tag:blogger.com,1999:blog-49885758753889133832024-03-06T15:03:02.299-05:00Mind & MarketA Safe Haven for Libertyfordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.comBlogger5266125tag:blogger.com,1999:blog-4988575875388913383.post-4604959466471364902022-09-22T16:31:00.003-04:002022-09-22T16:46:46.103-04:00Less Negative is Positive<div style="text-align: left;"><i>"A negative times a negative equals a positive."</i><br />--Jaime Escalante (Stand and Deliver)</div><p>Negative interest rate policies (<a href="https://mindandmarket.blogspot.com/2014/12/nirp.html">NIRP</a>) enacted by central banks across the globe in the middle of last decade spawned a mountain of negative interest-bearing debt. It was hard to imagine who was buying it although, in reality, central banks themselves were hoovering much of it up as part of their quantitative easing (QE) programs.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9z45qEbj9ogsjw9IM8tzXE-ay3ZU2BL-uqBCPHVlIPco_pgmCDXWWgdZeAUNmBwaNqpud2Nun89zOs5_CXfr9qICOY2QKb303dr1jdUQ83rbYwpYcPpovf-cQ3TBIv3k0PRvA2ZQ2zueaw33wIupx7a5-3u9rRli-hmckjQ17MINGIbGjrX2Ht5it/s955/negativeyield.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="447" data-original-width="955" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj9z45qEbj9ogsjw9IM8tzXE-ay3ZU2BL-uqBCPHVlIPco_pgmCDXWWgdZeAUNmBwaNqpud2Nun89zOs5_CXfr9qICOY2QKb303dr1jdUQ83rbYwpYcPpovf-cQ3TBIv3k0PRvA2ZQ2zueaw33wIupx7a5-3u9rRli-hmckjQ17MINGIbGjrX2Ht5it/s320/negativeyield.jpg" width="320" /></a></div><p>The worm has turned dramatically as inflation has picked up and CBs are now raising rates. After hitting a peak of about $17 trillion in 2020, negative yielding debt has plummeted to less than $2 trillion. Most of that decline has come since the beginning of 2022.</p><p>As NIRP debt declines, it seems likely that <a href="https://mindandmarket.blogspot.com/2016/07/nirp-and-discounting.html">broken</a> conventional discounting processes get repaired.</p><p>Central banks become extra big losers as NIRP reverses. They bought $trillions of negative yielding bonds that have now been pounded as rates rise and bond prices fall. Many CBs are approaching the broke point on paper.</p><p>While these institutions can simply print more money out of thin air to rectify their upside down balance sheets, this would create quite the paradox of creating more money in an inflationary environment.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-56069455905261441992022-09-21T14:05:00.003-04:002022-09-21T14:05:19.276-04:00TINA Turning?<div style="text-align: left;"><i>All I want is a little reaction<br />Just enough to tip the scales</i><br />--Tina Turner</div><p>During the era of interest rate suppression, people turned to stocks, particularly dividend payers, because it seemed there was no alterative (TINA). With yields presently moving higher, the TINA attitude should dissipate as investors switch out of stock in favor of the relative safety of high yielding bonds.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiV2MsF9uL_KnQM1jHMRtIBRxWlc9RHUsMiAgug1Md9Cx9i4NqBp0EYwGehiKm1_ZOQqEgwbGlom5RIiUfs5C0-xa07khqQkyEuTYXXKpaE8x2IgfdrNAM6x_6TcHhGy-UTMV_F-riP_Jm5dNBZzZQhjqgc75gs91fWjfE3NfrXW3Lgu-HeNgAkVQJ/s1280/TwoYearStocks.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="681" data-original-width="1280" height="170" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiiV2MsF9uL_KnQM1jHMRtIBRxWlc9RHUsMiAgug1Md9Cx9i4NqBp0EYwGehiKm1_ZOQqEgwbGlom5RIiUfs5C0-xa07khqQkyEuTYXXKpaE8x2IgfdrNAM6x_6TcHhGy-UTMV_F-riP_Jm5dNBZzZQhjqgc75gs91fWjfE3NfrXW3Lgu-HeNgAkVQJ/s320/TwoYearStocks.jpg" width="320" /></a></div><p>Today the 2 yr Treasury yields touched 4%. This more than 2x the S&P 500 dividend yield.</p><p>The higher this spread goes, the more pressure we should see on stocks as investors flock to 'risk-free' cash yields.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-53789272156327252492022-09-20T15:37:00.000-04:002022-09-20T15:37:14.337-04:00CAPE Fear<div style="text-align: left;"><i>I'm a walkin' in the rain<br />Tears are fallin' and I feel the pain<br />Wishin' you were here by me<br />To end this misery</i><br />--Del Shannon</div><p>Although stocks have come in, Robert Shiller's <a href="https://mindandmarket.blogspot.com/2018/01/on-cape.html">CAPE index</a> suggests much more downside work must be done before 'normal' valuations return.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ7hnczMC0slB3IkjhIUieNiK-ehg4LDWCHoKl9BKv0Edkhhg6HQhE-fKoR9jnOESEhLPUA_iuYj483xOX6ekzNIuf_kdTs2gddyIOnTESF_TrRKD-2J6nUZzEEIBZk5fuNRm_MeF1ZeDzrSOIAiGNIM3WFxYdr9acBU-eW00Z5W4L7RW5T3sEDBS0/s792/CAPE.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="511" data-original-width="792" height="206" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhQ7hnczMC0slB3IkjhIUieNiK-ehg4LDWCHoKl9BKv0Edkhhg6HQhE-fKoR9jnOESEhLPUA_iuYj483xOX6ekzNIuf_kdTs2gddyIOnTESF_TrRKD-2J6nUZzEEIBZk5fuNRm_MeF1ZeDzrSOIAiGNIM3WFxYdr9acBU-eW00Z5W4L7RW5T3sEDBS0/s320/CAPE.jpg" width="320" /></a></div><p>Could be, although I wonder how massive market stimulus and, now, structural goods/services inflation factor in.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-34532758396712821662022-09-16T10:50:00.006-04:002022-09-16T10:52:43.870-04:00Trading the Cable<div style="text-align: left;"><i>"Cockamamie. That's a word you generation hasn't embraced yet. You ought to use it once in a while to keep it alive."</i><br />--Frank Horrigan (In the Line of Fire)</div><p>They say you learn something new every day. Saw <a href="https://www.zerohedge.com/markets/sterling-marks-black-wednesday-plunge-lowest-level-soros-broke-bank-england">this headline</a> this am and couldn't figure what 'cable' meant in the context.</p><p>Turns out it refers to exchanges between the British pound and the USD. </p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi72_A4gv4jOPG1rEDhjoNNdoFHIAxOMSuJXXHLDL8K78SXk2SsQKp-kgBpoYTRk2DG29LCFHgCazAZwRnImBYccArcaqJxFeixW3XsrtHMPV1iHy9NrDJvx4oIfUk1BYQlBy33HY6r5nJoL6QT82zyQX-a5lOhZQYnX25nKuz-cSm969sCDkR6piUt/s1920/cable1.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1080" data-original-width="1920" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEi72_A4gv4jOPG1rEDhjoNNdoFHIAxOMSuJXXHLDL8K78SXk2SsQKp-kgBpoYTRk2DG29LCFHgCazAZwRnImBYccArcaqJxFeixW3XsrtHMPV1iHy9NrDJvx4oIfUk1BYQlBy33HY6r5nJoL6QT82zyQX-a5lOhZQYnX25nKuz-cSm969sCDkR6piUt/s320/cable1.jpg" width="320" /></a></div><p>When transatlantic cable was stretched across the ocean floor in the mid 1800s to connect telegraph services between the England and the US, transactions between the two currencies <a href="https://www.investopedia.com/ask/answers/09/trading-the-cable.asp#:~:text=The%20British%20pound%20is%20sometimes%20known%20as%20%22the,communications%20between%20London%20and%20New%20York.%20Cable%20Lingo">became known as</a> 'trading the cable.'</p><p>Obviously, this is no longer popular slang as it took me several decades before I heard it.</p><p>Interesting nonetheless. And I hope to put my newly discovered lingo to work soon.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-87149045572708243522022-09-14T12:42:00.003-04:002022-09-14T12:42:24.280-04:00See the Signs<div style="text-align: left;"><i>Life is demanding<br />Without understanding</i><br />--Ace of Base</div><p><a href="https://mises.org/wire/powells-pivot-pain-no-gain-triggering-coming-recession">Article</a> lays out five signs of recession currently flashing red:</p><p>1) Declining monetary base. As quantitative tightening proceeds, money supply should drop even more.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijXZIYTYdy3rGKUReVmiUQwMiTDoMQse9dH4OnHPFXTDmg2Ot188SFiTQ84BHeTSibdTrWDgma6viDkyfiaKCL7JfwOLrTH5HNf1Qx3aMV_FRoj5WAipAx9n8JETTmECuaecuFuoaxca6-DHM-SbSC33xhveTq0-x5-5gqtqRwLaBzIG7mB4VL1weC/s693/picture1_5.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="358" data-original-width="693" height="165" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEijXZIYTYdy3rGKUReVmiUQwMiTDoMQse9dH4OnHPFXTDmg2Ot188SFiTQ84BHeTSibdTrWDgma6viDkyfiaKCL7JfwOLrTH5HNf1Qx3aMV_FRoj5WAipAx9n8JETTmECuaecuFuoaxca6-DHM-SbSC33xhveTq0-x5-5gqtqRwLaBzIG7mB4VL1weC/s320/picture1_5.jpg" width="320" /></a></div><p>2) Inverted yield curve. Inverted yield curves are leading indicators of economic problems, and have preceded every recession for decades.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFnS_jN6U3nO5cbHNeNYZULetYdA_5kt3kdV3_iyk75Lyflee4R9GQGfX4HwatuQSRukX0EkRclplhkdsKcqXa9uDVyMLNYqBYCfWH_JupXt1dDm3GmaOmZkt2YYRovmL3dsEdYigkoWp3Ors_fhy2mcAW8-z9N4iPkMbdq0eKiheVk29GOIclENxl/s693/picture2_7.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="299" data-original-width="693" height="138" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFnS_jN6U3nO5cbHNeNYZULetYdA_5kt3kdV3_iyk75Lyflee4R9GQGfX4HwatuQSRukX0EkRclplhkdsKcqXa9uDVyMLNYqBYCfWH_JupXt1dDm3GmaOmZkt2YYRovmL3dsEdYigkoWp3Ors_fhy2mcAW8-z9N4iPkMbdq0eKiheVk29GOIclENxl/s320/picture2_7.jpg" width="320" /></a></div><p>3) Tighter lending standards. Economic slowdowns increase risk aversion. Banks tighten credit standards to avoid losses during recessions. We're approaching tightness associated with past recessions.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgn0ic9-nvHuGb4NK3HlwbFId3N8Aw_MOBYJbeVww2vtgmBS0nQaH4CaeviHpStbQQa9gwemMXV2p_f4eavBNOX6Ps_DQaJSmcJ7ElAE2Ge3OBxb_YrWwoaxbmQCSbUXlWa0bL3lM8pSR0XXVmi9t_lzcrkJdVU9F2cNSM7N3lO_h9allxaYE0tYyLI/s693/picture3_4.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="335" data-original-width="693" height="155" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgn0ic9-nvHuGb4NK3HlwbFId3N8Aw_MOBYJbeVww2vtgmBS0nQaH4CaeviHpStbQQa9gwemMXV2p_f4eavBNOX6Ps_DQaJSmcJ7ElAE2Ge3OBxb_YrWwoaxbmQCSbUXlWa0bL3lM8pSR0XXVmi9t_lzcrkJdVU9F2cNSM7N3lO_h9allxaYE0tYyLI/s320/picture3_4.jpg" width="320" /></a></div><p>4) Falling housing market prices. Mortgage rates have more than doubled over the past year. As prices and borrowing costs go up, demand for houses has gone down. Inventory is now above 10 months of supply--a threshold that has consistently been associated with past recessions.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCY85-YmZ-Drn3nDEf5404Z2xBf-2lFRqXhvq1mXsGhjbgCE520CoIiESlXh7XtPVT2SzGVb3t1NR0tuHyXLhgsyUWhgIGzMmq18q6kChnfMfkKpDEX5kMpAbkLipft9k3ri3bSo7pC_-V2UZtqfpr-8FkVtk6mjqm1Ygy-Ff0fB277VPbNbhWM8Jw/s693/picture4_2.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="335" data-original-width="693" height="155" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhCY85-YmZ-Drn3nDEf5404Z2xBf-2lFRqXhvq1mXsGhjbgCE520CoIiESlXh7XtPVT2SzGVb3t1NR0tuHyXLhgsyUWhgIGzMmq18q6kChnfMfkKpDEX5kMpAbkLipft9k3ri3bSo7pC_-V2UZtqfpr-8FkVtk6mjqm1Ygy-Ff0fB277VPbNbhWM8Jw/s320/picture4_2.jpg" width="320" /></a></div><p>5) Declining manufacturing and trade sales. Sales are down over one percent YOY. Declines below zero have coincided with every recession since the 1970s.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_BYue72ltpdcXJrlVHt-zc6zvuAmpAAqfhyXGEkuJFqkAfvaKdtjw0oXcYs5jDTuxPd4Qu194Ogf4t_CobH5oy-Io3XJw9yNgjL5_H3Gi2sHYR_7c41kctDB3EB_XSu3Tm-Hz7DrgEoZZ0M64hPB_yLkQnmL8bIrNkgOaTHCmICqwPh9RtMIzeUQR/s693/picture5_0.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="356" data-original-width="693" height="164" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj_BYue72ltpdcXJrlVHt-zc6zvuAmpAAqfhyXGEkuJFqkAfvaKdtjw0oXcYs5jDTuxPd4Qu194Ogf4t_CobH5oy-Io3XJw9yNgjL5_H3Gi2sHYR_7c41kctDB3EB_XSu3Tm-Hz7DrgEoZZ0M64hPB_yLkQnmL8bIrNkgOaTHCmICqwPh9RtMIzeUQR/s320/picture5_0.jpg" width="320" /></a></div><p>These indicators suggest that a recession is not imminent. Rather, it is likely already here.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-3486704515567900292022-09-13T11:41:00.000-04:002022-09-13T11:41:08.601-04:00Political Purge<div style="text-align: left;"><i>"So, here's to the men who did what was considered WRONG, in order to do what they knew was right...what they KNEW was right."</i><br />--Benjamin Franklin Gates (National Treasure)</div><p>After Donald Trump and his close circle were hit by DOJ search teams, it appears that this administration is widening its nets. Tucker Carlson <a href="https://www.zerohedge.com/political/full-blown-political-purge-tucker-carlson-obtains-doj-subpoenas-targeting-trump-allies">reports</a> that subpoenas are in the process of being issued on dozens of Trump allies.</p><p>This is what a political purge looks like.</p><p>Obviously, this is meant to send a message ahead of the upcoming midterm elections, and to those who are considering involvement in the presidential election two years off.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-18494704227945363942022-09-12T12:55:00.002-04:002022-09-12T15:02:16.926-04:00Railroads Crossing<div style="text-align: left;"><i>Seven, that's the time we leave, at seven<br />I'll be waiting up for heaven<br />Counting every mile of railroad track<br />That takes me back</i><br />--Doris Day </div><p>Nice map of US railroads. Time stamped 2020 so slightly out of date.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrBVZmWjJKEUMViMw3zwxRe-9KuSutr9FGPwcQd3OoLoH2_BJfmUCbPgFhQrMfD4rwYmlou1wCt10zT6MjwuFjj3EILGRRuDI6JKhoBdm8xhSziTqVkuiM0qk2B9SMFldcOv5c63PoTnzrhtPV9EOObd1XgS5HD3653DRvD1Ha1GK59WcWWayDVZwY/s1280/tracks.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="962" data-original-width="1280" height="241" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgrBVZmWjJKEUMViMw3zwxRe-9KuSutr9FGPwcQd3OoLoH2_BJfmUCbPgFhQrMfD4rwYmlou1wCt10zT6MjwuFjj3EILGRRuDI6JKhoBdm8xhSziTqVkuiM0qk2B9SMFldcOv5c63PoTnzrhtPV9EOObd1XgS5HD3653DRvD1Ha1GK59WcWWayDVZwY/s320/tracks.jpg" width="320" /></a></div><p>Mergers have left the industry with six major players. US operators include BNSF Railway (owned by Berkshire Hathaway), CSX (CSX), and Norfolk Southern (NSC), and Union Pacific (UNP). Two Canadian operators, Canadian National (CNI) and Canadian Pacific (CP), also have substantial presence.</p><p>Although their tracks overlap, you can see where each operator's home turf is.</p><p>As might be expected, the majors are now in the process of gobbling up smaller regional and local operators.</p><p><i>position in CSX</i></p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-36733442369601493202022-09-11T12:37:00.005-04:002022-09-11T12:38:09.097-04:00Lost and Found<div style="text-align: left;"><i>When my teeth bite down I can see the blood<br />Of a thousand men who have come and gone<br />Now we grieve 'cause now it's gone<br />Things were good when we were young</i><br />--Von Bondies</div><p>In some ways the holes in my heart still feel as large as those twin holes in the ground.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ6v2hS1pkEXeFiVvpjflvoiJ7cJeAJmLUU8rmFkmw8lwVJOhaxanOlfwuEdgGF5x2kHtv5q1akGmhTmkM9GFDWnngToaHHFgZKCNfYj2MG_FTr046EQFzlZLREYaI7hS0JP1Dc6kRHA23cYSr4HdyX5d1Tusu7fZYp5egmxl-YnB7q0DCvIFCodVi/s1536/aerial-view-of-the-9-11-memor3e1b51-1536x1536.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="1536" data-original-width="1536" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiZ6v2hS1pkEXeFiVvpjflvoiJ7cJeAJmLUU8rmFkmw8lwVJOhaxanOlfwuEdgGF5x2kHtv5q1akGmhTmkM9GFDWnngToaHHFgZKCNfYj2MG_FTr046EQFzlZLREYaI7hS0JP1Dc6kRHA23cYSr4HdyX5d1Tusu7fZYp5egmxl-YnB7q0DCvIFCodVi/s320/aerial-view-of-the-9-11-memor3e1b51-1536x1536.jpg" width="320" /></a></div><p>In other ways, those holes have been filled with knowledge and love.</p><p>As terrible as that day was, I am grateful for the positive changes it has brought. </p><p>Like today's gospel (Luke 15:1-32) that tells us of the lost son who has been found.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-52689555050360953602022-09-10T15:36:00.001-04:002022-09-10T15:36:38.272-04:00Climate Gravy Train<div style="text-align: left;"><i>Strange voices are saying</i></div><div style="text-align: left;"><i>What did they say?</i></div><div style="text-align: left;"><i>Things I can't understand</i></div><div style="text-align: left;"><i>It's too close for comfort</i></div><div style="text-align: left;"><i>This heat has got right out of hand</i><br />--Bananarama</div><p>On the back of <a href="http://mindandmarket.blogspot.com/2022/09/greenpeace-man.html">yesterday's post</a>, another credentialed 'expert' <a href="https://www.zerohedge.com/weather/nothing-do-man-astrophysicist-says-climate-cultists-are-gravy-train-make-money">fades the party line</a> on climate change. He argues that any relationship between man and climate change is a spurious one. It is more likely, he suggests, that cyclical activity on the sun's surface is influencing weather patterns on earth.</p><p>Meanwhile, climate alarmists seek to ride a 'gravy train' to make money.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-41729942496641962592022-09-09T16:07:00.004-04:002022-09-09T16:08:15.500-04:00Greenpeace Man<div style="text-align: left;"><i>"There is a WALL of water coming toward New York City!"</i><br />--Radio announcer (The Day After Tomorrow)</div><p><a href="https://www.zerohedge.com/markets/greenpeace-co-founder-patrick-moore-says-climate-change-based-false-narratives">Interesting piece</a> on Greenpeace founder who left the organization when it was 'hijacked by the political left' and morphed it into a 'political fundraising organization.'</p><p>Great comments particularly on the 'demonization' of carbon dioxide and its influence on climate. This chart should be particularly telling to any reasoning mind:</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY0Pi1SuxUOKsfDO5YTIuf1_q3O-zEfYWiF5i0ii6nB-VyDLzRApGmbRowjwjUEb3-R4LssxMeLRGA8cVL6kZzJ_8xgV-qBsCY-LKg7uJPWFnIQ5oUF_i7sIQpmUU5uCCic-UDnJG2zQRjubBJNSBy01wah9gCwvEFVoDzezxYSalHQreMvuyMse_l/s600/CO2.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="416" data-original-width="600" height="222" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhY0Pi1SuxUOKsfDO5YTIuf1_q3O-zEfYWiF5i0ii6nB-VyDLzRApGmbRowjwjUEb3-R4LssxMeLRGA8cVL6kZzJ_8xgV-qBsCY-LKg7uJPWFnIQ5oUF_i7sIQpmUU5uCCic-UDnJG2zQRjubBJNSBy01wah9gCwvEFVoDzezxYSalHQreMvuyMse_l/s320/CO2.jpg" width="320" /></a></div><p>Also liked his comments on the <a href="https://mindandmarket.blogspot.com/2019/01/co2.html">dynamics of</a> CO2, plant growth, and <a href="https://mindandmarket.blogspot.com/2016/06/natures-robust-nature.html">robust ecologies</a>--something these pages <a href="https://mindandmarket.blogspot.com/2016/08/co2-and-global-greening.html">have discussed</a>.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-25468948385017287842022-09-07T12:26:00.001-04:002022-09-07T12:26:05.057-04:00Sanctions Fever<div style="text-align: left;"><i>Life goin' nowhere<br />Somebody help me<br />Somebody help me, yeah</i><br />--Bee Gees</div><p>Vladimir Putin <a href="https://www.zerohedge.com/energy/western-elites-sanctions-fever-will-see-common-people-freeze-wreck-lives-putin">attributes</a> Europe's energy crisis and related probs to 'sanctions fever.' It is hard to disagree.</p><p>Watching a related special last nite on CNBC and host Brian Sullivan asked a guess whether he thought the West's sanctions on Russia were 'working.'</p><p>Perhaps he should have asked the millions around the world who face starvation and hypothermia due to these sanctions.</p><p>Sadly, this was predictable <a href="https://mindandmarket.blogspot.com/2022/03/sanctions.html">from the get go</a>...</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-11773889315604325602022-09-06T12:36:00.002-04:002022-09-06T12:36:27.132-04:00Euro Energy Bailout<div style="text-align: left;"><i>Here I am in silence<br />It's a game I have to play<br />You and I in silence<br />With nothing else to say</i><br />--Information Society</div><p>On the <a href="http://mindandmarket.blogspot.com/2022/09/frozen-policy.html">back of</a> yesterday's post, <a href="https://www.zerohedge.com/markets/nomura-yields-soar-markets-demand-return-printers-monetize-europes-energy-hyperinflation">headlines this morning</a> find euro bureaucrats committing to <a href="https://www.zerohedge.com/markets/trillions-liquidity-support-going-be-needed-swiss-finns-join-europes-bailout-brigade">massive bailouts</a> of consumers and producers as they face virtual margin calls as energy prices spiral higher.</p><p>These bailouts are forms of stimulus--subsidies that work against efforts to reign in higher prices.</p><p>Still wrapping my head around how this spills over to the US. The obvious consequence is an even strong USD vs the euro.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-25525811103106493212022-09-05T11:16:00.002-04:002022-09-05T11:16:20.919-04:00Frozen Policy<div style="text-align: left;"><i>Hear the Salvation Army band<br />Down by the riverside<br />Bound to be a better ride<br />Than what you've got planned</i><br />--The Bangles</div><p>Europe seems headed toward a self-imposed depression. Sanctions against Russia, combined with previous 'green' policies, have exploded in the face of euro bureaucrats, leaving the EU facing a winter with insufficient heat, electricity, and gasoline.</p><p>Some gas and electric bills are already printing 5-10x year ago levels.</p><p>Policymakers appear to be doubling down by developing plans for rationing, price capping, and money printing.</p><p>Absent a quick policy about-face, it is difficult to see how the EU survives the next few months.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-19886591264848651622022-09-04T13:45:00.003-04:002022-09-04T13:45:50.698-04:00Repos and QT<div style="text-align: left;"><i>Then the door was opened<br />And the wind appeared<br />The candles blew<br />And then disappered</i><br />--Blue Oyster Cult</div><p>Interesting <a href="https://www.wsj.com/articles/the-other-doomsday-scenario-looming-over-markets-11662212004?mod=markets_lead_pos11">WSJ article</a> suggesting that declining reserves stemming from the Fed's 'quantitative tightening' (QT) program poses a significant threat to financial markets. </p><p>QT is the reverse of quantitative easing (QE). In QE, the Fed printed money out of thin air to buy bonds from banks. That printed money became 'reserves' that the banks have deposited with the Fed. Unsurprisingly, reserves have rocketed higher given the $9 trillion of bonds that the Fed now holds on its balance sheet via QE. </p><p>Bank reserves serve various purposes. They can be used to settle trades with other banks. Reserves are also kept to satisfy regulatory requirements, which have generally been ratcheted higher since 2008, to provide some margin of safety in the event of another systemic credit event.</p><p>Reserves can also be used for investment purposes. One popular avenue toward this end is the <a href="https://mindandmarket.blogspot.com/2014/07/repos.html">repo</a> market. Repos are contracts where one party sells securities to another party in exchange for cash. The buyer (who is engaging in what is called a 'reverse repo) promises to sell the securities back to the original holder at some future (usually near term) date and at a set (usually higher) price.</p><p>These pseudo loans help the pseudo borrowers manage short term cash obligations while providing the reverse repo pseudo lenders with quick profits.</p><p>When reserve levels are high then the 'interest rates' governing repos are low and usually in line with the Fed Funds Rate. However, when reserves decline, repo rates are prone to rise because there is less capacity for reverse repo 'lenders' to employ. </p><p>As the Fed embarks on QT, reserves are beginning to fall. Although there are no signs yet of stress in the repo markets, there is belief that it is only a matter of time before problems surface. </p><p>Indeed, <a href="https://mindandmarket.blogspot.com/2019/10/repo-madness.html">in 2019</a>, the Fed had to inject emergency shots of liquidity into these markets after previous QT programs resulted in skyrocketing repo rates that threatened to seize up money markets.</p><p>Given the size and centrality of money markets to <a href="https://mindandmarket.blogspot.com/2014/05/next-banking-crisis.html">contemporary market</a> functioning, it may <a href="https://mindandmarket.blogspot.com/2014/07/could-it-be-repos.html">once again</a> be time to <a href="https://mindandmarket.blogspot.com/2013/10/fear-repo.html">fear the repo</a>.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-53148908375629181332022-09-03T13:09:00.007-04:002022-09-03T13:12:55.112-04:00Tracing History<div style="text-align: left;"><i>Dr Alexander Denny: You know you don't have to do this.</i></div><div style="text-align: left;"><i>Doug Carlin: What if I already have?<br /></i>--Deja Vu</div><p>Interesting analog comparing this year's market action to 2008-2009.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhc6G3xY96vnySLaN8poOVEMbuOWlHVNjIP0EYHWvfUCR2JG-v_cetgMBkk2I11YSYgcrj_etdqPs48b1nX_r4h_oAJqqGqvtbeoxro02zkVrhENrDTmmON1nTHxg3T1c6mdn-1rLYpL005tyPf6jHibpA3qBFMEVQ3-ajuVvKl7QfVGboK18k9mx-S/s931/Analog.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="501" data-original-width="931" height="172" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhc6G3xY96vnySLaN8poOVEMbuOWlHVNjIP0EYHWvfUCR2JG-v_cetgMBkk2I11YSYgcrj_etdqPs48b1nX_r4h_oAJqqGqvtbeoxro02zkVrhENrDTmmON1nTHxg3T1c6mdn-1rLYpL005tyPf6jHibpA3qBFMEVQ3-ajuVvKl7QfVGboK18k9mx-S/s320/Analog.jpg" width="320" /></a></div><p>So far patterns are pretty similar.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-8466094793558075422022-09-02T14:52:00.005-04:002022-09-02T14:52:53.945-04:00Extremism and Liberty<div style="text-align: left;"><i>"Tonight, our country, that which we stand for and all we hold dear, faces a grave and terrible threat. This violent and unparalleled assault on our security will not go undefended...or unpunished. Our enemy is an insidious one, seeking to divide us and destroy the very foundation of our great nation. Tonight, we must remain steadfast. We must remain determined. But most of all, we must remain united."</i><br />--Adam Sutler (V for Vendetta)</div><p>It's difficult to imagine that this administration doesn't lose more political support each time it opens its mouth. Last night Biden spoke like a geriatrically challenged version of <a href="https://vforvendetta.fandom.com/wiki/Adam_Sutler">Adam Sutler</a>, declaring that supporters of Donald Trump and the Make America Great Again ideology <a href="https://summit.news/2022/09/02/blood-red-biden-trump-supporters-represent-an-extremism-that-threatens-the-very-foundations-of-our-republic/">constitute</a> a "threat to our country."</p><p>If one infers that those who voted for Trump in 2020 comprise this group, then it numbers at least 70 million.</p><p>The president's press secretary <a href="https://summit.news/2022/09/02/video-wh-press-secretary-declares-if-you-disagree-with-the-majority-that-is-extreme-thinking/">added</a> the e-word. The president, she said, sees this group as "an extreme threat to our democracy."</p><p>Moreover, "when you are not with where the majority of Americans are, then, you know, that is extreme. That is an extreme way of thinking."</p><p>Setting aside questions involving what precisely in MAGA ideology is inconsistent with the views of the majority of Americans, or, for that matter, whether MAGA ideology itself doesn't actually constitute the majority viewpoint, any American with a modicum of grounding in US history understands that our founding ancestors designed a government that protected the rights of those who not aligned with the <a href="https://mindandmarket.blogspot.com/2011/08/democratic-tyranny.html">whims of majority opinion</a>. </p><p>If the press secretary's definition of extremism is employed, then opinions inconsistent with the majority are to be protected from tyrannical treatment. Government is legally barred from acting against 'extremists'--again defined as those who think differently from the 'majority.' </p><p>My sense is that Americans still understand this founding principle well enough they are are turned off by the caustic 'extremist' claims of leftists.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-77515947123191593502022-09-01T11:00:00.000-04:002022-09-01T11:00:04.344-04:00Cause for Pause<div style="text-align: left;"><i>How can you just leave me standing<br />Along in a world that's so cold?</i><br />--Prince</div><p>Our working hypothesis is that the Fed <a href="https://mindandmarket.blogspot.com/2022/04/chronically-dovish.html">will pivot</a> from its hawkish track when 'something breaks' in the market. That's been the <a href="https://mindandmarket.blogspot.com/2022/04/how-low-is-high.html">historical pattern</a> and there's no reason to believe this time will be any different.</p><p>But where will the breakage occur this time around? One possibility is something in the credit markets. The greater the systemic leverage, the more susceptible the system is to higher interest rates. And systemic leverage has never been higher.</p><p>After the Fed's historic tightening over the past six months (on a relative basis), some folks are <a href="http://mindandmarket.blogspot.com/2022/08/lagged-effects.html">on the lookout</a> for cracks in credit. We <a href="http://mindandmarket.blogspot.com/2022/08/ccc-spreads.html">recently noted</a>, for example, that low rated debt spreads are widening toward alarm levels.</p><p>Another possibility, one stressed <a href="https://www.youtube.com/watch?v=BQXaRbXP1YM">here</a>, is that a funding crisis arises in Washington. Higher rates mean more interest expense on ever-escalating federal debt levels. We're currently on a run rate to spend over $1 annually on Treasury bond interest. How much longer before politicians exert enough pressure on the Fed before it breaks?</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQBcwHEGPmVZV0K00OH_hecyeEKBJfoRZoVXiDzWrSsmXV8LTPNn_IBRv8PznALhfRlDRmXw-l6mlCRB60CR9hCRQruVirKUzK4vsVJVn_xGJbSJCLmZnbYRBm8gdwf3zbU693wnX7TkVqzrQ47MusUfXmmRwyuCaIBwyyZc1ycr47zTSwfVgIStSh/s500/DXY.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="278" data-original-width="500" height="178" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjQBcwHEGPmVZV0K00OH_hecyeEKBJfoRZoVXiDzWrSsmXV8LTPNn_IBRv8PznALhfRlDRmXw-l6mlCRB60CR9hCRQruVirKUzK4vsVJVn_xGJbSJCLmZnbYRBm8gdwf3zbU693wnX7TkVqzrQ47MusUfXmmRwyuCaIBwyyZc1ycr47zTSwfVgIStSh/s320/DXY.jpg" width="320" /></a></div><p>Finally, one possibility that I frankly had not entertained concerns the strong dollar. The dollar index (DXY) currently stands at its highest level since 2002. The broader Bloomberg dollar index has spiked above the pandemic highs.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaF5iokSfGmM-XNao8bTpCNjYd6E7A9Dh9elUP-rJ0KRidzm7ivxd_THSrCHI9lA3-wriHiY233YtGX1xuSzCcoPY29g74hPBt2sDukUXP9UsDTpS-h5wpXCgPXG95NUmpuP4wORyRiX0daXW0dAsnaYEcUvpbuymf3jDiTBsN1YDAe2XMhzZ9Vgau/s981/BDXY.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="542" data-original-width="981" height="177" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjaF5iokSfGmM-XNao8bTpCNjYd6E7A9Dh9elUP-rJ0KRidzm7ivxd_THSrCHI9lA3-wriHiY233YtGX1xuSzCcoPY29g74hPBt2sDukUXP9UsDTpS-h5wpXCgPXG95NUmpuP4wORyRiX0daXW0dAsnaYEcUvpbuymf3jDiTBsN1YDAe2XMhzZ9Vgau/s320/BDXY.jpg" width="320" /></a></div><p>There is <a href="https://www.zerohedge.com/markets/dollar-index-surges-above-covid-panic-highs-gold-back-below-1700">growing suspicion</a> that this is sparking margin calls in emerging markets stemming from short dollar positions. </p><p>If so, then systemic contagion could provide another possible cause for Fed pause.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-87204333907801517322022-08-31T13:13:00.001-04:002022-08-31T13:13:41.509-04:00Disconnect<div style="text-align: left;"><i>Hungry to touch<br />I'm eager to please<br />Out of control<br />And I hand you the keys</i><br />--Rick Springfield</div><p>Nice graphic that complements <a href="http://mindandmarket.blogspot.com/2022/08/student-loan-forgiveness.html">our previous post</a>.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYXRwdiGUzDjsxZFjXY8KMT0kgrNn9l4R4MqS9Wt71_XZ_bNTMv3xVIMtmOSODl6UlKYQbhj5t2M8oYC3tPiqmy_nRI6rGkAjKxIqR9qJ0lEIy0vN5TpUmopzqlS_R4NamI4a-s8-G50RcnS2AGvois4JqeiKG6yqvaLyIo10lbJFxla-LEZjPwfVx/s680/debtforgive.png" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="679" data-original-width="680" height="320" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgYXRwdiGUzDjsxZFjXY8KMT0kgrNn9l4R4MqS9Wt71_XZ_bNTMv3xVIMtmOSODl6UlKYQbhj5t2M8oYC3tPiqmy_nRI6rGkAjKxIqR9qJ0lEIy0vN5TpUmopzqlS_R4NamI4a-s8-G50RcnS2AGvois4JqeiKG6yqvaLyIo10lbJFxla-LEZjPwfVx/s320/debtforgive.png" width="320" /></a></div><p>When you bail out bad decisions, you get _____ of them.</p><p>a) more</p><p>b) less</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-64883751714885827692022-08-31T11:35:00.003-04:002022-08-31T11:35:57.747-04:00Student Loan Forgiveness<div style="text-align: left;"><i>"Somebody's got to pay. Not gonna be me."</i><br />--Harry Lynch (Wall Street)</div><p>Ron Paul <a href="http://ronpaulinstitute.org/archives/featured-articles/2022/august/29/biden-s-student-debt-forgiveness-scheme-is-unforgivable/">discusses </a>the administration's plan to forgive college student loan debt. The plan is an overt attempt to buy votes, of course. Who is being bought?</p><p>Indebted college students, naturally. Plus all those who benefit from government subsidies to higher ed.</p><p>The plan can be viewed as a wealth transfer to the elite class. The working man is being forced to subsidize the 'educated.'</p><p>Moreover, the plan is inflationary. Loans that are forgiven don't just disappear. The liability must still be paid for. The money that can't be raised through taxes or borrowing will be...printed.</p><p>One more thing. Those who have actually paid for college now feel like suckers. In the future, more will borrow under the assumption that they won't have to pay.</p><p>Moral hazard writ large.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-62005979386503597752022-08-30T16:17:00.005-04:002022-08-30T16:17:53.252-04:00CCC Spreads<div style="text-align: left;"><i>Papa don't preach<br />I'm in trouble deep<br />Papa don't preach<br />I've been losing sleep</i><br />--Madonna</div><p>As we <a href="http://mindandmarket.blogspot.com/2022/08/leveraged-loans.html">remain on the lookout</a> for cracks in the system, particularly credit, this chart is noteworthy.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjV7di3u03svLXULOTGZ_FpPGyJumSARoVO_hIz0j-I3H1sg5iTRtulbX_-QZiw4TEpUklJVcUtf4ZGswFpWB1A-9wuyj5gOE4mnHWrg0m4Cbzx8WrtOFIlvr2YK32ckmJyVvm2gI797R2-bkcJHsCqD-P4wr-4S2j745o91lPjuDLLN9vQuqDBSbpK/s1018/cccspreads.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="477" data-original-width="1018" height="150" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjV7di3u03svLXULOTGZ_FpPGyJumSARoVO_hIz0j-I3H1sg5iTRtulbX_-QZiw4TEpUklJVcUtf4ZGswFpWB1A-9wuyj5gOE4mnHWrg0m4Cbzx8WrtOFIlvr2YK32ckmJyVvm2gI797R2-bkcJHsCqD-P4wr-4S2j745o91lPjuDLLN9vQuqDBSbpK/s320/cccspreads.jpg" width="320" /></a></div><p>Low quality CCC debt spreads have once again breached 1000 bips.</p><p>Trouble usually starts at the risky end of the credit stack...</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-78099166207410731372022-08-29T13:11:00.001-04:002022-08-29T13:11:57.340-04:00Irreparably Compromised<div style="text-align: left;"><i>"The wheels turn slow around here. Real slow. But they do turn."</i><br />--Detective Marie Mitchell (Hard Target)</div><p>What would it take to show that there was massive fraud and interference in an election--long after a 'winner' was originally declared. What if this fraud and interference cast serious doubt who really won? Or even worse, that a candidate originally deemed to have lost actually won?</p><p>How would the damaged candidate(s) seek and obtain relief?</p><p>My sense is that those who perpetrate election fraud are prone to do so boldly, under the assumption that if they can get to the point where the results are declared 'official,' then it will be next to impossible for a damaged candidate to obtain relief in a manner that society views as legitimate.</p><p>Not long after the 2020 election, <a href="https://mindandmarket.blogspot.com/2021/05/not-too-late.html">these pages mused</a> about this situation. That we're still musing more than two years later suggests a) that compelling evidence of fraud continues to surface, and b) the spectre of widespread recognition of irreparably compromised election has not been extinguished by the perpetrators.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-62103791800525294252022-08-28T13:07:00.000-04:002022-08-28T13:07:05.447-04:00Leveraged Loans<div style="text-align: left;"><i>"The mother of all evils is speculation--leveraged debt."</i><br />--Gordon Gekko (Wall Street 2: Money Never Sleeps)</div><p>Leveraged loans are loans extended to entities that already have high levels of debt and/or poor credit history. Loans are usually arranged by at least one investment or commercial bank, and are often syndicated to other banks or institutions.</p><p><a href="https://www.zerohedge.com/markets/morgan-stanley-spots-new-recession-canary-credit-coal-mine">This article</a> estimates the current value of leveraged loans outstanding at $1.4 trillion--nearly double the 2015 market size. I have read elsewhere that leveraged loans have become popular among college endowments and other institutional investors as high yielding alternative investments.</p><p>With that high yield, of course, comes higher risk. Leveraged loan borrowers are more prone to default. Indeed, the article also suggests that leveraged loans may be a useful 'canary in the coal mine' this time around as credit market stress builds.</p><p>We know that tight monetary policy moves are <a href="http://mindandmarket.blogspot.com/2022/08/lagged-effects.html">often lagged</a> in their effects. The leveraged loan market may be a good place to look for manifestations of the Fed's previous actions.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-14440646836636133242022-08-27T11:39:00.001-04:002022-08-28T13:07:22.797-04:00Utilities Yielding to Miners<div style="text-align: left;"><i>"You know, the worst ain't so bad when it finally happens. Not half as bad as you figure it'll be before it's happened."</i><br />--Curtin (The Treasure of the Sierra Madre)</div><p>Those seeking dividend income often flock to utilities given the sector's consistently high payouts. However, the income-producing status of utes is currently being challenged by...mining stocks. The dividend yield differential has narrowed to decades+ lows.</p><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnR7rVncILXcrbccgl2NlD1vVfl3dAV5MCcLQtho0BJQLgzGD_1R01LEQvt2zVa1BPabHv0uNDRMbjd2HVzUjhDnk9cJpyttVXfxioJ-18OVqIY8EYyrVOzdH4ZkFCyze4xICU852C1dfIYlGOXmbCUkYyt7uAS43vjkWtihjH5rdonDMT6KLaRXcZ/s930/minersvutes.jpg" style="margin-left: 1em; margin-right: 1em;"><img border="0" data-original-height="692" data-original-width="930" height="238" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgnR7rVncILXcrbccgl2NlD1vVfl3dAV5MCcLQtho0BJQLgzGD_1R01LEQvt2zVa1BPabHv0uNDRMbjd2HVzUjhDnk9cJpyttVXfxioJ-18OVqIY8EYyrVOzdH4ZkFCyze4xICU852C1dfIYlGOXmbCUkYyt7uAS43vjkWtihjH5rdonDMT6KLaRXcZ/s320/minersvutes.jpg" width="320" /></a></div><p>Two things are going on. One is that utility stocks have been bid up recently, causing their yields to fall. The other is that mining stocks, despite their strong balance sheets and cash flows, have been crushed recently, causing their yields to rise.</p><p>While they have surely been disappointed that the sector has not yet responded to the present environment as expected, gold bulls are at least being paid well to wait.</p><p><i>position in gold</i></p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-81517565667775231442022-08-26T12:40:00.001-04:002022-08-26T12:40:45.295-04:00Jackson's Hole<div style="text-align: left;"><i>"You're the disease, and I'm the cure."</i><br />--Marion Cobretti (Cobra)</div><p>The much-awaited Jackson Hole speech from Fed chair Powell is now <a href="https://www.federalreserve.gov/newsevents/speech/powell20220826a.htm">in the books</a>. Personally, I always chuckle when Fed heads wax about economic problems that always seem to be exogenous, and the Fed's heroic role in taming them.</p><p>The topic this time around is, of course, inflation. Powell suggests that the Fed must draw upon 3 lessons learned. One is that the Fed must take on responsibility for delivering low and stable inflation. The obvious question is why should the Fed be responsible for delivering any rate of inflation at all? Moreover, if the Fed is responsible for delivering low inflation, then how did we get to this state of high inflation in the first place?</p><p>The second lesson learned related to 'inflation expectations.' Powell asserts that "if the public expects that inflation will remain low and stable over time, then, absent major shocks, it likely will. I found that statement particularly rich. It suggests that a major goal of 'fighting inflation' is persuasion--persuading the public that inflation is low. </p><p>Never mind the decades of easy money compliments of the Fed.</p><p>The third lesson is that the Fed must keep at it until the job is done. That is, keep monetary policy restrictive until "inflation is down to the low and stable levels that were the norm until the spring of last year. But monetary policy was extraordinarily 'unrestrictive' for more than a decade before the spring of last year. </p><p>If that prolonged period of easy money didn't unduly elevate the public's inflation expectations, then how will the Fed 'keeping at it' with restrictive monetary policy do the opposite?</p><p>Powell once again markets the Fed as the cure rather than the disease it is.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0tag:blogger.com,1999:blog-4988575875388913383.post-67800592204674348642022-08-25T10:42:00.003-04:002022-08-25T10:42:52.551-04:00Be Poor and Like It<div style="text-align: left;"><i>"Tis too much proved, that with devotion's visage and pious action, we do sugar o'er the devil himself."</i><br />-V (quoting Shakespeare) (V for Vendetta)</div><p>Another version of the <a href="http://mindandmarket.blogspot.com/2022/07/suck-it-up.html">'suck it up' message</a>. Euro leaders tell their people that 'abundance' is a thing of the past. Be poorer and like it.</p><p>One has to wonder how long a people is willing to endure hardship in support of a bureaucratic ideology.</p>fordmwhttp://www.blogger.com/profile/11971108560921372854noreply@blogger.com0