of Rates, Or At Least A Realistic Interpretation Of It

Last April, former Fed Chairman Ben Bernanke wrote a series of blog posts for Brookings that was intended to explain one of the biggest contradictions of his legacy. If quantitative easing had actually worked as he to this day suggests that it did, why wasn’t the bond market in clear agreement? In order to try to reconcile the huge discrepancy, Bernanke offered several possibilities, even titling his effort ‘Why Are Interest Rates So Low?’ to further emphasize the difficulty.
The fourth part of his series treated with ‘term premiums’, an element of Fisherian rate decomposition that economists use to try to understand bondholders and their motivations. In many ways, however, ‘term premiums’ are a plugline, a leftover after considering the other perhaps more visible (this is a relative designation, as we always need to keep in mind that nothing presented here or that is discussed in policy or mainstream circles about these ideas is visible) parts of rate decomposition – expected path of real short-term interest rates and inflation compensation.

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ September 28, 2016.

Yellen Grilled on Fed Partisanship

Just days after Donald Trump accused the Federal Reserve of playing politics with low interest rates during the first presidential debate, Congressman Scott Garrett challenged Chairman Janet Yellen today on whether Fed officials were guilty of playing politics this campaign season. In particular, Garrett questioned the actions of Fed Governor Lael Brainard who raised eyebrows earlier this year by donating the legal maximum to Hillary Clinton’s campaign.
Since the Fed’s decision to maintain low interest rates is widely seen as benefiting Hillary Clinton, and given that Brainard’s actions opened herself up to what Garrett described as ‘the appearance of conflict,’ Garrett asked whether she had recused herself from the FOMC. Yellen responded that Brainard did not, was not asked to, and was not barred from donating to political campaigns according to the Hatch Act.
Garrett pushed further. Noting that multiple media outlets have been openly speculating about a potential role for Brainard in a Clinton administration, the congressman asked Yellen whether such a conversation between Brainard and Clinton would be a violation of Fed policy. Yellen responded by saying that while she would need to check with Fed lawyers, she didn’t see any conflict.
That’s right, according to Janet Yellen, there is nothing wrong with a sitting Federal Reserve official lobbying a presidential candidate for a future job, even though they have the ability to vote on Fed decisions that can dramatically impact the American economy.

This post was published at Ludwig von Mises Institute on Sept. 28, 2016.

More Slumping Durables In August – – The New Abnormal

Durable goods continue to suggest a weak economy that only seems to remain in that state. Year-over-year, unadjusted estimates for new orders rose slightly for the first time since May, while seasonally adjusted total orders (including the transportation sector) were fractionally lower at $226.9 billion. That amount was 2% less than January 2016 and 4.3% below August 2014. Once again we find that the seriousness of the slump is not defined by its depth but its length, especially since there aren’t any signs that it is letting up even though there is every mainstream reason to expect differently.
U. S. factories reported flat demand for big-ticket goods in August, suggesting the economy continues to be restrained by sluggish business spending.
The Commerce Department said Wednesday orders for durable goods – products such as cars, tractors and refrigerators designed to last longer than three years – were unchanged from a month earlier. When excluding the volatile categories of defense and transportation products, sales declined.
As is usual, the article tries to make this continued weakness out to be a case of ‘woes in the energy industry’ but it is much more than that, an observation obscured by the ongoing contraction’s nonconformity to cyclical patterns. Because of that the media is left with nondescript and really misleading analysis, including ‘though demand remains sluggish more broadly.’

This post was published at David Stockmans Contra Corner by Jeffrey P. Snider ‘ September 28, 2016.

Obama Humiliated: Congress Overwhelmingly Votes To Override President’s Veto Of “Sept 11” Bill

Summary: The US Congress, first the Senate and then the House, humiliated the president when it voted on Wednesday to override Obama for the first time in his eight-year tenure, as the House voted 348-77 to reject a veto of legislation allowing families of terrorist victims to sue Saudi Arabia. The House easily cleared the two-thirds threshold to push back against the veto. The Senate voted 97-1 in favor of the override earlier in the day, with only Democratic Leader Harry Reid voting to sustain the president’s veto.
‘We can no longer allow those who injure and kill Americans to hide behind legal loopholes denying justice to the victims of terror,’ said House Judiciary Committee Chairman Bob Goodlatte (R-Va.).
The White House immediately slammed lawmakers following the Senate vote.
‘I would venture to say that this is the single most embarrassing thing that the United States Senate has done possibly since 1983,’ press secretary Josh Earnest told reporters aboard Air Force One, an apparent reference to a 95-0 vote to override President Ronald Reagan that year.

This post was published at Zero Hedge on Sep 28, 2016.

The Debate: Trump’s Three Points for Peace

For all Hillary Clinton’s reputation as a policy wonk, her debate performanceconsisted almost entirely of personal attacks. And while our media is out there proclaiming a Clinton ‘victory,’ their evaluation merely shows how distanced they are from ordinary Americans, who don’t revel in nastiness.
Trump, on the other hand, although he allowed himself to be distracted by her cattiness, was focused on the issues, and in the course of the evening he made three important points of interest to my readers.
1) The most important issue of our time, or any time – nuclear weapons and the looming possibility of nuclear war:
‘The single greatest problem the world has is nuclear armament, nuclear weapons, not global warming, like you think and your – your president thinks. Nuclear is the single greatest threat….
‘I would like everybody to end it, just get rid of it. But I would certainly not do first strike. I think that once the nuclear alternative happens, it’s over.’
This is the most under-noticed – and most significant – moment of the debate. Although, to be sure, it was immediately noted by the folks over atThe Intercept, who opined:
‘That may seem like common sense, but it’s actually a commitment that President Obama has been reluctant to make. The Pentagon argues that unless the U. S. is prepared to threaten a nuclear strike, it is less likely to deter Russian and Chinese aggression.

This post was published at David Stockmans Contra Corner by Justin Raimondo ‘ September 28, 2016.

INVESTIGATION REVEALS THAT POLICE ARE ABUSING CONFIDENTIAL WORK DATABASES FOR PERSONAL GAIN

Shootings, rape, fraud…it seems like nearly every day a story about police corruption makes the headlines.
Today is no different: This morning, the Associated Press broke a chilling story about widespread police misconduct.
The AP conducted an investigation and found that police officers across the US misuse confidential law enforcement databases to access personal information about romantic partners, ex-girlfriends, neighbors, journalists, business associates, politicians, and others for reasons that have nothing to do with police work.
Criminal history and driver databases are supposed to be used by officers to obtain information about people they encounter on the job.
But the AP’s investigation revealed that the systems can be exploited by officers who, ‘motivated by romantic quarrels, personal conflicts or voyeuristic curiosity,’ disregard the rules – and sometimes the law – and use the systems for nefarious purposes.


This post was published at The Daily Sheeple on SEPTEMBER 28, 2016.

At Last – – Even The FT Says Fed on Ropes as Yellen Seeks to Fend off Trump Blows

After a fusillade of excoriating and in many ways unprecedented attacks on the Federal Reserve by the Republican presidential candidate, Janet Yellen, the US central bank’s chair, finally hit back.
Ms Yellen last Wednesday dismissed as emphatically wrong Donald Trump’s claims that she and her institution were keeping short-term interest rates low at the behest of the Obama administration. ‘Partisan politics play no role in our decisions,’ she declared.
Mr Trump is throwing punches at a time when the US central bank is under assault from both sides of the partisan divide, and at a time when polling suggests public confidence in its leadership has declined during a subpar economic recovery.
Some experts say the Fed is vulnerable and that the populist attacks could fuel demands by politicians for tighter constraints on its policy freedoms. Mr Trump ‘is tossing a lot of fuel on the fire’, says Sarah Binder, a professor of political science at George Washington University. ‘It intensifies the partisan criticism of the Fed and keeps the Fed in the politicians’ crosshairs.’ Mr Trump’s interventions by no means mark the first time the Fed has been turned into a political punching bag. Previous Fed chairs have been the subject of barbs during presidential campaigns – including in 2011 when Republican candidate Rick Perry accused former Fed chair Ben Bernanke of ‘treasonous’ behaviour by conducting quantitative easing. Past administrations have seen outbreaks of tension with Fed chiefs, including under presidents George HW Bush and Richard Nixon.

This post was published at David Stockmans Contra Corner By Sam Fleming, Financial Times ‘ September 28, 2016.

Trump Pulled Off A 1980 Reagan Debate Performance

Like Reagan in 1980, viewers saw a Trump who was better than the liberal talking points.
In the run-up to the Hofstra presidential debate, the Clinton campaign mounted a concerted effort to make fact-checking the centerpiece of the event. Campaign manager Robby Mook argued that ‘it’s unfair to ask that Hillary Clinton both play traffic cop with Trump, make sure that his lies are corrected, and also to present her vision for what she wants to do for the American people.’ Mook said that if Trump ‘lied,’ it was moderator Lester Holt’s responsibility to point that out.
Fact-checking has never been an accepted role for debate moderators. Janet Brown, head of the Commission on Presidential Debates, said that a moderator should not ‘serve as the Encyclopedia Britannica.’ And moderator Candy Crowley’s ill-advised intervention against Mitt Romney in 2012 showed why fact checking on the fly is a bad idea.

This post was published at David Stockmans Contra Corner on September 28, 2016.

At Last – – FT Says Fed on Ropes as Yellen Seeks to Fend off Trump Blows

After a fusillade of excoriating and in many ways unprecedented attacks on the Federal Reserve by the Republican presidential candidate, Janet Yellen, the US central bank’s chair, finally hit back.
Ms Yellen last Wednesday dismissed as emphatically wrong Donald Trump’s claims that she and her institution were keeping short-term interest rates low at the behest of the Obama administration. ‘Partisan politics play no role in our decisions,’ she declared.
Mr Trump is throwing punches at a time when the US central bank is under assault from both sides of the partisan divide, and at a time when polling suggests public confidence in its leadership has declined during a subpar economic recovery.
Some experts say the Fed is vulnerable and that the populist attacks could fuel demands by politicians for tighter constraints on its policy freedoms. Mr Trump ‘is tossing a lot of fuel on the fire’, says Sarah Binder, a professor of political science at George Washington University. ‘It intensifies the partisan criticism of the Fed and keeps the Fed in the politicians’ crosshairs.’ Mr Trump’s interventions by no means mark the first time the Fed has been turned into a political punching bag. Previous Fed chairs have been the subject of barbs during presidential campaigns – including in 2011 when Republican candidate Rick Perry accused former Fed chair Ben Bernanke of ‘treasonous’ behaviour by conducting quantitative easing. Past administrations have seen outbreaks of tension with Fed chiefs, including under presidents George HW Bush and Richard Nixon.

This post was published at David Stockmans Contra Corner on September 28, 2016.

How The Deplorables Can Save America

In my last article, The Deplorables ‘ Who We Are And What We Want, I examined the basic philosophies that define what I call the liberty movement; the same group of Americans that Hillary Clinton admonishes as part of her basket of deplorables.
It is important to recognize that only foolish progressives actually take Clintons claims at face value. Clinton seeks to characterize a large subset of conservatives as narrow minded when she mentions the deplorables. But, it is how she defines narrow minded that is the crux of the thing.
When people like her talk about racists, they are referring to conservatives who want a secure southern border. When they talk about Islamaphobes, they are referring to people who want to stop Islamic refugees from being bused into the country without being vetted or philosophically and morally acclimated to our way of life. When they talk about sexists, they are usually referring to all males in general, because remember, social justice warriors (SJWs) claim that we are subconsciously sexist, even if we think we are fair to women. When they talk about homophobes, they are referring to Christian bakers who do not want to participate in services for gay weddings despite the fact that they should be perfectly free to refuse association with anyone at any time for any reason.
What Clinton and social justice lunatics are really referring to when they use these attacks are those people who want to be free to think and do as they see fit as long as they are not violating the constitutional rights of others. No one in Hillarys basket is actually narrow minded, but she and her cronies pigeonhole them as narrow minded anyway.

This post was published at Alt-Market on Wednesday, 28 September 2016.

Goldman Sachs Said to Plan 25% Cut to Asia Investment Bank Jobs

Goldman Sachs Group Inc. plans to cut about a quarter of its investment-banking jobs in Asia, excluding Japan, because of a slump in deal-making in the region, according to a person with knowledge of the matter.
The New York-based bank plans to make the cutback of about 75 jobs in the region later this year, the person said, asking not to be identified because the matter is confidential. The job reduction comes as the bank faces its worst Asia ranking in equity issuance since 2008, according to data compiled by Bloomberg data. A Goldman Sachs spokesman said he was unable to comment.
Asia ex-Japan equity offerings have declined 29 percent this year, and Goldman’s ranking plummeted to 11th from second in 2015, its worst showing in about eight years, the data show. The company also has come under scrutiny by authorities for its role in underwriting $6 billion of bond sales for 1MDB, the Malaysian government fund at the center of several international investigations into suspected corruption and money laundering.
Chinese securities firms are mounting a challenge to western banks like Goldman Sachs and Morgan Stanley in Asia, with mainland companies occupying seven of the top 10 positions in advising on Hong Kong initial public offerings this year, data compiled by Bloomberg show. Postal Savings Bank of China Co. raised $7.4 billion in a Hong Kong initial public offering this week, the world’s biggest first-time share sale this year.

This post was published at bloomberg

The Donald Nailed It: ‘We Are In A Big Fat Ugly Bubble’

Most of the 90 minutes last night was a waste – with both candidates lobbing well-worn clichs, slogans and sound bites at the audience and each other.
But there was one brief moment that made it all worthwhile. That was when Donald Trump peeled the bark off the Fed’s phony recovery narrative and warned that the stupendous stock market bubble it has created will come crashing down the minute it stops pegging rates to the zero bound.
‘…… Typical politician. All talk, no action. Sounds good, doesn’t work. Never going to happen. Our country is suffering because people like Secretary Clinton have made such bad decisions in terms of our jobs and in terms of what’s going on.
Now, look, we have the worst revival of an economy since the Great Depression. And believe me: We’re in a bubble right now. And the only thing that looks good is the stock market, but if you raise interest rates even a little bit, that’s going to come crashing down.
We are in a big, fat, ugly bubble. And we better be awfully careful. And we have a Fed that’s doing political things. This Janet Yellen of the Fed. The Fed is doing political – by keeping the interest rates at this level. And believe me: The day Obama goes off, and he leaves, and goes out to the golf course for the rest of his life to play golf, when they raise interest rates, you’re going to see some very bad things happen, because the Fed is not doing their job. The Fed is being more political than Secretary Clinton.

This post was published at David Stockmans Contra Corner by David Stockman ‘ September 27, 2016.