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Economic Outlook

Warnings We'll Wish We'd Heeded, Part One - Plunging Jobless Claims

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Posted by John Rubino - DollarCollapse.com

on Tuesday, 20 December 2016 07:49

It's the same story every time: Imbalances build up during a recovery but most investors ignore them because good times have become the new normal and the uptrend seems bullet-proof. Then things fall apart and everyone wishes they'd paid attention to history.

This series will cover a few of the more glaring examples of late-cycle myopia, beginning with jobless claims, i.e., the number of people joining the ranks of the unemployed.

In hard times when layoffs are widespread and new jobs scarce, this number spikes. In better times, when jobs are plentiful and employers are desperate to keep good people, the number falls.

But when it falls past a certain point wages start rising at a rate that leads (through market forces and/or Federal Reserve actions) to rising inflation and higher interest rates, which are destabilizing and generally cause a recession.

So let's see what this stat says about our place in the current business cycle:

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Economic Outlook

Trumponomics: Going for a Ride on the Trump Train

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Posted by David Haggith - The Great Recession Blog

on Thursday, 15 December 2016 07:19

I’m afraid the Trump train is headed for a sharp economic curve that takes the US further away from free-market capitalism. The US already pulled out of the free-market station a long time ago, but Trumponomics moves deeply into a “mixed economy,” an economy in which government funding and private funding are married. The bankster-baron confederation in the Trump cabinet is where business and government consumate their marriage.

My pervious article about Trump’s cabinet lineup demonstrated a major economic shift forming in the presidential cabinet. This article explains what that shift means.

How Trumponomics may radically change the US economy

In Trumponomics, this is worked out by placing corporate giants in direct control over all the reins of government in order to make sure that government is compliant to corporate interests as an effective way of boosting the economy. Trump has stated that most of his infrastructure spending will come from private enterprise, and this confederation assures government funding and business funding align.

While this union empowers rapid economic growth, the downside to Trumponomics is that a mixed economy easily sidetracks from its stimulus intentions to becoming the ultimate form of crony capitalism because government and industry become such intimate partners in development that you cannot tell where one begins and the other really ends. That entices a flow of money from public to private interests. The state risks becoming the weaker partner in this arrangement — a mere servant of corporate needs and wants — because those running the state have their former institutions, lifelong friends and their pocket books at heart.

Purportedly, Trumponomics is for the economic betterment of the entire nation, which is accelerated by combining the strength of state and business as a team in a unified direction. (It worked well for Germany after World War I.) I believe the Donald intends it for the best; but another downside is that Government — instead of having purely regulatory roles (congress and the executive branch) and the judicial role — effectively subsidizes certain businesses in creating the projects that government wants to accomplish.

Trump is proposing that government may, for example, pay half the cost of building a bridge while a private contractor pays the other half in exchange for owning the right to collect a toll at the bridge forever. A bridge can support a toll that will be profitable up to a certain cost of construction. Above that cost, no one will pay the toll. So, the government kicks in the full cost above what industry sees as leaving room for an acceptable margin of profit. Government also helps clear the hurdles for construction. That gets a lot more things done quickly, but at what risks?

Trumponomics is a plan for petal-to-the-metal growth; but it leaves no one regulating businesses when business executives are placed in charge of all the regulatory agencies. Another pitfall is that government, instead of simply assuring a level playing field for all businesses, can slip into favoritism toward businesses that are highly regarded by the corporate executives who assume the government reins of power.

Granted, the US hasn’t had a truly free market for decades. The Fed, which is corporately owned, already rigs the economy constantly by enticing banks to soak up government debt at practically no interest with its promises of buying the debt back from its member banks and by creating money that it gives freely to banks to invest in stocks.

Trump, however, is moving the country further in the direction of a mixed economy. Instead of state ownership of the economy (communism), it is corporate ownership of the state by corporate control of state offices, potentially directing them to the opposite end from what those offices were originally created for as regulatory bodies.

I’m not saying corporate leaders should never hold cabinet positions, but when the cabinet is stacked almost entirely in the direction of Trump placing his corporate cronies in power, it looks very problematic, whether they are truly cronies (as in friends) or just a clutch of high-power corporate colleagues.

The early surprise effects of Trumponomics

Trump is already boosting the economy, and he hasn’t even assumed office. His Wall-Street cabinet lineup and his enormous corporate tax gifts (See “Trump: Titan of Corporate Tax Cuts” and “Trump Tax Plan Turns the Donald into Trickle-Down King.”) coupled to his promise that the government will take out huge sums of debt to buy projects from corporate tycoons have all certainly goosed stock-market expectations. Investors now run long with hopes that Trump’s plans will further inflate the stock market bubble to all-time weather-balloon heights.

Given how Trump railed against Wall Street in his campaign, it is ironic that Trumponomics has proven most outstanding for Wall Street where bank stocks have risen more than any other sector. Leading the leaders of the pack, Goldman Sachs has absolutely skyrocketed, up a massive 33% since Trump won the election earlier this month:

GoldmanStocks-500x333



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Economic Outlook

Trumponomics – The New Hope

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Posted by Lance Roberts - The Real Investment Report

on Monday, 05 December 2016 08:21

Following the election, the market has surged around the theme of “Trumponomics” as a “New Hope” as tax cuts and infrastructure spending (read massive deficit increase) will fuel earnings growth for companies, stronger economic growth, and higher asset prices. It is a tall order given the already lengthy economic recovery at hand, but like I said, it is “hope” fueling the markets currently.

As I discussed on Tuesday:

“First, the market has moved from extremely oversold conditions to extremely overbought in a very short period. This is the first time, within the last three years, the markets have pushed a 3-standard deviation move from the 50-day moving average. Such a move is not sustainable and a correction to resolve this extreme deviation will occur before a further advance can be mounted.Currently, a pullback to the 50-day moving average, if not the 200-dma, would be most likely.”

SP500-MarketUpdate-112816-9

“Secondly, as discussed above, the advance to ‘all-time highs’ has been narrowly defined to only a few sectors. As shown the number of stocks participating, while improved from the pre-election lows, remains relatively weak and does not suggest a healthy advance.”

....continue to see all the charts and analysis HERE

 

 



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Economic Outlook

Fidel Castro’s Cuba vs Lee Kuan Yew’s Singapore: A Tale of Two Economies

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Posted by Frank Holmes - US Global Investors

on Wednesday, 30 November 2016 07:51

On Friday, November 25, Fidel Castro died at age 90. The former revolutionary and hardline dictator of Cuba was among the 20th century’s longest-serving leaders, third only to Elizabeth II and Bhumibol Adulyadej, the King of Thailand, who passed away in October.

Castro’s death comes at a pivotal moment in U.S.-Cuban relations. With trade between the two countries on the path to normalization, and with U.S. airlines making scheduled flights to Havana for the first time in more than 50 years, President-elect Donald J. Trump has pledged to reinstate many of the Cold War embargos that were lifted by President Barack Obama.

“If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate deal,” Trump tweeted on November 28.

In light of Castro’s passing, we are rerunning this Frank Talk from March 2015, in which Frank compares and analyzes the widely divergent economies of Cuba and Singapore under their now-deceased leaders, Castro and Lee Kuan Yew. 

Lee-Kuan-Yew-Fidel-Castro 03252015

It would be nearly impossible to find two world leaders in living memory whose influence is more inextricably linked to the countries they presided over than Cuba’s Fidel Castro and Singapore’s Lee Kuan Yew, who passed away this Monday at the age of 91.



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Economic Outlook

Consumer Confidence Rebounds in November

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Posted by Jill Mislinski via Advisor Perspectives

on Tuesday, 29 November 2016 07:01

557a3e141676a6f061683c1eecfc01fcThe latest Conference Board Consumer Confidence Index was released this morning based on data collected through November 15. The headline number of 107.1 was an increase from the final reading of 100.8 for October, an upward revision from 98.6. Today's number was above the Investing.com consensus of 101.2.

Here is an excerpt from the Conference Board press release.

"Consumer confidence improved in November after a moderate decline in October, and is once again at pre-recession levels," said Lynn Franco, Director of Economic Indicators at The Conference Board. (The Index stood at 111.9 in July 2007.) "A more favorable assessment of current conditions coupled with a more optimistic short-term outlook helped boost confidence. And while the majority of consumers were surveyed before the presidential election, it appears from the small sample of post-election responses that consumers' optimism was not impacted by the outcome. With the holiday season upon us, a more confident consumer should be welcome news for retailers."                                                                          Click for larger charts

Putting the Latest Number in Context

....continue reading HERE

....also:

Look what’s happening to Treasuries



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Economic Outlook

ECB Warns There Is "Significant Risk Of Abrupt Market Reversal"

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Posted by ZeroHedge

on Thursday, 24 November 2016 08:54

One week after the BIS issued an unexpectedly stern, if completely ignored warning, that the surge in the USD is leading to an abrupt tightening in financial conditions around the globe, making the repayment of trillions in USD-denominated cross-border debt increasingly more difficult and suggesting that the Dollar index itself is the new "fear indicator", overnight another central bank, the European Central Bank warned that the risk of "abrupt" global asset market corrections "have intensified" on the back of rising political uncertainty, posing a threat to banks, stability and economic growth.

ECB FSB chart 1 0

 

....read more HERE

...related:

As The Monetary Madness Continues, What Is Happening Is Stunning…



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Economic Outlook

The De-porter in Chief

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Posted by MIchael Campbell

on Monday, 21 November 2016 07:03

This weeks shocking stat: With all the outrage about Donald Trumps plans to de-port criminals, there is a President that has de-ported more in 8 years than all Presidents to date. The numbers are in the millions. Care to guess who?

....Michael's featured guest Dr. Michael Berry PhD: The Fed is Throwing Up Its Hands

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